Restructuring and Related Implementation Charges

In the fourth quarter of 2012, the Company commenced a four-year Global Growth and Efficiency Program (the 2012 Restructuring Program) for sustained growth. The program’s initiatives are expected to help Colgate ensure continued solid worldwide growth in unit volume, organic sales and earnings per share and enhance its global leadership positions in its core businesses.

Implementation of the 2012 Restructuring Program is projected to result in cumulative pretax charges, once all phases are approved and implemented, totaling between $1,100 and $1,250 ($775 and $875 aftertax), which are currently estimated to be comprised of the following categories: Employee-Related Costs, including severance, pension and other termination benefits (50%); asset-related costs, primarily Incremental Depreciation and Asset Impairments (15%); and Other charges, which include contract termination costs, consisting primarily of implementation-related charges resulting directly from exit activities (20%) and the implementation of new strategies (15%). Due to the acceleration of the implementation of certain program initiatives, the anticipated pretax charges for 2013 increased to approximately $365 to $390 ($290 to $305 aftertax) from approximately $260 to $310 ($185 to $220 aftertax) with no change to the amount of expected total program charges. Over the course of the 2012 Restructuring Program, it is estimated that approximately 75% of the charges will result in cash expenditures.

It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15%), Europe/South Pacific (20%), Latin America (5%), Asia (5%), Africa/Eurasia (5%), Hill’s Pet Nutrition (10%) and Corporate (40%), which includes substantially all of the costs related to the implementation of new strategies, noted above, on a global basis.

For the three and nine months ended September 30, 2013, restructuring and implementation-related charges are reflected in the income statement as follows:



	Three Months Ended		Nine Months Ended
	September 30, 2013		September 30, 2013
Cost of sales	$	8	$	26
Selling, general and administrative expenses	9		31
Other (income) expense, net	13		141
Total 2012 Restructuring Program charges, pretax	$	30	$	198

Total 2012 Restructuring Program charges, aftertax	$	22	$	153

Restructuring and related implementation charges in the preceding table are recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance. Total charges for the 2012 Restructuring Program for the three months ended September 30, 2013 relate to initiatives undertaken in North America (13%), Europe/South Pacific (22%), Latin America (6%), Hill’s Pet Nutrition (29%) and Corporate (30%). Total charges for the 2012 Restructuring Program for the nine months ended September 30, 2013 relate to initiatives undertaken in North America (20%), Europe/South Pacific (35%), Latin America (6%), Africa/Eurasia (4%), Hill's Pet Nutrition (8%) and Corporate (27%). Total program-to-date accumulated charges for the 2012 Restructuring Program relate to initiatives undertaken in North America (14%), Europe/South Pacific (42%), Latin America (4%), Africa/Eurasia (3%), Hill's Pet Nutrition (6%) and Corporate (31%).

Since the inception of the 2012 Restructuring Program in the fourth quarter of 2012, the Company has incurred pretax cumulative charges of $287 ($223 aftertax) in connection with the implementation of various projects as follows:



	Cumulative Charges
	as of September 30, 2013
Employee-Related Costs	$	169
Incremental Depreciation	20
Asset Impairments	1
Other	97
Total	$	287

The majority of costs incurred since inception relate to the following projects: 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; other exit costs related to office consolidation; and the restructuring of certain commercial operations in advance of implementing an overall hubbing strategy.

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



	Three Months Ended September 30, 2013
	Employee-Related Costs			Incremental Depreciation			Asset Impairments		Other			Total
Balance at June 30, 2013	$	141		$	—		$	—	$	31		$	172
Charges	5			5			—		20			30
Cash payments	(40		)	—			—		(11		)	(51		)
Charges against assets	—			(5		)	—		—			(5		)
Foreign exchange	—			—			—		—			—
Balance at September 30, 2013	$	106		$	—		$	—	$	40		$	146



	Nine Months Ended September 30, 2013
	Employee-Related Costs			Incremental Depreciation			Asset Impairments			Other			Total
Balance at December 31, 2012	$	84		$	—		$	—		$	5		$	89
Charges	91			20			1			86			198
Cash payments	(52		)	—			—			(51		)	(103		)
Charges against assets	(17		)	(20		)	(1		)	—			(38		)
Foreign exchange	—			—			—			—			—
Balance at September 30, 2013	$	106		$	—		$	—		$	40		$	146

Employee-related costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-related costs also include pension and other retiree benefit enhancements amounting to $17 for the nine months ended September 30, 2013, which are reflected as Charges against assets within Employee-related costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension and other retiree benefit liabilities.

Incremental depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived assets that will be taken out of service prior to the end of their normal service period. Asset impairments are recorded to write down assets held for sale or disposal to their fair value based on amounts expected to be realized. Asset impairments are net of cash proceeds pertaining to the sale of certain assets.

Other charges consist primarily of implementation-related charges resulting directly from exit activities and the implementation of new strategies as a result of the 2012 Restructuring Program. These charges for the three and nine months ended September 30, 2013 included third-party incremental costs related to the development and implementation of new business and strategic initiatives of $11 and $35, respectively, and contract termination costs of $8 and $27, respectively, directly related to the 2012 Restructuring Program. These charges were expensed as incurred. These charges, for the nine months ended September 30, 2013, also included a charge for other exit costs related to office space consolidation of $24.