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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-Q
_________________________
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________ to________ .
Commission File Number: 1-644
COLGATE-PALMOLIVE COMPANY
(Exact name of registrant as specified in its charter)
Delaware13-1815595
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
300 Park Avenue
New York,New York10022
(Address of principal executive offices)(Zip Code)
(212) 310-2000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $1.00 par valueCLNew York Stock Exchange
0.000% Notes due 2021CL21ANew York Stock Exchange
0.500% Notes due 2026CL26New York Stock Exchange
1.375% Notes due 2034CL34New York Stock Exchange
0.875% Notes due 2039CL39New York Stock Exchange

NO CHANGES
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
ClassShares OutstandingDate
Common stock, $1.00 par value857,400,188June 30, 2020




PART I. FINANCIAL INFORMATION


COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Income
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
 
 Three Months EndedSix Months Ended
June 30,June 30,
2020201920202019
Net sales$3,897  $3,866  $7,994  $7,750  
Cost of sales1,528  1,558  3,160  3,155  
Gross profit2,369  2,308  4,834  4,595  
Selling, general and administrative expenses1,395  1,369  2,868  2,734  
Other (income) expense, net28  51  68  94  
Operating profit946  888  1,898  1,767  
Non-service related postretirement costs20  27  41  52  
Interest (income) expense, net35  38  71  78  
Income before income taxes891  823  1,786  1,637  
Provision for income taxes216  205  363  419  
Net income including noncontrolling interests675  618  1,423  1,218  
Less: Net income attributable to noncontrolling interests40  32  73  72  
Net income attributable to Colgate-Palmolive Company$635  $586  $1,350  $1,146  
Earnings per common share, basic$0.74  $0.68  $1.58  $1.33  
Earnings per common share, diluted$0.74  $0.68  $1.57  $1.33  



See Notes to Condensed Consolidated Financial Statements.

2




COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Comprehensive Income
(Dollars in Millions)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
2020201920202019
Net income including noncontrolling interests$675  $618  $1,423  $1,218  
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments68  25  (287) 51  
Retirement plans and other retiree benefit adjustments14  13  30  25  
    Gains (losses) on cash flow hedges(21) (2) (3) (7) 
Total Other comprehensive income (loss), net of tax61  36  (260) 69  
Total Comprehensive income including noncontrolling interests736  654  1,163  1,287  
Less: Net income attributable to noncontrolling interests40  32  73  72  
Less: Cumulative translation adjustments attributable to noncontrolling interests3  (5) (13)   
Total Comprehensive income attributable to noncontrolling interests43  27  60  72  
Total Comprehensive income attributable to Colgate-Palmolive Company$693  $627  $1,103  $1,215  
See Notes to Condensed Consolidated Financial Statements.

3



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Balance Sheets
(Dollars in Millions)
(Unaudited)
June 30,
2020
December 31,
2019
Assets
Current Assets
Cash and cash equivalents$997  $883  
Receivables (net of allowances of $85 and $76, respectively)
1,231  1,440  
Inventories1,524  1,400  
Other current assets460  456  
Total current assets4,212  4,179  
Property, plant and equipment:  
Cost8,197  8,580  
Less: Accumulated depreciation(4,714) (4,830) 
 3,483  3,750  
Goodwill3,628  3,508  
Other intangible assets, net2,787  2,667  
Deferred income taxes224  177  
Other assets807  753  
Total assets$15,141  $15,034  
Liabilities and Shareholders’ Equity  
Current Liabilities  
Notes and loans payable$253  $260  
Current portion of long-term debt255  254  
Accounts payable1,189  1,237  
Accrued income taxes500  370  
Other accruals2,383  1,917  
Total current liabilities4,580  4,038  
Long-term debt6,884  7,333  
Deferred income taxes400  507  
Other liabilities2,545  2,598  
Total liabilities14,409  14,476  
Shareholders’ Equity  
Common stock1,466  1,466  
Additional paid-in capital2,666  2,488  
Retained earnings22,731  22,501  
Accumulated other comprehensive income (loss)(4,519) (4,273) 
Unearned compensation(1) (2) 
Treasury stock, at cost(22,075) (22,063) 
Total Colgate-Palmolive Company shareholders’ equity268  117  
Noncontrolling interests464  441  
Total equity732  558  
Total liabilities and equity$15,141  $15,034  
See Notes to Condensed Consolidated Financial Statements.

4



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
(Unaudited)
Six Months Ended
 June 30,
 20202019
Operating Activities  
Net income including noncontrolling interests$1,423  $1,218  
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:  
Depreciation and amortization266  256  
Restructuring and termination benefits, net of cash(35) 21  
Stock-based compensation expense32  34  
Deferred income taxes(147) 53  
Voluntary benefit plan contributions  (102) 
Cash effects of changes in:
Receivables121  (178) 
Inventories(176) (63) 
Accounts payable and other accruals347  (14) 
Other non-current assets and liabilities(37) 24  
Net cash provided by operations1,794  1,249  
Investing Activities  
Capital expenditures(159) (146) 
Purchases of marketable securities and investments(48) (80) 
Proceeds from sale of marketable securities and investments42  14  
Payment for acquisitions, net of cash acquired(352)   
Net cash used in investing activities(517) (212) 
Financing Activities  
Principal payments on debt(2,102) (3,105) 
Proceeds from issuance of debt1,620  3,368  
Dividends paid(784) (770) 
Purchases of treasury shares(228) (664) 
Proceeds from exercise of stock options353  267  
Net cash provided by (used in) financing activities(1,141) (904) 
Effect of exchange rate changes on Cash and cash equivalents(22) 4  
Net increase (decrease) in Cash and cash equivalents114  137  
Cash and cash equivalents at beginning of the period883  726  
Cash and cash equivalents at end of the period$997  $863  
Supplemental Cash Flow Information  
Income taxes paid$349  $463  
See Notes to Condensed Consolidated Financial Statements.

5



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders Equity
(Dollars in Millions)
(Unaudited)
Three Months Ended June 30, 2020
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, March 31, 2020
$1,466  $2,623  $(1) $(22,104) $22,481  $(4,578) $454  
Net income635  40  
Other comprehensive income (loss), net of tax
58  3  
Dividends ($0.44 per share)
(386) (33) 
Stock-based compensation expense
16  
Shares issued for stock options
27  33  
Shares issued for restricted stock units
(2) 2  
Treasury stock acquired
(8) 
Other2  2  1  1
Balance, June 30, 2020
$1,466  $2,666  $(1) $(22,075) $22,731  $(4,519) $464  
Three Months Ended June 30, 2019
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, March 31, 2019
$1,466  $2,241  $(3) $(21,532) $21,436  $(4,160) $342  
Net income586  32  
Other comprehensive income (loss), net of tax
41  (5) 
Dividends ($0.43 per share)
(369) (32) 
Stock-based compensation expense
17  
Shares issued for stock options
81  113  
Shares issued for restricted stock units
(1) 1  
Treasury stock acquired
(265) 
Other1  
Balance, June 30, 2019
$1,466  $2,338  $(3) $(21,682) $21,653  $(4,119) $337  
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,402 at June 30, 2020 ($3,104 at June 30, 2019) and $3,467 at March 31, 2020 ($3,134 at March 31, 2019), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,108 at June 30, 2020 ($1,013 at June 30, 2019) and $1,122 at March 31, 2020 ($1,026 at March 31, 2019), respectively.







See Notes to Condensed Consolidated Financial Statements.

6



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders Equity
(Dollars in Millions)
(Unaudited)
Six Months Ended June 30, 2020
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2019
$1,466  $2,488  $(2) $(22,063) $22,501  $(4,273) $441  
Net income1,350  73  
Other comprehensive income (loss), net of tax
(247) (13) 
Dividends ($1.31 per share)*
(1,124) (37) 
Stock-based compensation expense
32  
Shares issued for stock options
160  197  
Shares issued for restricted stock units
(17) 17  
Treasury stock acquired
(228) 
Other3  1  2  4  1
Balance, June 30, 2020
$1,466  $2,666  $(1) $(22,075) $22,731  $(4,519) $464  
Six Months Ended June 30, 2019
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2018
$1,466  $2,204  $(3) $(21,196) $21,615  $(4,188) $299  
Net income1,146  72  
Other comprehensive income (loss), net of tax
69  
Dividends ($1.28 per share)*
(1,103) (34) 
Stock-based compensation expense
34  
Shares issued for stock options
114  162  
Shares issued for restricted stock units
(14) 14  
Treasury stock acquired
(664) 
Other2  (5) 
Balance, June 30, 2019
$1,466  $2,338  $(3) $(21,682) $21,653  $(4,119) $337  
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,402 at June 30, 2020 ($3,104 at June 30, 2019) and $3,128 at December 31, 2019 ($3,155 at December 31, 2018), respectively, and unrecognized retirement plan and other retiree benefits costs of $1,108 at June 30, 2020 ($1,013 at June 30, 2019) and $1,138 at December 31, 2019 ($1,038 at December 31, 2018), respectively.

* Two dividends were declared in each of the first quarters of 2020 and 2019
See Notes to Condensed Consolidated Financial Statements.

7


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

1. Basis of Presentation

The Condensed Consolidated Financial Statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair statement of the results for interim periods. Results of operations for interim periods may not be representative of results to be expected for a full year. Colgate-Palmolive Company (together with its subsidiaries, the “Company” or “Colgate”) reclassifies certain prior year amounts, as applicable, to conform to the current year presentation.

For a complete set of financial statement notes, including the Company’s significant accounting policies, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”).

2.  Use of Estimates

Provisions for certain expenses, including income taxes, advertising and consumer promotion, are based on full year assumptions and are included in the accompanying Condensed Consolidated Financial Statements in proportion with estimated annual tax rates, the passage of time or estimated annual sales, as applicable.

3. Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“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 new 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 includes 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 new 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 new guidance is effective for the Company beginning on January 1, 2021, with early adoption permitted. This new 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 new guidance is effective for the Company beginning on January 1, 2021, with early adoption permitted. This new guidance is not expected to 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 new guidance was effective for the Company beginning on January 1, 2020. The new guidance did not have a material impact on the Company’s Consolidated Financial Statements.


8

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


In 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 new 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 new 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 new 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) Codification Improvements to Financial Instruments-Credit Losses (Topic 326).” Subsequent updates were released in November 2018 (ASU No. 2018-19), November 2019 (ASU No. 2019-10 and 2019-11) and February 2020 (ASU No. 2020-02) that provided additional guidance on this Topic. This ASU introduces the CECL model, which will require 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 will be 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.
9

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


4. Acquisitions

Hello Products LLC

On January 31, 2020, the Company acquired Hello Products LLC, 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 preliminary estimated fair values as follows:
Receivables $11  
Inventories 13  
Other assets and liabilities, net (4) 
Other intangible assets 160  
Goodwill171  
Fair value of net assets acquired$351  
Other intangible assets acquired include trademarks, now valued at $115, which are now 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. In the second quarter of 2020, the Company revised its estimate of the fair value of intangible assets acquired and decreased other intangible assets by $40, with a corresponding increase to goodwill.

The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in additional adjustments to the preliminary values discussed above. The Company expects to finalize the purchase price allocation no later than the first quarter of 2021.

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

Laboratoires Filorga Cosmétiques (“Filorga”)

On September 19, 2019 (the “Acquisition Date”), 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.
10

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



The total purchase price consideration of $1,712 has been allocated to the net assets acquired based on their respective preliminary estimated fair values as follows:
Cash$30  
Receivables53  
Inventories70  
Other current assets18  
Other intangible assets1,051  
Goodwill923  
Other current liabilities(67) 
Deferred income taxes(276) 
Noncontrolling interests(90) 
Fair value of net assets acquired$1,712  
Other intangible assets acquired include trademarks of $774, which are considered to have an indefinite useful life, and customer relationships of $277, which have an estimated life of 14 years. Goodwill of $923 was allocated to the Europe segment. The Company expects that goodwill will not be deductible for tax purposes.

The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in adjustments to the preliminary values discussed above. The Company continues to evaluate potential contingencies that may have existed as of the acquisition date and expects to finalize the purchase price allocation no later than the third quarter of 2020.

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


11

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


5. Restructuring and Related Implementation Charges
        
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. There were no restructuring and implementation-related charges incurred for the three and six months ended June 30, 2020.

For the three and six months ended June 30, 2019 restructuring and implementation-related charges are reflected in the income statement as follows:
Three Months EndedSix Months Ended
June 30, 2019June 30, 2019
Cost of sales$(3) $8  
Selling, general and administrative expenses10  14  
Other (income) expense, net33  46  
Non-service related postretirement costs2  3  
Total Global Growth and Efficiency Program charges, pretax$42  $71  
Total Global Growth and Efficiency Program charges, aftertax$31  $53  
Restructuring and implementation-related charges in the preceding table were recorded in the Corporate segment as these decisions were predominantly centrally directed and controlled and were not included in internal measures of segment operating performance.
















12

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



The following tables summarize the activity for restructuring accrual:
Three Months Ended June 30, 2020
 Employee-Related
Costs 
Incremental
Depreciation 
Asset
Impairments
OtherTotal
Balance at March 31, 2020$10  $  $  $59  $69  
Charges          
Cash payments(4)     (1) (5) 
Charges against assets          
Foreign exchange          
Other