Item 16. FORM 10-K SUMMARY

None.

COLGATE-PALMOLIVE COMPANY

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			Colgate-Palmolive Company (Registrant)
Date: February 18, 2021			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 18, 2021, by the following persons on behalf of the registrant and in the capacities indicated.

(a) Principal Executive Officer						(d) Directors:
/s/ Noel R. Wallace						/s/ Noel R. Wallace
Noel R. Wallace Chairman of the Board, President and Chief Executive Officer						Noel R. Wallace
(b) Principal Financial Officer						John P. Bilbrey, John T. Cahill, Lisa M. Edwards, Helene D. Gayle, C. Martin Harris, Martina Hund-Mejean, Lorrie M. Norrington, Michael B. Polk, Stephen I. Sadove*
/s/ Stanley J. Sutula III						*By: /s/ Jennifer M. Daniels
Stanley J. Sutula III Chief Financial Officer						Jennifer M. Daniels As Attorney-in-Fact
(c) Principal Accounting Officer
/s/ Philip G. Shotts
Philip G. Shotts Vice President and Controller

Index to Financial Statements

			Page
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			69
Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018			72
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018			73
Consolidated Balance Sheets as of December 31, 2020 and 2019			74
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2020, 2019 and 2018			75
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018			76
Notes to Consolidated Financial Statements			77
Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2020, 2019 and 2018			129
Selected Financial Data
Market Information			130
Historical Financial Summary			131

All other financial statements and schedules not listed have been omitted since the required information is included in the financial statements or the notes thereto or is not applicable or required.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Colgate-Palmolive Company:

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, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 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, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 15 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

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.

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 Assets Interim 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 $3.8 billion and $1.9 billion respectively as of December 31, 2020. 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. As a result of the COVID-19 Pandemic, in the first quarter of 2020, management determined that a “triggering event” had occurred relative to its recently acquired Filorga skin health business and, as required, performed a quantitative analysis. The results of the analysis indicated the estimated fair value of the reporting unit and indefinite-life intangible assets continue to exceed their carrying values and were not impaired. As disclosed by management, the fair value of the reporting units for goodwill and the fair value of its indefinite-lived intangible assets were determined using an income approach. These methods incorporate several estimates and assumptions, the most significant being future cash flows, sales growth rates, discount rate for the goodwill and indefinite-lived intangible assets, and the selection of royalty rates for the indefinite-lived intangible assets.

The principal considerations for our determination that performing procedures relating to the goodwill and indefinite-lived intangible assets interim impairment assessments of Filorga is a critical audit matter are (i) the significant judgment by management when determining the fair value measurements of the reporting unit and indefinite-lived intangible assets ; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to sales growth rates, discount rate for the goodwill and indefinite-lived intangible assets, and the royalty rate for the indefinite-lived intangible assets; 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 assets impairment assessment, including controls over the valuation of the Filorga reporting unit and indefinite-lived intangible assets.

These procedures also included, among others (i) testing management’s process for determining the fair value measurements of the reporting unit and indefinite-lived intangible assets; (ii) evaluating the appropriateness of the income approach based on a discounted cash flow and relief from royalty models; (iii) testing the completeness and accuracy of underlying data used in the models; and (iv) evaluating the reasonableness of significant assumptions used by management related to the sales growth rates, discount rate for the goodwill and indefinite-lived intangible assets, and the royalty rate for the indefinite-lived intangible assets. Evaluating management’s assumptions related to sales growth rates, discount rate for the goodwill and indefinite-lived intangible assets and royalty rate for the indefinite-lived intangible assets involved evaluating whether the assumptions used by management were reasonable considering (i) the consistency with external market and industry data, and (ii) 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 based on a discounted cash flow and relief from royalty models, and the discount rate and royalty rate assumptions.

/s/ PricewaterhouseCoopers LLP
New York, New York February 18, 2021
We have served as the Company’s auditor since 2002.

COLGATE-PALMOLIVE COMPANY

Consolidated Statements of Income

For the years ended December 31,

(Dollars in Millions Except Per Share Amounts)

			2020						2019						2018
Net sales			$	16,471					$	15,693					$	15,544
Cost of sales			6,454						6,368						6,313
Gross profit			10,017						9,325						9,231
Selling, general and administrative expenses			6,019						5,575						5,389
Other (income) expense, net			113						196						148
Operating profit			3,885						3,554						3,694
Non-service related postretirement costs			74						108						87
Interest (income) expense, net			164						145						143
Income before income taxes			3,647						3,301						3,464
Provision for income taxes			787						774						906
Net income including noncontrolling interests			2,860						2,527						2,558
Less: Net income attributable to noncontrolling interests			165						160						158
Net income attributable to Colgate-Palmolive Company			$	2,695					$	2,367					$	2,400
Earnings per common share, basic			$	3.15					$	2.76					$	2.76
Earnings per common share, diluted			$	3.14					$	2.75					$	2.75

See Notes to Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Consolidated Statements of Comprehensive Income

For the years ended December 31,

(Dollars in Millions)

			2020						2019						2018
Net income including noncontrolling interests			$	2,860					$	2,527					$	2,558
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments			(24)						25						(237)
Retirement plan and other retiree benefit adjustments			(40)						(100)						38
Gains (losses) on cash flow hedges			(2)						(12)						10
Total Other comprehensive income (loss), net of tax			(66)						(87)						(189)
Total Comprehensive income including noncontrolling interests			2,794						2,440						2,369
Less: Net income attributable to noncontrolling interests			165						160						158
Less: Cumulative translation adjustments attributable to noncontrolling interests			6						(2)						(19)
Total Comprehensive income attributable to noncontrolling interests			171						158						139
Total Comprehensive income attributable to Colgate-Palmolive Company			$	2,623					$	2,282					$	2,230

See Notes to Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Consolidated Balance Sheets

As of December 31,

(Dollars in Millions Except Share and Per Share Amounts)

			2020						2019
Assets
Current Assets
Cash and cash equivalents			$	888					$	883
Receivables (net of allowances of $89 and $76, respectively)			1,264						1,440
Inventories			1,673						1,400
Other current assets			513						456
Total current assets			4,338						4,179
Property, plant and equipment, net			3,716						3,750
Goodwill			3,824						3,508
Other intangible assets, net			2,894						2,667
Deferred income taxes			291						177
Other assets			857						753
Total assets			$	15,920					$	15,034
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and loans payable			$	258					$	260
Current portion of long-term debt			9						254
Accounts payable			1,393						1,237
Accrued income taxes			403						370
Other accruals			2,341						1,917
Total current liabilities			4,404						4,038
Long-term debt			7,334						7,333
Deferred income taxes			426						507
Other liabilities			2,655						2,598
Total liabilities			14,819						14,476
Commitments and contingent liabilities			—						—
Shareholders’ Equity
Common stock, $1 par value (2,000,000,000 shares authorized, 1,465,706,360 shares issued)			1,466						1,466
Additional paid-in capital			2,969						2,488
Retained earnings			23,699						22,501
Accumulated other comprehensive income (loss)			(4,345)						(4,273)
Unearned compensation			(1)						(2)
Treasury stock, at cost			(23,045)						(22,063)
Total Colgate-Palmolive Company shareholders’ equity			743						117
Noncontrolling interests			358						441
Total equity			1,101						558
Total liabilities and equity			$	15,920					$	15,034

See Notes to Consolidated Financial Statements.

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, 2018			$	1,466					$	1,984					$	(5)					$	(20,181)					$	20,531					$	(3,855)					$	303
Net income																											2,400												158
Other comprehensive income (loss), net of tax																																	(170)						(19)
Dividends ($1.66)/per share*																											(1,448)												(143)
Stock-based compensation expense									109
Shares issued for stock options									137												190
Shares issued for restricted stock awards									(31)												31
Treasury stock acquired																					(1,238)
Other									5						2						2						132						(163)			(1)
Balance, December 31, 2018			$	1,466					$	2,204					$	(3)					$	(21,196)					$	21,615					$	(4,188)					$	299
Net income																											2,367												160
Other comprehensive income (loss), net of tax																																	(85)						(2)
Dividends ($1.71)/per share*																											(1,472)												(141)
Stock-based compensation expense									100
Shares issued for stock options									210												305
Shares issued for restricted stock awards									(29)												29
Noncontrolling interests assumed through acquisition																																							125
Treasury stock acquired																					(1,202)
Other									3						1						1						(9)
Balance, December 31, 2019			$	1,466					$	2,488					$	(2)					$	(22,063)					$	22,501					$	(4,273)					$	441
Net income																											2,695												165
Other comprehensive income (loss), net of tax																																	(72)						6
Dividends ($1.75)/per share*																											(1,502)												(152)
Stock-based compensation expense									107
Shares issued for stock options									400												462
Shares issued for restricted stock awards									(31)												31
Noncontrolling interests acquired																																							(99)
Treasury stock acquired																					(1,476)
Other									5						1						1						5												(3)
Balance, December 31, 2020			$	1,466					$	2,969					$	(1)					$	(23,045)					$	23,699					$	(4,345)					$	358

(1) As a result of the early adoption of ASU 2018-02, the Company reclassified the stranded tax effects in Accumulated other comprehensive income (loss) resulting from the Tax Cuts and Jobs Act to Retained earnings.

• Two dividends were declared in each of the first quarters of 2020, 2019 and 2018.

See Notes to Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Consolidated Statements of Cash Flows

For the years ended December 31,

(Dollars in Millions)

			2020						2019						2018
Operating Activities
Net income including noncontrolling interests			$	2,860					$	2,527					$	2,558
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:
Depreciation and amortization			539						519						511
Restructuring and termination benefits, net of cash			(71)						18						(7)
Stock-based compensation expense			107						100						109
Loss on early extinguishment of debt			23						—						—
Charge for U.S. tax reform			—						—						80
Deferred income taxes			(120)						17						27
Voluntary benefit plan contributions			—						(113)						(67)
Cash effects of changes in:
Receivables			138						19						(79)
Inventories			(251)						(77)						(58)
Accounts payable and other accruals			520						36						18
Other non-current assets and liabilities			(26)						87						(36)
Net cash provided by operations			3,719						3,133						3,056
Investing Activities
Capital expenditures			(410)						(335)						(436)
Purchases of marketable securities and investments			(143)						(184)						(169)
Proceeds from sale of marketable securities and investments			124						131						156
Payment for acquisitions, net of cash acquired			(353)						(1,711)						(728)
Other			3						—						7
Net cash used in investing activities			(779)						(2,099)						(1,170)
Financing Activities
Short-term borrowing/(repayment) less than 90 days - net			497						294						546
Principal payments on debt (1)			(1,061)						(1,441)						(725)
Proceeds from issuance of debt			—						2,595						—
Dividends paid			(1,654)						(1,614)						(1,591)
Purchases of treasury shares			(1,476)						(1,202)						(1,238)
Proceeds from exercise of stock options			874						498						329
Purchases of non-controlling interests in subsidiaries			(99)						—						—
Net cash used in financing activities			(2,919)						(870)						(2,679)
Effect of exchange rate changes on Cash and cash equivalents			(16)						(7)						(16)
Net (decrease) increase in Cash and cash equivalents			5						157						(809)
Cash and cash equivalents at beginning of year			883						726						1,535
Cash and cash equivalents at end of year			$	888					$	883					$	726
Supplemental Cash Flow Information
Income taxes paid			$	845					$	803					$	847
Interest paid			$	188					$	185					$	194

(1) For the year ended December 31, 2020, Principal payments on debt includes cash charges of $20 related to the extinguishment of debt prior to maturity. See Note 6, Long-Term Debt and Credit Facilities for additional information.

See Notes to Consolidated Financial Statements.

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. 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:

						2020						2019						2018
Oral Care						44		%				46		%				47		%
Personal Care						21		%				20		%				20		%
Home Care						18		%				18		%				18		%
Pet Nutrition						17		%				16		%				15		%
Total						100		%				100		%				100		%

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, 2020 and 2019, equity method investments included in Other assets in the Consolidated Balance Sheets were $56 and $50, 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, 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.

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 $1,392, $1,275 and $1,255 for the years ended December 31, 2020, 2019 and 2018, 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. These tests were performed and did not result in an impairment charge. Other intangible assets with finite lives, such as local brands and trademarks, customer relationships and non-compete agreements, are amortized over their estimated useful lives, generally ranging from 5 to 40 years. Amortization expense related to intangible assets is included in Other (income) expense, net, which is included in Operating profit.

Income Taxes

The provision for income taxes is determined using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based upon the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect at the time such differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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.

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.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

Recent Accounting Pronouncements

In January 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2021-1, “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 due to reference rate reform. 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 is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” 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 March 2020, the FASB issued ASU No. 2020-03, “Codification to Financial Instruments.” This ASU improves and clarifies various financial instruments topics, including the current expected credit losses (“CECL”) standard issued in 2016. The ASU addresses seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of this update. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning on January 1, 2020. The guidance did not 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. This guidance is not expected to 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. This guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In November 2019, the FASB issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses.” This ASU clarifies and addresses certain items related to amendments in ASU 2016-13. This guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

In April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Financial Instruments (Topic 825).” This ASU clarifies three topics related to financial instruments accounting. This guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” eliminating the requirement to calculate implied fair value, essentially eliminating step two from the goodwill impairment test. The standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard was effective for the Company on a prospective basis beginning on January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326).” This ASU introduces the current expected credit loss (CECL) model, which requires an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The Company adopted the new standard, which primarily impacts the Company’s trade receivables and related methodology for assessing the collectability of its customer accounts, on January 1, 2020, on a “modified retrospective” basis. The adoption of this ASU 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.

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			$	11
Inventories			13
Other assets and liabilities, net			(4)
Other intangible assets			160
Goodwill			171
Fair value of net assets acquired			$	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. The Company expects that goodwill will be deductible for tax purposes.

Pro forma results of operations have not been presented as the impact on the Company’s Consolidated Financial Statements is not material.

Laboratoires Filorga Cosmétiques (“Filorga”)

On September 19, 2019, the Company acquired the Filorga skin health business for cash consideration of €1,516 (approximately $1,674), which included interest on the equity purchase price plus additional consideration of €32 (approximately $38), the majority of which related to repayment of loans from former shareholders of Filorga. Filorga is a premium anti-aging skin health brand focused primarily on facial care. 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, including by expanding its portfolio in premium skin health.

The total purchase price consideration of $1,712 has been allocated to the net assets acquired based on their respective estimated fair values as follows:

Cash			$	30
Receivables			53
Inventories			70
Other current assets			18
Other intangible assets			1,051
Goodwill			923
Other current liabilities			(67)
Deferred income taxes			(276)
Noncontrolling interests			(90)
Fair value of net assets acquired			$	1,712

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

Other intangible assets acquired include trademarks of $774, which are considered to have an indefinite useful life, and customer relationships of $277, which are considered to have a finite useful life of 14 years. Goodwill of $923 was allocated to the Europe segment. Goodwill will not be deductible for tax purposes.

In the third quarter of 2020, the Company completed the purchase of the outstanding non-controlling interest of Filorga’s joint venture based in Hong Kong and covering the Hong Kong and China markets for approximately €85 (approximately $99) in cash.

The results of operations of Filorga are reported on a lag basis. As such, Filorga’s results of operations from December 1, 2019 through November 30, 2020 and from the Acquisition Date through November 30, 2019 are included in the Company’s Consolidated Results of Operations for the periods ended December 31, 2020 and 2019, respectively.

Pro forma results of operations have not been presented as the impact on the Company’s Consolidated Financial Statements is not material.

Nigeria Joint Venture

On August 15, 2019, the Company acquired a 51% controlling interest in Colgate Tolaram Pte. Ltd., a joint venture which owns the Nigeria-based Hypo Homecare Products Limited, for $31.

Pro forma results of operations have not been presented as the impact on the Company’s Consolidated Financial Statements is not material.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

4. Restructuring and Related Implementation Charges

The Company’s restructuring 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 $3 was recorded in Selling, general and administrative expenses and $13 was recorded in Other (income) expense, net. During the year ended December 31, 2020, the Company also made cash payments of $53 related to projects approved prior to the conclusion of the Global Growth and Efficiency Program, and the remaining accrual balance at December 31, 2020 was $31. No new restructuring projects were approved for implementation during the year ended December 31, 2020.

For the years ended December 31, 2019 and 2018, restructuring and related implementation charges are reflected in the Consolidated Statements of Income as follows:

									2019						2018
Cost of sales									$	8					$	31
Selling, general and administrative expenses									60						33
Other (income) expense, net									57						88
Non-service related postretirement costs									7						9
Total Global Growth and Efficiency Program charges, pretax									$	132					$	161
Total Global Growth and Efficiency Program charges, aftertax									$	102					$	125

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.

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

																					Total Program
									2019						2018						Charges
North America									4		%				18		%				17		%
Latin America									12		%				10		%				5		%
Europe									4		%				(2)		%				19		%
Asia Pacific									6		%				13		%				4		%
Africa/Eurasia									(1)		%				5		%				5		%
Hill’s Pet Nutrition									2		%				19		%				8		%
Corporate									73		%				37		%				42		%
Total									100		%				100		%				100		%

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

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:

			Total Program Charges
			as of December 31, 2019
Employee-Related Costs			$	706
Incremental Depreciation			128
Asset Impairments			58
Other			962
Total			$	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.

The following table summarizes the activity for the restructuring and related implementation charges for the years ended December 31, 2019 and 2018 and the related accruals:

						Employee-Related Costs						Incremental Depreciation						Asset Impairments						Other						Total
Balance at December 31, 2017						$	127					$	—					$	—					$	107					$	234
Charges						53						2						16						90						161
Cash payments						(107)						—						—						(60)						(167)
Charges against assets						(9)						(2)						(16)						—						(27)
Foreign exchange						(4)						—						—						—						(4)
Other						—						—						—						5						5
Balance at December 31, 2018						$	60					$	—					$	—					$	142					$	202
Charges						25						36						6						65						132
Cash payments						(55)						—						—						(58)						(113)
Charges against assets						(7)						(36)						(6)						(27)						(76)
Foreign exchange						3						—						—						—						3
Other						—						—						—						(48)						(48)
Balance at December 31, 2019						$	26					$	—					$	—					$	74					$	100

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 amounting to $7 and $9 for the years ended December 31, 2019 and 2018, respectively, which are reflected as Charges against assets within Employee-Related Costs in the preceding table as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension and other retiree benefit liabilities. See Note 10, Retirement Plans and Other Retiree Benefits for additional information.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

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. These charges for the years ended December 31, 2019 and 2018 included third-party incremental costs related to the development and implementation of new business and strategic initiatives of $32 and $42, respectively, and contract termination costs and charges resulting directly from exit activities of $5 and $48, respectively. These charges were expensed as incurred. Also included in Other charges for the year ended December 31, 2019 were other exit costs of $28 related to the consolidation of facilities.

Other decreases to the restructuring accruals reflect the reclassification of restructuring accruals to lease assets as a result of the Company’s adoption of ASU No. 2018-10, “Codification Improvement to Topic 842, Leases,” on January 1, 2019.

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, 2020 and 2019 by segment was as follows:

						2020						2019
Oral, Personal and Home Care
North America						$	912					$	737
Latin America						171						212
Europe						2,415						2,234
Asia Pacific						190						186
Africa/Eurasia						121						124
Total Oral, Personal and Home Care						3,809						3,493
Pet Nutrition						15						15
Total Goodwill						$	3,824					$	3,508

The change in the amount of Goodwill during 2020 is primarily due to the acquisition of hello (see Note 3, Acquisitions for further information) and the impact of foreign currency translation.

Other intangible assets as of December 31, 2020 and 2019 were comprised of the following:

						2020																		2019
						Gross Carrying Amount						Accumulated Amortization						Net						Gross Carrying Amount						Accumulated Amortization						Net
Trademarks - finite life						$	902					$	(422)					$	480					$	771					$	(381)					$	390
Other finite life intangible assets						786						(237)						549						699						(169)						530
Indefinite life intangible assets						1,865						—						1,865						1,747						—						1,747
Total Other intangible assets						$	3,553					$	(659)					$	2,894					$	3,217					$	(550)					$	2,667

The change in the net carrying amounts of Other intangible assets during 2020 was primarily due to the acquisition of hello (see Note 3, Acquisitions for further information) and amortization expense of $88. Annual estimated amortization expense for each of the next five years is expected to be approximately $83.

As a result of the COVID-19 pandemic, in the first quarter of 2020, the Company assessed whether a “triggering event” had occurred indicating a possible impairment of its goodwill and indefinite-life intangible assets. As a result of this assessment, the Company determined that a “triggering event” had occurred relative to its recently acquired Filorga skin health business and, as required, performed a quantitative analysis, with the assistance of a third-party valuation firm, of the value of the Filorga reporting unit and its indefinite-life intangible assets. Based on the analysis, the Company determined that the fair value of the Filorga reporting unit and the related indefinite-life intangible assets continued to exceed their carrying values and were not impaired.

As of the date of the annual goodwill impairment test, the fair value of the Filorga reporting unit exceeded its carrying value by approximately 10%. Either a reduction in the long-term growth rate of 50 basis points or an increase in the discount rate of 25 basis points would result in the fair value of the Filorga reporting unit exceeding its carrying value by less than 5%. As of the date of the annual impairment test, the fair value of the Filorga indefinite-life intangible assets exceeded their carrying value by less than 10%. Either a reduction in the long-term growth rate of 50 basis points or an increase in the discount rate of 25 basis points would result in the fair value of the Filorga indefinite-life intangible assets approximating their carrying value.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

Determining the fair value of the Filorga reporting unit and indefinite-life intangible assets requires 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 rates 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.

Given the inherent uncertainties in estimating the future impacts of the COVID-19 pandemic on global macroeconomic conditions and interest rates in general and on the Filorga business in particular, actual results may differ from management’s current estimates and could have an adverse impact on one or more of the assumptions used in our quantitative models related to the Filorga reporting unit and the related indefinite-life intangible assets, resulting in potential impairment charges in subsequent periods. Given the recent acquisition of Filorga, where there is inherently a lower surplus of fair value over carrying value, management will continue to assess triggering events that may necessitate additional qualitative or quantitative analyses of our reporting units and indefinite-life intangible assets in future periods.

Except for the recently acquired Filorga business, as described above, where there is inherently a lower surplus of fair value over carrying value, 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.

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:

						Weighted Average Interest Rate						Maturities												2020						2019
Notes						1.9%						2021			-			2078						$	6,170					$	6,988
Commercial paper						(0.3)%						2021												1,139						579
Finance Lease Obligations						Various						Various												34						20
																								7,343						7,587
Less: Current portion of long-term debt																								(9)						(254)
Total																								$	7,334					$	7,333

The weighted-average interest rate on short-term borrowings included in Notes and loans payable in the Consolidated Balance Sheets as of December 31, 2020 and 2019 was 4.8% and 1.8%, respectively.

The Company classifies commercial paper and notes maturing within the next twelve months as long-term debt when it has the intent and ability to refinance such obligations on a long-term basis. Excluding such obligations, scheduled maturities of long-term debt and finance leases outstanding as of December 31, 2020, were as follows:

Years Ended December 31,
2021			$	631
2022			413
2023			896
2024			498
2025			130
Thereafter			3,636

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 first quarter of 2019, the Company issued €500 of seven-year notes at a fixed coupon rate of 0.500% and €500 of fifteen-year notes at a fixed coupon rate of 1.375%. During the fourth quarter of 2019, the Company issued €500 of two-year notes at a fixed coupon rate of 0.000% and €500 of twenty-year notes at a fixed coupon rate of 0.875%. The debt issuances were under the Company’s shelf registration statement. Proceeds from the debt issuances were used for general corporate purposes, which included the retirement of commercial paper and, in the case of the debt issuances in the first quarter of 2019, the repayment of the Company’s $500 1.750% fixed rate notes, which became due in March 2019, and €500 floating rate notes, which became due in May 2019.

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.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

At December 31, 2020, the Company had access to unused domestic and foreign lines of credit of $4,657 (including under the facilities discussed below) and could also issue long-term debt pursuant to an effective shelf registration statement. In November 2018, the Company entered into an amended and restated $2,650 revolving credit facility with a syndicate of banks that was scheduled to expire in November 2023. In August 2019, the term of the facility was extended by one year and it now expires in November 2024. In August 2020, the Company entered into a $1,500 364-day credit facility with a syndicate of banks that is scheduled to expire in August 2021. Commitment fees related to the credit facilities are not material.

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.

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).

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, pulp, tropical oils, 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, 2020 and December 31, 2019:

			Assets																		Liabilities
			Account						Fair Value												Account						Fair Value
Designated derivative instruments									December 31, 2020						December 31, 2019												December 31, 2020						December 31, 2019
Interest rate swap contracts			Other assets						14						4						Other liabilities						—						—
Forward-starting interest rate swaps			Other assets						5						—						Other liabilities						—						—
Foreign currency contracts			Other current assets						7						6						Other accruals						93						15
Foreign currency contracts			Other assets						—						—						Other liabilities						—						14
Commodity contracts			Other current assets						3						—						Other accruals						—						—
Total designated									$	29					$	10											$	93					$	29
Other financial instruments
Marketable securities			Other current assets						37						23
Total other financial instruments									$	37					$	23

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, 2020 and 2019. The estimated fair value of the Company’s long-term debt, including the current portion, as of December 31, 2020 and 2019, was $8,175 and $8,056, respectively, and the related carrying value was $7,343 and $7,587, 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:

			December 31, 2020						December 31, 2019
Long-term debt:
Carrying amount of hedged item			$	413					$	403
Cumulative hedging adjustment included in the carrying amount			$	14					$	4

The following tables present the notional values as of:

			December 31, 2020
			Foreign Currency Contracts						Foreign Currency Debt						Interest Rate Swaps						Forward-Starting Interest Rate Swaps						Commodity Contracts						Total
Fair Value Hedges			$	589					$	—					$	400					$	—					$	—					$	989
Cash Flow Hedges			854						—						—						300						17						1,171
Net Investment Hedges			528						4,523						—						—						—						5,051

			December 31, 2019
			Foreign Currency Contracts						Foreign Currency Debt						Interest Rate Swaps						Forward-Starting Interest Rate Swaps						Commodity Contracts						Total
Fair Value Hedges			$	388					$	—					$	400					$	—					$	—					$	788
Cash Flow Hedges			761						—						—						—						20						781
Net Investment Hedges			478						3,856						—						—						—						4,334

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,
			2020																		2019
			Cost of sales						Selling, general and administrative expenses						Interest (income) expense, net						Cost of sales						Selling, general and administrative expenses						Interest (income) expense, net
Gain (loss) on hedges recognized in income:
Interest rate swaps designated as fair value hedges:
Derivative instrument			$	—					$	—					$	(10)					$	—					$	—					$	(11)
Hedged items			—						—						10						—						—						11
Foreign currency contracts designated as fair value hedges:
Derivative instrument			—						29						—						—						10						—
Hedged items			—						(29)						—						—						(10)						—
Foreign currency contracts designated as cash flow hedges:
Amount reclassified from OCI			1						—						—						5						—						—
Commodity contracts designated as cash flow hedges:
Amount reclassified from OCI			(1)						—						—						1						—						—
Total gain (loss) on hedges recognized in income			$	—					$	—					$	—					$	6					$	—					$	—

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:

			Twelve Months Ended
December 31,
2020						2019
Foreign currency contracts designated as cash flow hedges:
Gain (loss) recognized in OCI			$	(11)					$	(9)
Forward-starting interest rate swaps designated as cash flow hedges:
Gain (loss) recognized in OCI			5						—
Commodity contracts designated as cash flow hedges:
Gain (loss) recognized in OCI			3						—
Foreign currency contracts designated as net investment hedges:
Gain (loss) on instruments			(52)						4
Gain (loss) on hedged items			52						(4)
Foreign currency debt designated as net investment hedges:
Gain (loss) on instruments			(356)						12
Gain (loss) on hedged items			356						(12)
Total unrealized gain (loss) on hedges recognized in OCI			$	(3)					$	(9)

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 $1,476 during 2020 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:

						Common Stock Outstanding						Treasury Stock
Balance, January 1, 2018						874,701,118						591,005,242
Common stock acquired						(18,786,897)						18,786,897
Shares issued for stock options						6,040,920						(6,040,920)
Shares issued for restricted stock units and other						957,651						(957,651)
Balance, December 31, 2018						862,912,792						602,793,568
Common stock acquired						(17,219,642)						17,219,642
Shares issued for stock options						8,145,777						(8,145,777)
Shares issued for restricted stock units and other						862,852						(862,852)
Balance, December 31, 2019						854,701,779						611,004,581
Common stock acquired						(18,701,843)						18,701,843
Shares issued for stock options						13,018,354						(13,018,354)
Shares issued for restricted stock units and other						875,311						(875,311)
Balance, December 31, 2020						849,893,601						615,812,759

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 $107, $100 and $109 for the years ended December 31, 2020, 2019 and 2018, respectively. The total income tax benefit recognized on stock-based compensation, excluding excess tax benefits discussed below, was approximately $20, $20 and $25 for the years ended December 31, 2020, 2019 and 2018, 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, 2020, 2019 and 2018 was $11.26, $10.48 and $9.48, respectively. Fair value is estimated using the Black-Scholes option pricing model with the assumptions summarized in the following table:

						2020						2019						2018
Expected term of options						6 years						6 years						4.5 years
Expected volatility rate						21.8		%				19.2		%				17.7		%
Risk-free interest rate						0.5		%				1.5		%				2.8		%
Expected dividend yield						2.3		%				2.3		%				2.5		%

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.

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, 2020 is presented below:

						Shares (in thousands)						Weighted Average Grant Date Fair Value Per Award
Performance-based restricted stock units as of January 1, 2020						346						$	67
Activity:
Granted						557						76
Forfeited						(38)						69
Performance-based restricted stock units as of December 31, 2020						865						$	73

As of December 31, 2020, there was $41 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. The most recent award granted under the previous long-term incentive program was in 2018 for the 2015-2017 performance period. No awards were granted for the 2016-2018 or 2017-2019 performance periods. Awards for the 2018-2020 performance period will be granted in 2021. As of December 31, 2020, approximately 12,420,000 shares of common stock were available for future restricted stock unit awards.

A summary of restricted stock unit activity during 2020 is presented below:

						Shares (in thousands)						Weighted Average Grant Date Fair Value Per Award
Restricted stock units as of January 1, 2020						2,203						$	71
Activity:
Granted						727						77
Vested						(1,130)						74
Forfeited						(63)						71
Restricted stock units as of December 31, 2020						1,737						$	73

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

As of December 31, 2020, there was $58 of total unrecognized compensation expense related to unvested restricted stock unit awards, which will be recognized over a weighted-average period of 2.1 years. The total fair value of restricted stock units vested during the years ended December 31, 2020, 2019 and 2018 was $58, $53 and $55, respectively.

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, 2020, approximately 36,144,000 shares of common stock were available for future stock option grants.

A summary of stock option activity during 2020 is presented below:

						Shares (in thousands)						Weighted Average Exercise Price						Weighted Average Remaining Contractual Life (in years)						Intrinsic Value of Unexercised In-the-Money Options
Options outstanding, January 1, 2020						36,185						$	69
Granted						4,976						76
Exercised						(13,019)						67
Forfeited or expired						(601)						72
Options outstanding, December 31, 2020						27,541						72						4						$	386
Options exercisable, December 31, 2020						18,084						$	70					3						$	274

As of December 31, 2020, 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, 2020, 2019 and 2018 was $136, $84 and $92, 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, 2020, 2019 and 2018 were $8, $6 and $12, 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, 2020, 2019 and 2018 were $874, $498 and $329, respectively.

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, 2020 and 2019, there were 11,545,950 and 13,359,448 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, 2020, 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 or (c) used for contributions to the Company’s defined contribution plans. Stock is allocated to participants based upon the ratio of the current year’s debt service to the sum of total outstanding principal and interest payments over the life of the debt. As of December 31, 2020, 10,454,105 shares of common stock had been released and allocated to participant accounts and 1,091,845 shares of common stock were available for future allocation to participant accounts.

Dividends on the stock used to repay principal and interest or credited to participant accounts are deductible for income tax purposes and, accordingly, are reflected net of their tax benefit in the Consolidated Statements of Changes in Shareholders’ Equity.

Annual expense related to the ESOP was $0 in 2020, 2019 and 2018.

The Company paid dividends on the shares held by the ESOP of $23 in 2020, $25 in 2019 and $29 in 2018. The Company did not make any contributions to the ESOP in 2020, 2019 or 2018.

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.

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:

						United States						International
Asset Category
Equity securities						21		%				38		%
Fixed income securities						74		%				46		%
Real estate and other investments						5		%				16		%
Total						100		%				100		%

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						Pension Plans
									United States						International						Other Retiree Benefit Plans
Cash and cash equivalents						Level 1						$	50					$	12					$	—
U.S. common stocks						Level 1						—						1						—
International common stocks						Level 1						—						8						—
Pooled funds(1)						Level 1						65						117						—
Fixed income securities(2)						Level 2						1,117						59						2
Guaranteed investment contracts(3)						Level 2						1						55						—
												1,233						252						2
Investments valued using NAV per share(4)
Domestic, developed and emerging markets equity funds												456						183						1
Fixed income funds(5)												136						225						—
Hedge funds(6)												—						6						—
Multi-asset funds(7)												77						2						—
Real estate funds(8)												34						30						—
												703						446						1
Other assets and liabilities, net(9)												(15)						—						—
Total Investments												$	1,921					$	698					$	3

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

At December 31, 2019, 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						Pension Plans
									United States						International						Other Retiree Benefit Plans
Cash and cash equivalents						Level 1						$	41					$	15					$	1
U.S. common stocks						Level 1						49						3						1
International common stocks						Level 1						—						3						—
Pooled funds(1)						Level 1						29						104						2
Fixed income securities(2)						Level 2						1,067						14						20
Guaranteed investment contracts(3)						Level 2						1						42						—
												1,187						181						24
Investments valued using NAV per share(4)
Domestic, developed and emerging markets equity funds												328						165						7
Fixed income funds(5)												177						196						3
Hedge funds(6)												3						17						—
Multi-asset funds(7)												155						2						2
Real estate funds(8)												41						25						1
												704						405						13
Other assets and liabilities, net(9)												(85)						—						—
Total Investments												$	1,806					$	586					$	37

---

(1)Pooled funds primarily invest in U.S. and foreign equity securities, debt and money market securities.

(2)The fixed income securities are traded over-the-counter and certain of these securities lack daily pricing or liquidity and as such are classified as Level 2. As of both December 31, 2020 and 2019, approximately 50% of the U.S. pension plan fixed income portfolio was invested in U.S. treasury or agency securities, with the remainder invested in other government bonds and corporate bonds.

(3)The guaranteed investment contracts (“GICs”) represent contracts with insurance companies measured at the cash surrender value of each contract. The Level 2 valuation reflects that the cash surrender value is based principally on a referenced pool of investment funds with active redemption.

(4)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.

(5)Fixed income funds primarily invest in U.S. government and investment grade corporate bonds.

(6)Consists of investments in underlying hedge fund strategies that are primarily implemented through the use of long and short equity and fixed income securities and derivative instruments such as futures and options.

(7)Multi-asset funds primarily invest across a variety of asset classes, including global stocks and bonds, as well as alternative strategies.

(8)Real estate is valued using the NAV per unit of funds that are invested in real estate property. The investment value of the real estate property is determined quarterly using independent market appraisals as determined by the investment manager.

(9)This category primarily includes unsettled trades for investments purchased and sold and dividend receivables.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

Equity securities in the U.S. plans include investments in the Company’s common stock representing 0% and 3% of U.S. plan assets at December 31, 2020 and December 31, 2019, respectively. In 2020 and 2019, the U.S. plans sold 739,869 and 588,334 shares, respectively, of the Company’s common stock to the Company. No shares of the Company’s stock were purchased by the U.S. plans in 2020 or 2019. The plans received dividends on the Company’s common stock of $0 in 2020 and $2 in 2019.

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:

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

						Pension Plans																								Other Retiree Benefit Plans
						2020						2019						2020						2019						2020						2019
						United States												International
Change in Benefit Obligations
Benefit obligations at beginning of year						$	2,272					$	2,147					$	876					$	787					$	1,050					$	876
Service cost						1						1						17						14						20						15
Interest cost						74						90						21						22						37						41
Participants’ contributions						—						—						5						2						—						—
Acquisitions/plan amendments						—						—						30						3						—						—
Actuarial loss (gain)						171						181						65						82						61						166
Foreign exchange impact						—						—						46						8						(9)						1
Termination benefits						3						7						—						—						—						—
Curtailments and settlements						(3)						—						(7)						(9)						—						—
Benefit payments						(155)						(154)						(40)						(35)						(47)						(49)
Other						—						—						—						2						—						—
Benefit obligations at end of year						$	2,363					$	2,272					$	1,013					$	876					$	1,112					$	1,050
Change in Plan Assets
Fair value of plan assets at beginning of year						$	1,806					$	1,568					$	586					$	510					$	37					$	54
Actual return on plan assets						243						262						59						76						2						8
Company contributions						30						130						36						30						11						24
Participants’ contributions						—						—						5						2						—						—
Foreign exchange impact						—						—						26						12						—						—
Settlements and acquisitions						(3)						—						26						(9)						—						—
Benefit payments						(155)						(154)						(40)						(35)						(47)						(49)
Other						—						—						—						—						—						—
Fair value of plan assets at end of year						$	1,921					$	1,806					$	698					$	586					$	3					$	37
Funded Status
Benefit obligations at end of year						$	2,363					$	2,272					$	1,013					$	876					$	1,112					$	1,050
Fair value of plan assets at end of year						1,921						1,806						698						586						3						37
Net amount recognized						$	(442)					$	(466)					$	(315)					$	(290)					$	(1,109)					$	(1,013)
Amounts Recognized in Balance Sheet
Noncurrent assets						$	20					$	—					$	18					$	13					$	—					$	—
Current liabilities						(30)						(28)						(14)						(13)						(45)						(13)
Noncurrent liabilities						(432)						(438)						(319)						(290)						(1,064)						(1,000)
Net amount recognized						$	(442)					$	(466)					$	(315)					$	(290)					$	(1,109)					$	(1,013)
Amounts Recognized in Accumulated Other Comprehensive Income (Loss)
Actuarial loss						$	902					$	910					$	255					$	238					$	429					$	388
Transition/prior service cost						1						1						7						7						—						(1)
						$	903					$	911					$	262					$	245					$	429					$	387
Accumulated benefit obligation						$	2,325					$	2,236					$	946					$	816					$	—					$	—

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

						Pension Plans																								Other Retiree Benefit Plans
						2020						2019						2020						2019						2020						2019
						United States												International
Weighted-Average Assumptions Used to Determine Benefit Obligations
Discount rate						2.65		%				3.40		%				1.61		%				2.06		%				2.88		%				3.56		%
Expected long-term rate of return on plan assets						5.70		%				6.30		%				2.93		%				3.38		%				5.70		%				6.30		%
Long-term rate of compensation increase						3.50		%				3.50		%				2.62		%				2.83		%				3.50		%				3.50		%
ESOP growth rate						—		%				—		%				—		%				—		%				10.00		%				10.00		%
Medical cost trend rate of increase						—		%				—		%				—		%				—		%				6.00		%				6.00		%
Interest Crediting Rate						2.48		%				3.21		%				0.83		%				0.85		%				—		%				—		%

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 actuarial gains recorded during 2019 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.

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, 2020 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 15%, 9%, 8%, 7% and 7%, respectively. Similar assessments were performed in determining rates of return on international pension plan assets to arrive at the Company’s 2020 weighted-average expected long-term rate of return on plan assets of 2.93%.

The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease from 6.00% in 2021 to 4.75% by 2026, remaining at 4.75% for the years thereafter.

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:

						2020						2019
Benefit Obligation Exceeds Fair Value of Plan Assets
Projected benefit obligation						$	1,092					$	2,862
Fair value of plan assets						299						2,094
Accumulated benefit obligation						882						875
Fair value of plan assets						134						166

Other Retiree Benefit plans with accumulated postretirement benefit obligation in excess of plan assets as of December 31 consisted of the following:

						2020						2019
Benefit Obligation Exceeds Fair Value of Plan Assets
Accumulated postretirement benefit obligation						$	1,112					$	958
Fair value of plan assets						3						37

Summarized information regarding the net periodic benefit costs for the Company’s defined benefit and other retiree benefit plans is as follows:

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

						Pension Plans																																				Other Retiree Benefit Plans
						2020						2019						2018						2020						2019						2018						2020						2019						2018
						United States																		International
Components of Net Periodic Benefit Cost
Service cost						$	1					$	1					$	1					$	17					$	14					$	14					$	20					$	15					$	16
Interest cost						74						90						86						21						22						21						37						41						38
Expected return on plan assets						(111)						(103)						(115)						(22)						(19)						(21)						(2)						(3)						(2)
Amortization of transition and prior service costs (credits)						—						—						—						—						1						—						—						—						—
Amortization of actuarial loss						46						51						47						9						9						8						18						11						14
Net periodic benefit cost						$	10					$	39					$	19					$	25					$	27					$	22					$	73					$	64					$	66
Other postretirement charges						4						7						9						—						1						2						—						—						—
Total pension cost						$	14					$	46					$	28					$	25					$	28					$	24					$	73					$	64					$	66
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
Discount rate						3.40		%				4.38		%				3.73		%				2.06		%				2.80		%				2.53		%				3.56		%				4.43		%				3.80		%
Expected long-term rate of return on plan assets						6.30		%				6.60		%				6.60		%				3.38		%				4.06		%				4.04		%				6.30		%				6.60		%				6.60		%
Long-term rate of compensation increase						3.50		%				3.50		%				3.50		%				2.83		%				2.86		%				2.79		%				—		%				—		%				—		%
ESOP growth rate						—		%				—		%				—		%				—		%				—		%				—		%				10.00		%				10.00		%				10.00		%
Medical cost trend rate of increase						—		%				—		%				—		%				—		%				—		%				—		%				6.00		%				6.00		%				6.00		%
Interest Crediting Rate						3.21		%				4.26		%				3.73		%				0.85		%				0.85		%				0.85		%				—		%				—		%				—		%

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.

Other postretirement charges in 2020, 2019 and 2018 include pension and other benefit enhancements amounting to $3, $7 and $9, respectively. Other postretirement charges from 2019 and 2018 were incurred pursuant to the Global Growth and Efficiency Program. Other postretirement charges in 2019 also include charges of $1, in part due to retirements under the Global Growth and Efficiency Program.

The Company made voluntary contributions of $0, $113 and $67 in 2020, 2019 and 2018, respectively, 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, 2021. 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 $90 for the year ending December 31, 2021.

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,						United States						International						Other Retiree Benefit Plans						Total
2021						$	154					$	42					$	49					$	245
2022						156						41						49						246
2023						157						42						50						249
2024						156						46						51						253
2025						155						45						52						252
2026-2030						741						244						269						1,254

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:

						2020						2019						2018
United States						$	1,317					$	1,050					$	1,175
International						2,330						2,251						2,289
Total Income before income taxes						$	3,647					$	3,301					$	3,464

The Provision for income taxes consists of the following for the years ended December 31:

						2020						2019						2018
United States						$	259					$	180					$	213
International						528						594						693
Total Provision for income taxes						$	787					$	774					$	906

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:

						2020						2019						2018
Goodwill and intangible assets						$	1					$	34					$	2
Property, plant and equipment						12						12						(15)
Pension and other retiree benefits						10						(13)						(7)
Stock-based compensation						(7)						(1)						9
Right-of-use assets/lease liabilities						(1)						—						—
Tax credits and tax loss carryforwards						(1)						3						(4)
Deferred withholding tax						111						(21)						(100)
Other, net						18						(33)						62
Total deferred tax benefit (provision)						$	143					$	(19)					$	(53)

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						2020						2019						2018
Tax at United States statutory rate						21.0		%				21.0		%				21.0		%
State income taxes, net of federal benefit						1.0						0.6						1.0
Earnings taxed at other than United States statutory rate						3.3						4.6						5.6
Charge for U.S. tax reform(1)						—						—						2.3
Foreign tax credit carryback(2)						—						—						(1.7)
Benefit for foreign tax matters(3)						(2.0)						(0.9)						(0.4)
Foreign-derived intangible income benefit						(1.6)						(1.3)						(1.1)
Other, net						(0.1)						(0.6)						(0.5)
Effective tax rate						21.6		%				23.4		%				26.2		%

---

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

(2)In 2018, the Company generated excess foreign taxes associated with its foreign branch operations which are being carried back to 2017. This item is not expected to be recurring.

(3)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 the previously recorded charge for 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. In 2018, the provision for income taxes includes a benefit of $15 related to several Supreme Court and Administrative Court rulings in a foreign jurisdiction allowing certain tax deductions which had the effect of reversing prior decisions.

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:

						2020						2019
Deferred tax liabilities:
Goodwill and intangible assets						$	(603)					$	(598)
Property, plant and equipment						(281)						(303)
Right-of-use assets						(131)						(135)
Deferred withholding tax						(95)						(207)
Other						(52)						(46)
Total deferred tax liabilities						(1,162)						(1,289)
Deferred tax assets:
Pension and other retiree benefits						404						381
Tax credits and tax loss carryforwards						42						93
Lease liabilities						144						152
Accrued liabilities						250						221
Stock-based compensation						73						88
Other						125						83
Total deferred tax assets						1,038						1,018
Valuation Allowance						$	(11)					$	(59)
Net deferred tax assets						$	1,027					$	959
Net deferred income taxes						$	(135)					$	(330)

						2020						2019
Deferred taxes included within:
Assets:
Deferred income taxes						$	291					$	177
Liabilities:
Deferred income taxes						(426)						(507)
Net deferred income taxes						$	(135)					$	(330)

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 benefits of $101, $13 and $2 were recorded directly through equity in 2020, 2019 and 2018, respectively. The net tax benefits in 2020 and 2019 predominantly include current and future tax impacts related to benefit plans. The amount in 2018 includes current and future tax impacts related to employee equity compensation and benefit plans.

The Company uses a comprehensive model to recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on an income tax return.

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, 2020, 2019 and 2018 is summarized below:

						2020						2019						2018
Unrecognized tax benefits:
Balance, January 1						$	173					$	190					$	214
Increases as a result of tax positions taken during the current year						18						14						14
Decreases of tax positions taken during prior years						(5)						(21)						(37)
Increases of tax positions taken during prior years						57						20						9
Decreases as a result of settlements with taxing authorities and the expiration of statutes of limitations						(19)						(30)						(6)
Effect of foreign currency rate movements						3						—						(4)
Balance, December 31						$	227					$	173					$	190

If all of the unrecognized tax benefits for 2020 above were recognized, approximately $213 would impact the effective tax rate and would result in a cash outflow of approximately $223. 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 approximately $9 of interest expense, $0 of interest expense, $1 of interest benefit related to the above unrecognized tax benefits within income tax expense in 2020, 2019 and 2018, respectively. The Company had accrued interest of approximately $24, $23 and $27 as of December 31, 2020, 2019 and 2018, 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, 2015. 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.

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, 2020, 2019 and 2018, earnings per share were as follows:

			2020																		2019																		2018
			Net income attributable to Colgate-Palmolive Company						Shares (millions)						Per Share						Net income attributable to Colgate-Palmolive Company						Shares (millions)						Per Share						Net income attributable to Colgate-Palmolive Company						Shares (millions)						Per Share
Basic EPS			$	2,695					856.8						$	3.15					$	2,367					859.1						$	2.76					$	2,400					870.6						$	2.76
Stock options and restricted stock units									2.5																		2.0																		2.4
Diluted EPS			$	2,695					859.3						$	3.14					$	2,367					861.1						$	2.75					$	2,400					873.0						$	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, 2020, 2019 and 2018, the average number of stock options that were anti-dilutive and not included in diluted earnings per share calculations were 3,257,310, 19,901,202 and 18,039,961, respectively. As of December 31, 2020, 2019 and 2018, the average number of restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 25,381, 4,516 and 9,529, respectively.

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, 2020, the Company has various contractual commitments for future multi-year purchases of raw, packaging and other materials totaling approximately $715.

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 amount may not represent the ultimate loss to the Company. Thus, the Company’s exposure and ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued or the range disclosed above.

Based on current knowledge, management does not believe that the ultimate resolution of loss contingencies arising from the matters discussed herein will have a material effect on the Company’s consolidated financial position or its ongoing results of operations or cash flows. However, in light of the inherent uncertainties noted above, an adverse outcome in one or more matters could be material to the Company’s results of operations or cash flows for any particular quarter or year.

Brazilian Matters

There are certain tax and civil proceedings outstanding, as described below, related to the Company’s 1995 acquisition of the Kolynos oral care business from Wyeth (the “Seller”).

The Brazilian internal revenue authority has disallowed interest deductions and foreign exchange losses taken by the Company’s Brazilian subsidiary for certain years in connection with the financing of the Kolynos acquisition. The tax assessments with interest, penalties and any court-mandated fees, at the current exchange rate, are approximately $113. 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.

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 $50, 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, 2020 of such competition law matters pending against the Company during the year ended December 31, 2020 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.

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. Most of these actions involve a number of co-defendants from a variety of different industries, including suppliers of asbestos and manufacturers of products that, unlike the Company’s products, were designed to contain asbestos. As of December 31, 2020, there were 137 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 121 cases as of December 31, 2019. During the year ended December 31, 2020, 65 new cases were filed and 49 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 will continue to be, covered by insurance policies issued by several primary, excess and umbrella insurance carriers, subject to deductibles, exclusions, retentions and policy limits.

While the Company and its legal counsel believe that these cases are without merit and intend to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters. With the exception of one case where the Company received an adverse jury verdict in the second quarter of 2019 that the Company has appealed, the range of reasonably possible losses in excess of accrued liabilities disclosed above does not include any amount relating to these cases because the amount of any possible losses from such cases currently cannot be reasonably estimated.

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.

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 Wal-Mart, Inc. and its affiliates represent approximately 12% of the Company’s Net sales in 2020. No other customer represents more than 10% of Net sales.

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. In 2018, Corporate Operating Profit included charges of $152 resulting from the Global Growth and Efficiency Program.

						2020						2019						2018
Net sales
Oral, Personal and Home Care
North America(1)						$	3,741					$	3,424					$	3,348
Latin America						3,418						3,606						3,605
Europe						2,747						2,450						2,502
Asia Pacific						2,701						2,707						2,734
Africa/Eurasia						981						981						967
Total Oral, Personal and Home Care						13,588						13,168						13,156
Pet Nutrition(2)						2,883						2,525						2,388
Total Net sales						$	16,471					$	15,693					$	15,544

---

(1) Net sales in the U.S. for Oral, Personal and Home Care were $3,447, $3,166 and $3,091 in 2020, 2019 and 2018, respectively.

(2) Net sales in the U.S. for Pet Nutrition were $1,712, $1,441 and $1,304 in 2020, 2019 and 2018, respectively.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

						2020						2019						2018
Operating profit
Oral, Personal and Home Care
North America						$	988					$	982					$	1,037
Latin America						975						963						995
Europe						652						624						634
Asia Pacific						773						749						777
Africa/Eurasia						206						187						173
Total Oral, Personal and Home Care						3,594						3,505						3,616
Pet Nutrition						793						703						680
Corporate						(502)						(654)						(602)
Total Operating profit						$	3,885					$	3,554					$	3,694

						2020						2019						2018
Capital expenditures
Oral, Personal and Home Care
North America						$	65					$	43					$	53
Latin America						104						90						131
Europe						41						42						39
Asia Pacific						51						40						75
Africa/Eurasia						13						8						11
Total Oral, Personal and Home Care						274						223						309
Pet Nutrition						56						41						35
Corporate						79						71						92
Total Capital expenditures						$	409					$	335					$	436

						2020						2019						2018
Depreciation and amortization
Oral, Personal and Home Care
North America						$	101					$	94					$	88
Latin America						81						84						82
Europe						94						72						70
Asia Pacific						95						100						103
Africa/Eurasia						9						8						8
Total Oral, Personal and Home Care						380						358						351
Pet Nutrition						58						55						53
Corporate						101						106						107
Total Depreciation and amortization						$	539					$	519					$	511

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

						2020						2019						2018
Identifiable assets
Oral, Personal and Home Care
North America						$	4,132					$	3,576					$	3,310
Latin America						2,251						2,384						2,225
Europe						5,386						5,104						2,883
Asia Pacific						2,272						2,155						2,148
Africa/Eurasia						605						590						502
Total Oral, Personal and Home Care						14,646						13,809						11,068
Pet Nutrition						1,210						1,175						1,033
Corporate(1)						64						50						60
Total Identifiable assets(2)						$	15,920					$	15,034					$	12,161

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(1)In 2020, Corporate identifiable assets primarily consist of investments in equity securities (95%). In 2019, Corporate identifiable assets primarily consist of derivative instruments (2%) and investments in equity securities (92%). In 2018, Corporate identifiable assets primarily consist of derivative instruments (7%) and investments in equity securities (88%).

(2)Long-lived assets in the U.S., primarily property, plant and equipment and goodwill and other intangibles represented approximately one-third of total long-lived assets of $10,911 in 2020, one-third of total long-lived assets of $10,192 in 2019, and one-half of total long-lived assets of $8,259 in 2018.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

15. Leases

The Company adopted ASU No. 2016-02 “Leases (Topic 842)” on January 1, 2019, resulting in the recognition of right-of-use assets of $458 and liabilities of $574. 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, 2020 and 2019.

As of December 31, 2020 and 2019, the Company’s right-of use assets and liabilities for operating leases were as follows:

						2020						2019
Other assets						$	521					$	502
Other accruals						$	137					$	145
Other liabilities						476						491
Total operating lease liabilities						$	613					$	636

Lease liabilities for operating leases as of December 31, 2020 were as follows:

2021			$	157
2022			133
2023			89
2024			58
2025			46
Thereafter			232
Total lease commitments			$	715
Less: Interest			(102)
Present value of lease liabilities			$	613

The components of the Company’s operating lease cost for the twelve months ended December 31, 2020 and 2019 were as follows:

						2020						2019
Operating lease cost						$	155					$	169
Short-term lease cost						3						5
Variable lease cost						20						30
Total lease cost						$	178					$	204

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.

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, 2020 and 2019 was as follows:

▪Payments against amounts included in the measurement of lease liabilities: $193 and $202, respectively

▪Lease assets obtained in exchange for lease liabilities: $163 and $232, respectively.

As of December 31, 2020 and 2019, 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 4.2% and 4.1%, respectively.

There were no material operating leases that the Company had entered into and that were yet to commence as of December 31, 2020.

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						2020						2019						2018
Global Growth and Efficiency Program						$	(13)					$	57					$	88
Amortization of intangible assets						88						62						59
Equity income						(12)						(9)						(10)
Value-added tax matter in Brazil						—						(30)						—
Write-off of certain investments and fixed assets						—						51						1
Acquisition-related costs						2						21						—
Charges for a change in go-to-market strategy in certain countries						—						15						—
Other, net						48						29						10
Total Other (income) expense, net						$	113					$	196					$	148

Interest (income) expense, net						2020						2019						2018
Interest incurred						$	184					$	193					$	195
Interest capitalized						(1)						(1)						(2)
Interest income						(19)						(47)						(50)
Total Interest (income) expense, net						$	164					$	145					$	143

						2020						2019						2018
Research and development						$	290					$	281					$	277
Advertising						$	1,948					$	1,694					$	1,590

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						2020						2019
Raw materials and supplies						$	454					$	305
Work-in-process						45						49
Finished goods						1,256						1,056
Total Inventories, net						$	1,755					$	1,410
Non-current inventory, net						(82)						(10)
Current Inventories, net						$	1,673					$	1,400

Inventories valued under LIFO amounted to $439 and $303 at December 31, 2020 and 2019, respectively. The excess of current cost over LIFO cost at the end of each year was $65 and $62, respectively. The liquidations of LIFO inventory quantities had no material effect on income in 2020, 2019 and 2018. Inventory classified as non-current at December 31, 2020 was recorded on the Consolidated Balance Sheets as “Other assets.”

Property, plant and equipment, net						2020						2019
Land						$	166					$	153
Buildings						1,623						1,600
Manufacturing machinery and equipment						5,409						5,309
Other equipment						1,553						1,518
						8,751						8,580
Accumulated depreciation						(5,035)						(4,830)
Total Property, plant and equipment, net						$	3,716					$	3,750

Other accruals						2020						2019
Accrued advertising and coupon redemption						$	728					$	525
Accrued payroll and employee benefits						401						340
Accrued taxes other than income taxes						116						104
Restructuring accrual						21						85
Pension and other retiree benefits						89						54
Lease Liabilities Due in One Year						137						145
Accrued interest						39						43
Derivatives						93						16
Other						717						605
Total Other accruals						$	2,341					$	1,917

Other liabilities						2020						2019
Pension and other retiree benefits						$	1,815					$	1,728
Restructuring accrual						10						15
Long-Term Lease Liabilities						476						491
Other						354						364
Total Other liabilities						$	2,655					$	2,598

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:

						2020									2019									2018
						Pretax			Net of Tax						Pretax			Net of Tax						Pretax			Net of Tax
Cumulative translation adjustments						$	(119)		$	(30)					$	49		$	27					$	(233)		$	(218)
Pension and other benefits:
Net actuarial gain (loss), prior service costs and settlements during the period						(125)			(97)						(204)			(154)						(21)			(16)
Amortization of net actuarial loss, transition and prior service costs(1)						74			57						72			54						69			54
Retirement Plan and other retiree benefit adjustments						(51)			(40)						(132)			(100)						48			38
Cash flow hedges:
Unrealized gains (losses) on cash flow hedges						(3)			(2)						(9)			(7)						10			8
Reclassification of (gains) losses into net earnings on cash flow hedges(2)						—			—						(6)			(5)						3			2
Gains (losses) on cash flow hedges						(3)			(2)						(15)			(12)						13			10
Total Other comprehensive income (loss)						$	(173)		$	(72)					$	(98)		$	(85)					$	(172)		$	(170)

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(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, 2020 and 2019, Accumulated other comprehensive income (loss) consisted primarily of aftertax unrecognized pension and other retiree benefit costs of $1,178 and $1,138, respectively, and cumulative foreign currency translation adjustments of $3,158 and $3,128, respectively. Foreign currency translation adjustments in 2020 primarily reflect losses from the Brazilian real and the Mexican peso. Foreign currency translation adjustments in 2019 primarily reflect gains from the Thai baht and the Mexican peso.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

19. Quarterly Financial Data (Unaudited)

			Total						First Quarter						Second Quarter						Third Quarter						Fourth Quarter
2020
Net sales			$	16,471					$	4,097					$	3,897					$	4,153					$	4,324
Gross profit			10,017			(1)			2,465			(3)			2,369						2,540						2,643
Net income including noncontrolling interests			2,860			(2)			748			(4)			675						745			(5)			692			(6)
Net income attributable to Colgate-Palmolive Company			2,695			(2)			715			(4)			635						698			(5)			647			(6)
Earnings per common share:
Basic			3.15			(2)			0.83			(4)			0.74						0.81			(5)			0.76			(6)
Diluted			3.14			(2)			0.83			(4)			0.74						0.81			(5)			0.75			(6)
2019
Net sales			$	15,693					$	3,884					$	3,866					$	3,928					$	4,015
Gross profit			9,325			(7)			2,287			(9)			2,308			(11)			2,316			(13)			2,414			(15)
Net income including noncontrolling interests			2,527			(8)			600			(10)			618			(12)			627			(14)			682			(16)
Net income attributable to Colgate-Palmolive Company			2,367			(8)			560			(10)			586			(12)			578			(14)			643			(16)
Earnings per common share:
Basic			2.76			(8)			0.65			(10)			0.68			(12)			0.67			(14)			0.75			(16)
Diluted			2.75			(8)			0.65			(10)			0.68			(12)			0.67			(14)			0.75			(16)

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Note: Basic and diluted earnings per share are computed independently for each quarter and the year-to-date period presented. Accordingly, the sum of the quarterly earnings per common share may not necessarily equal the earnings per share for the year-to-date period.

(1)Gross profit for the full year of 2020 includes a $4 charge for acquisition-related costs.

(2)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the full year of 2020 include aftertax benefits of $13 resulting from the Global Growth and Efficiency Program, a $4 aftertax charge for acquisition-related costs, a $71 tax benefit related to subsidiary and operating structure initiatives and a $18 aftertax loss on the early extinguishment of debt.

(3)Gross profit for the first quarter of 2020 includes a $4 charge for acquisition-related costs.

(4)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the first quarter of 2020 include a $4 aftertax charge for acquisition-related costs and a $71 tax benefit related to subsidiary and operating structure initiatives.

(5)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the third quarter of 2020 include aftertax benefits of $13 resulting from the Global Growth and Efficiency Program.

(6)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the fourth quarter of 2020 include a $18 aftertax loss on the early extinguishment of debt.

(7)Gross profit for the full year of 2019 includes $8 of charges resulting from the Global Growth and Efficiency Program and a $3 charge for acquisition-related costs.

COLGATE-PALMOLIVE COMPANY

Notes to Consolidated Financial Statements (continued)

(Dollars in Millions Except Share and Per Share Amounts)

(8)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the full year of 2019 include $102 of aftertax charges resulting from the Global Growth and Efficiency Program, a $20 aftertax charge for acquisition-related costs, a $20 aftertax benefit related to a value added tax matter in Brazil and a $29 tax benefit related to Swiss income tax reform.

(9)Gross profit for the first quarter of 2019 includes $11 of charges resulting from the Global Growth and Efficiency Program.

(10)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the first quarter of 2019 include $22 of aftertax charges resulting from the Global Growth and Efficiency Program.

(11)Gross profit for the second quarter of 2019 includes $3 of charges resulting from the Global Growth and Efficiency Program.

(12)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the second quarter of 2019 include $31 of aftertax charges resulting from the Global Growth and Efficiency Program.

(13)Gross profit for the third quarter of 2019 includes $1 of charges resulting from the Global Growth and Efficiency Program.

(14)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the third quarter of 2019 include $22 of aftertax charges resulting from the Global Growth and Efficiency Program and a $14 aftertax charge related to U.S. tax reform.

(15)Gross profit for the fourth quarter of 2019 includes $1 of benefit resulting from the Global Growth and Efficiency Program and a $3 charge for acquisition-related costs.

(16)Net income including noncontrolling interests, Net income attributable to Colgate-Palmolive Company and Earnings per common share for the fourth quarter of 2019 include $27 of aftertax charges resulting from the Global Growth and Efficiency Program, a $6 charge for acquisition-related costs, a $20 aftertax benefit related to a value added tax matter in Brazil and a $29 tax benefit related to Swiss income tax reform.

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, 2020
Allowance for doubtful accounts and estimated returns						$	76					$	16					$	—					$	3					$	89
Valuation allowance for deferred tax assets						$	59					$	1					$	—					$	49					$	11
Year Ended December 31, 2019
Allowance for doubtful accounts and estimated returns						$	82					$	6					$	—					$	12					$	76
Valuation allowance for deferred tax assets						$	54					$	12					$	—					$	7					$	59
Year Ended December 31, 2018
Allowance for doubtful accounts and estimated returns						$	77					$	15					$	—					$	10					$	82
Valuation allowance for deferred tax assets						$	9					$	45					$	—					$	—					$	54

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, 2020. The peer company index is comprised of consumer products companies that have both domestic and international businesses. For 2020, 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 N.V.

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.

COLGATE-PALMOLIVE COMPANY

Historical Financial Summary

For the years ended December 31,

(Dollars in Millions Except Per Share Amounts)

(Unaudited)

						2020						2019						2018						2017						2016						2015						2014						2013						2012						2011
Continuing Operations
Net sales						$	16,471					$	15,693					$	15,544					$	15,454					$	15,195					$	16,034					$	17,277					$	17,420					$	17,085					$	16,734
Results of operations:
Net income attributable to Colgate-Palmolive Company						2,695			(1)			2,367			(2)			2,400			(3)			2,024			(4)			2,441			(5)			1,384			(6)			2,180			(7)			2,241			(8)			2,472			(9)			2,431			(10)
Earnings per common share, basic						3.15			(1)			2.76			(2)			2.76			(3)			2.30			(4)			2.74			(5)			1.53			(6)			2.38			(7)			2.41			(8)			2.60			(9)			2.49			(10)
Earnings per common share, diluted						3.14			(1)			2.75			(2)			2.75			(3)			2.28			(4)			2.72			(5)			1.52			(6)			2.36			(7)			2.38			(8)			2.57			(9)			2.47			(10)
Depreciation and amortization expense						539						519						511						475						443						449						442						439						425						421
Financial Position
Current ratio						1.0						1.0						1.1						1.4						1.3						1.2						1.2						1.1						1.2						1.2
Property, plant and equipment, net						3,716						3,750						3,881						4,072						3,840						3,796						4,080						4,083						3,842						3,668
Capital expenditures						410						335						436						553						593						691						757						670						565						537
Total assets						15,920						15,034						12,161						12,676						12,123						11,935						13,440						13,968						13,379						12,711
Long-term debt						7,334						7,333						6,354						6,566						6,520						6,246						5,625						4,732						4,911						4,417
Colgate-Palmolive Company shareholders’ equity						743						117						(102)						(60)						(243)						(299)						1,145						2,305						2,189						2,375
Share and Other
Book value per common share						1.30						0.66						0.23						0.28						0.03						(0.04)						1.55						2.79						2.60						2.71
Cash dividends declared and paid per common share						1.75						1.71						1.66						1.59						1.55						1.50						1.42						1.33						1.22						1.14
Closing price						85.51						68.84						59.52						75.45						65.44						66.62						69.19						65.21						52.27						46.20
Number of common shares outstanding (in millions)						849.9						854.7						862.9						874.7						883.1						892.7						906.7						919.9						935.8						960.0
Number of common shareholders of record						19,442						20,556						21,900						22,700						23,600						24,400						25,400						26,900						27,600						28,900
Number of employees						34,200						34,300						34,500						35,900						36,700						37,900						37,700						37,400						37,700						38,600

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Note: All per share amounts and numbers of shares outstanding were adjusted for the two-for-one stock split of the Company’s common stock in 2013.

(1)Net income attributable to Colgate-Palmolive Company and Earnings per common share for the full year of 2020 include $13 of aftertax benefits resulting from the Global Growth and Efficiency Program, a $71 tax benefit related to subsidiary and operating structure initiatives, a $4 aftertax charge for acquisition-related costs, and a $18 aftertax loss on the early extinguishment of debt.

COLGATE-PALMOLIVE COMPANY

Historical Financial Summary

For the years ended December 31,

(Dollars in Millions Except Per Share Amounts)

(Unaudited)

(2)Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2019 include $102 of aftertax charges resulting from the Global Growth and Efficiency Program, a $20 aftertax charge for acquisition-related costs, a $20 aftertax benefit related to a value-added tax matter in Brazil and a $29 tax benefit related to Swiss income tax reform.

(3)Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2018 include $125 of aftertax charges resulting from the Global Growth and Efficiency Program, a $15 benefit from a foreign tax matter and an $80 charge related to U.S. tax reform.

(4)Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2017 include $246 of aftertax charges resulting from the Global Growth and Efficiency Program and a $275 charge related to U.S. tax reform.

(5)Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2016 include $168 of aftertax charges resulting from the Global Growth and Efficiency Program, a $63 aftertax gain on the sale of land in Mexico, $11 of aftertax charges for a litigation matter and $35 of benefits from tax matters.

(6)Net income attributable to Colgate-Palmolive Company and earnings per common share for the full year of 2015 include a $1,058 aftertax charge related to the change in accounting for the Company’s Venezuelan operations, $183 of aftertax charges resulting from the Global Growth and Efficiency Program, $22 of aftertax charges related to the remeasurement of the local currency-denominated net monetary assets of the Company's Venezuelan subsidiary (“CP Venezuela”) as a result of effective devaluations, $120 aftertax gain on the sale of the South Pacific laundry detergent business, a $14 aftertax charge for a litigation matter and a $15 charge for a tax matter.

(7)Net income attributable to Colgate-Palmolive Company and earnings per common share in 2014 include $208 of aftertax charges resulting from the Global Growth and Efficiency Program, $214 of aftertax charges related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of effective devaluations, $41 of charges for litigation matters, $3 of aftertax costs related to the sale of land in Mexico and a $66 charge for a tax matter.

(8)Net income attributable to Colgate-Palmolive Company and earnings per common share in 2013 include $278 of aftertax charges resulting from the Global Growth and Efficiency Program, a $111 aftertax charge related to the remeasurement of CP Venezuela’s local currency-denominated net monetary assets as a result of a devaluation, a $23 charge for a litigation matter and $12 of aftertax costs related to the sale of land in Mexico.

(9)Net income attributable to Colgate-Palmolive Company and earnings per common share in 2012 include $70 of aftertax charges resulting from the Global Growth and Efficiency Program, $18 of aftertax costs related to the sale of land in Mexico and $14 of aftertax costs associated with various business realignment and other cost-saving initiatives.

(10)Net income attributable to Colgate-Palmolive Company and earnings per common share in 2011 include an aftertax gain of $135 on the sale of the non-core laundry detergent business in Colombia, offset by $147 of aftertax costs associated with various business realignment and other cost-saving initiatives, $9 of aftertax costs related to the sale of land in Mexico and a $21 charge for a litigation matter.