What is the primary reason for this 8-K filing?

This 8-K filing is to report a change in accounting treatment for Colgate-Palmolive's Venezuelan subsidiary due to Venezuela being designated as hyper-inflationary and new guidance from the SEC staff on accounting for foreign currency issues.

How will this accounting change affect Colgate-Palmolive's reported earnings?

The change will result in a one-time charge against earnings of approximately $275 million in the first quarter of 2010, reducing diluted earnings per share by an estimated $0.53.

Is the $275 million charge related to the Venezuelan currency devaluation?

No, the $275 million charge is related to the accounting treatment of Venezuela's hyper-inflationary status and the resulting currency translation differences. The impact of the currency devaluation itself is a separate, ongoing estimate and is expected to reduce full-year 2010 diluted EPS by $0.06 to $0.10.

CL 8-K SEC Disclosure — Mar 22, 2010

Q: Why is the accounting treatment changing from Other Comprehensive Income to the income statement?

The SEC staff provided guidance indicating that differences previously arising from remeasuring U.S. dollar-denominated assets and liabilities at the parallel rate and translating them at the official rate should now be recognized in the income statement, rather than in Other Comprehensive Income (as a cumulative translation adjustment).

Summary

Colgate-Palmolive Company (CL) filed an 8-K on March 22, 2010, to report a change in accounting for its Venezuelan subsidiary, prompted by new guidance from the SEC staff. Venezuela was designated as hyper-inflationary effective January 1, 2010, which changes the subsidiary's functional currency to the U.S. dollar. This accounting change will result in a one-time charge against earnings in the first quarter of 2010, reducing diluted EPS by approximately $0.53. This charge was previously planned to be recorded as a cumulative translation adjustment in Other Comprehensive Income. The SEC staff's guidance requires that differences previously arising from remeasuring U.S. dollar-denominated assets and liabilities at the parallel rate and translating them at the official rate be recognized in the income statement, rather than in Other Comprehensive Income. This adjustment, totaling approximately $275 million, will be recognized in the first quarter of 2010. It's important to note that this accounting change does not affect the previously disclosed estimate of the impact from Venezuela's currency devaluation.

Key Highlights

1Colgate-Palmolive is changing its accounting for its Venezuelan subsidiary following SEC staff guidance.
2Venezuela was designated as hyper-inflationary effective January 1, 2010, changing the subsidiary's functional currency to the U.S. dollar.
3A one-time charge of approximately $275 million will be recognized in earnings in Q1 2010 due to this accounting change.
4This charge will reduce diluted earnings per share (EPS) by approximately $0.53 for the first quarter and full year 2010.
5The charge will be recognized in the income statement, not in Other Comprehensive Income as previously planned.
6The SEC guidance impacts the accounting treatment of currency translation differences related to U.S. dollar-denominated assets and liabilities.
7This accounting change is separate from and does not affect the estimated impact of Venezuela's currency devaluation on EPS (expected $0.06-$0.10 reduction).

COLGATE PALMOLIVE CO 8-K Report, Corporate Update (Mar 22, 2010)

Summary

Key Highlights

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