C
o
l
g
a
t
e
-
P
a
l
m
o
l
i
v
e
C
o
m
p
a
n
y
2
0
2
1
A
n
n
u
a
l
R
e
p
o
r
t
Building A Brighter Future
2021 Annual Report
2021 At A Glance
#1
Market Share
in Toothpaste
Worldwide
$17.4B
Worldwide
Net Sales
59
Consecutive
Years of Dividend
Increases
$3.3B
Operating
Cash Flow
$3.0B
Cash Returned to
Shareholders Through
Dividends and Share
Repurchases
5th
Consecutive Year
Named to the Dow
Jones Sustainability
Indices
Net Sales By Geographic Region
Net Sales By Market Maturity
21% North America
21% Latin America
16% Europe
17% Asia Pacific
6% Africa/Eurasia
19% Hill’s Pet Nutrition
55% Developed Markets
45% Emerging Markets
Dear Colgate Shareholders
NNoel oel
Wallace
Wallace
As I reflect back on 2021, I am pleased
with the progress we are making on our
strategic and operational journey. I am also
truly inspired by the power and resilience
of Colgate people as we all continue to face
the many challenges brought on by the
COVID-19 pandemic. Their extraordinary
ability to execute our strategies
consistently while adapting to new ways
of working enabled us to deliver another year of strong
top-line growth. Net sales increased 6.0% and organic sales
(excludes foreign exchange, acquisitions and divestments)
grew 4.5%* in 2021 on top of 7.0%* organic sales growth in
2020 and despite a very difficult operating environment.
The strong organic sales growth was led by our oral care
and pet nutrition businesses.
We maintained our strong balance sheet and operating
cash flow, which led the Board of Directors to authorize
an increase in the quarterly cash dividend, which was
effective in the second quarter of 2021. This was our
59th consecutive year of dividend increases and our 127th
consecutive year paying a dividend.
Consistent with our purpose, and as reflected in the title
of this year’s annual report, we remain deeply committed
to Building a Brighter Future for all people, their pets and
our planet. As we enter 2022, we have strong plans in place
to continue our organic sales growth momentum, further
strengthen our capabilities across the
organization and make progress on our
sustainability and social impact goals.
Driving Organic Sales Growth
Our strategy is focused on delivering
broad-based sustainable, profitable
growth. We are seeking growth in every
division and every category, driven by
1
both volume and higher pricing. To do this, we are focused
on three key initiatives: driving premium innovation in
our core businesses, pursuing adjacent categories and
high-growth segments and expanding in faster-growing
channels and markets.
Across the organization we are changing the way
we think about innovation and are strengthening our
culture and capabilities to support a growth mindset.
We are accelerating the launch of more premium,
transformational innovation, especially in our larger core
businesses. In oral care, we brought package design to a
whole new level with Colgate Elixir toothpaste. This highly
differentiated toothpaste has a unique clear recyclable
bottle, is enriched with beauty-inspired ingredients and
contains technology that allows users to squeeze out
every last drop. In personal care, we launched Softsoap
foaming hand soap tablets with a refillable aluminum
bottle, offering consumers an easier, more eco-friendly
Elevating Our
Innovation
We are embracing a
design-obsessed mindset
to bring our brands to life
through premium-priced,
breakthrough innovations
like Colgate Elixir toothpaste
in Europe.
*For a reconciliation of organic sales growth to net sales growth, see page 46 of our Annual Report on Form 10-K.
and data and analytics will enable us to deliver sustainable,
profitable growth and be more responsive to the
challenges we face in a rapidly changing world.
Our digital transformation is of paramount importance
to our success going forward. We are actively accelerating
our digital penetration and capabilities around the Colgate
world. This reflects the changing behaviors of consumers,
the desire for convenient and frictionless shopping
experiences and the opportunity to create relevant
engagement with our brands. This is an exciting time of
transformation and new techniques to drive our growth
and be future-ready. We are investing in the upskilling of
our people, optimizing our media and creative, adding
talent and expertise and developing omnichannel go-
to-market experiences across our brands and in all
geographies.
Any transformation requires collaboration and
excellence in execution across all functional areas of the
business. Our IT team is contributing to growth more than
ever with advanced cloud platforms for marketing and
advertising technology and analytics, developing robust
collaboration tools and using enterprise-wide solutions,
like SAP S/4HANA, that drive efficiency throughout our
business processes and functions. Likewise, our advanced
analytics team is developing powerful, predictive tools
across revenue growth management and marketing and
media effectiveness, that enable data-driven decisions
and allow us to pinpoint opportunities across pricing,
promotions and media that maximize not only revenue
and market share but longer-term profitability.
2
way to refill their soap. In home care, we introduced fabric
refresher sprays with antibacterial/antiviral protection
in certain geographies, expanding our footprint beyond
fabric conditioners. We are also deeply excited about the
breakthrough, science-based innovation that is driving
significant growth at Hill’s including Prescription Diet
Derm Complete, nutrition for both food and environmental
sensitivities in dogs.
The increase in premium, transformational innovation
extends to how we are going after adjacent categories and
high-growth segments, like whitening. We are targeting
the whitening opportunity much more broadly with new
technologies, formulations and delivery systems to expand
our growth potential. The success of Colgate Enzyme
Whitening toothpaste in China and the Colgate Optic
White Overnight Pen in the U.S. are both perfect examples.
Our emphasis on faster-growing channels and markets also
continues to pay off. During 2021, we saw significant sales
growth in eCommerce, direct-to-consumer and pharmacy.
We are taking formerly regional brands like Tom’s of Maine,
hello, elmex and meridol and expanding them to select
channels and markets to take advantage of consumer
trends and their strong brand equities. In the pharmacy
channel, for example, where consumers shop for high-end,
therapeutic brands, we are gaining incremental market
share in Africa/Eurasia where we recently launched our
European-based meridol oral care products.
Our robust innovation activity was supported by a 4%
increase in advertising in 2021, following a 15% increase
in 2020. Importantly, we are increasing the effectiveness
and efficiency of our brand-building support by using
data and analytics to focus spending on higher-return
investments, such as targeted digital media and more
emotional equity messaging versus traditional product
advertising. Optimism in Action is our latest equity
campaign for the Colgate brand. This uplifting campaign
celebrates optimists who overcome adversity to make a
positive impact on others. It aims to inspire and encourage
everyone to take action for good, to help create a future
worth smiling about.
In addition to innovation and higher advertising,
capital spending is a critical component of our growth
strategy. Capital expenditures increased in 2021 as we
expanded capacity to meet heightened long-term growth
opportunities across our business and progressed on our
sustainability goals.
Building Capabilities Across The Organization
We understand that we need to perform in the short term
while transforming for the long term. Strengthening our
capabilities in areas like innovation, digital, eCommerce
Strengthening Our Digital Capabilities
Strong digital execution and science-based innovation drove
double-digit organic sales growth for Hill’s in 2021.
Focusing On Fast-Growing Channels
In 2021, we continued to strengthen our presence in the
fast-growing pharmacy channel with the rollout of our
meridol therapeutic oral care products to select markets
in Africa/Eurasia.
leadership. Of our many advancements this year, we are
particularly proud that, as of December 31, 2021, half
of our manufacturing facilities worldwide are now TRUE
Zero Waste certified. We have 26 TRUE Zero Waste
certifications in 16 countries on five continents, more than
any other company. You can read more about our 2025
Sustainability & Social Impact Strategy and our progress
against our sustainability targets on page 5 of this report
and on our website at www.colgatepalmolive.com.
Likewise, making the world a better place includes our
commitment to building a diverse, equitable and inclusive
culture where every Colgate person feels a real sense
of belonging and value. We are making progress in our
diversity representation among our senior leadership,
particularly for women globally and Hispanics and Asians in
the U.S. We are working toward our ambition of full labor
force representation in the U.S. among all major ethnic
groups so that our people can see themselves across all
organizational levels. Representation, however, is not
sustainable if we do not have an inclusive culture. We are
driving a culture of inclusion through education, dialogue
and encouraging personal accountability. You can learn
more about our Global Diversity, Equity & Inclusion (DE&I)
Strategy and our progress in this area in our DE&I Report
available on our website at www.colgatepalmolive.com.
3
Outlook
As we begin 2022, our number one priority remains
keeping Colgate people safe and healthy. There is
still much uncertainty stemming from the COVID-19
pandemic, supply chain disruptions and an elevated cost
environment. Despite these challenges, we are excited
that the changes we have made are having an impact. We
have good growth momentum and feel confident that
we are well positioned to continue to deliver sustainable,
profitable growth in 2022 and beyond.
As we move ahead together, I would like to thank
all Colgate people for their extraordinary commitment
to achieving our goals, and express appreciation for
the support of our consumers, customers, suppliers,
shareholders and Board of Directors.
Noel Wallace
Chairman, President and Chief Executive Officer
Driving growth in eCommerce continues to be a priority.
In 2021, sales from eCommerce grew 26% worldwide, with
every operating division growing at a double-digit rate.
We saw terrific performance in China where we are using
eCommerce to incubate our premium-priced innovations
a lot faster before scaling them more broadly into brick
and mortar outlets. As a leader in the digital space, Hill’s is
connecting with shoppers in new ways to drive awareness
for the brand and provide an easier path to purchase.
Hill’s was an early adopter of the Amazon Live streaming
platform in the pet food space, using it to promote the
Hill’s Science Diet portfolio of weight management pet
foods during the brand’s national weight campaign.
Reimagining A Healthier, More Sustainable
Future For All
As a caring, innovative growth company, our purpose is to
reimagine a healthier future for all people, their pets and
our planet. With the Colgate brand found in more homes
than any other, we feel an extraordinary responsibility
to make the world a better place. This year was a period
of key sustainability initiatives and accomplishments for
Colgate, including the issuance of our first sustainability
bond pursuant to our Sustainable Financing Framework.
We committed to investing an amount equal to the net
proceeds from the offering in certain environmental and
social projects as described in the Framework. We were
also named to the Dow Jones Sustainability Indices for
the fifth consecutive year, in recognition of our ongoing
commitment to sustainable business practices and
Our Leading Brands
Oral Care
44%
of Net Sales
4
Personal Care
20%
of Net Sales
Home Care
17%
of Net Sales
Pet Nutrition
19%
of Net Sales
2025 Sustainability
& Social Impact Strategy
We are pleased to report excellent progress in 2021 on our 2025 Sustainability & Social Impact Strategy. Our continued
commitment to building environmental and social consciousness into every decision earned us recognition in 2021 on
the Dow Jones Sustainability Indices for the fifth consecutive year and Gold Class distinction in the Household Products
industry in the 2022 Sustainability Yearbook published by S&P Global. We were also named a U.S. EPA ENERGY STAR®
Partner of the Year for the 11th consecutive year and received the Sustained Excellence Award for our continued leadership
and superior contributions to ENERGY STAR. In addition to the highlights below, more about our 2025 Sustainability &
Social Impact Strategy progress is available in the Sustainability section of our website at www.colgatepalmolive.com.
Driving
Social Impact
We are committed to helping to
ensure the wellbeing of all people
and their pets, building a culture of
inclusivity and creating meaningful
opportunities for all people to
succeed inside and outside Colgate.
Helping
Millions Of Homes
We are empowering people to
develop healthier habits by choosing
sustainable products that improve
their lives and homes from oral and
personal care to home care and pet
nutrition.
Preserving Our
Environment
We are accelerating action on
climate change and reducing our
environmental footprint, including
by working with our partners and
operations to eliminate waste,
decrease plastic usage, save water
and conserve natural resources.
5
Colgate Bright Smiles,
Bright Futures is our flagship
oral health education and
wellbeing initiative. Since the
program was established in
1991, we have reached over
1.4B
children and their families in
places that are convenient for
them in more than 80 countries.
Launched Colgate Keep,
our first-of-its-kind manual
toothbrush with a replaceable
head and a reusable
aluminum handle for
80%
less plastic waste compared
to similarly sized Colgate
toothbrushes.
As of
December 31, 2021,
we have
26
TRUE Zero Waste
certifications in 16
countries
on five continents,
more than any
other company.
We instituted mandatory
allyship and unconscious
bias training for all salaried and
clerical employees at Colgate,
with 100% compliance, to
help our employees better
understand diversity, equity and
inclusion concepts and embed
allyship as a daily practice.
Thanks to our Save Water
campaign, we estimate that
consumers have contributed to
an avoidance of approximately
206B
gallons of water and
10.8 million metric tons
of CO2 emissions, since its
launch in 2016.
In North America, our
relaunched Palmolive Ultra
dish soap is now in
100%
post-consumer recycled
plastic bottles and formulated
with 100% biodegradable
cleaning ingredients.*
*†OECD 301 B,C,D / OCDE 301 B,C,D
Our Leadership
Board Of Directors
Executive Team
John P. Bilbrey
Kimberly A. Nelson
Noel Wallace
Independent Director
Former Chairman, President
and Chief Executive Officer
of The Hershey Company
Elected director in 2015.
Age 65
Independent Director
Former Senior Vice
President, External Relations
of General Mills, Inc.
Elected director in 2021.
Age 59
Chairman, President and
Chief Executive Officer
Lorrie M. Norrington
Jennifer M. Daniels
6
John T. Cahill
Independent Director
Vice Chairman of The
Kraft Heinz Company
Elected director in 2005.
Age 64
Lisa M. Edwards
Independent Director
President & Chief
Operating Officer of
Diligent Corporation
Elected director in 2019.
Age 54
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
Elected director in 2016.
Age 65
Independent Director
Operating Partner of
Lead Edge Capital LLC
Elected director in 2015.
Age 62
Michael B. Polk
Independent Director
Advisory Director to
Berkshire Partners
LLC, Chief Executive
Officer of Implus LLC
Elected director in 2014.
Age 61
Stephen I. Sadove
Independent Director
Founding Partner,
JW Levin Management
Partners LLC
Elected director in 2007.
Age 70
Martina Hund-Mejean
Noel Wallace
Independent Director
Former Chief Financial
Officer of Mastercard Inc.
Elected director in 2020.
Age 61
Chairman, President
and Chief Executive
Officer of Colgate-
Palmolive Company
Elected director in 2019
and Chairman in 2020.
Age 57
Biographical information for the above directors and executives is available on our website at www.colgatepalmolive.com.
Chief Legal Officer
and Secretary
Stanley J. Sutula III
Chief Financial Officer
Prabha Parameswaran
Group President,
Growth and Strategy
Panagiotis Tsourapas
Group President, Europe
and Developing Markets
Management Team
Jules Andrew
VP & Chief Business
Services Officer
Thierry Antona-Traversi
VP & GM, Filorga
Lia Arvanitidou
VP, Global R&D
Issam Bachaalani
VP & GM, Colgate-Eurasia
Daniel Bagley
VP, Global R&D
Sophie Bailly-Maitre
VP & GM, Colgate-Canada
Dave Baloga
VP, Hill’s Pet Nutrition
Gillian Barclay
VP, Global Public Health
& Scientific Affairs
Claudia Barrera
VP, Global Information
Technology
Nicki Baty
VP & GM, Hill’s Pet
Nutrition-U.S.
Don Beatty
VP, Hill’s Pet Nutrition
Angel Dario Belalcazar
VP, Global R&D
Wendy Boise
VP, Global Human
Resources
Jose Borrell
VP, Hill’s Pet Nutrition
Yves Briantais
VP, Colgate-Asia Pacific
Scott Cain
VP, Global Finance
Scott Campbell
VP, Global Marketing
Burc Cankat
VP & GM, Colgate-North
Africa, Middle East & Turkey
Gonzalo Canteros Paz
VP, Global Supply Chain
*Maria Paula Capuzzo
President, Colgate-
Africa/Eurasia
Maria Elisa Carvajal
VP & GM, Global Oral Care
Martin J. Collins
VP, Global Human
Resources
*Michael A. Corbo
Chief Supply Chain Officer
*Mike Crowe
Chief Information Officer
Shirley Dai
VP, Colgate-Asia Pacific
Paula Davis
Chief Communications
Officer
Pierre Denis
VP, Global R&D
*Mukul Deoras
President, Colgate-
Asia Pacific
Craig Dubitsky
Chief Innovation Strategist,
Colgate and Friendly
Founder & Chief Creative
Officer, hello Products
Philip Durocher
VP, Colgate-North America
Gavin du Toit
VP, Colgate-Latin America
*John Faucher
Chief Investor Relations
Officer and SVP, M&A
Kimberly Faulkner
VP, Global Supply Chain
*Jean-Luc Fischer
President, Colgate-Europe
Betsy Fishbone
VP, Global Legal
Nadine Flynn
VP, Global Legal
David Foster
VP, Global Information
Technology
Anne-Sophie Gaget
VP & GM, Colgate-
Western Europe
Diana Geofroy
VP, Colgate-Mexico
Corrado Giaquinto
VP & GM, Colgate-
Greater Indochina
Derek Gordon
VP & Chief Diversity,
Equity & Inclusion Officer
Taylor Gordy
VP & GM, Colgate-
Northern Europe
Peter Graylin
VP, Global Legal
Valerie Haliburton
VP, Global Ethics &
Compliance
Diana Haussling
VP & GM, Colgate-
North America
*John Hazlin
President, Hill’s Pet
Nutrition
Yvonne Hsu
VP, Hill’s Pet Nutrition
Henry Hu
VP, Colgate-Asia Pacific
Kristine Hutchinson
VP, Global Legal
Eugene Kelly
VP, Diversity,
Equity & Inclusion
Iain Kielty
VP, Global Finance
Brigitte H. King
Chief Digital Officer
Charalabos Klados
VP, Global Legal
Raj Kohli
VP, Global R&D
*John Kooyman
Chief of Staff
Wojciech Krol
VP & GM, Colgate-
Central Europe East
*Al Lee
Chief Internal
Governance Officer
Adriana Leite
VP, Colgate-Africa/Eurasia
Sergio Leite
VP, Global R&D
*Stephane Lionnet
VP & Corporate Treasurer
Javier Llinas
VP, Global Information
Technology
Amalia Londono
VP, Colgate-Latin America
Gregory Malcolm
VP & Assistant Controller
Cesar Martinez
VP & GM, Colgate-
Southern Cone
Pablo Mascolo
VP, Colgate-Latin America
*Sally Massey
Chief Human
Resources Officer
Gerald Mastio
VP & GM, Colgate-
Central Europe West
Paul McGarry
VP, Global Information
Technology
Dana Medema
VP & GM, Oral Care
Colgate-North America
Catalina Monroy
VP, Global R&D
Anne-Marie Motte
VP & GM, Global
Toothbrush
Francisco Muñoz
VP & GM, Colgate-
Central America
Josue M. Muñoz
VP, Global Supply Chain
Eddie Niem
VP & GM, Hawley & Hazel
*Jesper Nordengaard
President, Colgate-
North America
Godfrey Nthunzi
VP, Colgate-Africa/Eurasia
Gregg Parsons
VP & GM, Colgate-
North America
Sara Scrittore
VP & GM, Colgate-
Southern Europe
Alain Semeneri
VP & GM, Hill’s Pet
Nutrition-Europe,
Middle East & Africa
Esi Seng
VP & GM, Tom’s of Maine
Jose Fernando Serrano
VP, Colgate-Latin America
Andrew Shepard
VP & GM, CP Skin Health
Group-Global
*Philip Shotts
VP & Controller
Luciano Sieber
VP, Colgate-North America
Hector Pedraza
VP & GM, Colgate-Andina
Linda Topping
VP, Global Supply Chain
Simon Petersen
VP & GM, Colgate-
South Pacific
Brent Peterson
VP, Global Human
Resources
Massimo Poli
VP & GM, Colgate-Mexico
Warren Pruitt
VP, Global Supply Chain
Ram Raghavan
VP & GM, Colgate-
India & South Asia
Rekha Rao
VP & GM, hello Products
Riccardo Ricci
VP & GM, Colgate-Brazil
Lauren Richardson
VP & Chief
Procurement Officer
Chad D. Riley
VP, Hill’s Pet Nutrition
Nancy Rolph
VP & Chief Security Officer
Paolo Rossetto
VP, Colgate-Europe
Maria Ryan
VP & Chief Clinical Officer
Bernal Saborio
VP & GM, Colgate-
Greater Caribbean
Arvind Sachdev
VP & GM, Colgate-
Philippines
Ivan Sandoval
VP, Global Legal
Diana Schildhouse
VP & Chief Analytics
& Insights Officer
7
Ann Tracy
VP & Chief
Sustainability Officer
Bill Van de Graaf
VP, Colgate-North America
*Patricia Verduin
Chief Technology Officer
Juan Vernaza
VP, Colgate-North America
Jean-Bernard Vidaillet
VP, Colgate-Europe
James Wang
VP & GM, Colgate-
Asia Pacific
Mauro Watanabe
VP, Colgate-Europe
& Africa/Eurasia
Cliff Wilkins
VP, Global Legal
Courtney Williams
VP, Global Legal
Andrew Wilson
VP, Colgate-Asia Pacific
Dan Wish
VP, Global Oral
Care Insights
Winnie Wong
VP & GM, Colgate-
Greater China
*Juan Pablo Zamorano
President, Colgate-
Latin America
Jenny A. Zirinsky
VP, Global Marketing
Joanna Zucker
VP & GM, CP Skin
Health Group-U.S.
*Corporate Officer
Reconciliation Of Non-GAAP
Financial Measures
The following is provided to supplement certain financial
measures discussed in this report both as reported (GAAP)
and excluding the impact of certain items (non-GAAP)
as shown below. 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 and
divestments. For a reconciliation of organic sales growth
to net sales growth for 2021, see page 46 of the Company’s
Annual Report on Form 10-K.
8
(Dollars in Millions Except Per Share Amounts)
Gross Profit
Margin
Operating
Profit
Net
Income
Diluted
EPS
2021
As Reported (GAAP)
Goodwill and Indefinite-Lived Intangible Impairment Charges
Loss on Early Extinguishment of Debt
Value-Added Tax Matter in Brazil
Excluding Items (Non-GAAP)
2020
As Reported (GAAP)
Global Growth and Efficiency Program
Subsidiary and Operating Structure Initiatives
Acquisition-Related Costs
Loss on Early Extinguishment of Debt
Excluding Items (Non-GAAP)
2019
As Reported (GAAP)
Global Growth and Efficiency Program
Acquisition-Related Costs
Value-Added Tax Matter in Brazil
Swiss Income Tax Reform
Excluding Items (Non-GAAP)
59.6%
–
–
–
59.6%
60.8%
–
–
–
–
60.8%
59.4%
0.1%
–
–
–
59.5%
$3,332
571
–
(26)
$3,877
$3,885
(16)
–
6
–
$3,875
$3,554
125
24
(30)
–
$3,673
$2,166
518
55
(20)
$2,719
$2,695
(13)
(71)
4
18
$2,633
$2,367
102
20
(20)
(29)
$2,440
$2.55
0.61
0.07
(0.02)
$3.21
$3.14
(0.02)
(0.08)
–)
0.02
$3.06
$2.75
0.12
0.02
(0.02)
(0.04)
$2.83
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2021
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
300 Park Avenue New York, NY 10022-7499
300 Park Avenue New York, NY 10022-7499
COLGATE-PALMOLIVE COMPANY
COLGATE-PALMOLIVE COMPANY
(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
Common Stock, $1.00 par value
0.500% Notes due 2026
0.300% Notes due 2029
1.375% Notes due 2034
0.875% Notes due 2039
Trading Symbol(s)
CL
CL26
CL29
CL34
CL39
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
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 every Interactive Data File required to be submitted 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. Yes ☒ No ☐
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, 2021 (the last
business day of its most recently completed second quarter) was approximately $68.6 billion.
There were 840,487,222 shares of Colgate-Palmolive Company Common Stock outstanding as of January 31, 2022.
DOCUMENTS INCORPORATED BY REFERENCE:
Documents
Portions of Proxy Statement for the 2022 Annual Meeting of Stockholders
Form 10-K Reference
Part III, Items 10 through 14
Part I
Page
Colgate-Palmolive Company
Table of Contents
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.
Item 9C.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
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
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
1
8
20
21
22
22
23
23
24
56
57
57
57
57
57
58
58
59
59
59
60
64
65
ITEM 1.
BUSINESS
(a) General Development of the Business
PART I
Colgate-Palmolive Company (together with its subsidiaries, “we,” “us,” “our,” the “Company” or “Colgate”) is a
caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. We seek to
deliver sustainable, profitable growth and superior shareholder returns, as well as provide Colgate people with an
innovative and inclusive work environment. We do this by developing and selling products globally that make people’s and
their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and diversity, equity
and inclusion (“DE&I”) strategies across our organization. Our 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,” “–
Outlook,” “–Results of Operations” and “– Liquidity and Capital Resources” in Part II, Item 7 of this report.
(c) Narrative Description of the Business
We operate in two product segments: Oral, Personal and Home Care; and Pet Nutrition. We are a leader in Oral Care
with global leadership in the toothpaste and manual toothbrush categories according to market share data. We sell our
toothpastes under brands such as Colgate, Darlie, elmex, hello, meridol, Sorriso and Tom’s of Maine, our toothbrushes
under brands such as Colgate, Darlie, elmex and meridol and our mouthwashes under brands such as Colgate, elmex and
meridol. Our Oral Care business also includes pharmaceutical products for dentists and other oral health professionals.
We are a leader in many product categories of the Personal Care market with global leadership in liquid hand soap,
according to market share data, which we sell under brands such as Palmolive, Protex and Softsoap. Our Personal Care
products also include Irish Spring, Palmolive and Protex bar soaps, Irish Spring, Palmolive, Sanex and Softsoap shower
gels, Lady Speed Stick, Sanex, Speed Stick and Tom’s of Maine deodorants and antiperspirants, EltaMD, Filorga and PCA
SKIN skin health products and Palmolive shampoos and conditioners.
We manufacture and market a wide array of products for the Home Care market, including Ajax, Axion and Palmolive
dishwashing liquids and Ajax, Fabuloso and Murphy household cleaners. We are a market leader in fabric conditioners
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 44%, 20% and 17%, respectively, of our total
worldwide Net sales in 2021. Geographically, Oral Care is a significant part of our business in Asia Pacific, comprising
approximately 81% of Net sales in that region for 2021.
Through our Hill’s Pet Nutrition segment (“Hill’s” or “Pet Nutrition”), we are a world leader in specialty pet nutrition
products for dogs and cats with products marketed in over 80 countries and territories worldwide. Hill’s markets pet foods
primarily under two brands. Hill’s Science Diet, which is called Hill’s Science Plan in Europe, is a range of products for
everyday nutritional needs. Hill’s Prescription Diet is a range of therapeutic products to help nutritionally manage disease
conditions in dogs and cats. Sales of Pet Nutrition products accounted for 19% of our total worldwide Net sales in 2021.
For more information regarding our worldwide Net sales by product category, refer to Note 1, Nature of Operations
and Note 14, Segment Information to the Consolidated Financial Statements.
For additional information regarding market share data, see “Market Share Information” in Part II, Item 7 of this
report.
1
Distribution; Raw Materials; Competition; Trademarks and Patents
Our Oral, Personal and Home Care products are sold to a variety of traditional and eCommerce retailers, wholesalers
and distributors worldwide. Pet Nutrition products are sold by authorized pet supply retailers, veterinarians and
eCommerce retailers. Certain of our products are also sold direct-to-consumer. Our sales to Walmart, Inc. and its affiliates
represent approximately 12% of our Net sales in 2021. No other customer represents more than 10% of our Net sales. We
support our products with advertising, promotion and other marketing (with increasing emphasis on digital) to build
awareness and trial of our products. Our products are marketed by a direct sales force at individual operating subsidiaries or
business units and by distributors or brokers.
The majority of raw and packaging materials used in our products are purchased from other companies and is available
from several sources. No single raw or packaging material represents, and no single supplier provides, a significant portion
of our total material requirements. We do, however, purchase certain key raw and packaging materials from single-source
suppliers or a limited number of suppliers. For certain materials, however, new suppliers may have to be qualified under
industry, governmental and/or Colgate standards, which can require additional investment and take a significant period of
time. Raw and packaging material commodities, such as essential oils, resins, tropical oils, pulp, tallow, corn, poultry and
soybeans, are subject to market price variations. For further information regarding the impact of changes in commodity
prices, see Item 1A, “Risk Factors - Volatility in material and other costs could adversely impact our profitability” and Item
7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Our products are sold in a highly competitive global marketplace which has experienced increased retail trade
concentration, the rapid growth of eCommerce, the integration of traditional and digital operations at key retailers and the
growing presence of large-format retailers, discounters and eCommerce retailers. Products similar to those that we produce
and sell are available from multinational and local competitors in the U.S. and overseas. Certain of our competitors are
larger and have greater resources than we do. In addition, the substantial growth in eCommerce has encouraged the entry of
new competitors and business models. In certain geographies, we also face strong local competitors, who may be more
agile and have better local consumer insights than we do. Private label brands sold by retailers are also a source of
competition for certain of our products.
The retail landscape in many of our markets continues to evolve as a result of the rapid growth of eCommerce retailers,
changing consumer preferences (as consumers increasingly shop online and via mobile and social applications) and the
increased presence of alternative retail channels, such as subscription services and direct-to-consumer businesses. These
trends have accelerated during the COVID-19 pandemic. At the same time, during the COVID-19 pandemic, we have
experienced disruptions in certain channels, including travel retail. We also continue to see changes in the purchasing
patterns of our consumers, including the nature and/or frequency of visits by consumers to retailers and dental, veterinary
and skin health professionals as well as a shift, in many markets, to purchasing our products online. We face competition in
several aspects of our business, including pricing, promotional activities, new product and brand introductions and
expansion into new geographies and channels. Product quality, innovation, brand recognition, marketing capability and
acceptance of new products and brands largely determine success in Colgate’s operating segments.
We consider trademarks to be of material importance to our business. We follow a practice of seeking trademark
protection in the U.S. and throughout the world where our products are sold. Principal global and regional trademarks
include Colgate, Palmolive, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, Lady Speed
Stick, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Murphy, Soupline and Suavitel, as well as
Hill’s Science Diet and Hill’s Prescription Diet. Our rights in these trademarks endure for as long as they are used and/or
registered. Although we actively develop and maintain a portfolio of patents, no single patent is considered significant to
the business as a whole.
2
COVID-19
COVID-19 and government steps to reduce the spread and address the impact of COVID-19 have had and continue to
have a profound impact on the way people live, work, interact and shop and have significantly impacted and may continue
to impact economic activity around the world.
During the COVID-19 pandemic, many of the communities in which we manufacture, market and sell our products
experienced and in some cases continue to experience “stay at home” orders, travel or movement restrictions and other
government actions to reduce the spread and address the impact of COVID-19, and have implemented varying policies to
address the pandemic, resume economic activity and vaccinate their populations. Because the vast majority of our products
(such as oral care products, soaps and other personal hygiene products, home cleaners and pet food) have been deemed
essential for the health and well-being of people and their pets, we have, in most instances, been able to continue operating
our business, although not always at full capacity. In doing so, the health, safety and well-being of our employees and their
families has been and remains our first priority. In addition, some of our suppliers, customers, distributors, logistics
providers and service providers have experienced disruptions to their businesses.
We saw a significant increase in demand across many of our categories, such as liquid hand soap, dish liquid, bar soap
and cleaners, during 2020 as a result of the COVID-19 pandemic, driven by consumer pantry-loading and increased
consumption of our products. While consumer demand for most of these categories declined year-over-year in 2021, most
remained above historical levels, and we believe that some of this increase in consumption is sustainable in light of changes
in consumer behavior related to COVID-19. Across our business, changes in consumer demand for our products vary by
product category and geography depending on, among other things, the severity of the COVID-19 outbreak, the availability
of our products at retailers and supply chain disruptions.
The COVID-19 pandemic and government steps to reduce the spread and address the impact of COVID-19 have
impacted and may continue to impact our consumers’ ability to purchase and our ability to manufacture and distribute our
products. While we believe that, in the long-term, consumer demand for the products in our categories will continue to be
strong, uncertainties continue surrounding the timing and duration of the pandemic and the recovery from it. COVID-19
has also disrupted our retail customers, contract manufacturers, logistics providers and other third parties; their ability to
address COVID-19 and maintain their operations at full capacity has impacted and may continue to impact sales of and
consumer access to our products. In particular, COVID-19 has disrupted, and may continue to disrupt, the travel retail
channel. We expect the ongoing economic impact, health concerns associated with COVID-19 and supply chain
disruptions to continue to impact consumer behavior, shopping patterns and consumption preferences during 2022.
For additional information regarding COVID-19’s impact on our business, see Part I, Item 1A “Risk Factors” and Part
II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive
Overview.”
Government Regulations
As a global company, we are subject to extensive governmental regulations, including environmental rules and
regulations, in the U.S. and abroad. The most significant government regulations that impact our business are discussed
below. It is our policy and practice to comply with all government regulations applicable to our business. In 2021,
compliance with these regulations did not have, and we do not expect such compliance in the future to have, a material
adverse effect on our capital expenditures, earnings or competitive position. For further discussion of how global legal and
regulatory requirements may impact our business, see Part I, Item 1A, “Risk Factors.”
Product Development: Legal and regulatory requirements apply to most aspects of our products, including their
development, ingredients, formulation, manufacture, packaging content, labeling, storage, transportation, distribution,
export, import, advertising, sale and environmental impact. U.S. federal authorities, including the U.S. Food and Drug
Administration, the Federal Trade Commission, the Consumer Product Safety Commission, the Occupational, Health and
Safety Administration 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.
3
Anti-Corruption, Anti-Bribery, Commercial Bribery and Competition: We are subject to anti-corruption laws and
regulations, including the U.S. Foreign Corrupt Practices Act and other laws that generally prohibit the making or offering
of improper payments to foreign government officials and political figures for the purpose of obtaining or retaining
business or to gain an unfair business advantage, and laws that prohibit commercial bribery. In addition, our selling
practices are regulated by competition law authorities in the U.S. and abroad.
Privacy and Data Protection: Our collection, storage, transfer and/or processing of customer, consumer, employee,
vendor and other stakeholder information and personal data is subject to privacy, data use and data security regulations in
the U.S. and abroad, including the General Data Protection Regulation and the California Consumer Privacy Act of 2018.
Trade Compliance: We are subject to laws and sanctions imposed by the U.S., including, without limitation, those
imposed by the U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”), and/or by other jurisdictions that
may prohibit us or certain of our affiliates from doing business in certain countries or restrict the kind of business that may
be conducted.
Human Capital Management
Human capital matters at Colgate are managed by our Global Human Resources function, led by our Chief Human
Resources Officer, with oversight from the Personnel and Organization Committee of our Board of Directors (the
“Board”). As of December 31, 2021, we had approximately 33,800 employees based in over 100 countries. Approximately
70% of our revenues are generated from markets outside the U.S. and 86% of our employees are located outside the U.S.
Approximately 36% of our employees are based in Asia Pacific, 30% are based in Latin America, 15% are based in
Europe, 14% are based in North America and 5% are based in Africa/Eurasia. Our global workforce covers a broad range
of functions, from manufacturing employees to management personnel and certain of our employees are represented by
unions or works councils.
Colgate’s Culture and Core Values
As we work to achieve Colgate’s purpose to reimagine a healthier future for all people, their pets and our planet,
Colgate people, working around the world, share a commitment to our three core corporate values: Caring, Global
Teamwork and Continuous Improvement. These values are reflected not only in the quality of our products and reputation,
but also in our dedication to serving the communities where we live and work, as reflected in our sustainability and social
impact and DE&I strategies. With these values, we work to maintain a strong culture based on integrity, ethical behavior
and a commitment to doing the right thing. Underlying these values and our strong culture is the commitment of all Colgate
people to maintain the highest ethical standards and demonstrate ethical leadership, including compliance with Colgate
policies and our Code of Ethics.
CARING: We care about people — Colgate people, consumers, customers, stockholders, business partners and people
in the communities where we live and work. We are committed to acting with compassion, integrity, honesty and high
ethics in all situations and to providing our employees with an innovative and inclusive work environment. As a reflection
of Colgate’s caring value, during the COVID-19 pandemic, protecting the health, safety and well-being of Colgate people
and their families has been and remains our first priority. While we have reopened most of our offices, in some instances
on a limited and voluntary basis, many of our office-based employees globally continue to work from home. We have
implemented additional health and safety measures consistent with government recommendations and/or requirements to
help ensure employee safety in our offices, production facilities, warehouses and technology centers. These measures may
include: health and temperature screening, social distancing and personal protective equipment protocols, hand washing,
contact tracing, enhanced cleaning procedures, respiratory hygiene, education and, in some instances, testing and/or
vaccination requirements. We also leveraged our available technologies to maximize our connectivity and productivity and
drew upon new capabilities gained through our focus on digital transformation to help to keep our people connected during
the COVID-19 pandemic. We have also offered Colgate people and their families enhanced mental health and wellness
benefit offerings, including counseling, paid leave to care for family members and flexible schedules to adapt to changing
circumstances, and have provided ongoing health and safety education, including bringing in experts on infectious diseases
and COVID-19 vaccines. Combined with the fact that the vast majority of our products have been deemed essential for the
health and well-being of people and their pets, these efforts have, in most instances, enabled us to continue to operate
during the pandemic providing consumers with the health and hygiene products they need and want.
4
GLOBAL TEAMWORK: All Colgate people are part of a global team, committed to working and collaborating
together across functions and countries. Only by sharing ideas, technologies and talents can we achieve and sustain
profitable growth.
CONTINUOUS IMPROVEMENT: We are committed to getting better every day in all that we do, as individuals and
as teams. We continue to drive a continuous learning culture and transform our learning strategy to better meet the evolving
expectations of our people. We provide our employees with learning experiences focused on building leadership skills and
offer training programs that are closely aligned with our business strategy. Specifically, we are implementing new ways of
working and instilling a growth mindset to drive innovation with focus, empowerment, experimentation and digitization.
For example, in 2021, we implemented required training for all salaried and clerical employees to support our focus on
digital with courses that demonstrate the importance of digital and what it means to have a digital culture. We are also
committed to listening to our employees and seeing how the company is evolving and growing through regular employee
engagement surveys.
Diversity, Equity & Inclusion
We believe our people are crucial to our ongoing business success and aim to recruit, develop and retain strong and
diverse talent. We celebrate differences, promote an equitable and inclusive environment and value the contributions of all
Colgate people. At Colgate, we are proud of our collaborative spirit – what we call The Power of WE. As a truly global
company, we are working to ensure that our workforce reflects the diversity of the communities in which we live and work.
As of December 31, 2021, our global workforce was approximately 60% male and 40% female. Women represented
approximately 53% of our salaried and clerical employees, 40% of Colgate’s executives and 33% of senior leadership.
Measuring the race/ethnicity of our workforce is challenging to do on a global basis. In the U.S., on an employee self-
reported basis, the racial/ethnic composition of our workforce was approximately 67% White, 9% Asian, 9% Black, 9%
Hispanic, 4% unidentified and 2% Other. The racial/ethnic composition of our executives was approximately 60% White,
17% Hispanic, 14% Asian, 7% Black, 1% unidentified and 1% Other and the composition of senior leadership was
approximately 63% White, 18% Hispanic, 10% Black and 9% Asian. “Other” refers to American Indian/Alaska Native,
two or more races or Native Hawaiian/other Pacific Islander. In this section, “executives” refers to those employees who
are eligible to participate in Colgate’s equity incentive compensation plans and “senior leadership” refers to employees
who are Vice Presidents and above.
We are committed to providing all of our employees with an equitable and inclusive work environment, learning
opportunities and promotion and growth opportunities. A vital piece of our DE&I strategy has been ensuring that our
succession planning process incorporates the advancement of women and people of all cultures, including underrepresented
communities. To help further foster inclusiveness, we support employee resource groups for team members of many
different underrepresented communities. Each of these resource groups contributes to our inclusive work environment by
developing and implementing programs to promote business and community involvement as well as cultural awareness.
We also partner with external organizations to develop an inclusive and supportive work environment.
Our global DE&I strategy aims to further advance our commitment to become an even more diverse, equitable and
inclusive organization. The four pillars of our strategy are People, Community, Supplier Diversity and Communication.
Consistent with this strategy, we are working to implement policies, learning experiences and processes that promote
awareness, empathy, advocacy and opportunity; become an ally for positive change for the underserved in communities in
which we live and work; support minority and women-owned suppliers to enable success of diversity-owned businesses;
and promote dialogue around DE&I to increase awareness and advance the culture change to achieve our vision. In 2021,
we released our first DE&I Report, which is available on the Colgate website. In addition, we instituted mandatory allyship
and unconscious bias training for all salaried and clerical employees at Colgate to help our employees better understand
DE&I concepts and embed allyship as a daily practice. Our Board, through its Personnel and Organization Committee,
receives regular updates from management on our DE&I efforts.
Succession Planning
We have a rigorous succession planning process, led by our Global Human Resources function. Our Board is also
extensively involved in succession planning and people development with special focus on CEO succession. As part of the
succession planning process, we review and discuss potential successors to key positions and examine backgrounds,
capabilities and appropriate developmental assignments.
5
Compensation Philosophy
Given the importance of Colgate people to our business success, motivating and retaining critical talent is a key focus.
We view compensation as an important tool to motivate leaders at all levels of the organization. For information regarding
our compensation philosophy and executive compensation programs, please see our Proxy Statement to be filed with the
United States Securities and Exchange Commission (the “SEC”) in connection with the 2022 Annual Meeting of
Stockholders.
Sustainability
We view sustainability as being critically important to our overall business and growth strategy. In November 2020,
we announced our 2025 Sustainability & Social Impact Strategy, focusing on three key ambitions — preserving our
environment by accelerating action on climate change and reducing our environmental footprint; helping millions of homes
by empowering people to develop healthier habits; and driving social impact with a commitment to helping to ensure the
well-being of all people and their pets. These ambitions are supported by actionable targets consistent with our continued
commitment to building environmental and social consciousness into our decision-making.
In 2021, we made progress on the targets set forth in our 2025 Sustainability & Social Impact Strategy.
Reduce Plastic Waste: As a positive step toward achieving our targets to reduce the use of new plastic by a third and
make our packaging 100% recyclable, reusable or compostable by 2025, we are working to implement our first-of-its-kind
recyclable toothpaste tube across our toothpaste portfolio. We also launched Colgate Keep, our first-of-its-kind manual
toothbrush with a replaceable head and a reusable aluminum handle for 80% less plastic waste compared to similarly sized
Colgate toothbrushes.
Accelerate Action on Climate Change and Conserve Water: To support our goal to become net zero carbon in our
operations by 2040, we have built renewable energy roadmaps at each of our operational sites across the world and have
engaged all of our Tier 1 Suppliers in support of our goal to reduce their greenhouse gas emissions by 30% (versus 2018).
With our Save Water campaign, we estimate that our consumers have contributed to an avoidance of approximately 206
billion gallons of water and 10.8 million metric tons of CO2 emissions, since its launch in 2016.
Ingredient Transparency: We continue to promote ingredient transparency and seek to follow the highest safety and
efficacy standards as we formulate our products. We have rolled out a new “Fragrance & Flavors Share for Good”
ingredient transparency program, which provides additional ingredient information.
Social Impact: Colgate Bright Smiles, Bright Futures is our flagship oral health education and well-being initiative.
Since the program was established in 1991, we have reached over 1.4 billion children and their families in more than 80
countries.
During the fourth quarter of 2021, to help support and further our 2025 Sustainability & Social Impact Strategy, the
Company issued €500 of eight-year notes at a fixed coupon rate of 0.300% (the “Sustainability Bond”). An amount equal
to the net proceeds of the Sustainability Bond will be used to finance or refinance, in part or in full, new and existing
projects and programs with distinct environmental or social benefits pursuant to our Sustainable Financing Framework.
Additional information about our sustainability strategy and achievements can be found on the Sustainability section of
our website.
6
Information about our Executive Officers
The following is a list of our executive officers as of February 17, 2022:
Name
Age
Date First Elected
Officer
Noel R. Wallace
Stanley J. Sutula III
Patricia Verduin
Jennifer M. Daniels
Philip G. Shotts
John W. Kooyman
Prabha Parameswaran
Panagiotis Tsourapas
Sally Massey
57
56
62
58
67
57
63
57
48
2009
2020
2011
2014
2018
2019
2019
2019
2020
Present Title
Chairman of the Board, President and
Chief Executive Officer
Chief Financial Officer
Chief Technology Officer
Chief Legal Officer and Secretary
Vice President and Controller
Chief of Staff
Group President, Growth and Strategy
Group President, Europe and Developing Markets
Chief Human Resources Officer
Each of our executive officers listed above has served the Company or our subsidiaries in various executive capacities
for the past five years with the exception of Stanley J. Sutula III, who joined the Company in 2020 as Chief Financial
Officer. Prior to joining the Company, Mr. Sutula was Executive Vice President and Chief Financial Officer of Pitney
Bowes Inc. (“Pitney Bowes”), which he joined in 2017. Prior to Pitney Bowes, Mr. Sutula served in various executive
finance positions at International Business Machines Corporation.
Under our By-Laws, our officers 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 our Board. There are no family relationships
between any of our 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.
(e) Available Information
Our website address is www.colgatepalmolive.com. The information contained on our website is not included as a part
of, or incorporated by reference into, this Annual Report on Form 10-K. We make available, free of charge, on our website
our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, interactive data files posted pursuant to Rule 405 of
Regulation S-T, 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 we
electronically file such material with, or furnish it to, the SEC. Also available on our website are the Company’s Code of
Conduct and Board Guidelines on Significant Corporate Governance Issues, the charters of the Committees of the Board,
Specialized Disclosure Reports on Form SD, reports under Section 16 of the Exchange Act of transactions in Company
stock by directors and executive officers and our Proxy Statements.
7
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, some of which have occurred and/or are occurring and any of which could occur
in the future, 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.
Business and Industry Risks
We face risks associated with significant international operations, including exposure to foreign currency
fluctuations.
We operate on a global basis serving consumers in more than 200 countries and territories with approximately 70% 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 face risks associated with significant international operations,
including, but not limited to:
•
•
•
•
•
•
•
changing macroeconomic conditions in our markets, including as a result of inflation, volatile commodity prices
and increases in the cost of raw and packaging materials, labor, energy and logistics;
political or economic instability, geopolitical events, environmental events, widespread health emergencies, such
as COVID-19 or other pandemics or epidemics, natural disasters or social or labor unrest;
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, including
as a result of COVID-19, or to repatriate earnings from overseas;
lack of well-established, reliable and/or impartial legal systems in certain countries where we operate and
difficulties in enforcing contractual, intellectual property or other legal rights;
foreign ownership and investment restrictions and the potential for nationalization or expropriation of property or
other resources; and
changes to trade policies and agreements and other foreign or domestic legal and regulatory requirements,
including those resulting in potentially adverse tax consequences or the imposition of and/or the increase in
onerous trade restrictions and/or tariffs, sanctions, price controls, labor laws, travel or immigration restrictions,
including as a result of COVID-19 or other pandemics or epidemics, profit controls or other government controls.
Any or all of the foregoing 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 addition, a number of these risks may adversely impact consumer confidence and consumption, 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.
In addition, there continue to be uncertainties related to the United Kingdom’s exit from the European Union (“EU”)
(commonly referred to as Brexit), including the long-term impact of the bilateral trade and cooperation deal governing the
future relationship between the United Kingdom and the EU (the “EU-UK Trade and Cooperation Agreement”). These
uncertainties include the impact of the EU-UK Trade and Cooperation Agreement on businesses in the EU and the United
Kingdom and how the new relationship between the EU and the United Kingdom will develop over time, including
disruptions to trade and the free movement of goods, services and people to and from the United Kingdom, increased
foreign exchange volatility with respect to the British pound and/or the euro and disruptions to our workforce and that of
8
our suppliers and business partners. We do not, however, believe Brexit has had or will have a material impact on our
business, results of operations, cash flows or financial condition.
Furthermore, the imposition of tariffs and/or increase in tariffs on various products by the United States and other
countries have introduced greater uncertainty with respect to trade policies and government regulations affecting trade
between the United States and other countries and new and/or increased tariffs have subjected, and may continue in the
future to subject, us to additional costs and expenditure of resources. Major developments in trade relations, including the
imposition of new or increased tariffs by the United States and/or other countries, and any emerging nationalist trends in
specific countries could alter the trade environment and consumer purchasing behavior which, in turn, could have a
material effect on 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, the impact of these measures may not fully offset any negative impact of foreign currency
rate movements on our business, results of operations, cash flows and financial condition.
Significant competition in our industry could adversely affect our business.
We face vigorous competition worldwide, including from strong local competitors and from other large, multinational
companies, some of which have greater resources than we do. In addition, the substantial growth in eCommerce has
encouraged the entry of new competitors and business models.
We face competition in several aspects of our business, including pricing, promotional activities, new product
introductions and expansion into new geographies and channels. Some of our competitors may spend more aggressively on
or have more effective advertising and promotional activities than we do, introduce competing products more quickly and/
or respond more effectively to business and economic conditions and changing consumer preferences, including by
launching innovative new products. Such competition also extends to administrative and legal challenges of product claims
and advertising. Our success is increasingly dependent on our ability to effectively leverage digital technology and data
analytics to gain new commercial insights and develop relevant marketing and advertising to reach customers and
consumers. In addition, during the COVID-19 pandemic, we have experienced and may continue to experience elevated
demand for some of our products as compared to pre-pandemic levels. 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. A failure to
compete effectively could adversely affect our business, results of operations, cash flows and financial condition.
Increasing dependence on key retailers in developed markets, changes in the policies of our retail trade customers,
the emergence of alternative retail channels and the rapidly changing retail landscape and changing consumer
preferences 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, discounters and eCommerce retailers. With the growing trend toward
retail trade consolidation, the rapid growth of eCommerce and the integration of traditional and digital operations at key
retailers, we are increasingly dependent on certain retailers, and some of these retailers have and may continue to have
greater bargaining strength than we do. They have used and may continue to use this leverage to demand higher trade
discounts, allowances, slotting fees or increased investment, including through display media, paid search, preparation fees
and co-op programs, which have led to and could continue to lead to reduced sales or profitability in certain markets. 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 also have been and may continue to be negatively affected by changes in the policies or practices of our retail trade
customers, such as inventory de-stocking, fulfillment requirements, limitations on access to shelf space, delisting of our
products, or environmental, sustainability, supply chain or packaging standards or initiatives. For example, a determination
9
by a key retailer that any of our ingredients should not be used in certain consumer products or that our packaging does not
comply with certain environmental, supply chain or packaging standards or initiatives could adversely impact our business,
results of operations, cash flows and financial condition. In addition, “private label” products sold by our retail customers,
which are typically sold at lower prices than branded products, are a source of competition for certain of our products.
Further, the retail landscape in many of our markets continues to evolve as a result of the rapid growth of eCommerce
retailers, changing consumer preferences (as consumers increasingly shop online and via mobile and social applications)
and the increased presence of alternative retail channels, such as subscription services and direct-to-customer (DTC)
businesses. These trends accelerated during the COVID-19 pandemic. The rapid growth in eCommerce and the emergence
of alternative retail channels have created and may continue to create pricing pressures and/or adversely affect our
relationships with our key retailers. If we are not successful in continuing to adapt or to effectively react to changes in
consumer preferences, purchasing patterns and market dynamics and/or expanding sales through eCommerce retailers and
other alternative retail channels, including the profitable expansion of our own DTC capabilities, our business, results of
operations, cash flows and financial condition could be adversely affected.
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, the successful identification, development and
launch of innovative new and differentiated products and the expansion into adjacent categories, channels of distribution or
geographies. Our ability to launch new products, to sustain existing products and to expand into adjacent categories,
channels of distribution or geographies is affected by whether we can successfully:
•
•
•
•
identify, develop and fund technological innovations;
obtain and maintain necessary intellectual property 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 quickly respond to the needs and preferences of consumers and customers.
The identification, development and introduction of innovative new products that drive incremental sales involves
considerable costs and effort, and any new product 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 could also be adversely affected by preemptive actions taken by competitors in response to the
launch, such as increased promotional activities and advertising. In addition, new products may not be accepted quickly or
significantly in the marketplace.
Our ability to quickly innovate to adapt and market our products and to adapt our packaging to meet evolving
consumer preferences is an essential part of our business strategy. The failure to develop and launch successful new
products or to adapt our packaging and supply chain to meet such preferences 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.
10
We face various risks related to pandemics, epidemics or similar widespread public health concerns, which may
have a material adverse effect on our business, results of operations, cash flows and financial condition.
We face various risks related to pandemics, epidemics or similar widespread public health concerns, including the
COVID-19 pandemic. A pandemic, epidemic or similar widespread health concern could have, and COVID-19 has had and
will continue to have, a variety of impacts on our business, results of operations, cash flows and financial condition,
including:
•
•
•
•
•
•
•
•
•
our ability to continue to maintain and support the health, safety and well-being of our employees, including key
employees;
disruptions to our global supply chain, including the closure of manufacturing and distribution facilities, due to,
among other things, the lack of availability of raw and packaging materials or manufacturing components; a
decrease in our workforce or in the efficiency of such workforce, including as a result of illness, travel restrictions,
absenteeism or governmental regulations; transportation and logistics challenges, including as a result of port and
border closures and other governmental restrictions or volume and capacity restraints; or the impact of COVID-19
on our retailers, third party suppliers, contract manufacturers, logistics providers or distributors;
volatility in the demand for and availability of our products, which may be caused by the temporary inability of
our consumers to purchase our products due to illness, financial hardship, quarantine, government actions
mandating the closure of our facilities (which impacted some of our production facilities in Asia in 2021),
distributors or retailers and/or imposing travel or movement restrictions, shifts in demand and consumption away
from more discretionary or higher priced products to lower-priced products or pantry-loading activity;
changes in purchasing patterns of our consumers, including the nature and/or frequency of in-store visits by
consumers to retailers and dental, veterinary and skin health professionals and a shift to purchasing our products
online and disruptions in certain channels, including travel retail;
significant volatility in demand for certain of our products, which may require us to increase our production
capacity or acquire additional capacity at an additional cost and expense;
failure of third parties on which we rely, including our retailers, suppliers, contract manufacturers, logistics
providers, customers, commercial banks, joint venture partners and external business partners, to meet their
obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or
operational difficulties;
significant changes in the economic and political conditions of the markets in which we operate, which could
restrict and have restricted our employees’ ability to work and travel, could mandate and have mandated or caused
the closure of certain distributors or retailers, our offices, shared business service centers and/or operating and
manufacturing facilities or otherwise could prevent and have prevented us as well as our third-party partners,
suppliers or customers from sufficiently staffing operations, including operations necessary for the manufacture,
distribution, sale and support of our products;
disruptions and volatility in the global capital markets, which may increase the cost of capital and adversely
impact our access to capital; and/or
volatility in foreign exchange rates and increases in the cost of raw and packaging materials and transportation and
logistics costs.
Despite our efforts to manage these impacts, their ultimate impact also depends on factors beyond our knowledge or
control, including the duration, severity and geographic scope of an outbreak, such as COVID-19, including the emergence
and spread of COVID-19 variants, the availability, distribution, acceptance and effectiveness of vaccines and the actions
taken by governmental authorities and other third parties to contain its spread and mitigate its public health and economic
effects, each of which is uncertain, rapidly changing and difficult to predict. Furthermore, these and other impacts of
COVID-19 could also have the effect of heightening many of the other risk factors included in this Item 1A, “Risk
Factors.” For additional information regarding how COVID-19 has affected or is expected to affect our business, refer to
11
Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive
Overview.”
Damage to our reputation could have an adverse effect on our business.
Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded
products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our
reputation, such as our ethics and compliance, DE&I, sustainability and social impact, brand protection and product safety,
regulatory and quality initiatives. Negative publicity about us, our brands, our products, our supply chain, our ingredients,
our packaging, our environmental, social and governance (“ESG”) practices, including as they relate to sustainability,
DE&I, or our employees, whether or not deserved, could jeopardize our reputation. Such negative publicity could relate to,
among other things, health concerns, threatened or pending litigation or regulatory proceedings, environmental impact
(including deforestation, packaging, plastic, energy and water use and waste management), our ESG practices or our
sustainability targets. In addition, the proliferation of digital and social media has greatly increased the accessibility of
information and the speed of its dissemination and the potential for negative publicity. Negative publicity, posts or
comments on digital and social media about us, our brands, our products, our sustainability efforts, our environmental and
social impact (including our packaging) or our employees, whether true or untrue, could damage our brands and 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, compliance and ESG practices, 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.
Our success depends upon our ability to recruit, attract and retain key employees, including through the
implementation of diversity, equity and inclusion initiatives, and the succession of senior management.
Our success largely depends on the performance of our management team and other key employees. If we are unable
to recruit, 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. Successfully executing organizational change,
including management transitions at leadership levels of the Company and succession plans for senior management, is
critical to our business success. 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. Further, changes in immigration laws and
government policies, including related to the COVID-19 pandemic, have made, in certain circumstances, and may continue
to make it more difficult for us to recruit or relocate highly skilled technical, professional and management personnel to
meet our business needs. Our ability to attract and retain talent has been and may continue to be impacted by challenges in
the labor market, particularly in the United States, which is experiencing wage inflation, labor shortages, a shift toward
remote work and the effects of COVID-19. In addition, we also continue to work to advance culture change through the
implementation of DE&I initiatives throughout our organization. We are also implementing new ways of working to,
among other things, instill a growth mindset to drive innovation with focus, empowerment, experimentation and
digitization. If we do not (or are perceived not to) successfully implement these initiatives, our ability to recruit, attract and
retain talent may be adversely impacted.
12
We have pursued and may continue to pursue acquisitions and divestitures, which could adversely impact our
business.
We have pursued and may continue to pursue acquisitions of brands, businesses, assets or technologies from third
parties. Acquisitions and their pursuit have involved, and can involve, numerous potential risks, including, among other
things:
•
•
•
•
•
•
•
•
•
•
realizing the full extent of the expected benefits or synergies as a result of a transaction, within the anticipated
time frame, or at all;
successfully integrating the operations, technologies, services, products and systems of the acquired brands, assets
or businesses in an effective, timely and cost-efficient manner;
receiving necessary consents, clearances and approvals in connection with a transaction;
diverting management’s attention from other business priorities;
successfully operating in new lines of business, channels of distribution or markets;
achieving distribution expansion related to products, categories and markets;
retaining key employees, partners, suppliers and customers of the acquired business;
conforming standards, controls, procedures and policies of the acquired business with our own;
developing or launching products with acquired technologies; and
other unanticipated problems or liabilities.
Moreover, acquisitions have resulted in and could in the future result in substantial additional debt, the assumption of
contingent liabilities, such as litigation or earn-out obligations, or transaction costs. In addition, to the extent that the
economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired
company or business is less robust than expected, we may be required to record additional impairments of intangible assets,
including trademarks and goodwill. In the fourth quarter of 2021, we took a non-cash, aftertax impairment charge of $518
million to adjust the carrying values of goodwill and a trade name intangible asset related to the Filorga skin health
business. Any of these risks could adversely impact our business, results of operations, cash flows and financial condition.
We have divested and may in the future periodically divest brands or businesses. These divestitures may adversely
impact our business, results of operations, cash flows and financial condition 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 business, results of operations, cash flows
and financial condition.
Operational Risks
Our business results are impacted by our ability to manage disruptions in our global supply chain and/or key office
facilities.
We are engaged in the manufacture and sourcing of products and materials on a global scale. Our operations and those
of our suppliers, contract manufacturers or logistics providers have been and may continue to be disrupted by a number of
factors, including, but not limited to:
•
•
environmental events;
widespread health emergencies, such as COVID-19 or other pandemics or epidemics;
13
•
•
•
•
•
•
•
•
•
•
•
strikes and other labor disputes;
disruptions in logistics;
loss or impairment of key manufacturing sites;
loss of key suppliers or contract manufacturers;
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;
the lack of availability of qualified personnel, such as truck drivers and production labor;
governmental incentives and controls (including import and export restrictions, such as new or increased tariffs,
sanctions, quotas or trade barriers); and
natural disasters, including climatic events (including any potential effects of climate change) and earthquakes,
acts of war or terrorism, political unrest or uncertainty, fires or explosions, cyber-security incidents 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/or Colgate standards, which can
require additional investment and take a significant period of time. If our existing or new suppliers fail to meet such
standards or if we are unable to contract with suppliers on favorable terms, our business, results of operations, cash flows
and financial condition could be adversely affected.
We believe that the supplies of raw and packaging materials needed to manufacture our products are adequate. In
addition, we have business continuity and contingency plans in place for key manufacturing sites and contract
manufacturers and the supply of raw and packaging materials. Nonetheless, a significant disruption to the manufacturing or
sourcing of products or materials for any reason, including those mentioned above, have at times interrupted and could, in
the future, interrupt product supply and, if not remedied, could have an adverse impact on our business, results of
operations, cash flows and financial condition.
In addition, as a result of our global shared service organizational model, certain of our functions, such as finance and
accounting, customer service and logistics, human resources, global information technology and data analytics are
concentrated in key office facilities. A significant disruption to any of our key office facilities for any reason, including
those mentioned above, could adversely affect our business, results of operations, cash flows and financial condition.
Volatility in material and other costs could adversely impact our profitability.
Raw and packaging material commodities, such as essential oils, resins, tropical oils, pulp, tallow, corn, poultry and
soybeans, are subject to market price variations. Increases in the costs of and/or a reduction in the availability of
commodities, energy and logistics (including trucks and containers) and other necessary services, including during the
COVID-19 pandemic, have affected and are likely to continue to adversely affect our profit margins. Inflationary pressures
have also increased and may continue to increase the cost of such commodities and services. If commodity and other cost
increases continue in the future and we are unable to pass along such higher costs in the form of price increases, achieve
cost efficiencies, such as in manufacturing and distribution, or otherwise manage the exposure through sourcing strategies,
ongoing productivity initiatives and the limited use of commodity hedging contracts, our business, results of operations,
cash flows and financial condition could be adversely impacted. In addition, even if we are able to increase the prices of
our products in response to commodity and other cost increases, we may not be able to sustain the price increases. Also,
sustained price increases may lead to declines in volume as competitors may not adjust their prices or consumers may
14
decide not to pay higher prices, which could lead to sales declines and loss of market share and could adversely affect our
business, results of operations, cash flows and financial condition. See “Our business results depend on our ability to
manage disruptions in our global supply chain and/or key office facilities” above for additional information.
There is no guarantee that our ongoing efforts to reduce costs will be successful.
One way that we generate funds needed to support the growth of our business is 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 goals
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 any or 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.”
We may not realize the benefits that we expect from our 2022 Global Productivity Initiative.
On January 27, 2022, the Board approved a targeted productivity program (the “2022 Global Productivity Initiative”).
The program is intended to reallocate resources toward our strategic priorities and faster growth businesses, drive
efficiencies in our operations and streamline our supply chain to reduce structural costs. The successful implementation of
the program may present 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 anticipated benefits from the 2022 Global Productivity
Initiative. 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 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
anticipated cost savings as measured in U.S. dollars. If we are unable to realize the anticipated savings from the 2022
Global Productivity Initiative, our ability to fund other initiatives and enhance profitability may be adversely affected. Any
failure to implement the 2022 Global Productivity Initiative in accordance with our expectations could adversely affect our
business, results of operations, cash flows and financial condition. For additional information regarding the 2022 Global
Productivity Initiative, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results
of Operations – Restructuring and Related Implementation Charges.”
A cyber-security incident, data breach or a failure of a key information technology system could adversely impact
our business.
We rely extensively on information technology systems (“IT Systems”), including some which are managed, hosted,
provided and/or used by third parties, including cloud-based service providers, and their vendors, in order to conduct our
business. Our uses of these systems include, but are not limited to:
•
•
•
•
communicating within our 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, shipping products to and invoicing our customers and consumers;
• marketing products to consumers;
•
collecting, storing, transferring and/or processing customer, consumer, employee, vendor, investor and other
stakeholder information and personal data, including, but not limited to, such data from residents of the European
Union who are covered by the General Data Protection Regulation, which went into effect on May 25, 2018, and
15
residents of the State of California who are covered by the California Consumer Privacy Act of 2018, which went
into effect on January 1, 2020;
processing transactions, including but not limited to employee payroll, employee and retiree benefits and
payments to customers and vendors;
hosting, processing and sharing confidential and proprietary research, intellectual property, business plans and
financial information;
summarizing and reporting results of operations, including financial reporting;
•
•
•
• managing our banking and other cash liquidity systems and platforms;
•
•
•
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. Cyber-attacks and other
cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are
being made by groups, individuals and nation states with a wide range of expertise and motives. Such cyber-attacks and
cyber incidents can take many forms, including cyber extortion, social engineering, password theft or introduction of
viruses or malware, such as ransomware through phishing emails. 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 us or our third-party service providers is securely
maintained, data leakages due to human error or intentional or unintentional conduct have occurred and likely will continue
to occur. Furthermore, we periodically upgrade our IT Systems or adopt new technologies. If such an upgrade or new
technology does not function as designed, does not go as planned or increases our exposure to a cyber-attack or cyber
incident, it may adversely impact our business, including our ability to ship products to customers, issue invoices and
process payments or order raw and packaging materials. Although we have seen no material impact on our business
operations from the cyber-security incidents we have experienced to date, if we suffer a significant 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, or otherwise, we may suffer reputational, competitive and/or business
harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which may
adversely impact our business, results of operations, cash flows and financial condition. In addition, while we currently
maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain
aspects of cyber-security incidents and IT System failures, this insurance coverage may not, depending on the specific facts
and circumstances surrounding an incident, cover all losses or all types of claims that arise from an incident, or the damage
to our business, reputation or brands that may result from an incident.
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
may be subject to governmental investigations and litigation, any of which may adversely impact our business, results of
operations, cash flows and financial condition.
Climate change and other sustainability matters could have an adverse impact on our business and results of
operations.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the
atmosphere and its impact on global temperatures, weather patterns and the frequency and severity of extreme weather and
natural disasters may adversely impact our business, results of operations, cash flows and financial condition. Specifically,
16
the predicted effects of climate change may exacerbate challenges regarding the availability and quality of water and other
ingredients. In addition, the increased concern over climate change is likely to result in new or additional legal and
regulatory requirements intended to reduce or mitigate the effects of climate change on the environment and may relate to,
among other things, greenhouse gas emissions (e.g., carbon pricing), alternative energy policy and additional disclosure
obligations. Such additional regulation may adversely affect our business, results of operations, cash flows and financial
condition by increasing our compliance and manufacturing costs and/or negatively impacting our reputation if we are
unable to, or are perceived (whether or not valid) not to, satisfy such requirements. Despite our sustainability efforts, any
failure to achieve our sustainability targets, including those aimed to reduce our impact on, improve or preserve the
environment, or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or
to effectively respond to new or additional legal or regulatory requirements regarding climate change, could result in
adverse publicity and adversely affect our business and reputation. There is also increased focus, including by
governmental and non-governmental organizations, investors, customers, consumers, our employees and other stakeholders
on these and other sustainability matters, including responsible sourcing and deforestation, the use of plastic, energy and
water, the recyclability or recoverability of packaging, including single-use and other plastic packaging, and a growing
demand for natural or organic products and ingredients and ingredient transparency. Our reputation could be damaged if
we do not (or are perceived not to) act responsibly with respect to sustainability matters, which could adversely affect our
business, results of operations, cash flows and financial condition.
Legal and Regulatory Risks
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, formulation,
manufacture, packaging content, labeling, storage, transportation, distribution, export, import, advertising, sale and
environmental impact. U.S. federal authorities, including the U.S. Food and Drug Administration (the “FDA”), the Federal
Trade Commission, the Consumer Product Safety Commission, the Occupational Safety and Health Administration 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. In addition, 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 around the world review the use of various ingredients and packaging content in
consumer products. While we monitor and seek to mitigate the impact of any emerging information, a decision by a
regulatory or governmental authority that any ingredient or packaging content in our products should be restricted or
should otherwise be newly regulated could adversely impact our business and reputation, as could negative reactions by
our consumers, trade customers or non-governmental organizations to our current or prior use of such ingredients or
packaging. Additionally, an inability to develop new or reformulated products containing alternative ingredients, to obtain
regulatory approval of such products or ingredients on a timely basis or to effectively market and sell such products could
likewise adversely affect our business.
Because of our extensive international operations, we could be adversely affected by violations of worldwide anti-
bribery laws, including those that prohibit companies and their intermediaries from making improper payments to
government officials or other third parties for the purpose of obtaining or retaining business, such as the U.S. Foreign
Corrupt Practices Act, and laws that prohibit commercial bribery. We are also subject to laws and sanctions imposed by the
U.S. (including, without limitation, those imposed by OFAC) and/or by other jurisdictions that may prohibit us or certain
of our affiliates from doing business in certain countries, or restrict the kind of business that may be conducted. While our
policies mandate compliance with these 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,
findings that we are in violation of, or out of compliance with, applicable laws or regulations have subjected us to, and
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
17
unsuccessful, is without merit or is not fully pursued, the cost of responding to such a claim, including management time
and out-of-pocket expenses, and the negative publicity surrounding such assertions regarding our products, processes or
business practices could adversely affect our reputation, brand image and our business, results of operations, cash flows
and financial condition. For information regarding our legal and regulatory matters, see Item 3 “Legal Proceedings” and
Note 13, Commitments and Contingencies to the Consolidated Financial Statements.
Legal claims and proceedings could adversely impact our business.
As a global company serving consumers in more than 200 countries and territories, we are and may continue to be
subject to a wide variety of 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, pension, data privacy and security, 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 an ingredient contained in our
products, is perceived or found to be defective, or unsafe or have a quality issue, we have had to and may in the future need
to withdraw, recall or reformulate some of our products. Whether or not a legal claim or proceeding is successful, or a
withdrawal, recall or reformulation is required or advisable, 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. The resolution of, or increase in the reserves taken in connection with, one or more of these
matters in any reporting period could have a material adverse effect on our business, results of operations, cash flows and
financial condition for that period. 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.
Financial and Economic Risks
Uncertain or unfavorable global economic conditions, including as a result of COVID-19, may adversely affect our
business.
Uncertain or unfavorable global economic conditions could adversely affect our business. Unfavorable global
economic conditions, such as a recession, an economic slowdown, inflation and/or reduced category growth rates,
including as a result of the COVID-19 pandemic, could negatively impact our business and 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 or unfavorable economic conditions, consumers
may reduce consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain
of our products or by switching to “private label” or lower-priced brands. These changes could reduce demand for and
sales volumes of our products or result in a shift in our product mix from higher margin to lower margin product offerings.
Additionally, our retailers may be impacted and they 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. Furthermore, economic
conditions can cause our suppliers, distributors, contract manufacturers, logistics providers or other third-party partners to
suffer financial or operational difficulties, which may impact their inability to provide us with or distribute finished
product, raw and packaging materials and/or services in a timely manner or at all. In addition, we could face difficulty
collecting or recovering accounts receivables from third parties facing financial or operational difficulties.
Disruptions in the credit markets or changes to our credit ratings may adversely affect our business.
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, interest rate increases, changes that may result
from the implementation of new benchmark rates that are expected to replace the London Interbank Offered Rate (LIBOR)
or changes to our credit ratings 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 undrawn revolving
credit facility supporting our commercial paper programs or other financing arrangements, such as interest rate, foreign
exchange or commodity 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
18
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.
Tax matters, including changes in tax rates, disagreements with taxing authorities and imposition of new taxes
could negatively impact our business.
We are subject to taxes in the U.S. and in the foreign jurisdictions where we do business. Due to economic and
political conditions, tax rates in the U.S. and various foreign jurisdictions have been and may be subject to significant
change. Changes in the mix of our earnings between countries with differing statutory tax rates, changes in the valuation of
deferred tax assets and liabilities related to changes in tax rates, changes in tax laws, including how existing tax laws are
interpreted or enforced, or contemplated changes in long-standing tax principles, if finalized and adopted, could adversely
impact our future effective tax rate and business, results of operations, cash flows and financial condition. For example,
long-standing international tax norms that determine each country’s jurisdiction to tax cross-border international trade are
evolving as a result of a multilateral project, the Base Erosion and Profit Shifting Project (the “BEPS Project”), that has
established new principles and reporting requirements recommended by countries that then made up the G8 and the G20
and the Organization for Economic Cooperation and Development (the “OECD”). In connection with the BEPS Project,
companies are required to disclose more information to tax authorities on operations around the world, which may lead to
greater audit scrutiny of profits earned in countries outside of the U.S. The OECD, through the BEPS Project, is also
addressing the challenges of the digitization of the global economy with plans to redefine jurisdictional taxation rights in
market countries and establish a global minimum tax. As these and other tax laws and related regulations change, our
business, results of operations, cash flows and financial condition could be materially impacted. For more information
regarding U.S. tax reform, see Note 11, Income Taxes to the Consolidated Financial Statements.
Furthermore, we are subject to regular reviews, examinations and audits by the Internal Revenue Service and other
taxing authorities with respect to taxes inside and outside of the U.S. Although we believe our tax positions are reasonable,
when a taxing authority disagrees with the positions we have taken, we have faced and in the future may face additional tax
liabilities, including interest and penalties, in excess of reserves. The payment of such additional amounts upon final
adjudication of any disputes could adversely impact our business, results of operations, cash flows and financial condition.
19
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
20
ITEM 2.
PROPERTIES
We own or lease 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., we operate in approximately 80 properties, of which 13 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
Cambridge, Ohio; Greenwood, South Carolina; and Morristown, Tennessee. The Pet Nutrition segment has major
manufacturing and warehousing facilities in Bowling Green, Kentucky; Emporia, Kansas; Richmond, Indiana; and Topeka,
Kansas.
Overseas, we operate in approximately 250 properties, of which 57 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, Guatemala, 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 primary research center for Oral Care and Personal Care products is located in Piscataway, New Jersey, the
primary research center for Home Care products is located in Mexico 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.
We have shared business service centers in India, Mexico and Poland, 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.
21
ITEM 3.
LEGAL PROCEEDINGS
For information regarding legal proceedings, refer to Note 13, Commitments and Contingencies to the Consolidated
Financial Statements included in Part IV, Item 15 of this report.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
22
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
For information regarding the market for the Company’s common stock, including stock price performance graphs,
refer to “Market Information” 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.
As of December 31, 2021, the number of common shareholders of record was 18,388.
Issuer Purchases of Equity Securities
On June 18, 2018, the Board authorized the repurchase of shares of the Company’s common stock having an aggregate
purchase price of up to $5 billion under a new share repurchase program (the “2018 Program”), which replaced a
previously authorized share repurchase program. The Board also has authorized share repurchases on an ongoing basis to
fulfill certain requirements of the Company’s compensation and benefit programs. The shares are repurchased from time to
time in open market or privately negotiated transactions at the Company’s discretion, subject to market conditions,
customary blackout periods and other factors.
The following table shows the share repurchase activity for the three months in the quarter ended December 31, 2021:
Total Number of
Shares
Purchased(1)
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs(2)
Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans or
Programs(3)
(in millions)
1,141,404 $
1,054,644 $
2,441,785 $
4,637,833 $
75.74
77.44
81.77
79.30
1,140,853
1,050,501
2,433,320
4,624,674
806
725
526
Month
October 1 through 31, 2021
November 1 through 30, 2021
December 1 through 31, 2021
Total
_______
(1)
Includes share repurchases under the 2018 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 13,159 shares, which represents 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, 2021.
ITEM 6.
[Reserved]
23
(Dollars in Millions Except Per Share Amounts)
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Executive Overview
Business Organization
Colgate-Palmolive Company (together with its subsidiaries, “we,” “us” “our” the “Company” or “Colgate”) is a
caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. We seek to
deliver sustainable, profitable growth and superior shareholder returns, as well as to provide Colgate people with an
innovative and inclusive work environment. We do this by developing and selling products globally that make people’s and
their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and DE&I strategies
across our organization.
We are tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition. Within these
segments, we follow a closely defined business strategy to grow our key product categories and increase our overall market
share. Within the categories in which we compete, we prioritize our efforts based on their capacity to maximize the use of
the organization’s core competencies and strong global equities and to deliver sustainable, profitable long-term growth.
Operationally, we are organized along geographic lines with management teams having responsibility for the business
and financial results in each region. We compete in more than 200 countries and territories worldwide with established
businesses in all regions contributing to our sales and profitability. Approximately 70% of our Net sales are generated from
markets outside the U.S., with approximately 45% of our 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
our exposure to business and other risks in any one country or part of the world.
The Oral, Personal and Home Care product segment is managed geographically in five reportable operating segments:
North America, Latin America, Europe, Asia Pacific and Africa/Eurasia, all of which sell primarily to a variety of
traditional and eCommerce retailers, wholesalers and distributors. Through Hill’s Pet Nutrition, we also compete on a
worldwide basis in the pet nutrition market, selling products principally through authorized pet supply retailers,
veterinarians and eCommerce retailers. We also sell certain of our products direct-to-consumer. We are engaged in
manufacturing and sourcing of products and materials on a global scale and have major manufacturing facilities,
warehousing facilities and distribution centers in every region around the world.
On an ongoing basis, management focuses on a variety of key indicators to monitor business health and performance.
These indicators include net sales (including volume, pricing and foreign exchange components), organic sales growth (net
sales growth excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, and
gross profit margin, operating profit, net income and earnings per share, in each case, on a GAAP and non-GAAP basis, as
well as measures used to optimize the management of working capital, capital expenditures, cash flow and return on
capital. In addition, we review market share and other data to assess how our brands are performing within their categories
on a global and regional basis. The monitoring of these indicators and our Code of Conduct and corporate governance
practices help to maintain business health and strong internal controls. For additional information regarding non-GAAP
financial measures and the Company’s use of market share data and the limitations of such data, see “Non-GAAP Financial
Measures” and “Market Share Information” below.
24
(Dollars in Millions Except Per Share Amounts)
COVID-19
The COVID-19 pandemic and government steps to reduce the spread and address the impact of COVID-19 have had
and continue to have a profound impact on the way people live, work, interact and shop and have significantly impacted
and continue to impact economic activity around the world. We have a well-established Crisis Management Team
(“CMT”) process, and the CMT, together with our senior management team and Colgate people around the world, continue
to respond to and manage the challenges presented by COVID-19.
During the COVID-19 pandemic, many of the communities in which we manufacture, market and sell our products
experienced and in some cases continue to experience “stay at home” orders, travel or movement restrictions and other
government actions to reduce the spread and address the impact of COVID-19, and have implemented varying policies to
address the pandemic, resume economic activity and vaccinate their populations. The situation continues to be uncertain
and varies by geography, as the impact of COVID-19 remains significant in many countries throughout the world,
including Brazil, China, India, Mexico, Thailand, the U.S. and Vietnam, where we have substantial manufacturing
facilities. Because the vast majority of our products (such as oral care products, soaps and other personal hygiene products,
home cleaners and pet food) have been deemed essential for the health and well-being of people and their pets, we have, in
most instances, been able to continue operating our business, although not always at full capacity.
The health, safety and well-being of our employees and their families has been and remains our first priority. While we
have reopened most of our offices, in some instances on a limited and voluntary basis, many of our office-based employees
globally continue to work from home. We have implemented additional health and safety measures consistent with
government recommendations and/or requirements to help ensure employee safety in our offices, production facilities,
warehouses and technology centers, often at additional cost. These measures may include: health and temperature
screening, social distancing and personal protective equipment protocols, hand washing, contact tracing, enhanced cleaning
procedures, respiratory hygiene, education and, in some instances, testing and/or vaccination requirements. In addition,
during the COVID-19 pandemic, we have seen increased instances of absenteeism and, in some cases, we have experienced
some limited production facility closures and related supply chain disruptions. Furthermore, some of our suppliers,
customers, distributors, logistics providers and service providers have experienced disruptions to their businesses.
We saw a significant increase in demand across many of our categories, such as liquid hand soap, dish liquid, bar soap
and cleaners, during 2020 as a result of the COVID-19 pandemic, driven by consumer pantry-loading and increased
consumption of our products. While consumer demand for most of these categories declined year-over-year in 2021, most
still remained above historical levels, and we believe that some of this increase in consumption is sustainable in light of
changes in consumer behavior related to COVID-19. Across our business, changes in consumer demand for our products
vary by product category, channel and geography depending on, among other things, the severity of the COVID-19
outbreak, the availability of our products at retailers and supply chain disruptions. At the same time, during the COVID-19
pandemic, we have experienced disruptions in certain channels, including travel retail. We also continue to see changes in
the purchasing patterns of our consumers, including the nature and/or frequency of visits by consumers to retailers and
dental, veterinary and skin health professionals and a shift in many markets to purchasing our products online.
COVID-19 and government steps to reduce the spread and address the impact of COVID-19 have impacted and may
continue to impact our consumers’ ability to purchase and our ability to manufacture and distribute our products. While we
believe that, in the long-term, consumer demand for the products in our categories will continue to be strong, uncertainties
continue surrounding the COVID-19 pandemic. These uncertainties include: the impact of the timing and scale of changes
to travel and movement restrictions in certain geographies, the availability and widespread distribution and use of
COVID-19 vaccines, the emergence and spread of COVID-19 variants, the timing and impact of consumer pantry-loading
and destocking activity in certain markets, product demand trends and the impact of COVID-19 on the global economy,
including as a result of inflation, and supply chain disruptions. COVID-19 has also disrupted our retail customers, contract
manufacturers, logistics providers and other third parties; their ability to address COVID-19 and maintain their operations
at full capacity has impacted and may continue to impact sales of and consumer access to our products. We expect the
ongoing economic impact and health concerns associated with COVID-19 to continue to impact consumer behavior,
shopping patterns and consumption preferences during 2022.
While we currently expect to be able to continue operating our business as described above and we intend to continue
to work with government authorities and to follow the necessary protocols to maintain the health and safety of our
employees and third parties, uncertainty resulting from COVID-19 could result in an unforeseen additional disruption to
our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs.
For more information about the anticipated COVID-19 impact, see “Outlook” below.
25
(Dollars in Millions Except Per Share Amounts)
Business Strategy
To achieve our business and financial objectives, we are focused on driving organic sales growth and long-term
profitable growth through innovation on our core businesses; leveraging faster growth in adjacent categories; expanding in
high-growth channels and markets and delivering margin expansion through operating leverage and efficiency. We are also
seeking to maximize the impact of our ESG programs and leading in the development of human capital, including our
sustainability and social impact and DE&I strategies, which we are working to integrate across our organization. We are
strengthening our capabilities in areas such as innovation, digital, eCommerce and data and analytics enabling us to be
more responsive in today’s rapidly changing world. In particular, we believe our digital transformation is of paramount
importance to our success going forward. We continue to invest behind our brands, including through advertising, and to
develop initiatives to build strong relationships with consumers, dental, veterinary and skin health professionals and
traditional and eCommerce retailers. We also continue to broaden our eCommerce offerings, including direct-to-consumer
and subscription services. We continue to believe that growth opportunities are greater in those areas of the world in which
economic development and rising consumer incomes expand the size and number of markets for our products.
We are also changing the way we work to drive growth and how we approach innovation with focus, empowerment,
experimentation and digitization to respond to the dynamic retail landscape and the evolving preferences of our customers
and consumers. The retail landscape, the ease of new entrants into the market in many of our categories and the evolving
preferences of our customers and consumers demand that we work differently and faster in an agile, authentic and
culturally relevant manner to drive innovation.
The investments needed to drive growth are supported through continuous, Company-wide initiatives to lower costs
and increase effective asset utilization. Through these initiatives, which are referred to as our funding-the-growth
initiatives, we seek to become even more effective and efficient throughout our 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. We also continue to prioritize our
investments in high growth segments within our Oral Care, Personal Care and Pet Nutrition businesses, including by
expanding our portfolio in premium skin health.
On January 27, 2022, the Board approved a targeted productivity program (the “2022 Global Productivity Initiative”).
The program is intended to reallocate resources towards our strategic priorities and faster growth businesses, drive
efficiencies in our operations and streamline our supply chain to reduce structural costs. Implementation of the 2022 Global
Productivity Initiative, which is expected to be substantially completed by December 31, 2022, is projected to result in
cumulative pre-tax charges, once all phases are approved and implemented, totaling between $200 and $240, which are
currently estimated to be comprised of the following: employee-related costs, including severance, pension and other
termination benefits (80%); asset-related costs, primarily accelerated depreciation and asset write-downs (10%); and other
charges (10%), which include contract termination costs, consisting primarily of implementation-related charges resulting
directly from exit activities and the implementation of new strategies. It is estimated that approximately 90% of the charges
will result in cash expenditures. For more information regarding the 2022 Global Productivity Initiative, see “Restructuring
and Related Implementation Charges” below.
Significant Items Impacting Comparability
In the fourth quarter of 2021, we recorded a non-cash charge of $571 pretax ($518 aftertax) to adjust the carrying
values of goodwill and indefinite-lived intangible related to the Filorga skin health business. The impairment was due
primarily to the impact of the COVID-19 pandemic on the Filorga business as a result of government restrictions and
reduced consumer mobility, which negatively impacted consumption in the duty-free, travel retail and pharmacy channels.
See Note 5, Goodwill and Other Intangible Assets to the Consolidated Financial Statements for further information.
In 1990, our Canadian subsidiary (“CP Canada”), issued C$145 of Canadian dollar-denominated unsecured
unsubordinated 12.85% guaranteed notes due October 4, 2030 (the “Canada notes”). In the third quarter of 2021, CP
Canada redeemed the Canada notes and recorded a loss on the early extinguishment of debt of $75 pretax ($55 aftertax),
which is included in Interest (income) expense, net in the Consolidated Statements of Income, representing the difference
between the redemption price and the carrying amount of the debt extinguished.
26
(Dollars in Millions Except Per Share Amounts)
In 2019, we received a favorable judgment regarding certain value-added tax previously paid in Brazil. As a result of
this favorable judgment, during the fourth quarter of 2019, we filed an application with the Brazilian government to recover
value-added tax previously paid and recorded a benefit. In May 2021, the Brazilian Supreme Court issued a clarifying
ruling allowing a higher deduction of state value-added tax when determining the taxable base. In light of this ruling, we
recorded an additional benefit of $26 pretax ($20 aftertax) in the year ended December 31, 2021.
The Global Growth and Efficiency Program, a multi-year restructuring program, concluded on December 31, 2019.
Initiatives under the Global Growth and Efficiency Program 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. During the year ended December 31, 2020, we adjusted the accrual balances related to certain projects
approved prior to the conclusion of the Global Growth and Efficiency Program to reflect our revised estimate of remaining
liabilities, which resulted in a reduction of $16 ($13 aftertax) to restructuring accruals. For more information regarding the
Global Growth and Efficiency Program, see Note 4, Restructuring and Related Implementation Charges to the
Consolidated Financial Statements.
The provision for income taxes for the year ended December 31, 2020 includes $71 of income tax benefits, of which
$45 relates to previously recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance
against a deferred tax asset. As described more fully in “Results of Operations-Income Taxes,” below, both items were
previously recorded in connection with the charge recorded in 2017 and revised in 2018 related to the Tax Cuts and Jobs
Act (the “TCJA”).
On January 31, 2020, we acquired Hello Products LLC (“hello”), an oral care business, for cash consideration of $351.
The acquisition was financed with a combination of debt and cash. This acquisition is part of our strategy to focus on high
growth segments within our Oral Care, Personal Care and Pet Nutrition businesses. See Note 3, Acquisitions to the
Consolidated Financial Statements for additional information.
Outlook
Looking forward, we expect global macroeconomic, political and market conditions to remain challenging, especially
due to COVID-19. During the year ended December 31, 2021, all of our divisions experienced significantly higher raw and
packaging material costs. We also incurred increased logistics costs due to volume and capacity constraints in the shipping
and logistics industry and higher eCommerce demand. We expect this difficult cost environment to continue in 2022.
While the global marketplace in which we operate has always been highly competitive, we continue to experience
heightened competitive activity in certain markets from strong local competitors, from other large multinational companies,
some of which have greater resources than we do, and from new entrants into the market in many of our categories. Such
activities have included more aggressive product claims and marketing challenges, as well as increased promotional
spending and geographic expansion.
We have been negatively affected by changes in the policies and practices of our trade customers in key markets, such
as inventory de-stocking, fulfillment requirements, limitations on access to shelf space, delisting of our products and
certain environmental, sustainability, supply chain and packaging standards or initiatives. In addition, the retail landscape
in many of our markets continues to evolve as a result of the rapid growth of eCommerce, changing consumer preferences
(as consumers increasingly shop online and via mobile and social applications) and the increased presence of alternative
retail channels, such as subscription services and direct-to-consumer businesses. These trends have been magnified due to
COVID-19 in many of our geographies and we plan to continue to invest behind our digital and analytics capabilities and
higher growth businesses, such as eCommerce. This rapid growth in eCommerce and the emergence of alternative retail
channels have created and may continue to create pricing pressures and/or adversely affect our relationships with our key
retailers.
In addition, given that approximately 70% of our Net sales originate in markets outside the U.S., we have experienced
and will likely continue to experience volatile foreign currency fluctuations. As discussed above, we have also experienced
higher raw and packaging material and logistics costs. While we have taken, and will continue to take, measures to mitigate
the effect of these conditions, such as the 2022 Global Productivity Initiative and our funding the growth and revenue
growth management initiatives, including additional pricing, in the current environment, it may become increasingly
difficult to implement certain of these mitigation strategies. Should these conditions persist, they could adversely affect our
future results.
27
(Dollars in Millions Except Per Share Amounts)
As discussed above, we continue to closely monitor the impact of COVID-19 on our business. During 2020 as a result
of the COVID-19 pandemic, we saw a significant increase in demand across many of our categories, such as liquid hand
soap, dish liquid, bar soap and cleaners. While consumer demand for most of these categories declined year-over-year in
2021, most remained above historical levels. We believe that some of this increased consumption is sustainable due to
consumer behavior changes related to COVID-19. We expect increased volatility across all of our categories, and it is
therefore difficult to predict category growth rates in the near term. COVID-19 has also disrupted our retail customers,
contract manufacturers, logistics providers and other third parties; their ability to address COVID-19 and maintain their
operations at full capacity has impacted and may continue to impact sales of and consumer access to our products. While
we have taken, and will continue to take, measures to mitigate the effects of COVID-19, we cannot estimate with certainty
the full extent of COVID-19’s impact on our business, results of operations, cash flows and/or financial condition. For
more information about factors that could impact our business, including due to COVID-19, see “Risk Factors” in Part I,
Item 1A of this Annual Report.
In summary, we believe that we are well prepared to meet the challenges ahead due to our strong financial condition,
broad based experience operating in challenging environments, resilient global supply chain and focused business strategy.
Our strategy is based on driving organic sales growth and long-term profitable growth through innovation within our core
businesses, leveraging faster growth in adjacent categories, expanding in high-growth channels and markets and delivering
margin expansion through operating leverage and efficiency. We are also seeking to maximize the impact of our
environmental, social and governance programs and leading in the development of human capital, including our
sustainability and social impact and DE&I strategies. Our commitment to these priorities, the strength of our brands, the
breadth of our global footprint and a commitment to driving efficiency in cash generation should position us well to
manage through the challenges presented by COVID-19 and increase shareholder value over time.
28
(Dollars in Millions Except Per Share Amounts)
Results of Operations
This section of this Annual Report on Form 10-K generally discusses 2021 and 2020 items and year-to-year
comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 that
are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2020.
Net Sales
Worldwide Net sales were $17,421 in 2021, up 6.0% from 2020, due to volume growth of 1.0%, net selling price
increases of 3.5%, and positive foreign exchange of 1.5%. Organic sales (Net sales excluding, as applicable, the impact of
foreign exchange, acquisitions and divestments), a non-GAAP financial measure as discussed below, increased 4.5% in
2021.
Net sales in the Oral, Personal and Home Care product segment were $14,110 in 2021, up 4.0% from 2020, due to net
selling price increases of 2.5% and positive foreign exchange of 1.5%, while volume was flat. Organic sales in the Oral,
Personal and Home Care product segment increased 2.5% in 2021.
The increase in organic sales in 2021 versus 2020 was due to an increase in Oral Care organic sales, partially offset by
a decrease in Personal Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the
toothpaste, manual toothbrush and mouthwash categories. The decrease in Personal Care was primarily due to organic sales
declines in the liquid hand soap and bar soap categories.
The Company’s share of the global toothpaste market was 39.4% for full year 2021, down 0.3 share points from full
year 2020, and its share of the global manual toothbrush market was 30.9% for full year 2021, up 0.1 share points from full
year 2020. Full year 2021 market shares in toothpaste were up in Europe and Africa/Eurasia and down in North America,
Latin America and Asia Pacific versus full year 2020. In the manual toothbrush category, full year 2021 market shares
were up in Latin America, Europe and Africa/Eurasia and down in North America and Asia Pacific versus full year 2020.
For additional information regarding the Company’s use of market share data and limitations of such data, see “Market
Share Information” below.
Net sales for Hill’s Pet Nutrition were $3,311 in 2021, an increase of 15.0% from 2020, driven by volume growth of
8.0%, net selling price increases of 5.5% and positive foreign exchange of 1.5%. Organic sales for Hill’s Pet Nutrition
increased 13.5% in 2021.
The increase in organic sales in 2021 versus 2020 was primarily due to increases in organic sales in the Science Diet
and Prescription Diet categories.
29
(Dollars in Millions Except Per Share Amounts)
Gross Profit/Margin
Worldwide Gross profit increased 4% to $10,375 in 2021 from $10,017 in 2020. Gross profit in 2020 included
acquisition-related costs. Excluding acquisition-related costs in 2020, Gross profit increased to $10,375 in 2021 from
$10,021 in 2020, reflecting an increase of $565 resulting from higher Net sales and a decrease of $211 resulting from lower
Gross profit margin.
Worldwide Gross profit margin decreased to 59.6% in 2021 from 60.8% in 2020. This decrease in Gross profit margin
was primarily due to higher raw and packaging material costs (450 bps), partially offset by cost savings from the
Company’s funding-the-growth initiatives (210 bps) and higher pricing (120 bps).
Gross profit, GAAP
Acquisition-related costs
Gross profit, non-GAAP
Gross profit margin
2021
2020
$
10,375 $
10,017
—
4
$
10,375 $
10,021
2021
2020
Basis Point
Change
59.6 %
60.8 %
(120)
30
(Dollars in Millions Except Per Share Amounts)
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 6% to $6,407 in 2021 from $6,019 in 2020. Selling, general and
administrative expenses in 2020 included benefits resulting from the Global Growth and Efficiency Program. Excluding
benefits resulting from the Global Growth and Efficiency Program, Selling, general and administrative expenses increased
to $6,407 in 2021 from $6,022 in 2020, reflecting higher overhead expenses of $312 and increased advertising investment
of $73.
Selling, general and administrative expenses as a percentage of Net sales increased to 36.8% in 2021 from 36.5% in
2020. Excluding benefits resulting from the Global Growth and Efficiency Program, Selling, general and administrative
expenses as a percentage of Net sales increased by 20 bps to 36.8% in 2021 as compared to 36.6% in 2020. This increase
was due to higher overhead expenses (50 bps), driven by higher logistics costs, partially offset by decreased advertising
investment (30 bps), both as a percentage of Net sales. In 2021, advertising investment decreased as a percentage of Net
sales to 11.6% from 11.9% in 2020, while it increased in absolute terms by 3.7% to $2,021 as compared with $1,948 in
2020.
Selling, general and administrative expenses, GAAP
Global Growth and Efficiency Program
Selling, general and administrative expenses, non-GAAP
Selling, general and administrative expenses as a percentage of Net sales,
GAAP
Global Growth and Efficiency Program
Selling, general and administrative expenses as a percentage of Net sales,
non-GAAP
2021
2020
$
6,407 $
6,019
—
3
$
6,407 $
6,022
2021
2020
Basis Point
Change
36.8 %
— %
36.5 %
0.1 %
36.8 %
36.6 %
30
20
31
(Dollars in Millions Except Per Share Amounts)
Other (Income) Expense, Net
Other (income) expense, net was $65 and $113 in 2021 and 2020, respectively. Other (income) expense, net in 2021
included a benefit related to a value-added tax matter in Brazil. Other (income) expense, net in 2020 included benefits
resulting from the Global Growth and Efficiency Program and acquisition-related costs.
Other (income) expense, net, GAAP
Global Growth and Efficiency Program
Acquisition-related costs
Value-added tax matter in Brazil
Other (income) expense, net, non-GAAP
2021
2020
$
65 $
113
—
—
26
13
(2)
—
$
91 $
124
Excluding the items described above in both periods, as applicable, Other (income) expense, net was $91 in 2021 and
$124 in 2020, comprised of the following:
Amortization of intangible assets
Equity income
Write-off of certain investments and fixed assets
Other, net
Total Other (income) expense, net
2021
2020
$
$
89 $
(12)
10
4
91 $
88
(12)
—
48
124
Goodwill & Indefinite-Lived Intangible Impairment Charges
The Company made revisions to the internal forecasts relating to its Filorga reporting unit during the fourth quarter of
2021 due primarily to the impact of the COVID-19 pandemic on the Filorga skin health business as a result of government
restrictions and reduced consumer mobility, which negatively impacted consumption in the duty-free, travel retail and
pharmacy channels. The Company concluded that the changes in circumstances in this reporting unit triggered the need for
an interim impairment review of its indefinite-lived trademark and goodwill and, accordingly, performed an interim
impairment test for the trademark as of December 31, 2021. The Company concluded that the carrying value of the
trademark exceeded its estimated fair value, and recorded an impairment charge of $204, reducing the carrying value to
approximately $588. After adjusting the carrying value of the trademark, the Company completed a quantitative
impairment test for goodwill and recorded a goodwill impairment charge of $367 in the Filorga reporting unit, reducing the
carrying value of goodwill to approximately $577. The Company continues to believe in the strength of the Filorga brand
and is confident about its growth opportunities. See Note 5, Goodwill and Other Intangible Assets to the Consolidated
Financial Statements for further information.
32
(Dollars in Millions Except Per Share Amounts)
Operating Profit
Operating profit decreased 14% to $3,332 in 2021 from $3,885 in 2020. In 2021, Operating profit included a benefit
related to a value-added tax matter in Brazil, and goodwill and indefinite-lived intangible impairment charges related to the
Filorga reporting unit. In 2020, Operating profit included benefits resulting from the Global Growth and Efficiency
Program and acquisition-related costs. Excluding these items in both periods, as applicable, Operating profit was flat in
2021.
Operating profit margin was 19.1% in 2021, a decrease of 450 bps compared with 23.6% in 2020. Excluding the items
described above in both periods, as applicable, Operating profit margin was 22.3% in 2021, a decrease of 120 bps from
23.5% in 2020. This decrease in Operating profit in 2021 was primarily due to a decrease in Gross profit (120 bps), as a
percentage of Net sales.
2021
2020
% Change
$
3,332 $
3,885
(14) %
—
—
(26)
571
3,877 $
(16)
6
—
—
3,875
2021
2020
— %
Basis Point
Change
(450)
23.6 %
(0.1) %
—
—
—
23.5 %
(120)
Operating profit, GAAP
Global Growth and Efficiency Program
Acquisition-related costs
Value-added tax matter in Brazil
Goodwill and indefinite-lived intangible impairment charges
Operating profit, non-GAAP
$
Operating profit margin, GAAP
Global Growth and Efficiency Program
Acquisition-related costs
Value-added tax matter in Brazil
Goodwill and indefinite-lived intangible impairment charges
Operating profit margin, non-GAAP
19.1 %
—
—
(0.2) %
3.4 %
22.3 %
Non-Service Related Postretirement Costs
Non-service related postretirement costs were $70 in 2021 compared to $74 in 2020.
33
(Dollars in Millions Except Per Share Amounts)
Interest (Income) Expense, Net
Interest (income) expense, net was $175 in 2021 compared with $164 in 2020. In 2021 and 2020, Interest (income)
expense, net included losses on the early extinguishment of debt. Excluding the losses on the early extinguishment of debt,
in both periods, Interest (income) expense, net was $100 in 2021 compared to $141 in 2020, primarily due to lower average
interest rates on debt.
Interest (income) expense, GAAP
Loss on early extinguishment of debt
Interest (income) expense, non-GAAP
2021
2020
$
$
175 $
(75)
100 $
164
(23)
141
34
(Dollars in Millions Except Per Share Amounts)
Income Taxes
The effective income tax rate was 24.3% in 2021 and 21.6% in 2020. As reflected in the table below, the non-GAAP
effective income tax rate was 22.0% in 2021 and 23.6% in 2020.
As Reported GAAP
Goodwill and indefinite-lived intangible impairment
charges
Loss on early extinguishment of debt
Value-added tax matter in Brazil
Non-GAAP
As Reported GAAP
Global Growth and Efficiency Program
Subsidiary and operating structure initiatives
Acquisition-related costs
Loss on early extinguishment of debt
$
$
$
Income Before
Income Taxes
2021
Provision For
Income Taxes(1)
Effective Income
Tax Rate(2)
3,087 $
571
75
(26)
3,707 $
749
53
20
(6)
816
24.3 %
(2.1) %
(0.3) %
0.1 %
22.0 %
Income Before
Income Taxes
2020
Provision For
Income Taxes(1)
Effective Income
Tax Rate(2)
3,647 $
(16)
—
6
23
787
(3)
71
2
5
862
21.6 %
—
2.0 %
—
—
23.6 %
Non-GAAP
$
3,660 $
_______
(1)
(2)
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.
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.
The provision for income taxes for 2020 includes $71 of income tax benefits, of which $45 relates to previously
recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance against a deferred tax
asset. As described more fully below, both items were previously recorded in connection with the charge recorded by the
Company in 2017 and revised in 2018 related to the TCJA.
As part of the previously recorded charge for the TCJA, the Company had provided for foreign withholding taxes
expected to be paid on the remittance of earnings from certain overseas subsidiaries no longer deemed indefinitely
reinvested. As a result of a reorganization of the ownership structure of certain foreign subsidiaries, the Company
determined that no withholding taxes will be due on the remittance by certain subsidiaries of earnings previously deemed
reinvested and, accordingly, reversed $45 of previously recorded foreign withholding taxes in the first quarter of 2020.
Also as part of the previously recorded charge for the TCJA, the Company provided a valuation allowance against a
deferred tax asset related to foreign tax credit carry-forwards that the Company did not expect to be able to use due to
changes made by the TCJA. As a result of a new operating structure implemented within one of the Company’s divisions,
the Company believes the use of these foreign tax credit carry-forwards will not be limited in the future and, accordingly,
reversed the previously recorded valuation allowance of $26 in the first quarter of 2020.
The effective income tax rate in all years benefited from tax planning associated with the Company’s global business
initiatives.
35
(Dollars in Millions Except Per Share Amounts)
Net income attributable to Colgate-Palmolive Company and Earnings per share
Net income attributable to Colgate-Palmolive Company of $2,166, or $2.55 per share on a diluted basis, in 2021
decreased from $2,695, or $3.14 per share on a diluted basis, in 2020. In 2021, Net income attributable to Colgate-
Palmolive Company included aftertax goodwill and indefinite-lived intangible impairment charges, an aftertax benefit
related to a value-added tax matter in Brazil and an aftertax loss on the early extinguishment of debt. In 2020, Net income
attributable to Colgate-Palmolive Company included aftertax benefits resulting from the Global Growth and Efficiency
Program, aftertax acquisition-related costs, a tax benefit related to subsidiary and operating structure initiatives and an
aftertax loss on the early extinguishment of debt.
Excluding the items described above in both periods, as applicable, Net income attributable to Colgate-Palmolive
Company increased 3% to $2,719 in 2021 from $2,633 in 2020, and Earnings per common share on a diluted basis
increased 5% to $3.21 in 2021 from $3.06 in 2020.
2021
Income
Before
Income
Taxes
Provision
For
Income
Taxes(1)
Net Income
Including
Noncontrolling
Interests
Less: Income
Attributable To
Noncontrolling
Interests
Net Income
Attributable to
Colgate-
Palmolive
Company
$ 3,087 $
749 $
2,338 $
172 $
2,166 $
Diluted
Earnings
Per
Share(2)
2.55
571
75
53
20
518
55
—
—
518
0.61
55
0.07
(26)
$ 3,707 $
(6)
816 $
(20)
2,891 $
—
172 $
(20)
2,719 $
(0.02)
3.21
2020
Net Income
Including
Noncontrolling
Interests
Less: Income
Attributable To
Noncontrolling
Interests
Net Income
Attributable to
Colgate-
Palmolive
Company
787 $
2,860 $
165 $
2,695 $
Income
Before
Income
Taxes
$ 3,647 $
Provision
For
Income
Taxes(1)
(16)
(3)
—
6
23
71
2
5
(13)
(71)
4
18
—
—
—
—
Diluted
Earnings
Per
Share(2)
3.14
(13)
(0.02)
(71)
4
(0.08)
—
18
0.02
3.06
As Reported GAAP
Goodwill and indefinite-lived
intangible impairment charges
Loss on early extinguishment of
debt
Value-added tax matter in
Brazil
Non-GAAP
As Reported GAAP
Global Growth and Efficiency
Program
Subsidiary and operating
structure initiatives
Acquisition-related costs
Loss on early extinguishment of
debt
Non-GAAP
$ 3,660 $
862 $
2,798 $
165 $
2,633 $
_______
(1)
(2)
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.
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.
36
(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.
Oral, Personal and Home Care
North America
Net sales
Operating profit
% of Net sales
$
$
2021
3,694
754
20.4 %
$
$
2020
3,741
988
26.4 %
% Change
(1.0) %
(24) %
(600) bps
Net sales in North America decreased 1.0% in 2021 to $3,694, driven by volume declines of 4.0%, partially offset by
net selling price increases of 2.0% and positive foreign exchange of 1.0%. Organic sales in North America decreased 2.0%
in 2021. The organic sales decline was largely driven by the United States.
The decrease in organic sales in North America in 2021 versus 2020 was primarily due to decreases in Personal Care
and Home Care organic sales. The decrease in Personal Care was primarily due to organic sales declines in the liquid hand
soap and bar soap categories. The decrease in Home Care was primarily due to organic sales declines in the hand dish
category, partially offset by organic sales growth in the liquid cleaner category.
Operating profit in North America decreased 24% in 2021 to $754, or 600 bps to 20.4% as a percentage of Net
sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (330
bps) and an increase in Selling, general and administrative expenses (300 bps), both as a percentage of Net sales. This
decrease in Gross profit was primarily due to higher raw and packaging material costs (600 bps), partially offset by cost
savings from the Company’s funding-the-growth initiatives (190 bps) and higher pricing. This increase in Selling, general
and administrative expenses was due to higher overhead expenses (290 bps), primarily driven by higher logistics costs, and
increased advertising investment (10 bps).
37
(Dollars in Millions Except Per Share Amounts)
Latin America
Net sales
Operating profit
% of Net sales
$
$
2021
3,663
1,012
27.6 %
$
$
2020
3,418
975
28.5 %
% Change
7.0 %
4 %
(90) bps
Net sales in Latin America increased 7.0% in 2021 to $3,663, as volume growth of 1.0% and net selling price increases
of 7.0% were partially offset by negative foreign exchange of 1.0%. Organic sales in Latin America increased 8.0% in
2021. Organic sales growth was led by Brazil, Mexico, Argentina and Colombia.
The increase in organic sales in Latin America in 2021 versus 2020 was due to increases in Oral Care, Personal Care
and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste,
manual toothbrush and mouthwash categories. The increase in Personal Care was primarily due to organic sales growth in
the bar soap and underarm protection categories. The increase in Home Care was primarily due to organic sales growth in
the fabric softener and liquid cleaner categories.
Operating profit in Latin America increased 4% in 2021 to $1,012, while as a percentage of Net sales it decreased 90
bps to 27.6%. This decrease in Operating profit as a percentage of Net sales was due to a decrease in Gross profit (150
bps), partially offset by a decrease in Selling, general and administrative expenses (20 bps) and a decrease in Other
(income) expense, net (40 bps), all as a percentage of Net sales. This decrease in Gross profit was primarily due to higher
raw and packaging material costs (740 bps), which were partially offset by cost savings from the Company’s funding-the-
growth initiatives (330 bps) and higher pricing. This decrease in Selling, general and administrative expenses was due to
decreased advertising investment (70 bps), partially offset by higher overhead expenses (50 bps), primarily driven by
higher logistics costs. The decrease in Other (income) expense, net was primarily due to a value added tax refund.
38
(Dollars in Millions Except Per Share Amounts)
Europe
Net sales
Operating profit
% of Net sales
2021
2,841
682
$
$
2020
2,747
652
$
$
% Change
3.5 %
5 %
24.0 %
23.7 %
30 bps
Net sales in Europe increased 3.5% in 2021 to $2,841, as Net selling prices were flat and positive foreign exchange of
4.0% was partially offset by volume declines of 0.5%. Organic sales in Europe decreased 0.5% in 2021. Organic sales
declines were driven by the Filorga duty-free business and Germany, partially offset by organic sales growth in Poland.
The decrease in organic sales in Europe in 2021 versus 2020 was due to decreases in Personal Care and Home Care
organic sales, partially offset by an increase in Oral Care organic sales. The decrease in Personal Care was primarily due to
organic sales declines in the liquid hand soap, body wash, skin health and bar soap categories. The decrease in Home Care
was primarily due to organic sales declines in the bleach and hand dish categories, partially offset by organic sales growth
in the fabric softener category. The increase in Oral Care was primarily due to organic sales growth in the toothpaste,
prescription dental and manual toothbrush categories.
Operating profit in Europe increased 5% in 2021 to $682, or 30 bps to 24.0% as a percentage 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 (110 bps), partially offset by a decrease in Gross profit (100 bps), both as a percentage of Net
sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs (330 bps), partially offset
by cost savings from the Company’s funding-the-growth initiatives (220 bps). This decrease in Selling, general and
administrative expenses was largely due to decreased advertising investment (100 bps).
39
(Dollars in Millions Except Per Share Amounts)
Asia Pacific
Net sales
Operating profit
% of Net sales
$
$
2021
2,867
844
29.4 %
$
$
2020
2,701
773
28.6 %
% Change
6.0 %
9 %
80 bps
Net sales in Asia Pacific increased 6.0% in 2021 to $2,867, driven by volume growth of 3.0% and positive foreign
exchange of 3.0%, while net selling prices were flat. Organic sales in Asia Pacific increased 3.0% in 2021. Organic sales
growth was led by India and the Greater China region.
The increase in organic sales in 2021 versus 2020 was primarily due to an increase in Oral Care organic sales. The
increase in Oral Care was driven by organic sales growth in the toothpaste, manual toothbrush and mouthwash categories.
Operating profit in Asia Pacific increased 9% in 2021 to $844, or 80 bps to 29.4% of Net sales. This increase in
Operating profit as a percentage of Net sales was due primarily to an increase in Gross profit (50 bps) and a decrease in
Other (income) expense, net (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 (230 bps), mix (20 bps) and other, partially offset by
higher raw and packaging material costs (230 bps). The decrease in Other (income) expense, net was primarily due to a
gain on an investment.
40
(Dollars in Millions Except Per Share Amounts)
Africa/Eurasia
Net sales
Operating profit
% of Net sales
$
$
2021
1,045
203
19.4 %
$
$
2020
% Change
981
206
21.0 %
6.5 %
(1) %
(160) bps
Net sales in Africa/Eurasia increased 6.5% in 2021 to $1,045, as volume growth of 1.0% and net selling price
increases of 6.0% were partially offset by negative foreign exchange of 0.5%. Organic sales in Africa/Eurasia increased
7.0% in 2021. Organic sales growth was led by Turkiye, Nigeria and South Africa.
The increase in organic sales in 2021 versus 2020 was primarily due to an increase in Oral Care organic sales. The
increase in Oral Care was primarily due to organic sales growth in the toothpaste and manual toothbrush categories.
Operating profit in Africa/Eurasia decreased 1% in 2021 to $203, or 160 bps to 19.4% of Net sales. This decrease in
Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (170 bps), partially offset by a
decrease in Selling, general and administrative expenses (60 bps), both as a percentage of Net sales. This decrease in Gross
profit was primarily due to higher raw and packaging material costs (590 bps), partially offset by higher pricing and cost
savings from the Company’s funding-the-growth initiatives (190 bps). This decrease in Selling, general and administrative
expenses was due to decreased advertising investment (140 bps), partially offset by higher overhead expenses (80 bps),
primarily driven by higher logistics costs.
41
(Dollars in Millions Except Per Share Amounts)
Hill’s Pet Nutrition
Net sales
Operating profit
% of Net sales
$
$
2021
3,311
901
27.2 %
$
$
2020
2,883
793
27.5 %
% Change
15.0 %
14 %
(30) bps
Net sales for Hill’s Pet Nutrition increased 15.0% in 2021 to $3,311, driven by volume growth of 8.0%, net selling
price increases of 5.5% and positive foreign exchange of 1.5%. Organic sales in Hill’s Pet Nutrition increased 13.5% in
2021. Organic sales growth was led by the United States and Europe.
The increase in organic sales in 2021 versus 2020 was due to organic sales growth in the Science Diet and Prescription
Diet categories.
Operating profit in Hill’s Pet Nutrition increased 14% in 2021 to $901, while as a percentage of Net sales it decreased
30 bps to 27.2%. This decrease in Operating profit as a percentage of Net sales was due to a decrease in Gross profit (40
bps) and an increase in Selling, general and administrative expenses (30 bps), partially offset by a decrease in Other
(income) expense, net (40 bps), all as a percentage of Net sales. This decrease in Gross profit was primarily due to higher
raw and packaging material costs (300 bps), partially offset by higher pricing and cost savings from the Company’s
funding-the-growth initiatives (100 bps). This increase in Selling, general and administrative expenses was due to increased
advertising investment (110 bps), partially offset by lower overhead expenses (80 bps). This decrease in Other (income)
expense, net was primarily due to the portion of costs incurred in 2020 in connection with the voluntary recall of selected
canned dog food products due to potentially elevated levels of Vitamin D resulting from a supplier error for which Hill’s
was not indemnified.
42
(Dollars in Millions Except Per Share Amounts)
Corporate
Operating profit (loss)
2021
2020
$
(1,064) $
(502)
% Change
112 %
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:
Global Growth and Efficiency Program
Acquisition-related costs
Value-added tax matter in Brazil
Goodwill and indefinite-lived intangible impairment charges
Corporate overhead costs and other, net
Total Corporate Operating profit (loss)
2021
2020
$
$
— $
—
26
(571)
(519)
(1,064) $
16
(6)
—
—
(512)
(502)
43
(Dollars in Millions Except Per Share Amounts)
Restructuring and Related Implementation Charges
Global Productivity Initiative
On January 27, 2022, the Board approved the 2022 Global Productivity Initiative. The program is intended to
reallocate resources towards the Company’s strategic priorities and faster growth businesses, drive efficiencies in the
Company’s operations and streamline the Company’s supply chain to reduce structural costs.
Implementation of the Global Productivity Initiative, which is expected to be substantially completed by December 31,
2022, is projected to result in cumulative pre-tax charges, once all phases are approved and implemented, totaling between
$200 and $240, which are currently estimated to be comprised of the following: employee-related costs, including
severance, pension and other termination benefits (80%); asset-related costs, primarily accelerated depreciation and asset
write-downs (10%); and other charges (10%), which include contract termination costs, consisting primarily of
implementation-related charges resulting directly from exit activities and the implementation of new strategies. It is
estimated that approximately 90% of the charges will result in cash expenditures. Annualized pre-tax savings are projected
to be in the range of $90 to $110.
44
(Dollars in Millions Except Per Share Amounts)
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 and divestments) (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 and divestments, as applicable. A reconciliation of organic sales growth to Net sales growth
for the years ended December 31, 2021 and 2020 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, Interest (income) expense, net, 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
excluding, as applicable, goodwill and indefinite-lived intangible impairment charges, a benefit related to a value-added tax
matter in Brazil, the benefits resulting from the Global Growth and Efficiency Program, a benefit related to a
reorganization of the ownership structure of certain foreign subsidiaries and a new operating structure implemented within
one of the Company’s divisions, acquisition-related costs and losses on the early extinguishment of debt. These non-GAAP
financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of
the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax
matters, gains and losses from certain acquisitions, divestitures and certain 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, 2021 and
2020 is presented within the applicable section of Results of Operations.
45
(Dollars in Millions Except Per Share Amounts)
The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for the years
ended December 31, 2021 and 2020 versus the prior year:
Year ended December 31, 2021
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, 2020
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Market Share Information
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and
Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
(1.0)%
7.0%
3.5%
6.0%
6.5%
4.0%
15.0%
6.0%
1.0%
(1.0)%
4.0%
3.0%
(0.5)%
1.5%
1.5%
1.5%
—%
—%
—%
—%
—%
—%
—%
—%
(2.0)%
8.0%
(0.5)%
3.0%
7.0%
2.5%
13.5%
4.5%
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and
Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
9.5%
(5.0)%
12.0%
(0.5)%
—%
3.0%
14.0%
5.0%
—%
(14.0)%
1.5%
(1.0)%
(8.5)%
(5.0)%
(0.5)%
(3.5)%
1.5%
—%
7.5%
—%
1.0%
2.0%
—%
1.5%
8.0%
9.0%
3.0%
0.5%
7.5%
6.0%
14.5%
7.0%
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. In particular, market share data
is currently not generally available for certain retail channels, such as eCommerce or certain discounters. The Company
measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market
share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party
vendors we use to provide data are reliable, but we have not verified the accuracy or completeness of the data or any
assumptions underlying the data. In certain limited circumstances, the COVID-19 pandemic has impacted the ability of our
third-party vendors to provide the Company with reliable updated market share 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.
46
(Dollars in Millions Except Per Share Amounts)
Liquidity and Capital Resources
The Company expects cash flow from operations and debt issuances will be sufficient to meet foreseeable business
operating and recurring cash needs (including for debt service, dividends, capital expenditures, share repurchases and
acquisitions). 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 decreased to $3,325 in 2021 as compared to $3,719 in 2020, primarily due to changes
in working capital. The Company’s working capital as a percentage of Net sales was (2.7)% in 2021 and (4.4)% in 2020.
This change in working capital as a percentage of Net sales is primarily due to lower accrued liabilities, partially offset by
higher accounts payable and higher prepaid expenses. 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).
Investing activities used $592 of cash in 2021 compared to $779 during 2020. Investing activities in 2020 included the
acquisition of hello for cash consideration of $351 as part of the Company’s continued strategy to focus on the high growth
segments within its Oral Care, Personal Care and Pet Nutrition businesses. This acquisition was financed with a
combination of debt and cash.
Capital expenditures in the year ended December 31, 2021 were $567, an increase from $410 in 2020. Capital
expenditures increased in 2021 primarily due to capacity expansion of manufacturing facilities and sustainability projects.
Capital expenditures for 2022 are expected to be approximately 4.0% of Net sales. The Company continues to focus its
capital spending on projects that are expected to yield high aftertax returns.
Financing activities used $2,774 of cash during 2021 compared to $2,919 during 2020. The decrease in cash used was
primarily due to a decrease in net payments on debt, partially offset by higher share repurchases, net in 2021 as compared
to 2020.
In 2020, as a result of the incremental debt related to recent acquisitions, net of proceeds from the exercise of stock
options, the Company moderated its share repurchases, net. In addition, due to the initial uncertainties resulting from the
COVID-19 pandemic and our intent to preserve cash, the Company discontinued all share repurchases other than those
pursuant to equity plans during the second quarter of 2020. The Company resumed its share repurchases, at a moderated
level, net in the third quarter of 2020. Share repurchases, net returned to historical levels in 2021.
Long-term debt, including the current portion, decreased to $7,206 as of December 31, 2021, as compared to $7,343 as
of December 31, 2020, and total debt decreased to $7,245 as of December 31, 2021 as compared to $7,601 as of
December 31, 2020. The Company’s debt issuances and redemptions support the Company’s capital structure objectives of
funding its business and growth initiatives while minimizing its risk-adjusted cost of capital.
During the fourth quarter of 2021, the Company issued €500 of eight-year notes at a fixed coupon rate of 0.300% (the
“Sustainability Bond”). The debt issuance was under the Company’s shelf registration statement. An amount equal to the
net proceeds of the Sustainability Bond will be used to finance or refinance, in part or in full, new and existing projects and
programs with distinct environmental or social benefits pursuant to the Company’s Sustainable Financing Framework.
During the fourth quarter of 2021, the Company redeemed prior to maturity all of its outstanding 0.000% notes due
2021 with a principal amount of €500, originally issued on November 12, 2019. The redemption was financed with
commercial paper borrowings. The redemption price was equal to the carrying amount of the debt extinguished.
In 1990, the Company’s Canadian subsidiary (“CP Canada”), issued C$145 of Canadian dollar-denominated
unsecured unsubordinated 12.85% guaranteed notes due October 4, 2030 (the “Canada notes”). During the third quarter of
2021, CP Canada redeemed the Canada notes and recorded a loss on the early extinguishment of debt of $75, which is
included in Interest (income) expense, net in the Consolidated Statements of Income, representing the difference between
the redemption price and the carrying amount of the debt extinguished.
47
(Dollars in Millions Except Per Share Amounts)
During the fourth quarter of 2020, the Company redeemed prior to maturity all of its outstanding 2.450% notes due
2021 with a principal amount of $300, originally issued on November 8, 2011, and all of its outstanding 2.300% notes due
2022 with a principal amount of $500, originally issued on May 3, 2012. These redemptions were financed with
commercial paper borrowings and cash. The Company recorded a loss on this early extinguishment of debt of $23, which is
included in Interest (income) expense, net in the Consolidated Statements of Income, representing the difference between
the redemption price and the carrying amount of the debt extinguished.
At December 31, 2021, the Company had access to unused domestic and foreign lines of credit of $3,457 (including
under the facility discussed below) and could also issue long-term debt pursuant to an effective shelf registration statement.
In August 2021, the Company entered into a new $3,000 five-year revolving credit facility with a syndicate of banks for a
five-year term expiring August 2026, which replaced, on substantially similar terms, the Company’s $2,650 revolving
credit facility that was scheduled to expire in November 2024. Commitment fees related to the credit facility were not
material. The Company’s $1,500 364-day credit facility with a syndicate of banks expired in August 2021 and was not
renewed.
Domestic and foreign commercial paper outstanding was $1,204 and $1,389 as of December 31, 2021 and
December 31, 2020, respectively. The average daily balances outstanding of commercial paper in 2021 and 2020 were
$2,052 and $1,050, 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 available lines of credit (under the facilities discussed above).
The following is a summary of the Company’s commercial paper and global short-term borrowings as of
December 31, 2021 and 2020:
2021
2020
Weighted
Average
Weighted
Average
Global short-term borrowings
Commercial Paper (1)
Total
Interest Rate Maturities Outstanding
2022
39
1,204
2022
1,243
0.7 %
(0.4) %
$
$
Interest Rate Maturities Outstanding
8
2021
1,389
2021
1,397
4.8 %
(0.3) %
$
$
(1) Commercial paper included a current portion of $250, included in Notes and loans payable, as of December 31, 2020.
Certain of the agreements with respect to the Company’s bank borrowings contain financial and other covenants as
well as cross-default provisions. Noncompliance with these requirements could ultimately result in the acceleration of
amounts owed. The Company is in full compliance with all such requirements and believes the likelihood of
noncompliance is remote. Refer to Note 6, Long-Term Debt and Credit Facilities to the Consolidated Financial Statements
for further information about the Company’s long-term debt and credit facilities.
Dividend payments in 2021 were $1,679, an increase from $1,654 in 2020. Dividend payments increased to $1.79 per
share in 2021 from $1.75 per share in 2020. In the first quarter of 2021, the Company increased the quarterly common
stock dividend to $0.45 per share from $0.44 per share, effective in the second quarter of 2021.
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 June 18, 2018, the
Board authorized the repurchase of shares of the Company’s common stock having an aggregate purchase price of up to
$5,000 under the 2018 Program. The Board also has authorized share repurchases on an ongoing basis to fulfill certain
requirements of the Company’s compensation and benefit programs. The shares are repurchased from time to time in open
market or privately negotiated transactions at the Company’s discretion, subject to market conditions, customary blackout
periods and other factors.
Aggregate share repurchases in 2021 consisted of approximately 16.4 million common shares under the 2018 Program
and 0.3 million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of
$1,320. Aggregate repurchases in 2020 consisted of approximately 18.2 million common shares under the 2018 Program
48
(Dollars in Millions Except Per Share Amounts)
and 0.4 million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of
$1,476. Share repurchases net of proceeds from exercise of stock options were $896 and $602 in 2021 and 2020,
respectively.
Cash and cash equivalents decreased $56 during 2021 to $832 at December 31, 2021, compared to $888 at
December 31, 2020. Cash and cash equivalents held by the Company’s foreign subsidiaries was $784 and $872,
respectively, at December 31, 2021 and 2020.
The following represents the scheduled maturities of the Company’s contractual obligations as of December 31, 2021:
Total
2022
2023
2024
2025
2026
Thereafter
Long-term debt including current portion(1)
Net cash interest payments on long-term debt(2)
Operating Leases
Purchase obligations(3)
U.S. tax reform payments
$
6,002 $ 456 $ 908 $ 506 $ 135 $ 566 $
1,391
109
65
72
99
83
685
724
210
156
421
109
171
25
46
76
90
62
61
22
77
48
19
—
3,431
963
235
1
—
Total
$
9,012 $ 1,167 $ 1,333 $ 817 $ 367 $ 698 $
4,630
_______
(1)
(2)
(3)
The Company classifies commercial paper and notes maturing within the next 12 months as long-term debt when it has the intent
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.
The Company had outstanding contractual obligations with suppliers at the end of 2021 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
2021. The Company does not expect to make any voluntary contributions to its U.S. postretirement plans in 2022. In
addition, total benefit payments expected to be paid from the Company’s assets to participants in unfunded plans are
estimated to be approximately $89 for the year ending December 31, 2022.
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 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.
49
(Dollars in Millions Except Per Share Amounts)
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.
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. See
“Results of Operations” above for a 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.
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 a net
unrealized gain of $12 and net unrealized loss of $11 at December 31, 2021 and 2020, 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 2021, an
unfavorable 10% change in exchange rates would have resulted in a net unrealized loss of $76.
50
(Dollars in Millions Except Per Share Amounts)
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 Company utilizes forward-starting interest rate swaps to mitigate the risk of variability in interest rate for future debt
issuances. 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 2021 variable rate debt levels, a 1% increase in interest rates would have increased Interest
(income) expense, net by $14 in 2021.
The Company is assessing the impact of the discontinuation of LIBOR as a benchmark interest rate on its current
financial instruments and contractual arrangements, including debt outstanding, and believes it will not be material as the
Company does not have significant exposure to LIBOR in either its debt or other financing arrangements. The Company
will continue to monitor its exposure in subsequent periods.
Commodity Price Risk
The Company is exposed to price volatility related to raw materials used in production, such as essential oils, resins,
tropical oils, pulp, tallow, corn, poultry 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 that qualify for cash flow hedge accounting resulted in a net
unrealized gain of $2 and $3 at December 31, 2021 and 2020, respectively. At the end of 2021, an unfavorable 10% change
in commodity futures prices would have resulted in a net unrealized loss of $1.
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
In November 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update
(“ASU”) No. 2021-10, “Government Assistance (Topic 832).” This ASU requires increased disclosure on an annual basis
about transactions with domestic, foreign, local, regional and national governments, including entities related to those
governments and intergovernmental organizations, that are accounted for by applying a grant or contribution accounting
model by analogy to other accounting guidance. This guidance is effective for the Company beginning on January 1, 2022
and is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract
Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities
acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance
with ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606).” This guidance is effective for the
Company beginning on January 1, 2023 and is not expected to have a material impact on the Company’s Consolidated
Financial Statements.
In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848): Scope.” This ASU
clarifies that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the
discounting transition. This guidance was effective upon issuance for the Company and is not expected to have a material
impact on the Company’s Consolidated Financial Statements.
51
(Dollars in Millions Except Per Share Amounts)
In October 2020, the FASB issued ASU No. 2020-10, “Codification Improvements.” This ASU improves the
consistency of the codification topics by including all disclosure guidance in the appropriate disclosure section and also
clarifies the application of various provisions in the codification. This guidance was effective for the Company beginning
on January 1, 2021 and did not have a material impact on the Company’s Consolidated Financial Statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects
of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying
generally accepted accounting principles (“GAAP”) to contracts, hedging relationships and other transactions that reference
LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance was effective
upon issuance of this ASU for contract modifications and hedging relationships on a prospective basis and is not expected
to have a material impact on the Company’s Consolidated Financial Statements.
In January 2020, the FASB issued ASU No. 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity
Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between
Topic 321, Topic 323, and Topic 815.” The guidance provides clarification of the interaction of rules for equity securities,
the equity method of accounting and forward contracts and purchase options on certain types of securities. This guidance
was effective for the Company beginning on January 1, 2021 and did not have a material impact on the Company’s
Consolidated Financial Statements.
In December 2019, the FASB issued ASU No. 2019-12, “Income taxes (Topic 740): Simplifying the Accounting for
Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general
principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance
was effective for the Company beginning on January 1, 2021 and did not have a material impact on the Company’s
Consolidated Financial Statements.
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 inventories and shipping and handling costs.
▪
▪
The Company accounts for inventories using both the first-in, first-out (“FIFO”) method (75% of inventories) and
the last-in, first-out (“LIFO”) method (25% of inventories). There would have been no material impact on
reported earnings for 2021 or 2020 had all inventories been accounted for under the FIFO method.
Shipping and handling costs may be reported as either a component of Cost of sales or Selling, general and
administrative expenses. The Company accounts for such costs, primarily related to warehousing and outbound
freight, as fulfillment costs and reports them 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 as a component of Cost of sales, the Company’s Gross profit margin would have been lower by
968 bps in 2021, by 845 bps in 2020, and 810 bps in 2019, with no impact on reported earnings.
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.
52
(Dollars in Millions Except Per Share Amounts)
▪
▪
▪
▪
In accounting for pension and other postretirement benefit costs, the most significant actuarial assumptions are the
discount rate and the expected long-term rate of return on plan assets. The discount rate used to measure the
benefit obligation for U.S. defined benefit plans was 2.98% and 2.65% as of December 31, 2021 and 2020,
respectively. The discount rate used to measure the benefit obligation for other U.S. postretirement plans was
3.06%, and 2.88% as of December 31, 2021 and 2020, 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 expected long-term rate of return on plan assets for U.S. plans was 5.70% as of December 31, 2021 and
2020. In determining the expected 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 3%, 8%, 8%, 6% and 7%, 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 76% in
fixed income securities, 21% in equity securities and 3% 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 $18. A 1% change in the discount rate for the U.S. pension plans
and U.S. other retiree benefit plan would impact future Net income attributable to Colgate-Palmolive Company by
approximately $2 and $10, respectively. 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 expected long-term
rate of return. This rate was 3.50% as of December 31, 2021, and 2020. 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 (other than the
discount rate noted above) 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 6.00% for 2022, declining to 4.75% by 2026 and remaining at 4.75% for the
years thereafter. The effect on the total of service cost and interest costs components of a 1% increase in the
assumed long-term medical cost trend rate would decrease Net income attributable to Colgate-Palmolive
Company by $11.
The Company recognizes the cost of employee services received in exchange for awards of equity instruments,
such as stock options and restricted stock units (both performance-based and time-vested), 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 estimate 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, 2021 was $11.11. The Black-Scholes model uses
various assumptions to estimate 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 4%. A 1% change in volatility would change fair value by approximately 6%. The Company uses a
Monte-Carlo simulation to determine the fair value of performance-based restricted stock units at the date of
grant. The Monte-Carlo simulation model uses substantially the same inputs as the Black-Scholes model.
Goodwill and indefinite-life intangible assets, such as the Company’s global brands, are subject to impairment
tests at least annually or when events or changes in circumstances indicate an asset may be impaired. In assessing
impairment, the Company performs either a quantitative or a qualitative analysis.
53
(Dollars in Millions Except Per Share Amounts)
Determining the fair value of the Company’s reporting units for goodwill and the fair value of its intangible assets
requires significant estimates and judgments by management. When a quantitative analysis is performed, the
Company generally uses the income approach, which requires several estimates, including future cash flows
consistent with management’s strategic plans, sales growth rates, foreign exchange rates and the selection of
royalty rates and a discount rate. Estimating sales growth rates requires significant judgment by management in
areas such as future economic conditions, category growth rates, product pricing, consumer tastes and preferences
and future expansion expectations. In selecting an appropriate royalty rate, the Company considers recent market
transactions for similar brands and products. In determining an appropriate discount rate, the Company considers
the current interest rate environment and its estimated cost of capital. Other qualitative factors the Company
considers, in addition to those quantitative measures discussed above, include assessments of general
macroeconomic conditions, industry-specific considerations and historical financial performance. The Company
generally engages a third-party valuation firm to assist it in determining the fair value of intangible assets acquired
in business combinations.
In determining the fair value of the Company’s reporting units, fair value is also determined using the market
approach, which is generally derived from metrics of comparable publicly traded companies. As multiple
valuation methodologies are used, the Company also performs a qualitative analysis comparing the fair value of a
reporting unit under each method to assess its reasonableness and ensure consistency of results.
Determining the expected life of a brand requires management judgment and is based on an evaluation of several
factors including market share, brand history, future expansion expectations, the level of in-market support
anticipated by management, legal or regulatory restrictions and the economic environment in the countries in
which the brand is sold.
The Company made revisions to the internal forecasts relating to its Filorga reporting unit during the fourth
quarter of 2021 due primarily to the impact of the COVID-19 pandemic on the Filorga skin health business as a
result of government restrictions and reduced consumer mobility, which negatively impacted consumption in the
duty-free, travel retail and pharmacy channels. The Company concluded that the changes in circumstances in this
reporting unit triggered the need for an interim impairment review of its indefinite-lived trademark and goodwill
and, accordingly, performed an interim impairment test for the trademark as of December 31, 2021. The Company
concluded that the carrying value of the trademark exceeded its estimated fair value, and recorded an impairment
charge of $204, reducing the carrying value to approximately $588. After adjusting the carrying value of the
trademark, the Company completed a quantitative impairment test for goodwill and recorded a goodwill
impairment charge of $367 in the Filorga reporting unit, reducing the carrying value of goodwill to approximately
$577.
Except for the Filorga skin health business, as described above, the estimated fair value of the Company’s
reporting units substantially exceeds the recorded carrying value. The fair value of the Company’s indefinite-life
intangible assets other than Filorga exceeds their recorded carrying value by at least 20%. 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.
▪
▪
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.
54
(Dollars in Millions Except Per Share Amounts)
▪
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.
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.
55
(Dollars in Millions Except Per Share Amounts)
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 SEC in its rules, regulations and releases that set forth anticipated
results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume
growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial
goals, the impact of foreign exchange volatility, the impact of COVID-19, cost-reduction plans (including the 2022 Global
Productivity Initiative), tax rates, new product introductions, commercial investment levels, acquisitions, divestitures, share
repurchases, or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s
views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a
result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC.
Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of
those statements. The Company cautions investors that any such forward-looking statements are not guarantees of future
performance and that actual events or results may differ materially from those statements. Actual events or results may
differ materially because of factors that affect international businesses and global economic conditions, as well as matters
specific to the Company and the markets it serves, including the uncertain economic and political environment in different
countries and its effect on consumer spending habits, foreign currency rate fluctuations, exchange controls, sanctions,
tariffs, price or profit controls, labor relations, changes in foreign or domestic laws, or regulations or their interpretation,
political and fiscal developments, including changes in trade, tax and immigration policies, increased competition and
evolving competitive practices (including from the growth of eCommerce and the entry of new competitors and business
models), the ability to operate and respond effectively during a pandemic, epidemic or widespread public health concern,
including COVID-19, ability to manage disruptions in our global supply chain and/or key office facilities, ability to
manage the availability and cost of raw and packaging materials and logistics costs, the ability to maintain or increase
selling prices as needed, changes in the policies of retail trade customers, the emergence of alternative retail channels, the
growth of eCommerce and the rapidly changing retail landscape (as consumers increasingly shop online and via mobile and
social applications), the ability to develop innovative new products, the ability to lower costs, successfully implement the
2022 Global Productivity Initiative and drive growth and instill a growth mindset to drive innovation, the ability to
maintain the security of our information technology systems from a cyber-security incident or data breach, the ability to
lessen and address the effects of climate change and achieve our sustainability and social impact targets, the ability to
complete acquisitions and divestitures as planned, the ability to successfully integrate acquired businesses, the ability to
attract and retain key employees and integrate DE&I initiatives across our organization, the uncertainty of the outcome of
legal proceedings, whether or not the Company believes they have merit, and the ability to address uncertain or unfavorable
global economic conditions, disruptions in the credit markets and tax matters. For information about these and other factors
that could impact the Company’s business and cause actual results to differ materially from forward-looking statements,
refer to 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.
56
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, 2021 (the
“Evaluation”). Based upon the Evaluation, the Company’s Chairman of the Board, President and Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e)
of the Securities Exchange Act of 1934) are effective.
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 Securities Exchange Act of 1934. 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 was effective as of December 31, 2021.
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, 2021, and has expressed an
unqualified opinion in their report, which appears under “Index to Financial Statements – Report of Independent
Registered Public Accounting Firm.”
Changes in Internal Control Over Financial Reporting
The Company is in the process of upgrading its enterprise IT system to SAP S/4 HANA. This change has not had and
is not expected to have a material impact on the Company’s internal controls over financial reporting.
Except as noted above, there were no changes in the Company’s internal control over financial reporting that occurred
during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
57
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
See “Information about our Executive Officers” in Part I, Item 1 of this report.
PART III
Additional information required by this Item relating to directors, executive officers and corporate governance of the
Company is incorporated herein by reference to the Company’s Proxy Statement for its 2022 Annual Meeting of
Stockholders (the “2022 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 of the Board, President and Chief Executive Officer, the Chief Financial
Officer and the Vice President and 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 2022 Proxy Statement is incorporated herein by
reference.
58
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
(a) The information regarding security ownership of certain beneficial owners and management set forth in the 2022
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, 2021:
(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)
28,011 (1) $
72.27 (2)
37,028 (3)
Not applicable
28,011
$
Not applicable
72.27
Not applicable
37,028
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
_______
(1)
Consists of 26,095 options outstanding and 1,916 restricted stock units awarded but not yet vested under the Company’s 2013
Incentive Compensation Plan and the Company’s 2019 Incentive Compensation Plan, respectively, 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 $72 and restricted stock units of $76.
Amount includes 26,038 options available for issuance and 10,990 restricted stock units available for issuance under the
Company’s 2019 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 2022
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 2022 Proxy Statement is incorporated herein by
reference.
59
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Financial Statement Schedules
PART IV
See “Index to Financial Statements.”
(b) Exhibits:
60
Exhibit No.
Description
3-A
3-B
4
a)
b)
c)
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.)
Colgate-Palmolive Company By-laws, Amended and Restated as of December 9, 2021. (Registrant
hereby incorporates by reference Exhibit 3.01 to its Current Report on Form 8-K filed on December 9,
2021, File No. 1-644.)
Description of Securities of the Registrant**
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.)(1)
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 2019 Incentive Compensation Plan. (Registrant hereby incorporates by reference
Annex C to its 2019 Notice of Annual Meeting and Proxy Statement, File No. 1-644.)*
b)
c)
d)
Form of Nonqualified Option Award Agreement used in connection with grants under the Colgate-
Palmolive Company 2019 Incentive Compensation Plan. (Registrant hereby incorporates by reference
Exhibit 10-C to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, File No.
1-644.)*
Form of Restricted Stock Unit Award Agreement used in connection with grants under the Colgate-
Palmolive Company 2019 Incentive Compensation Plan. (Registrant hereby incorporates by reference
Exhibit 10-D to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, File No.
1-644.)*
Form of Performance Stock Unit Award Agreement for the 2020-2022 Performance Cycle (Registrant
hereby incorporates by reference Exhibit 10-A to its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020, File No. 1-644.)*
10-B 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, File No. 1-644.)*
b)
c)
d)
Form of Nonqualified Option Award Agreement used in connection with grants under the 2013 Incentive
Compensation Plan. (Registrant hereby incorporates by reference Exhibit 10-A (b) to its Annual Report
on Form 10-K for the year ended December 31, 2017, File No. 1-644.)*
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, 2017, File No. 1-644.)*
Form of Performance Stock Unit Award Agreement for the 2019-2021 Performance Cycle. (Registrant
hereby incorporates by reference Exhibit 99 to its Current Report on Form 8-K filed on March 20, 2019,
File No. 1-644.)*
10-C a)
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.)*
b)
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.)*
10-D
Colgate-Palmolive Company Supplemental Salaried Employees’ Retirement Plan, amended and restated,
effective as of January 1, 2021.* **
61
10-E
a)
Colgate-Palmolive Company Executive Severance Plan, as amended and restated through September 13,
2018. (Registrant hereby incorporates by reference Exhibit 10-A to its Current Report on Form 8-K filed
on September 18, 2018, 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-F
10-G a)
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.)*
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, effective as of January 1, 2005, 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-H
Colgate-Palmolive Company Deferred Compensation Plan, amended and restated, effective as of October
28, 2021. (Registrant hereby incorporates by reference Exhibit 10-B to its Quarterly Report on Form 10-Q
for the quarter ended September 30, 2021, File No. 1-644.)*
10-I
10-J
10-K
10-L
21
23
24
31-A
31-B
32
101
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 August 20, 2021, by and among Colgate-Palmolive Company, as
Borrower, Citibank, N.A., as Administrative Agent and Arranger, and the Lenders party thereto.
(Registrant hereby incorporates by reference Exhibit 10-A to its Quarterly Report on Form 10-Q for the
quarter ended September 30, 2021, File No. 1-644.)
Colgate-Palmolive Company Supplemental Savings and Investment Plan, amended and restated, effective
as of January 1, 2021.* **
Form of Indemnification Agreement between Colgate-Palmolive Company and its directors, executive
officers and certain key employees. (Registrant hereby incorporates by reference Exhibit 10-K to its
Annual Report on Form 10-K for the year ended December 31, 2017, File No. 1-644.)
Subsidiaries of the Registrant.**
Consent of Independent Registered Public Accounting Firm.**
Powers of Attorney.**
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.**
Certificate of the Chief Financial Officer of Colgate-Palmolive Company pursuant to Rule 13a-14(a)
under the Securities Exchange Act of 1934.**
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, 2021, formatted in Inline eXtensible Business Reporting Language (Inline 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.**
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).**
62
__________
*
Indicates a management contract or compensatory plan or arrangement.
** Filed herewith.
*** Furnished herewith.
(1) 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.
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
63
ITEM 16. FORM 10-K SUMMARY
None.
64
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 17, 2022
By
/s/ Noel R. Wallace
Noel R. Wallace
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 17, 2022, by the following persons on behalf of the registrant and in the capacities indicated.
(a) Principal Executive Officer
(d) Directors:
/s/ Noel R. Wallace
Noel R. Wallace
Chairman of the Board, President and
Chief Executive Officer
/s/ Noel R. Wallace
Noel R. Wallace
(b) Principal Financial Officer
John P. Bilbrey, John T. Cahill,
Lisa M. Edwards, C. Martin Harris,
Martina Hund-Mejean, Kimberly A. Nelson,
Lorrie M. Norrington, Michael B. Polk,
Stephen I. Sadove*
/s/ Stanley J. Sutula III
Stanley J. Sutula III
Chief Financial Officer
*By: /s/ Jennifer M. Daniels
Jennifer M. Daniels
As Attorney-in-Fact
(c) Principal Accounting Officer
/s/ Philip G. Shotts
Philip G. Shotts
Vice President and Controller
65
Index to Financial Statements
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021, 2020 and
2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Financial Statement Schedule
Page
67
70
71
72
73
74
75
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2021, 2020 and 2019
122
Selected Financial Data
Market Information
123
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.
66
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Colgate-Palmolive Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the consolidated financial statements, including the related notes and financial statement
schedule, of Colgate-Palmolive Company and its subsidiaries (the “Company”) as listed in the accompanying index
(collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal
control over financial reporting as of December 31, 2021, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established
in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, 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 the Company’s consolidated financial
statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. 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.
Definition and Limitations of Internal Control over Financial Reporting
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.
67
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Goodwill and Indefinite-Lived Intangible Asset Impairment Assessments - Filorga
As described in Notes 2 and 5 to the consolidated financial statements, the Company’s consolidated balance of
goodwill and indefinite-lived intangible assets was $3.3 billion and $1.6 billion, respectively, as of December 31,
2021. Goodwill and indefinite-lived intangible assets are subject to impairment tests at least annually or when
events or changes in circumstances indicate that an asset may be impaired. Given the impact of the COVID-19
pandemic on the Filorga skin health business, during the fourth quarter of 2021, the Company concluded that the
changes in circumstances in this reporting unit triggered the need for an interim impairment review of its
indefinite-lived trademark and goodwill. Accordingly, the Company performed an interim impairment test for the
trademark as of December 31, 2021. The Company concluded that the carrying value of the trademark exceeded its
estimated fair value, and recorded an impairment charge of $204 million, reducing the carrying value to
approximately $588 million. After adjusting the carrying value of the trademark, the Company completed a
quantitative impairment test for goodwill and recorded a goodwill impairment charge of $367 million in the
Filorga reporting unit, reducing the carrying value of goodwill to approximately $577 million. The fair value of the
Filorga reporting unit and indefinite-lived trademark were determined using an income approach. This method
incorporates significant judgments and estimates by management regarding several key inputs, including future
cash flows, sales growth rates, discount rate, and the selection of royalty rates, among others.
The principal considerations for our determination that performing procedures relating to the goodwill and
indefinite-lived intangible asset impairment assessments of Filorga is a critical audit matter are (i) the significant
judgment by management when developing the fair value of the reporting unit and indefinite-lived intangible
asset; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating
management’s significant assumptions related to the sales growth rates and discount rate for the goodwill and
indefinite-lived intangible asset, and the royalty rate for the indefinite-lived intangible asset; and (iii) the audit
effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to management’s goodwill and indefinite-lived intangible asset impairment assessments,
including controls over the valuation of the Filorga reporting unit and indefinite-lived intangible asset. These
procedures also included, among others (i) testing management’s process for developing the fair value of the
reporting unit and indefinite-lived intangible asset; (ii) evaluating the appropriateness of the income approach;
(iii) testing the completeness and accuracy of underlying data used in the income approach; and (iv) evaluating
the reasonableness of significant assumptions used by management related to the sales growth rates and discount
rate for the goodwill and indefinite-lived intangible asset, and the royalty rate for the indefinite-lived intangible
asset. Evaluating management’s significant assumptions related to the sales growth rates and discount rate for the
goodwill and indefinite-lived intangible asset and the royalty rate for the indefinite-lived intangible asset involved
evaluating whether the significant assumptions used by management were reasonable considering (i) the current
and past performance of the reporting unit; (ii) the consistency with external market and industry data, and (iii)
whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with
specialized skill and knowledge were used to assist in evaluating the appropriateness of the income approach and
the reasonableness of the discount rate and royalty rate significant assumptions.
68
/s/ PricewaterhouseCoopers LLP
New York, New York
February 17, 2022
We have served as the Company’s auditor since 2002.
69
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Income
For the years ended December 31,
(Dollars in Millions Except Per Share Amounts)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Other (income) expense, net
Goodwill and indefinite-lived intangible impairment charges
Operating profit
Non-service related postretirement costs
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
2021
2020
2019
$
17,421 $
16,471 $
15,693
7,046
10,375
6,407
65
571
3,332
70
175
3,087
749
2,338
172
6,454
10,017
6,019
113
—
3,885
74
164
3,647
787
2,860
165
$
$
$
2,166 $
2,695 $
2.56 $
2.55 $
3.15 $
3.14 $
6,368
9,325
5,575
196
—
3,554
108
145
3,301
774
2,527
160
2,367
2.76
2.75
See Notes to Consolidated Financial Statements.
70
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 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
2021
2020
2019
$
2,338 $
2,860 $
2,527
(193)
134
16
(43)
2,295
172
(2)
170
(24)
(40)
(2)
(66)
2,794
165
6
171
25
(100)
(12)
(87)
2,440
160
(2)
158
$
2,125 $
2,623 $
2,282
See Notes to Consolidated Financial Statements.
71
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 $78 and $89, 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
See Notes to Consolidated Financial Statements.
72
2021
2020
$
832 $
1,297
1,692
576
4,397
3,730
3,284
2,462
193
974
888
1,264
1,673
513
4,338
3,716
3,824
2,894
291
857
$
15,040 $
15,920
$
39 $
12
1,479
436
2,085
4,051
7,194
395
2,429
14,069
—
1,466
3,269
24,350
(4,386)
(1)
258
9
1,393
403
2,341
4,404
7,334
426
2,655
14,819
—
1,466
2,969
23,699
(4,345)
(1)
(24,089)
(23,045)
609
362
971
$
15,040 $
743
358
1,101
15,920
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, 2019
$
1,466 $
2,204 $
(3) $ (21,196) $ 21,615 $
(4,188)
$
Net income
Other comprehensive income (loss), net
of tax
Dividends ($1.71)/per share*
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Noncontrolling interests assumed
through acquisition
Treasury stock acquired
Other
2,367
(1,472)
(85)
100
210
(29)
305
29
(1,202)
3
1
1
(9)
Balance, December 31, 2019
$
1,466 $
2,488 $
(2) $ (22,063) $ 22,501 $
(4,273)
$
Net income
Other comprehensive income (loss), net
of tax
Dividends ($1.75)/per share*
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Noncontrolling interests acquired
Treasury stock acquired
Other
2,695
(1,502)
(72)
107
400
(31)
462
31
(1,476)
5
1
1
5
Balance, December 31, 2020
$
1,466 $
2,969 $
(1) $ (23,045) $ 23,699 $
(4,345)
$
Net income
Other comprehensive income (loss), net
of tax
Dividends ($1.79)/per share*
Stock-based compensation expense
Shares issued for stock options
Shares issued for restricted stock awards
Treasury stock acquired
Other
2,166
(1,515)
(41)
135
188
(27)
248
27
(1,320)
4
—
1
—
Balance, December 31, 2021
$
1,466 $
3,269 $
(1) $ (24,089) $ 24,350 $
(4,386)
$
* Two dividends were declared in each of the first quarters of 2021, 2020 and 2019.
299
160
(2)
(141)
125
441
165
6
(152)
(99)
(3)
358
172
(2)
(166)
—
362
See Notes to Consolidated Financial Statements.
73
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Cash Flows
For the years ended December 31,
(Dollars in Millions)
Operating Activities
Net income including noncontrolling interests
$
2,338 $
2,860 $
2,527
2021
2020
2019
Adjustments to reconcile net income including noncontrolling interests to net cash
provided by operations:
Depreciation and amortization
Restructuring and termination benefits, net of cash
Stock-based compensation expense
Goodwill and indefinite-lived intangible impairment charges
Loss on early extinguishment of debt
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
Purchases of marketable securities and investments
Proceeds from sale of marketable securities and investments
Payment for acquisitions, net of cash acquired
Other investing activities
Net cash used in investing activities
Financing Activities
Short-term borrowing (repayment) less than 90 days, net
Principal payments on debt (1)
Proceeds from issuance of debt
Dividends paid
Purchases of treasury shares
Proceeds from exercise of stock options
Purchases of non-controlling interests in subsidiaries
Other financing activities
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
556
(21)
135
571
75
(132)
—
(84)
(72)
14
(55)
3,325
(567)
(141)
141
—
(25)
(592)
(171)
(703)
699
(1,679)
(1,320)
424
—
(24)
539
(71)
107
—
23
(120)
—
138
(251)
520
(26)
3,719
(410)
(143)
124
(353)
3
(779)
488
(1,085)
—
(1,654)
(1,476)
874
(99)
33
(2,774)
(2,919)
(15)
(56)
888
(16)
5
883
$
$
832 $
888 $
890 $
845 $
Interest paid
(1) For the years ended December 31, 2021 and 2020, Principal payments on debt includes cash charges of $75 and $20, respectively, related to the
188 $
194 $
$
extinguishment of debt prior to maturity. See Note 6, Long-Term Debt and Credit Facilities for additional information.
See Notes to Consolidated Financial Statements.
74
519
18
100
—
—
17
(113)
19
(77)
36
87
3,133
(335)
(184)
131
(1,711)
—
(2,099)
296
(1,441)
2,578
(1,614)
(1,202)
498
—
15
(870)
(7)
157
726
883
803
185
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, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and antiperspirants,
skin health products, dishwashing detergents, fabric conditioners, household cleaners and other similar items. These
products are sold primarily to a variety of traditional and eCommerce retailers, wholesalers and 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, veterinarians and eCommerce retailers.
Some of our products are also sold direct-to-consumer. Principal global and regional trademarks include Colgate,
Palmolive, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, Lady Speed Stick, PCA SKIN,
Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Murphy, Soupline and Suavitel, as well as Hill’s Science
Diet and Hill’s Prescription Diet.
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
2021
2020
2019
44 %
20 %
17 %
19 %
100 %
44 %
21 %
18 %
17 %
100 %
46 %
20 %
18 %
16 %
100 %
75
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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, 2021 and 2020, equity method
investments included in Other assets in the Consolidated Balance Sheets were $64 and $56, respectively. Unrelated third
parties hold the remaining ownership interests in these investments. Investments with less than a 20% interest are recorded
at cost and periodically adjusted based on observable price changes or quoted market prices in active markets, if applicable.
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 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 and legal and
other contingency reserves. 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
The Company’s revenue contracts represent a single performance obligation to sell its products to trade customers.
Sales are recorded at the time control of the products is transferred to trade customers, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for the products. Control is the ability of trade customers
to “direct the use of” and “obtain” the benefit from our products. In evaluating the timing of the transfer of control of
products to trade customers, the Company considers several control indicators, including significant risks and rewards of
products, the Company’s right to payment and the legal title of the products. Based on the assessment of control indicators,
sales are generally recognized when products are delivered to trade customers.
Net sales reflect the transaction prices for contracts, which include units shipped at selling list prices reduced by
variable consideration. Variable consideration includes expected sales returns and the cost of current and continuing
promotional programs. Current promotional programs primarily include product listing allowances and co-operative
advertising arrangements. Continuing promotional programs are predominantly consumer coupons and volume-based sales
incentive arrangements. The cost of promotional programs is estimated using the expected value method considering all
reasonably available information, including the Company’s historical experience and its current expectations, and is
reflected in the transaction price when sales are recorded. Adjustments to the cost of promotional programs in subsequent
periods are generally not material, as the Company’s promotional programs are typically of short duration, thereby
reducing the uncertainty inherent in such estimates.
Sales returns are generally accepted at the Company’s discretion and are not material to the Company’s Consolidated
Financial Statements. The Company’s contracts with trade customers do not have significant financing components or non-
cash consideration and the Company does not have unbilled revenue or significant amounts of prepayments from
customers. The Company records Net sales excluding taxes collected on its sales to its trade customers. Shipping and
handling activities are accounted for as contract fulfillment costs and classified as Selling, general and administrative
expenses.
76
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Shipping and Handling Costs
Shipping and handling costs are classified as Selling, general and administrative expenses and were $1,687, $1,392
and $1,275 for the years ended December 31, 2021, 2020 and 2019, 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
The cost of approximately 75% of inventories is determined using the FIFO method, which is stated at the lower of
cost or net realizable value. The cost of all other inventories, in the U.S. and Mexico, is determined using the LIFO method,
which is stated at the lower of cost or market. Inventories in excess of one year of forecasted sales are classified in the
Consolidated Balance Sheets as non-current “Other assets.”
Property, Plant and Equipment
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.
Goodwill and Other Intangibles
Goodwill and indefinite-life intangible assets, such as the Company’s global brands, are subject to impairment tests at
least annually or when events or changes in circumstances indicate that an asset may be impaired. 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.
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.
77
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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 (both performance-based and time-vested), 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 estimate the fair value of stock option awards. In addition to performance conditions, performance-
based restricted stock units also include a total shareholder return modifier. Because the total shareholder return modifier is
considered a market condition, the Company uses a Monte-Carlo simulation model to determine the fair value of
performance-based restricted stock units. The fair value of time-vested restricted stock units is determined based on the
closing market price of the Company’s stock at the date of grant. 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.
Currency Translation
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.
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.
78
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Recent Accounting Pronouncements
In November 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update
(“ASU”) No. 2021-10, “Government Assistance (Topic 832).” This ASU requires increased disclosure on an annual basis
about transactions with domestic, foreign, local, regional and national governments, including entities related to those
governments and intergovernmental organizations, that are accounted for by applying a grant or contribution accounting
model by analogy to other accounting guidance. This guidance is effective for the Company beginning on January 1, 2022
and is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract
Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities
acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance
with ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606).” This guidance is effective for the
Company beginning on January 1, 2023 and is not expected to have a material impact on the Company’s Consolidated
Financial Statements.
In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848): Scope.” This ASU
clarifies that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the
discounting transition. This guidance was effective upon issuance for the Company and is not expected to have a material
impact on the Company’s Consolidated Financial Statements.
In October 2020, the FASB issued ASU No. 2020-10, “Codification Improvements.” This ASU improves the
consistency of the codification topics by including all disclosure guidance in the appropriate disclosure section and also
clarifies the application of various provisions in the codification. This guidance was effective for the Company beginning
on January 1, 2021 and did not have a material impact on the Company’s Consolidated Financial Statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects
of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying
generally accepted accounting principles (“GAAP”) to contracts, hedging relationships and other transactions that reference
LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance was effective
upon issuance of this ASU for contract modifications and hedging relationships on a prospective basis and is not expected
to have a material impact on the Company’s Consolidated Financial Statements.
In January 2020, the FASB issued ASU No. 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity
Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between
Topic 321, Topic 323, and Topic 815.” The guidance provides clarification of the interaction of rules for equity securities,
the equity method of accounting and forward contracts and purchase options on certain types of securities. This guidance
was effective for the Company beginning on January 1, 2021 and did not have a material impact on the Company’s
Consolidated Financial Statements.
In December 2019, the FASB issued ASU No. 2019-12, “Income taxes (Topic 740): Simplifying the Accounting for
Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general
principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance
was effective for the Company beginning on January 1, 2021 and did not have a material impact on the Company’s
Consolidated Financial Statements.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
79
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
3.
Acquisitions
Hello Products LLC (“hello”)
On January 31, 2020, the Company acquired hello, an oral care business, for cash consideration of $351. The
acquisition was financed with a combination of debt and cash. This acquisition is part of the Company’s strategy to focus
on high growth segments within its Oral Care, Personal Care and Pet Nutrition businesses.
The total purchase price consideration of $351 has been allocated to the net assets acquired based on their respective
estimated fair values as follows:
Receivables
Inventories
Other assets and liabilities, net
Other intangible assets
Goodwill
Fair value of net assets acquired
$
$
11
13
(4)
160
171
351
Other intangible assets acquired include trademarks, valued at $115, which are considered to have a finite useful life of
25 years, and customer relationships valued at $45, which are considered to have a finite useful life of 17 years. Goodwill
of $171 was allocated to the North America segment and is deductible for tax purposes.
Pro forma results of operations have not been presented as the impact on the Company’s Consolidated Financial
Statements is not material.
80
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
4.
Restructuring and Related Implementation Charges
2022 Global Productivity Initiative
On January 27, 2022, the Board approved a targeted productivity program (the “2022 Global Productivity Initiative”).
The program is intended to reallocate resources towards the Company’s strategic priorities and faster growth businesses,
drive efficiencies in the Company’s operations and streamline the Company’s supply chain to reduce structural costs.
Implementation of the 2022 Global Productivity Initiative, which is expected to be substantially completed by
December 31, 2022, is projected to result in cumulative pre-tax charges, once all phases are approved and implemented,
totaling between $200 and $240, which are currently estimated to be comprised of the following: employee-related costs,
including severance, pension and other termination benefits (80%); asset-related costs, primarily accelerated depreciation
and asset write-downs (10%); and other charges (10%), which include contract termination costs, consisting primarily of
implementation-related charges resulting directly from exit activities and the implementation of new strategies. It is
estimated that approximately 90% of the charges will result in cash expenditures.
Global Growth and Efficiency Program
The Global Growth and Efficiency Program, which commenced in the fourth quarter of 2012, concluded on
December 31, 2019. Initiatives under the Global Growth and Efficiency Program 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. Substantially all initiatives under the Global Growth and Efficiency Program had been
implemented as of December 31, 2019.
In the third quarter of 2020, the Company adjusted the accrual balances related to certain projects approved prior to the
conclusion of the Global Growth and Efficiency Program to reflect its revised estimate of remaining liabilities. This
adjustment resulted in a reduction of $16 ($13 aftertax), of which a benefit of $3 was recorded in Selling, general and
administrative expenses and $13 was recorded in Other (income) expense, net.
For the year ended December 31, 2019, 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
Non-service related postretirement costs
Total Global Growth and Efficiency Program charges, pretax
Total Global Growth and Efficiency Program charges, aftertax
$
$
$
2019
8
60
57
7
132
102
Restructuring and related implementation charges in the preceding table and the adjustment recorded in the third
quarter of 2020 were recorded in the Corporate segment as these initiatives were predominantly centrally directed and
controlled and were not included in internal measures of segment operating performance.
81
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Total charges incurred for the Global Growth and Efficiency Program related to initiatives undertaken by the following
reportable operating segments:
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Hill’s Pet Nutrition
Corporate
Total
2019
Total Program
Charges
4 %
12 %
4 %
6 %
(1) %
2 %
73 %
100 %
17 %
5 %
19 %
4 %
5 %
8 %
42 %
100 %
Over the course of the Global Growth and Efficiency Program, the Company incurred total pretax charges of $1,854
($1,380 aftertax) in connection with the implementation of various projects as follows:
Employee-Related Costs
Incremental Depreciation
Asset Impairments
Other
Total
Total Program Charges
as of December 31, 2019
706
$
128
58
962
1,854
$
Over the course of the Global Growth and Efficiency Program, the majority of the costs incurred related 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 closing of the Morristown, New Jersey
personal care facility; the simplification and streamlining of the Company’s research and development capabilities and oral
care supply chain, both in Europe; redesigning the European commercial organization; restructuring how the Company will
provide future retirement benefits to substantially all of the U.S.-based employees participating in the Company’s defined
benefit retirement plan by shifting them to the Company’s defined contribution plan; and the implementation of a
Corporate efficiencies program.
Employee-Related Costs primarily included severance and other termination benefits and were calculated based on
long-standing benefit practices, local statutory requirements and, in certain cases, voluntary termination arrangements.
Employee-Related Costs also included pension and other retiree benefit enhancements.
Incremental Depreciation was 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 were recorded to
write down inventories and assets held for sale or disposal to their fair value based on amounts expected to be realized.
Charges against assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.
Other charges consisted primarily of charges resulting directly from exit activities and the implementation of new
strategies as a result of the Global Growth and Efficiency Program.
82
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
5.
Goodwill and Other Intangible Assets
The net carrying value of Goodwill as of December 31, 2021 and 2020 by segment was as follows:
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Goodwill
2021
2020
$
$
912 $
159
1,902
182
114
3,269
15
3,284 $
912
171
2,415
190
121
3,809
15
3,824
The change in the amount of Goodwill during 2021 is due to the goodwill impairment charge related to the Filorga
reporting unit as more fully described below, and foreign currency translation.
Other intangible assets as of December 31, 2021 and 2020 were comprised of the following:
2021
2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
Trademarks - finite life
Other finite life intangible assets
Indefinite life intangible assets
Total Other intangible assets
$
$
891 $
744
1,561
3,196 $
(445) $
(289)
—
446 $
455
1,561
(734) $ 2,462 $
902 $
786
1,865
3,553 $
(422) $
(237)
—
480
549
1,865
(659) $ 2,894
The change in the net carrying amounts of Other intangible assets during 2021 was primarily due to the impact of
impairment charge related to the Filorga indefinite-lived trademark as more fully described below, foreign currency
translation and amortization expense of $89. Annual estimated amortization expense for each of the next five years is
expected to be approximately $77.
The Company made revisions to the internal forecasts relating to its Filorga reporting unit during the fourth quarter of
2021 due primarily to the impact of the COVID-19 pandemic on the Filorga skin health business as a result of government
restrictions and reduced consumer mobility, which negatively impacted consumption in the duty-free, travel retail and
pharmacy channels. The Company concluded that the changes in circumstances in this reporting unit triggered the need for
an interim impairment review of its indefinite-lived trademark and goodwill and, accordingly, performed an interim
impairment test for the trademark as of December 31, 2021. The Company concluded that the carrying value of the
trademark exceeded its estimated fair value, and recorded an impairment charge of $204, reducing the carrying value to
approximately $588. After adjusting the carrying value of the trademark, the Company completed a quantitative
impairment test for goodwill and recorded a goodwill impairment charge of $367 in the Filorga reporting unit, reducing the
carrying value of goodwill to approximately $577. The goodwill and trademark impairment charges are presented as a
separate line item in the Consolidated Statements of Income.
83
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The Company used the income approach to determine the fair value of the Filorga reporting unit and indefinite-lived
trademark that required significant judgments and estimates by management regarding several key inputs, including future
cash flows consistent with management’s strategic plans, sales growth rates and the selection of royalty rate and a discount
rate, among others. Estimating sales growth rates requires significant judgment by management in areas such as future
economic conditions, category and industry growth rates, product pricing, consumer tastes and preferences and future
expansion expectations.
84
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
Finance Lease Obligations
Less: Current portion of long-term debt
Total
Weighted
Average
Interest Rate
1.9%
(0.4)%
Various
Maturities
2022 - 2078
2022
Various
2021
$ 5,958
1,204
44
7,206
(12)
$ 7,194
2020
$ 6,170
1,139
34
7,343
(9)
$ 7,334
The weighted-average interest rate on short-term borrowings included in Notes and loans payable in the Consolidated
Balance Sheets as of December 31, 2021 and 2020 was 0.7% and 4.8%, 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 finance leases outstanding as of December 31, 2021, were as follows:
Years Ended December 31,
2022
2023
2024
2025
2026
Thereafter
$
456
908
506
135
566
3,431
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.
The Company’s debt issuances and redemptions support its capital structure strategy objectives of funding its business
and growth initiatives while minimizing its risk-adjusted cost of capital. During the fourth quarter of 2021, the Company
issued €500 of eight-year notes at a fixed coupon rate of 0.300%. The debt issuance was under the Company’s shelf
registration statement. An amount equal to the net proceeds of the notes will be used to finance or refinance, in part or in
full, new and existing projects and programs with distinct environmental or social benefits.
During the fourth quarter of 2021, the Company redeemed prior to maturity all of its outstanding 0.000% notes due
2021 with a principal amount of €500, originally issued on November 12, 2019. The redemption was financed with
commercial paper borrowings. The redemption price was equal to the carrying amount of the debt extinguished.
In 1990, the Company’s Canadian subsidiary (“CP Canada”), issued C$145 of Canadian dollar-denominated
unsecured unsubordinated 12.85% guaranteed notes due October 4, 2030 (the “Canada notes”). During the third quarter of
2021, CP Canada redeemed the Canada notes and recorded a loss on the early extinguishment of debt of $75, which is
included in Interest (income) expense, net in the Consolidated Statements of Income, representing the difference between
the redemption price and the carrying amount of the debt extinguished.
85
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
During the fourth quarter of 2020, the Company redeemed prior to maturity all of its outstanding 2.450% notes due
2021 with a principal amount $300, originally issued on November 8, 2011, and all of its outstanding 2.300% notes due
2022 with a principal amount of $500, originally issued on May 3, 2012. These redemptions were financed with
commercial paper borrowings and cash. The Company recorded a loss on the early extinguishment of debt of $23, which is
included in Interest (income) expense, net in the Consolidated Statements of Income, representing the difference between
the redemption price and the carrying amount of the debt extinguished.
At December 31, 2021, the Company had access to unused domestic and foreign lines of credit of $3,457 (including
under the facility discussed below) and could also issue long-term debt pursuant to an effective shelf registration statement.
In August 2021, the Company entered into a new $3,000 five-year revolving credit facility with a syndicate of banks for a
five-year term expiring August 2026, which replaced, on substantially similar terms, the Company’s $2,650 revolving
credit facility that was scheduled to expire in November 2024. Commitment fees related to the credit facility are not
material. The Company’s $1,500 364-day credit facility with a syndicate of banks expired in August 2021 and was not
renewed.
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.
86
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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. Provided below are details of the Company’s exposures by type of risk
and derivative instruments by type of hedge designation.
Valuation Considerations
The Company’s derivative instruments include interest rate swap contracts, forward-starting interest rate swaps,
foreign currency contracts and commodity contracts. The Company utilizes interest rate swap contracts to manage its
targeted mix of fixed and floating rate debt, and these swaps are 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
Company utilizes forward-starting interest rate swaps to mitigate the risk of variability in interest rate for future debt
issuances. 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).
87
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 essential oils, resins,
tropical oils, pulp, tallow, corn, poultry 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
which are carried at fair value in the Company’s Consolidated Balance Sheets as of December 31, 2021 and December 31,
2020:
Assets
Liabilities
Account
Fair Value
Account
Fair Value
Designated derivative
instruments
Interest rate swap contracts
Other current
assets
Interest rate swap contracts Other assets
Forward-starting interest
rate swaps
Foreign currency contracts
Commodity contracts
Total designated
Other assets
Other current
assets
Other current
assets
December
31, 2021
December
31, 2020
December
31, 2021
December
31, 2020
$
5 $
— Other accruals
$
— $
—
20
22
2
14 Other liabilities
5 Other liabilities
7 Other accruals
3 Other accruals
—
21
6
—
$
49 $
29
$
27 $
—
—
—
93
—
93
Other financial
instruments
Marketable securities
Total other financial
instruments
Other current
assets
34
$
34 $
37
37
88
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The carrying amount of cash, cash equivalents, accounts receivable and short-term debt approximated fair value as of
December 31, 2021 and 2020. The estimated fair value of the Company’s long-term debt, including the current portion, as
of December 31, 2021 and 2020, was $7,651 and $8,175, respectively, and the related carrying value was $7,206 and
$7,343, respectively. The estimated fair value of long-term debt was derived principally from quoted prices on the
Company’s outstanding fixed-term notes (Level 2 valuation).
The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustment for fair
value hedges as of:
Long-term debt:
Carrying amount of hedged item
Cumulative hedging adjustment included in the carrying amount
The following tables present the notional values as of:
December 31, 2021
December 31, 2020
$
$
405 $
5 $
413
14
Fair Value Hedges
Cash Flow Hedges
Net Investment Hedges
December 31, 2021
Foreign
Currency
Contracts
Foreign
Currency
Debt
Interest
Rate
Swaps
Forward-
Starting
Interest Rate
Swaps
Commodity
Contracts
Total
$
566 $
— $
400 $
— $
— $
873
173
—
4,600
—
—
700
—
24
—
966
1,597
4,773
Foreign
Currency
Contracts
Foreign
Currency
Debt
December 31, 2020
Forward-
Starting
Interest Rate
Swaps
Interest
Rate
Swaps
Commodity
Contracts
Total
Fair Value Hedges
Cash Flow Hedges
Net Investment Hedges
$
589 $
— $
400 $
— $
— $
854
528
—
4,523
—
—
300
—
17
—
989
1,171
5,051
89
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The following table presents the location and amount of gains (losses) on hedges recognized on the Company’s
Consolidated Statements of Income:
Twelve Months Ended December 31,
2021
2020
Selling, general
and
administrative
expenses
Interest
(income)
expense,
net
Selling, general
and
administrative
expenses
Interest
(income)
expense,
net
Cost of
sales
Cost of
sales
Gain (loss) on hedges
recognized in income:
Interest rate swaps
designated as fair value
hedges:
Derivative instrument
$
Hedged items
Foreign currency
contracts designated as
fair value hedges:
Derivative instrument
Hedged items
Foreign currency
contracts designated as
cash flow hedges:
Amount reclassified from
OCI
Commodity contracts
designated as cash flow
hedges:
Amount reclassified from
OCI
Total gain (loss) on hedges
recognized in income
$
—
—
—
—
—
—
6
(6)
$
8
$
(8)
—
—
—
—
—
—
$
$
—
—
(10)
10
29
(29)
—
—
(12)
—
—
1
—
—
5
—
—
(1)
—
$
(7) $
—
$
—
$
—
$
—
$
—
—
90
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The following table presents the location and amount of unrealized gains (losses) on hedges included in OCI:
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI
Forward-starting interest rate swaps designated as cash flow
hedges:
Gain (loss) recognized in OCI
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments
Gain (loss) on hedged items
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments
Gain (loss) on hedged items
Twelve Months Ended
December 31,
2021
2020
$
16
$
(11)
(6)
3
30
(30)
370
(370)
5
3
(52)
52
(356)
356
(3)
Total unrealized gain (loss) on hedges recognized in OCI
$
13
$
91
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
8.
Capital Stock and Stock-Based Compensation Plans
Preference Stock
The Company has the authority to issue 50,262,150 shares of preference stock.
Stock Repurchases
On June 18, 2018, the Board authorized the repurchase of shares of the Company’s common stock having an aggregate
purchase price of up to $5 billion under a new share repurchase program (the “2018 Program”), which replaced a
previously authorized share repurchase program. The Company commenced repurchases of shares of the Company’s
common stock under the 2018 Program beginning June 19, 2018. 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
$1,320 during 2021 under the 2018 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.
A summary of common stock and treasury stock activity for the three years ended December 31 is as follows:
Balance, January 1, 2019
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2019
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2020
Common stock acquired
Shares issued for stock options
Shares issued for restricted stock units and other
Balance, December 31, 2021
Common
Stock
Outstanding
Treasury
Stock
862,912,792
602,793,568
(17,219,642) 17,219,642
8,145,777
(8,145,777)
862,852
(862,852)
854,701,779
611,004,581
(18,701,843) 18,701,843
13,018,354
(13,018,354)
875,311
849,893,601
(875,311)
615,812,759
(16,518,163) 16,518,163
6,357,793
(6,357,793)
747,053
(747,053)
840,480,284
625,226,076
92
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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. 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 pursuant to which it issues restricted stock units (both
performance-based and time-vested) 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. The total stock-based compensation expense charged
against pretax income for this plan was $135, $107 and $100 for the years ended December 31, 2021, 2020 and 2019,
respectively. The total income tax benefit recognized on stock-based compensation, excluding excess tax benefits, was
approximately $25, $20 and $20 for the years ended December 31, 2021, 2020 and 2019, 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.
The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards. The
weighted-average estimated fair value of stock options granted in the years ended December 31, 2021, 2020 and 2019 was
$11.11, $11.26 and $10.48, 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
2021
2020
2019
6 years
20.3 %
1.0 %
2.3 %
6 years
21.8 %
0.5 %
2.3 %
6 years
19.2 %
1.5 %
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 the 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.
93
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Performance-based Restricted Stock Units
In 2019, the Company evolved its approach to granting long-term incentive compensation from granting time-vested
restricted stock units following the conclusion of a three-year performance cycle to granting officers and other key
employees a target number of unearned performance-based restricted stock units at the beginning of each three-year
performance cycle. Awards are earned and vest following the conclusion of the performance period on the basis of
achievement of performance goals established at the commencement of each three-year performance period.
A summary of performance-based restricted stock unit activity for the year ended December 31, 2021 is presented
below:
Performance-based restricted stock units as of January 1, 2021
Activity:
Granted
Forfeited
Performance-based restricted stock units as of December 31, 2021
Shares
(in thousands)
Weighted Average
Grant Date Fair Value
Per Award
860 $
355
(189)
1,026 $
73
70
81
70
As of December 31, 2021, there was $26 of total unrecognized compensation expense related to unvested
performance-based restricted stock unit awards, which will be recognized ratably over the remaining performance period.
The Company uses a Monte-Carlo simulation model to estimate the fair value of performance-based restricted stock
units at the date of grant.
Time-Vested Restricted Stock Units
The Company also grants time-vested restricted stock unit awards. As described above, under the Company’s previous
long-term incentive program, time-vested restricted stock unit awards were granted to officers and other key employees
following a three-year performance period. Awards vest at the end of the restriction period, which is three years from the
date of grant. Awards for the 2018-2020 performance period were granted in 2021. No awards were granted in 2019 or
2020 for the 2016-2018 or 2017-2019 performance periods. As of December 31, 2021, approximately 10,990,000 shares of
common stock were available for future restricted stock unit awards.
A summary of restricted stock unit activity during 2021 is presented below:
Restricted stock units as of January 1, 2021
Activity:
Granted
Vested
Forfeited
Restricted stock units as of December 31, 2021
Shares
(in thousands)
Weighted Average
Grant Date Fair Value
Per Award
1,897 $
749
(674)
(56)
1,916 $
73
78
70
74
76
As of December 31, 2021, there was $56 of total unrecognized compensation expense related to unvested time-vested
restricted stock unit awards, which will be recognized over a weighted-average period of 2 years. The total fair value of
time-vested restricted stock units vested during the years ended December 31, 2021, 2020 and 2019 was $47, $58 and $53,
respectively.
94
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Stock Options
The Company issues non-qualified stock options to non-employee directors, officers and other employees. Beginning
in 2019, stock options have a contractual term of eight years. Prior to 2019, stock options generally had a contractual term
of six years. Stock options generally vest ratably over three years. As of December 31, 2021, approximately 26,038,000
shares of common stock were available for future stock option grants.
A summary of stock option activity during 2021 is presented below:
Options outstanding, January 1, 2021
Granted
Exercised
Forfeited
Expired
Options outstanding, December 31, 2021
Options exercisable, December 31, 2021
Shares
(in thousands)
27,530
5,120
(6,358)
(173)
(24)
26,095
16,725
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Life
(in years)
Intrinsic Value
of Unexercised
In-the-Money
Options
$
$
71
77
68
75
73
72
72
5
3
$
$
309
223
As of December 31, 2021, there was $32 of total unrecognized compensation expense related to unvested options,
which will be recognized over a weighted-average period of 1.5 years. The total intrinsic value of options exercised during
the years ended December 31, 2021, 2020 and 2019 was $83, $136 and $84, 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, 2021, 2020 and 2019 were $9, $8 and $6,
respectively, and are 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, 2021, 2020 and 2019 were $424, $874 and $498, respectively.
95
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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, 2021
and 2020, there were 10,290,667 and 11,545,950 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, 2021, the ESOP had outstanding borrowings from the Company of $1,
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, (c) used for
contributions to the Company’s defined contribution plans or (d) used to pay the Company’s defined contribution plan
expenses. 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, 2021, 9,559,255 shares of
common stock had been released and allocated to participant accounts and 731,412 shares of common stock were available
for future release and 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 in 2021, 2020 and 2019.
The Company paid dividends on the shares held by the ESOP of $20 in 2021, $23 in 2020 and $25 in 2019. The
Company did not make any contributions to the ESOP in 2021, 2020 or 2019.
96
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
10.
Retirement Plans and Other Retiree Benefits
Retirement Plans
The Company and certain of its U.S. and foreign subsidiaries maintain defined benefit retirement plans. Benefits under
these plans are based primarily on years of service and employees’ earnings.
In the U.S., effective January 1, 2014, the Company provides virtually 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 principal U.S. defined benefit retirement plan. Participants in the Company’s principal 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 or career average earnings formula continue to have their accrued
benefit adjusted for pay increases until termination of employment.
97
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
In the Company’s principal U.S. plans and certain funded foreign 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
21 %
76 %
3 %
100 %
22 %
63 %
15 %
100 %
At December 31, 2021, the allocation of the Company’s plan assets and the level of valuation input, as applicable, for
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
$
38 $
—
—
48
905
1
992
361
469
—
26
—
856
9 $
2
13
116
67
51
258
97
328
8
2
30
465
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Other assets and liabilities, net(9)
Total Investments
(14)
1,834 $
$
—
723 $
98
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
At December 31, 2020, the allocation of the Company’s plan assets and the level of valuation input, as applicable, for
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
$
50 $
—
—
65
1,117
1
1,233
456
136
—
77
34
703
12 $
1
8
117
59
55
252
183
225
6
2
30
446
—
—
—
—
2
—
2
1
—
—
—
—
1
—
3
Other assets and liabilities, net(9)
Total Investments
(15)
1,921 $
$
—
698 $
_______
(1)
Pooled funds primarily invest in U.S. and foreign equity securities, debt and money market securities.
(2)
(3)
(4)
(5)
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, 2021, approximately 40% 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, compared to
approximately 50% as of December 31, 2020.
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.
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 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.
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.
99
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 did not include any investment in the Company’s common stock at either
December 31, 2021 or December 31, 2020. In 2020, the U.S. plans sold 739,869 shares of the Company’s common stock to
the Company to take the number of shares of the Company’s stock in the U.S. plans to zero as of December 31, 2020. No
shares of the Company’s stock were purchased by the U.S. plans in 2021 or 2020. The plans received no dividends on the
Company’s common stock in either 2021 or 2020.
Other Retiree Benefits
The Company and certain of its subsidiaries provide health care and life insurance benefits for retired employees to the
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:
100
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Pension Plans
2021
2020
2020
2021
United States
International
Other Retiree
Benefit Plans
2020
2021
Change in Benefit Obligations
Benefit obligations at beginning of year
$ 2,363 $ 2,272 $ 1,013 $ 876 $ 1,112 $ 1,050
Service cost
Interest cost
Participants’ contributions
Acquisitions/plan amendments
Actuarial loss (gain)
Foreign exchange impact
Termination benefits
Curtailments and settlements
Benefit payments
Other
Benefit obligations at end of year
Change in Plan Assets
—
61
1
74
—
—
19
20
6
(2) —
—
(52) 171
—
—
(39)
(38)
17
21
26
35
5
—
30
65
46
—
(50)
(8)
—
3
—
—
—
(5)
(3)
(4)
(7) —
(158) (155)
(40)
(40)
(35)
—
—
—
—
—
20
37
—
—
61
(9)
—
—
(47)
—
$ 2,207 $ 2,363 $ 937 $ 1,013 $ 1,080 $ 1,112
Fair value of plan assets at beginning of year
$ 1,921 $ 1,806 $ 698 $ 586 $
3 $
Actual return on plan assets
Company contributions
Participants’ contributions
Foreign exchange impact
Settlements and acquisitions
Benefit payments
Other
46
28
243
30
—
—
45
33
6
—
—
(14)
(3)
(3)
(5)
59
36
—
32
5
—
26
26
—
—
(158) (155)
(40)
(40)
(35)
(47)
—
—
—
—
—
37
2
11
—
—
—
—
3
Fair value of plan assets at end of year
$ 1,834 $ 1,921 $ 723 $ 698 $ — $
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
Accumulated benefit obligation
$ 2,207 $ 2,363 $ 937 $ 1,013 $ 1,080 $ 1,112
3
1,834
$ (373) $ (442) $ (214) $ (315) $ (1,080) $ (1,109)
—
1,921
698
723
$
70 $ 20 $ 72 $ 18 $ — $ —
(27)
(30)
(13)
(14)
(47)
(45)
(416) (432) (273) (319) (1,033) (1,064)
$ (373) $ (442) $ (214) $ (315) $ (1,080) $ (1,109)
$ 866 $ 902 $ 179 $ 255 $ 356 $
429
—
1
9
7
—
—
$ 866 $ 903 $ 188 $ 262 $ 356 $
429
$ 2,171 $ 2,325 $ 872 $ 946 $ — $ —
101
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Pension Plans
2021
2021
2020
2020
International
United States
Other Retiree
Benefit Plans
2020
2021
Weighted-Average Assumptions Used to Determine
Benefit Obligations
Discount rate
2.98 % 2.65 % 2.10 % 1.61 % 3.06 % 2.88 %
Expected long-term rate of return on plan assets
5.70 % 5.70 % 2.72 % 2.93 %
N/A 5.70 %
Long-term rate of compensation increase
ESOP growth rate
Medical cost trend rate of increase
Interest Crediting Rate
3.50 % 3.50 % 2.89 % 2.62 % 3.50 % 3.50 %
— % 6.00 % 10.00 %
— % 6.00 % 6.00 %
— %
— %
— % — %
— % — %
2.85 % 2.48 % 0.84 % 0.83 %
— %
— %
The actuarial gains recorded during 2021 for both the U.S. pension and other retiree benefit plans were primarily a
result of an increase in discount rates applied against future estimated benefit payments that resulted in a decrease in the
benefit obligation for both the U.S. pension and Other retiree benefit plans. The actuarial losses incurred during 2020 were
primarily driven by a decrease in discount rates applied against future expected benefit payments that resulted in an
increase in the benefit obligation for both the U.S. pension and Other retiree benefit plans.
The overall investment objective of the plans is to balance risk and return so that obligations to employees are met.
The Company evaluates its expected long-term rate of return on plan assets on an annual basis. In determining the expected
long-term rate of return, the Company considers the nature of the plans’ investments and the historical rates of return. The
assumed expected long-term rate of return on plan assets as of December 31, 2021 for the U.S. plans was 5.70%. 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 3%,
8%, 8%, 6% and 7%, respectively. Similar assessments were performed in determining rates of return on international
pension plan assets to arrive at the Company’s 2021 weighted-average expected long-term rate of return on plan assets of
2.72%.
The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease
from 6.00% in 2022 to 4.75% by 2026, remaining at 4.75% for the years thereafter.
102
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Pension 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
2021
2020
$
805 $
82
1,092
299
771
81
882
134
Other Retiree Benefit plans with accumulated postretirement benefit obligation in excess of plan assets as of December
31 consisted of the following:
Benefit Obligation Exceeds Fair Value of Plan Assets
Accumulated postretirement benefit obligation
Fair value of plan assets
2021
2020
$
1,080 $
—
1,112
3
103
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Summarized information regarding the net periodic benefit costs for the Company’s defined benefit and other retiree
benefit plans is as follows:
Pension Plans
2021
2019
2021
2020
United States
2020
International
2019
Other Retiree Benefit Plans
2019
2020
2021
Components of Net Periodic
Benefit Cost
Service cost
Interest cost
Expected return on plan assets
Amortization of transition and
prior service costs (credits)
Amortization of actuarial loss
Net periodic benefit cost
$ —
61
$ 1
74
$ 1
90
$ 19
20
$ 17
21
$ 14
22
$ 26
35
(106)
(111)
(103)
(20)
(22)
(19)
—
—
47
$ 2
—
46
$ 10
—
51
$ 39
7
1
11
$ 31
1
$ 32
—
9
$ 25
—
$ 25
1
9
$ 27
1
$ 28
—
23
$ 84
—
$ 84
$ 20
37
(2)
—
18
$ 73
—
$ 73
$ 15
41
(3)
—
11
$ 64
—
$ 64
Other postretirement charges
(3)
4
Total pension cost
$ (1)
$ 14
$ 46
Weighted-Average Assumptions
Used to Determine Net Periodic
Benefit Cost
Discount rate
Expected long-term rate of return
on plan assets
Long-term rate of compensation
increase
2.65 % 3.40 % 4.38 % 1.61 % 2.06 % 2.80 % 2.88 % 3.56 % 4.43 %
5.70 % 6.30 % 6.60 % 2.93 % 3.38 % 4.06 % 5.70 % 6.30 % 6.60 %
3.50 % 3.50 % 3.50 % 2.62 % 2.83 % 2.86 %
— %
— %
— %
ESOP growth rate
— % — % — % — % — % — % 10.00 % 10.00 % 10.00 %
Medical cost trend rate of increase
— % — % — % — % — % — % 6.00 % 6.00 % 6.00 %
Interest Crediting Rate
2.48 % 3.21 % 4.26 % 0.83 % 0.85 % 0.85 %
— %
— %
— %
104
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
The service related component of pension and other postretirement benefit costs is included in Operating profit. The
non-service related components (interest cost, expected return on assets and amortization of actuarial gains and losses) are
included in the line item “Non-service related postretirement costs,” which is below Operating profit.
The Company made no voluntary contributions in 2021 and 2020, and made voluntary contributions of $113 in 2019,
to its U.S. retirement plans.
Expected Contributions and Benefit Payments
The Company does not expect to make any voluntary contributions to its U.S. postretirement plans for the year ending
December 31, 2022. 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.
Benefit payments expected to be paid from the Company’s assets to participants in unfunded plans are estimated to be
approximately $89 for the year ending December 31, 2022.
Total benefit payments expected to be paid to participants in both funded and unfunded plans are estimated as follows:
Pension Plans
Years Ended December 31,
2022
2023
2024
2025
2026
2027-2031
United States
$
International
Other
Retiree
Benefit Plans
Total
147 $
146
147
144
147
692
43 $
40
45
44
46
246
47 $
48
49
50
51
267
237
234
241
238
244
1,205
105
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
11.
Income Taxes
The components of Income before income taxes are as follows for the years ended December 31:
United States
International
Total Income before income taxes
2021
2020
2019
$
$
1,256 $
1,831
3,087 $
1,317 $
2,330
3,647 $
1,050
2,251
3,301
The Provision for income taxes consists of the following for the years ended December 31:
United States
International
Total Provision for income taxes
2021
2020
2019
$
$
228 $
521
749 $
259 $
528
787 $
180
594
774
Temporary differences between accounting for financial statement purposes and accounting for tax purposes result in
the current provision for taxes being higher (lower) than the total provision for income taxes as follows:
Goodwill and intangible assets
Property, plant and equipment
Pension and other retiree benefits
Stock-based compensation
Right-of-use assets/lease liabilities
Tax credits and tax loss carryforwards
Deferred withholding tax
Other, net
Total deferred tax benefit (provision)
2021
2020
2019
$
$
50 $
(19)
(4)
11
(2)
(2)
(16)
19
37 $
1 $
12
10
(7)
(1)
(1)
111
18
143 $
34
12
(13)
(1)
—
3
(21)
(33)
(19)
106
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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
Tax at United States statutory rate
State income taxes, net of federal benefit
Earnings taxed at other than United States statutory rate
Benefit for foreign tax matters(1)
Non-deductible goodwill impairment charges
Foreign-derived intangible income benefit
Other, net
Effective tax rate
2021
2020
2019
21.0 %
1.1
2.7
—
2.2
(2.2)
(0.5)
24.3 %
21.0 %
1.0
3.3
(2.0)
—
(1.6)
(0.1)
21.6 %
21.0 %
0.6
4.6
(0.9)
—
(1.3)
(0.6)
23.4 %
_________
(1)
In 2020, the provision for income taxes includes $71 of income tax benefits recorded on a discrete period basis, of which $45 relates to previously
recorded foreign withholding taxes and $26 relates to a previously recorded valuation allowance against a deferred tax asset. As part of a previously
recorded charge for the Tax Cuts and Jobs Act of 2017 (the “TCJA”), the Company has provided for foreign withholding taxes expected to be paid
on the remittance of earnings from certain overseas subsidiaries no longer deemed indefinitely reinvested. As a result of a recent reorganization of
the ownership structure of certain foreign subsidiaries, the Company determined that no withholding taxes will be due on the remittance by certain
subsidiaries of earnings previously deemed reinvested and, accordingly, reversed $45 of previously recorded foreign withholding taxes. Also as part
of the previously recorded charge for the TCJA, the Company provided a valuation allowance against a deferred tax asset related to the foreign tax
credit carryforwards that the Company did not expect to be able to use due to changes made by the TCJA. As a result of a new operating structure
being implemented within one of the Company’s divisions, the Company believes the use of these foreign tax credit carryforwards will not be
limited in the future and, accordingly, reversed the previously recorded valuation allowance of $26. In 2019, the provision for income taxes includes
a net benefit of $29 related to changes enacted by the Swiss government to its corporate tax regime, which included, among other items, the repeal
of certain preferential tax regimes and an increase to the cantonal tax rate for future periods. Additionally, the government provided transition rules
which allowed companies to record goodwill for tax purposes, partially offsetting the impact on cash taxes of the higher cantonal rate over the next
ten years.
107
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:
Deferred tax liabilities:
Goodwill and intangible assets
Property, plant and equipment
Right-of-use assets
Deferred withholding tax
Other
Total deferred tax liabilities
Deferred tax assets:
Pension and other retiree benefits
Tax credits and tax loss carryforwards
Lease liabilities
Accrued liabilities
Stock-based compensation
Other
Total deferred tax assets
Valuation Allowance
Net deferred tax assets
Net deferred income taxes
2021
2020
$
$
$
$
(523) $
(301)
(125)
(111)
(35)
(1,095)
344
152
138
234
76
69
1,013
(120) $
893 $
(202) $
(603)
(281)
(131)
(95)
(52)
(1,162)
404
127
144
250
73
125
1,123
(96)
1,027
(135)
Applicable U.S. income and foreign withholding taxes have been provided on substantially all of the Company’s
accumulated earnings of foreign subsidiaries.
Net tax expense of $(146) was recorded directly through equity in 2021, and net tax benefits of $101 and $13 were
recorded directly through equity in 2020 and 2019, respectively. The net tax expense or benefit in each year predominantly
includes current and future tax impacts related to benefit plans and the impact of currency translation adjustments.
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.
108
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Unrecognized tax benefits activity for the years ended December 31, 2021, 2020 and 2019 is summarized below:
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
2021
2020
2019
$
$
227 $
26
(20)
40
(23)
(5)
245 $
173 $
18
(5)
57
(19)
3
227 $
190
14
(21)
20
(30)
—
173
If all of the unrecognized tax benefits for 2021 above were recognized, approximately $235 would impact the effective
tax rate. Although it is possible that the amount of unrecognized benefits with respect to our uncertain tax positions will
increase or decrease in the next twelve months, the Company does not expect material changes.
The Company recognized expense of approximately $10, $9 and $0 for interest and penalties related to the above
unrecognized tax benefits within income tax expense in 2021, 2020 and 2019, respectively. The Company had accrued
interest and penalties of approximately $35, $24 and $23 as of December 31, 2021, 2020 and 2019, 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, 2013 have been audited by the IRS and
there are limited matters which the Company plans to appeal for years 2010 through 2013, the settlement of which is not
expected to have a material 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, 2016. 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.
The Company has made an accounting policy election to treat Global Intangible Low-Taxed Income taxes as a current
period expense rather than including these amounts in the measurement of deferred taxes.
109
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
12.
Earnings Per Share
For the years ended December 31, 2021, 2020 and 2019, earnings per share were as follows:
2021
2020
2019
Net income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
Net income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
Net income
attributable
to Colgate-
Palmolive
Company
Shares
(millions)
Per
Share
$
2,166
845.0 $ 2.56 $
2,695
856.8 $ 3.15 $
2,367
859.1 $ 2.76
3.3
2.5
2.0
Basic EPS
Stock options and
restricted stock
units
Diluted EPS
$
2,166
848.3 $ 2.55 $
2,695
859.3 $ 3.14 $
2,367
861.1 $ 2.75
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.
As of December 31, 2021, 2020 and 2019, the average number of stock options that were anti-dilutive and not
included in diluted earnings per share calculations were 2,495,393, 3,257,310 and 19,901,202, respectively. As of
December 31, 2021, 2020 and 2019, the average number of restricted stock units that were anti-dilutive and not included in
diluted earnings per share calculations were 126,378, 25,381 and 4,516, respectively.
110
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
13.
Commitments and Contingencies
As of December 31, 2021, the Company has various contractual commitments for future multi-year purchases of
raw, packaging and other materials totaling approximately $724.
As a global company serving consumers in more than 200 countries and territories, the Company is routinely
subject to a wide variety of legal proceedings. These include disputes relating to intellectual property, contracts,
product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, as well as labor and
employment, pension, data privacy and security, environmental and tax matters and consumer class actions.
Management proactively reviews and monitors the Company’s exposure to, and the impact of, environmental matters.
The Company is party to various environmental matters and, as such, may be responsible for all or a portion of the
cleanup, restoration and post-closure monitoring of several sites.
The Company establishes accruals for loss contingencies when it has determined that a loss is probable and that
the amount of loss, or range of loss, can be reasonably estimated. Any such accruals are adjusted thereafter as
appropriate to reflect changes in circumstances.
The Company also determines estimates of reasonably possible losses or ranges of reasonably possible losses in
excess of related accrued liabilities, if any, when it has determined that a loss is reasonably possible and it is able to
determine such estimates. For those matters disclosed below for which the amount of any potential losses can be
reasonably estimated, the Company currently estimates that the aggregate range of reasonably possible losses in excess
of any accrued liabilities is $0 to approximately $425 (based on current exchange rates). The estimates included in this
amount are based on the Company’s analysis of currently available information and, as new information is obtained,
these estimates may change. Due to the inherent subjectivity of the assessments and the unpredictability of outcomes
of legal proceedings, any amounts accrued or included in this aggregate range may not represent the ultimate loss to
the Company. Thus, the Company’s exposure and ultimate losses may be higher or lower, and possibly significantly
so, than the amounts accrued or the range disclosed above.
Based on current knowledge, management does not believe that the ultimate resolution of loss contingencies
arising from the matters discussed herein will have a material effect on the Company’s consolidated financial position
or its ongoing results of operations or cash flows. However, in light of the inherent uncertainties noted above, an
adverse outcome in one or more matters could be material to the Company’s results of operations or cash flows for any
particular quarter or year.
Brazilian Matters
There are certain tax and civil proceedings outstanding, as described below, related to the Company’s 1995
acquisition of the Kolynos oral care business from Wyeth (the “Seller”).
The Brazilian internal revenue authority has disallowed interest deductions and foreign exchange losses taken by
the Company’s Brazilian subsidiary for certain years in connection with the financing of the Kolynos acquisition. The
tax assessments with interest, penalties and any court-mandated fees, at the current exchange rate, are approximately
$106. This amount includes additional assessments received from the Brazilian internal revenue authority in April
2016 relating to net operating loss carryforwards used by the Company’s Brazilian subsidiary to offset taxable income
that had also been deducted from the authority’s original assessments. The Company has been disputing the
disallowances by appealing the assessments since October 2001.
In each of September 2015, February 2017, June 2018, April 2019 and September 2020, the Company lost an
administrative appeal and subsequently filed an appeal in Brazilian federal court. Currently, there are five appeals
pending in the Brazilian federal court. Although there can be no assurances, management believes, based on the
opinion of its Brazilian legal counsel, that the disallowances are without merit and that the Company should ultimately
prevail. The Company is challenging these disallowances vigorously.
111
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
In July 2002, the Brazilian Federal Public Attorney filed a civil action against the federal government of Brazil,
Laboratorios Wyeth-Whitehall Ltda. (the Brazilian subsidiary of the Seller) and the Company, as represented by its
Brazilian subsidiary, in the 6th. Lower Federal Court in the City of São Paulo, seeking to annul an April 2000 decision
by the Brazilian Board of Tax Appeals that found in favor of the Seller’s Brazilian subsidiary on the issue of whether it
had incurred taxable capital gains as a result of the divestiture of Kolynos. The action seeks to make the Company’s
Brazilian subsidiary jointly and severally liable for any tax due from the Seller’s Brazilian subsidiary. The case has
been pending since 2002, and the Lower Federal Court has not issued a decision. Although there can be no assurances,
management believes, based on the opinion of its Brazilian legal counsel, that the Company should ultimately prevail
in this action. The Company is challenging this action vigorously.
In December 2005, the Brazilian internal revenue authority issued to the Company’s Brazilian subsidiary a tax
assessment with interest, penalties and any court-mandated fees of approximately $47, at the current exchange rate,
based on a claim that certain purchases of U.S. Treasury bills by the subsidiary and their subsequent disposition during
the period 2000 to 2001 were subject to a tax on foreign exchange transactions. The Company had been disputing the
assessment within the internal revenue authority’s administrative appeals process. However, in November 2015, the
Superior Chamber of Administrative Tax Appeals denied the Company’s final administrative appeal, and the Company
has filed a lawsuit in the Brazilian federal court. In the event the Company is unsuccessful in this lawsuit, further
appeals are available within the Brazilian federal courts. Although there can be no assurances, management believes,
based on the opinion of its Brazilian legal counsel, that the tax assessment is without merit and that the Company
should ultimately prevail. The Company is challenging this assessment vigorously.
Competition Matter
Certain of the Company’s subsidiaries were historically subject to actions and, in some cases, fines, by
governmental authorities in a number of countries related to alleged competition law violations. Substantially all of
these matters also involved other consumer goods companies and/or retail customers. The Company’s policy is to
comply with antitrust and competition laws and, if a violation of any such laws is found, to take appropriate remedial
action and to cooperate fully with any related governmental inquiry. The status as of December 31, 2021 of such
competition law matters pending against the Company during the year ended December 31, 2021 is set forth below.
▪
In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction
of parallel imports into Greece. The Company responded to this statement of objections. In July 2017, the
Company received the decision from the Greek competition law authority in which the Company was
fined $11. The Company appealed the decision to the Greek courts. In April 2019, the Greek courts
affirmed the judgment against the Company’s Greek subsidiary, but reduced the fine to $10.5 and
dismissed the case against Colgate-Palmolive Company. The Company’s Greek subsidiary and the Greek
competition authority have appealed the decision to the Greek Supreme Court.
112
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Talcum Powder Matters
The Company has been named as a defendant in civil actions alleging that certain talcum powder products that
were sold prior to 1996 were contaminated with asbestos and/or caused mesothelioma and other cancers. Many of
these actions involve a number of co-defendants from a variety of different industries, including suppliers of asbestos
and manufacturers of products that, unlike the Company’s products, were designed to contain asbestos. As of
December 31, 2021, there were 171 individual cases pending against the Company in state and federal courts
throughout the United States, as compared to 136 cases as of December 31, 2020. During the year ended December 31,
2021, 74 new cases were filed and 39 cases were resolved by voluntary dismissal, settlement or dismissal by the court.
The value of the settlements in the years presented was not material, either individually or in the aggregate, to each
such period’s results of operations.
A significant portion of the Company’s costs incurred in defending and resolving these claims has been, and the
Company believes that a portion of the costs will continue to be, covered by insurance policies issued by several
primary, excess and umbrella insurance carriers, subject to deductibles, exclusions, retentions, policy limits and
insurance carrier insolvencies.
While the Company and its legal counsel believe that these cases are without merit and intend to challenge them
vigorously, there can be no assurances regarding the ultimate resolution of these matters.
ERISA Matter
In June 2016, a putative class action claiming that residual annuity payments made to certain participants in the
Colgate-Palmolive Company Employees’ Retirement Income Plan (the “Plan”) did not comply with the Employee
Retirement Income Security Act was filed against the Plan, the Company and certain individuals (the “Company
Defendants”) in the United States District Court for the Southern District of New York (the “Court”). The relief sought
includes recalculation of benefits, pre- and post-judgment interest and attorneys’ fees. This action was certified as a
class action in July 2017. In July 2020, the Court granted in part and denied in part the Company Defendants’ motion
for summary judgment and dismissed certain claims on consent of the parties. In August 2020, the Court granted the
plaintiffs’ motion for summary judgment on the remaining claims. The Company and the Plan are contesting this
action vigorously and, in September 2020, appealed to the United States Court of Appeals for the Second Circuit. The
appeal is currently pending.
113
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
14.
Segment Information
The Company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition.
The operations of the Oral, Personal and Home Care product segment are managed geographically in five reportable
operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia.
The Company evaluates segment performance based on several factors, including Operating profit. The Company uses
Operating profit as a measure of operating segment performance because it excludes the impact of Corporate-driven
decisions related to interest expense and income taxes.
The accounting policies of the operating segments are generally the same as those described in Note 2, Summary of
Significant Accounting Policies. Intercompany sales have been eliminated. Corporate operations include costs related to
stock options and restricted stock units, research and development costs, Corporate overhead costs, restructuring and
related implementation charges and gains and losses on sales of non-core product lines and assets. The Company reports
these items within Corporate operations as they relate to Corporate-based responsibilities and decisions and are not
included in the internal measures of segment operating performance used by the Company to measure the underlying
performance of the operating segments.
Approximately 70% of the Company’s Net sales are generated from markets outside the U.S., with approximately 45%
of the Company’s Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan),
Africa/Eurasia and Central Europe). Oral, Personal and Home Care sales to Walmart, Inc. and its affiliates represent
approximately 12%, 12% and 11% of the Company’s Net sales in 2021, 2020 and 2019, respectively. No other customer
represented more than 10% of Net sales in any period presented.
In 2021, Corporate Operating profit included goodwill and indefinite-lived intangible impairment charges of $571, and
a benefit of $26 related to a value-added tax matter in Brazil. In 2020, Corporate Operating profit included benefits of $16
resulting from the Global Growth and Efficiency Program and a charge of $6 for acquisition-related costs. In 2019,
Corporate Operating profit included charges of $125 resulting from the Global Growth and Efficiency Program, a charge of
$24 for acquisition-related costs and a benefit of $30 from a value-added tax matter in Brazil.
2021
2020
2019
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
$
3,694 $
3,741 $
3,663
2,841
2,867
1,045
14,110
3,311
3,418
2,747
2,701
981
13,588
2,883
$
17,421 $
16,471 $
3,424
3,606
2,450
2,707
981
13,168
2,525
15,693
_________
(1)
Net sales in the U.S. for Oral, Personal and Home Care were $3,391, $3,447 and $3,166 in 2021, 2020 and 2019, respectively.
(2)
Net sales in the U.S. for Pet Nutrition were $2,018, $1,712 and $1,441 in 2021, 2020 and 2019, respectively.
114
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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
2021
2020
2019
$
754 $
988 $
1,012
682
844
203
3,495
901
975
652
773
206
3,594
793
(1,064)
(502)
982
963
624
749
187
3,505
703
(654)
$
3,332 $
3,885 $
3,554
2021
2020
2019
$
87 $
65 $
118
44
50
33
332
147
88
104
41
51
13
274
56
79
$
567 $
409 $
2021
2020
2019
$
104 $
101 $
88
98
96
9
395
62
99
81
94
95
9
380
58
101
43
90
42
40
8
223
41
71
335
94
84
72
100
8
358
55
106
519
Total Depreciation and amortization
$
556 $
539 $
115
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Identifiable assets
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Corporate(1)
Total Identifiable assets
2021
2020
2019
$
$
4,058 $
2,369
4,432
2,161
599
13,619
1,342
79
15,040 $
4,132 $
2,251
5,386
2,272
605
14,646
1,210
64
15,920 $
3,576
2,384
5,104
2,155
590
13,809
1,175
50
15,034
____________
(1)
In 2021, Corporate identifiable assets primarily consisted of investments in equity securities (87%) and derivative instruments
(10%). In 2020, Corporate identifiable assets primarily consisted of investments in equity securities (95%). In 2019, Corporate
identifiable assets primarily consisted of investments in equity securities (92%) and derivative instruments (2%).
Long-lived assets(1)
United States
International
Total Long-lived assets
2021
2020
2019
$
$
1,981 $
2,275
4,256 $
1,889 $
2,348
4,237 $
1,895
2,359
4,254
____________
(1)
Long-lived assets include Property, plant and equipment, net and lease right-of-use assets.
116
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
15. Leases
The Company enters into leases for land, office space, warehouses and equipment. A number of the leases include
one or more options to renew the lease terms, purchase the leased property or terminate the lease. The exercise of these
options is at the Company’s discretion and is therefore recognized on the balance sheet when it is reasonably certain the
Company will exercise such options. As the Company’s leases typically do not contain a readily determinable implicit
rate, the Company determines the present value of the lease liability using its incremental borrowing rate at the lease
commencement date.
Substantially all of the Company’s leases are considered operating leases. Finance leases were not material as of
December 31, 2021 and 2020.
As of December 31, 2021 and 2020, the Company’s right-of use assets and liabilities for operating leases were as
follows:
Other assets
Other accruals
Other liabilities
Total operating lease liabilities
Lease liabilities for operating leases as of December 31, 2021 were as follows:
2022
2023
2024
2025
2026
Thereafter
Total lease commitments
Less: Interest
Present value of lease liabilities
2021
2020
$
527 $
521
137
451
$
588 $
$
$
$
137
476
613
156
109
76
61
48
235
685
(97)
588
The components of the Company’s operating lease cost for the twelve months ended December 31, 2021 and 2020
were as follows:
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease Income
Total lease cost
2021
2020
$
142 $
155
7
20
(1)
3
20
—
$
168 $
178
Short-term lease cost represents the Company’s cost with respect to leases with a duration of 12 months or less and
is not reflected on the Company’s Consolidated Balance Sheets. Variable lease costs are comprised of costs, such as the
Company’s proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance, that
are not included in the lease liability and are recognized in the period in which they are incurred.
117
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
Supplemental cash flow information related to operating leases for the twelve months ended December 31, 2021 and
2020 was as follows:
▪
▪
Payments against amounts included in the measurement of lease liabilities: $173 and $193, respectively
Lease assets obtained in exchange for lease liabilities: $197 and $163, respectively.
As of December 31, 2021 and 2020, the weighted-average remaining lease term for operating leases was 8 and 8
years, respectively, and the weighted-average discount rate for operating leases was 4.0% and 4.2%, respectively.
There were no material operating leases that the Company had entered into and that were yet to commence as of
December 31, 2021.
118
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
16.
Supplemental Income Statement Information
Other (income) expense, net
Global Growth and Efficiency Program
Amortization of intangible assets
Equity income
Value-added tax matter in Brazil
Write-off of certain investments and fixed assets
Acquisition-related costs
Charges for a change in go-to-market strategy in certain countries
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
2021
2020
2019
— $
89
(12)
(26)
10
—
—
4
65 $
(13) $
88
(12)
—
—
2
—
48
113 $
57
62
(9)
(30)
51
21
15
29
196
$
$
2021
2020
2019
$
195 $
184 $
(3)
(17)
(1)
(19)
$
175 $
164 $
193
(1)
(47)
145
2021
2020
2019
$
$
307 $
2,021 $
290 $
1,948 $
281
1,694
119
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
17.
Supplemental Balance Sheet Information
Inventories by major class are as follows at December 31:
Inventories
Raw materials and supplies
Work-in-process
Finished goods
Total Inventories, net
Non-current inventory, net
Current Inventories, net
2021
2020
$
505 $
39
1,248
1,792 $
(100)
454
45
1,256
1,755
(82)
1,692 $
1,673
$
$
Inventories valued under LIFO amounted to $410 and $439 at December 31, 2021 and 2020, respectively. The excess
of current cost over LIFO cost at the end of each year was $60 and $65, respectively. The liquidations of LIFO inventory
quantities had no material effect on income in 2021, 2020 and 2019. Inventory classified as non-current at December 31,
2021 was recorded on the Consolidated Balance Sheets as “Other assets.”
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
Lease liabilities due in one year
Accrued interest
Derivatives
Other
Total Other accruals
Other liabilities
Pension and other retiree benefits
Restructuring accrual
Long-term lease liabilities
Other
Total Other liabilities
120
2021
2020
$
163 $
1,603
5,527
1,606
8,899
(5,169)
3,730 $
166
1,623
5,409
1,553
8,751
(5,035)
3,716
$
$
$
$
$
2021
2020
709 $
353
118
7
87
137
38
6
630
2,085 $
728
401
116
21
89
137
39
93
717
2,341
2021
2020
1,722 $
2
451
254
2,429 $
1,815
10
476
354
2,655
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
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:
2021
2020
2019
Pretax
Net of Tax
Pretax
Net of Tax
Pretax
Net of Tax
Cumulative translation adjustments
$
(99) $
(191) $
(119) $
(30) $
49 $
27
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(1)
Retirement Plan and other retiree benefit
adjustments
Cash flow hedges:
Unrealized gains (losses) on cash flow
hedges
Reclassification of (gains) losses
into net earnings on cash flow
hedges(2)
Gains (losses) on cash flow hedges
Total Other comprehensive income
(loss)
102
82
71
63
(125)
(97)
(204)
(154)
74
57
72
54
184
134
(51)
(40)
(132)
(100)
13
10
(3)
(2)
(9)
(7)
7
20
6
16
—
(3)
—
(2)
(6)
(15)
$
105 $
(41) $
(173) $
(72) $
(98) $
(5)
(12)
(85)
_________
(1)
These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 10,
Retirement Plans and Other Retiree Benefits for additional details.
(2)
These (gains) losses are reclassified into Cost of sales. See Note 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 and unrealized gains and losses from derivative instruments
designated as cash flow hedges. At December 31, 2021 and 2020, Accumulated other comprehensive income (loss)
consisted primarily of aftertax unrecognized pension and other retiree benefit costs of $1,044 and $1,178, respectively, and
cumulative foreign currency translation adjustments of $3,349 and $3,158, respectively. Foreign currency translation
adjustments in 2021 primarily reflect losses from the euro, Brazilian real, Thailand bhat and Turkish lira. Foreign currency
translation adjustments in 2020 primarily reflect loss from the Brazilian real and the Mexican peso.
121
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, 2021
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
Year Ended December 31, 2020
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
Year Ended December 31, 2019
Allowance for doubtful accounts and estimated
returns
Valuation allowance for deferred tax assets
$
$
$
$
$
$
89 $
96 $
35 $ — $
27 $ — $
46 $
3 $
76 $
115 $
16 $ — $
31 $ — $
3 $
50 $
82 $
54 $
6 $ — $
68 $ — $
12 $
7 $
78
120
89
96
76
115
122
COLGATE-PALMOLIVE COMPANY
Market Information
The Company’s common stock is listed on the New York Stock Exchange, and its trading symbol is CL.
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 a peer company index for the twenty-year, ten-year and five-year periods
each ended December 31, 2021. The peer company index is comprised of consumer products companies that have both
domestic and international businesses. For 2021, the peer company index consisted of Campbell Soup Company, The
Clorox Company, The Coca-Cola Company, ConAgra Brands, 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 PLC.
These performance graphs do not constitute soliciting material, are not deemed filed with the SEC and are not
incorporated by reference in any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934, as amended, 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.
123
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Shareholder Information
Corporate Office
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,
stock transfers, questions about dividend
checks, direct deposit of dividends and
Colgate’s Direct Stock Purchase Plan.
Direct Stock Purchase Plan
A Direct Stock Purchase Plan is available
through Computershare. The Plan includes
dividend reinvestment options, offers
optional cash investments by check or
automatic monthly payments, as well as
many other features. If you would like to
learn more about the Plan or to enroll,
please contact Computershare:
Computershare
PO Box 505000
Louisville, KY 40233-5000
1-800-756-8700 or (781) 575-3301
Email: web.queries@computershare.com
Website: www.computershare.com
Hearing impaired:
TDD 1-800-231-5469
Annual Meeting
Colgate’s shareholders are invited to
attend our annual meeting, which will be
held exclusively online via live webcast.
It will be held at 10:00 a.m. ET on Friday,
May 6, 2022 and can be accessed at www.
virtualshareholdermeeting.com/CL2022.
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 as a group, individual
independent directors and committee
chairs by sending an email 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.
Such communications are handled in
accordance with the procedures described
in the Governance section of our 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, 2021. In addition, in
2021, 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 2021 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,
2021) for information about certain factors
that could cause such differences.
Reports and Polices
Annual reports, press releases, SEC filings
and other publications are available on our
website at www.colgatepalmolive.com.
Also available on our website is additional
information on our Sustainability & Social
Impact and Diversity, Equity & Inclusion
strategies and recent achievements,
our Code of Conduct, and Colgate’s
sustainability policies on, among other
things, Ingredient Safety, No Deforestation,
Palm Oil, Responsible Soy, Environment,
Health & Safety and Product Research and
Animal Welfare.
Investor Relations
1-855-322-3551 or (212) 310-2575
Email: investor_relations@colpal.com
Institutional Investors:
Call John Faucher at (212) 310-3653
Consumer Affairs
For Oral, Personal and Home Care
1-800-468-6502
For Hill’s Pet Nutrition
1-800-445-5777
Corporate Communications
(212) 310-2551
Media Inquiries
(212) 310-2670
Email: colgate_palmolive_media_
inquiries@colpal.com
More information about Colgate
and our products is available on our
website at www.colgatepalmolive.com
© 2022 Colgate-Palmolive Company
Design by Robert Webster Inc. (RWI),
www.rwidesign.com
Printing by DSG | UW
The Company has complied with applicable public health and regulatory guidance, including social
distancing and the use of face coverings, in the preparation of this Annual Report.
Sustainability In Action:
Leading With Zero Waste Facilities
As of December 31, 2021, Colgate has 26 TRUE Zero Waste certifications
in 16 countries on five continents, more than any other company.
C
o
l
g
a
t
e
-
P
a
l
m
o
l
i
v
e
C
o
m
p
a
n
y
2
0
2
1
A
n
n
u
a
l
R
e
p
o
r
t
TRUE and the related logo is a trademark owned by Green Business Certification Inc.™ and is used with permission.
Colgate-Palmolive Company is a caring, innovative growth company reimagining a healthier
future for all people, their pets and our planet. Focused on Oral Care, Personal Care, Home
Care and Pet Nutrition, we sell our products in more than 200 countries and territories
under brands such as Colgate, Palmolive, elmex, hello, meridol, Sorriso, Tom’s of Maine,
EltaMD, Filorga, Irish Spring, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion,
Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet.
We are recognized for our leadership and innovation in promoting sustainability and
community wellbeing, including our achievements in decreasing plastic waste and promoting
recyclability, saving water, conserving natural resources and improving children’s oral health
through the Colgate Bright Smiles, Bright Futures program, which has reached more than
1.4 billion children since 1991. For more information about Colgate’s global business and how
we are building a future to smile about, visit www.colgatepalmolive.com.
www.instagram.com/colgatepalmoliveco
www.linkedin.com/company/colgate-palmolive
www.youtube.com/user/colgatepalmolive
twitter.com/CP_News