Bina Thompson - IR Ian Cook - CEO Dennis Hickey - CFO Victoria Dolan - Corporate Controller Elaine Paik - Treasurer

Dara Mohsenian - Morgan Stanley Wendy Nicholson - Citigroup Caroline Levy - CLSA Ali Dibadj - Bernstein Bill Schmitz - Deutsche Bank Jason English - Goldman Sachs Steve Powers - UBS Chris Ferrara - Wells Fargo Javier Escalante - Consumer Edge Research Joe Altobello - Raymond James Lauren Lieberman - Barclays John Faucher - JP Morgan Alex Paterson - AGI Mark Astrachan - Stifel

Good day, everyone, and welcome to today's Colgate-Palmolive Company's Third Quarter 2015 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Today's conference call will include forward-looking statements. These statements are made on the basis of the company’s views and assumptions as of this time and are not guarantees of future performance. Actual events or results may differ materially from these statements. So for information about certain factors that could cause such differences, investors should consult the company’s reports filed with the Securities and Exchange Commission and available on Colgate’s Web site, including the information set forth under the captions Risk Factors and Cautionary Statements on Forward-looking Statements. This conference call will also include a discussion of non-GAAP financial measures, which differ from the company’s results prepared in accordance with GAAP. Colgate will discuss organic sales growth, which is net sales growth excluding foreign exchange, acquisitions and divestitures. The company will also discuss gross profit, gross profit margin, SG&A, SG&A as percent of net sales, operating profit, operating profit margin, net income and earnings per-share on a diluted basis excluding the impact of the items described in the press release. A full reconciliation of the corresponding GAAP measures is included in the press release and is posted in the Investors section of Colgate’s Web site at www.colgatepalmolive.com. Just a reminder, there may be a slight delay before the question-and-answer session begin due to the web simulcast. Now for opening remarks, I'd like to turn the call over to the Senior Vice President of Investor Relations, Bina Thompson. Please go ahead, Bina.

Thank you, Kelly. Good morning, everybody, and welcome to our third quarter 2015 earnings release conference call. With me this morning are Ian Cook, President, Chairman and CEO; Dennis Hickey, CFO; Victoria Dolan, Corporate Controller and Elaine Paik, Treasurer. We're pleased with the continued solid organic sales growth, of course negative foreign exchange continues to be a major challenge, but as you’ll hear our market shares are strong and growing, one of the best indications of the health of the business. Happily gross profit margin increase in the quarter as a result of our funding the growth initiatives, pricing actions and our global growth and efficiency program. Worldwide our overhead cost are down on a dollar basis. Now while we reported advertising was down on dollar basis, we think we’re getting good results from the dollars we spend both in-store and out. Digital advertising is growing in fact as an example in Latin America we are increasing our investment in digital to better reach our younger audiences as well as to drive engagements. And as we focused on developing strategic collaborations with partners such as Google and Facebook, we’re better able to measure the results of our investments. Marketing mix model studies from several countries across Latin America show an ROI for digital investment that is three to four times higher than TV confirming this shift is right to drive our business. Our balance sheet remain solid and we’re making very good progress on working capital. So let's get right into the divisions starting with North America. Innovation continues to a fuel our success in North America. As mentioned in the press release, our market shares are up year-to-date in toothpaste, manual toothbrushes, mouthwash, liquid hand soap, body wash and fabric conditioners. And this was true on a quarter-over-quarter comparison as well. At the same time, we’ve seen a decline in private label shares in many of our categories indicating the consumers preference for branded products and respect of our equities. In the toothpaste category, the launch of Colgate Total Daily Repair supported by engaging media campaign and strong in-store shopper materials has added incremental share to the base line products. In the whitening segment, we offer a full range of products toothpaste, toothbrushes and mouthwash. Our Colgate Optic White toothpaste has grown share from 2.4% in the third quarter of 2011 to a 5.7% share in the most recent quarter. Colgate Enamel Health has also seen good growth momentum increasing a full share point quarter-over-quarter. Another exciting opportunity is a sensitivity segment where we are a strong number two player. That segment has seen a compound growth of 7.7% over the last four years versus 2.8% for toothpaste overall. In the mouthwash category, where our share is up year-to-date 20 basis points, both Colgate Total for gum health and Colgate Enamel Health mouthwash are picking up momentum. Our Colgate Total for gum health is the number one new item in the leading retailer and receiving full support in-store. In liquid hand soaps, our year-to-date share is up almost a full point to a leading 30.6% while private label products have declined almost two full points year-to-date to the lowest level in at least five years. Premium offerings such as soap Softsoap Fragrant Foaming Collection and Décor Collection foaming hand soap offer distinctive benefits. Similar Softsoap Fresh & Glow body wash with real extract with a unique formula giving you healthy looking skin that glows launched earlier this year has increased our share in that category but almost a full point year-to-date. Fabric conditioner also continue to perform well. Suavitel Fragrance Pearls in-wash scent boosters which provide five times longer lasting fragrance versus detergent alone which we told you about last quarter have helped increase our national share almost a full point year-to-date now approaching 20% of the market. More trial focus programs are expected to drive further growth in the fourth quarter. Now as you’d expect our new product grid is well populated and we will share with you some more exciting innovation slated for early 2016 on future calls. Turning then to Europe, South Pacific. Our business there is showing encouraging signs of recovery with innovation playing a critical role. Our market shares are up year-to-date in toothpaste, manual toothbrushes, body wash, shower gels, underarm protection and fabric conditioners. In toothpaste we’re very excited about the early success of our launch of Colgate Max Light Expert White toothpaste, latest premium offering in this fast growing segment. Launched in the UK in June, it achieved 2.7% share in August and was named the best new toiletries launched for 2015 by one of our larger drug retailers. Two products under the Elmex brand developed specifically for the pharmacy channel, Elmex Sensitive Professional and Elmex ANTI-CARIES PROFESSIONAL has driven our pharmacy share in France to a leadership position 26.3% year-to-date and now ahead of the nearest competitor by 150 basis points. In manual toothbrushes, our leading market share in Europe is up 130 basis points year-to-date to 24.6% with our nearest competitor down to 17.4%. Driving these excellent results has been the launch across the region of our Colgate 360° manual toothbrush line, priced at a super-premium tier these brushes deliver superior cleaning for whole mouth clean and has been supported by a full shopper program. We’re also very encouraged by our launch of Sanex advanced range of body washes, underarm protection and body and hand lotion. This innovation brings dermatological expertise for skin specific needs to a third growth pillar for Sanex leading the brand towards a more professional approach in mass. Early results are excellent. Since launch Sanex is the fastest growing brand in both body washes and underarm and in our top markets of France, Spain and the UK our market shares are up in both categories. In fabric conditioners our market shares are up 20 basis points year-to-date to 24% across the European region with the most recent read at 24.5%. Contributing to this success is Soupline Fruity Sensations with a striking look and feel and new different and long lasting fragrances. More innovation is planned across our categories for the rest of this year and into 2016. Specifically in oral care, we will launching the Colgate Expert toothbrush and built in whitening pen. And as you know that product form has helped drive our manual toothbrush share to record high tier in the U.S. In toothpaste we will be launching Colgate Total Proof. This innovation uses breakthrough color change technology that turns the white paste into a blue foam while brushing, giving consumers the confidence of ultimate clean feeling. Turning then to Latin America. Business across the region is solid and as elsewhere innovation has driven market share increases. Our regional market shares are up year-to-date in toothpaste, manual toothbrushes, mouthwash, toilet soap, liquid soap, shampoo, hand dish and liquid cleaners. And even in the face of some economic uncertainties in countries such as Brazil, our categories still show solid local currency growth. Our regional toothpaste share is up two full points year-to-date to 78.2%. In Brazil our market share is up 50 basis points year-to-date to 72%, the highest share in over 20 years and in the face of continued heightened competitive activity. Colgate Total 12 re-launched in August with the positioning of protects a 100% of the services of the mouth. Now has an 18.5% share in the most recent period. In Mexico our share is up 1 point year-to-date to 81.3% with the most recent read at 81.6%, while our major competitor shows continued share decline. Contributing to this success is our premium priced Colgate Luminous White Advanced, Colgate’s most advanced whitening toothpaste formulated to intensify the whiteness of your teeth by three shades. In manual toothbrushes our market share is up 230 basis points year-to-date to 45.4% with the most recent read at 49.8%. In Mexico we recently reintroduced our Colgate 360° line with a new packaging structure with premium finishing and improved benefit communications, all mouth clean with a 151% more bad breadth bacteria removal. As a result the Colgate 360° equity is up 110 basis points year-to-date reaching a record 11.1% share. Our leading year-to-date bar soap share is at 30.8% with the most recent read at 32%. Record high shares were achieved in Mexico, Columbia and Guatemala and our two equities Protex and Palmolive continue to hold the number one and two position across the regions. In Mexico where we have a strong Home Care business our result to excellent across the three sub categories hand dish, liquid cleaners and fabric conditioners. Our market-shares are up on year-to-date basis 230, 40 and 150 basis points respectively to 52.6%, 33.5% and 48.4%. So looking ahead to further boost our leading manual toothbrush share, we are now in the process of launching Colgate Slim Soft White with 17 times slimmer tip spiraled bristles which provide both whitening and deep, yet gentle cleaning. And innovation launching in fabric conditioners is Suavitel Goodbye Rinse, the market leading Suavitel with an improved no rinse formula. And as you would expect more innovation is planned for 2016 to continue the momentum in this region. Turning then to Asia, we’re pleased with the strength of the business particularly in our two largest markets China and India which both delivered good volume growth, category growth rates remain mid-single digit in China while in India our categories are growing as well. In India, our year-to-date toothpaste share is at almost 55% on a national basis and close to 59% in rural market. Our market leading manual toothbrush share is 43.6% year-to-date and our launch of Colgate Sensitive Pro-Relief Enamel repair toothpaste while in its early days is doing well. Our Colgate 360° Charcoal Gold toothbrush launched earlier in other Asian markets is no contributing to the results in India. This successful innovation with anti-bacterial bristles provides a whole mouth clean and have achieved strong shares across the region in the most recent period, 1.4% in Hong Kong; 2.5% in the Philippines; 1.3% in Taiwan and almost a 1% in Malaysia and has been incremental in each market. More innovation is slated for this quarter and beyond. In China we will be launching two new products developed to appeal to local consumer preferences, Colgate Power White Lemon Salt toothpaste for freshness and whitening experience with a lemon and sea salt flavor and Colgate 360° Gold ginseng gum care toothpaste which contains ginseng essence and enhances the gums power of defense. Two popular Colgate Total variance Charcola Deep Clean and Pro Gum will now be available in a gel format in addition to the paste. And in Thailand in the personal care category, we’re launching products for both men and women. For men, Protex Men 3-in-1 an all-in-one body cleansing solution with anti-bacterial protection and for women Protex Intimate with anti-bacterial protection for long lasting freshness and well-being sensation every day. Africa, Eurasia, as you know several of our larger markets in Africa Eurasia region have been facing major currency headwinds. Despite the pricing actions we have taken to combat the currency headwinds, organic sales growth is holding at mid-single digit. Market shares are increasing and successful innovation is fueling our growth. Our regional toothpaste share is up at full point year-to-date to almost 33%. In Russia, our share is up 230 basis points year-to-date to 34.2% hitting a record share of 35.1% in the most recent period. We recently launched Colgate Maximum Cavity Protection with Sugar Acid Neutralizer which has already reached at 0.7% share year-to-date and contributed to the share gain. In South Africa, our share grew 150 basis points year-to-date to 50.2% driven by a new marketing campaign behind Colgate Total. In toothbrushes our share declined in only one country and was up in the majority of our market. In Russia where we achieved incremental listings in Russia’s number one retailer, our toothbrush share grew 270 basis points year-to-date to 48.1% with the most recent read at 49.4%. And in Turkey our share grew 10 basis points year-to-date to 28.6% with the most recent read at 29.7% and in South Africa our share was up 30 basis points year-to-date to 38.2% with the most recent read at 38.6%. Our bar soap business continued with strong momentum in our two biggest markets Russia and South Africa, the recent introduction of Protex Men Power contributed to a regional share gain of 150 basis points year-to-date to almost 24%. More innovation is slated for this quarter. Across the region we will be relaunching our base Colgate Sensitive toothpaste and our line of Plax mouthwash. In the personal care category, we will launching a body wash occupying the new energizing segment for men’s body wash Palmolive Men Citrus Crush. It invite the consumer to experience an intense invigorating shower with [indiscernible] and grape fruit ingredients sourced from the purest substances of nature and this buzzing citrus fragrance to spoil the senses. And Hill’s, Hill’s delivered another solid quarter of organic sales growth with a good balance of volume and price. Here in the U.S. superstore retail consumption showed a good increase, innovation across Hill’s prescription diet and Hill’s science diet as well as volume growth in our ideal balanced brand contributed to our good results. Our Prescription Diet Metabolic Canine and Feline food continue to gain share around the world. Our new stews form has accelerated our growth in the wet segment. We continue to receive endorsements from key thought leaders and the global rollout this year of Prescription Diet Metabolic Plus breakthrough dual efficacy food with nutrition and clinically proven to address obesity and concurrent conditions has added to the momentum of the business. It’s now selling in 38 countries and has benefited from extensive sampling to drive awareness and trial. Our ongoing global integrated marketing campaign includes professional print online media, in clinic seminars and recommendation tools and testimonial videos to showcase efficacy. In our wellness business one of our newer launches Science Diet Urinary Hairball Control is meeting with excellent results. The only wellness food that addressed the two most common conditions in health cats it was among the top three wet variants in the U.S. marketing during the first three months after its launch and had a very high star rating on Amazon.com. It’s been the product focus for our new professional consultants at PetSmart and Petco and has received good in store activation feedback. Building on our success in the U.S. it is just been launched in Europe. And as we look into 2016 there is more exciting innovation news which we will discuss with you on future calls. So in summary we’re pleased with the continued solid organic sales growth and market share gains around the world. Our innovation pipeline is as full as ever and our savings programs are on track. Colgate people around the world continue to focus on our four strategic initiatives delivering consistent results. So we look forward to sharing our results with you as we finish the year. And now Kelly I should like to turn it over for questions.

Thank you. Today’s question-and-answer session will be conducted electronically for the cell phone audience [Operator Instructions]. And we’ll take our first question from Dara Mohsenian with Morgan Stanley.

So first Ian just a detail question, I think last quarter you’d indicated in local currency advertising will be roughly flat year-over-year as a percent of sales in 2015. Is that still the case? How you think about that line item? And then the real question on that front is, it’s now been six quarters in a row where A&P has been down substantially as a percent of sales. I know you’ve indicated before it’s been funneled back into promotion which has been a fact given the market share performance. But the level of pull back in A&P is really striking relative to your -- traditionally the way you’ve run the business. So what gives you confidence this won’t come back to bite you in the long run in terms of lower demand going forward particularly given the macro situation out there right now?

As you might imagine not an unexpected question, and in answering it as you did let’s take a little bit broader perspective and then come back to your specific question. So the world we’re dealing in today in terms of our categories so I am talking Colgate businesses now and the categories in which we do business not the macroeconomic scene, we have a world where our categories are growing between 0% and 2% in the developed world in Europe at the low end of that and in the U.S. at the upper end of that 0% to 2% growth. In the emerging markets through this call the growth rates in our categories continue to be mid-single digits generally. And our objective, business objective, in that arena has been to have a sustainable rate of growth organically in that 4% to 7% range that we mentioned at the beginning of the year, which we think we continue into the third quarter and we continue to talk about 4 to 7 of the year and indeed as we think about 2016, we begin our budgeting process with the same ambition next year. And the way you get that consistent rate of growth is by building new brands. And you build your brands as measured in market share and as we choose investment vehicles to build those brands you’re focusing on trial and repeat purchase of our new innovation and our existing businesses. And don’t forget in many of these emerging markets consumer behavior is challenged by local category conditions in those markets, and in store engagement can be more persuasive than -- we were all educated as being proper advertising investment. So we balance and like to think we invest smartly in traditional media the traditional television magazine, radio, sampling devices that would be in that advertising number with an increasing shift as Bina pointed out to digital, being both lower cost and better rate of return and frankly in Latin America with the millennials are now the predominant parent generation a better way of engaging with that target group. And you as you indicated the in-store work that we do within these volatile times can be particularly powerful. Now all of that said as we think about going forward and we begin our process for the budget in 2016 even though we haven’t yet fully begun that process, if we look at the array of innovation we have over the next three years starting in 2016, I think it would be safe to say that our expectation would be that our traditional advertising ratios would be up in 2016.

Okay is that on a local currency basis so that’s overall company and also can you give us a sense of where you kind of lead 2015 in terms of the ad ratio?

Well, the ad ratio will be according to our current plan for 2015, will be up quarter-on-quarter for the balance of the year and now I am talking income statement, so I am talking dollar. And if you think about 2016, I think at this stage the expectation would be dollar and of course therefore local currency given what I think most believe will be an improving or at least less bad foreign exchange environment.

We’ll move next to Wendy Nicholson with Citigroup.

Hi. First of all Bina you talked about the Brazilian competitive environment as still being fairly intent. But can you talk a little bit more qualitatively is that more price based competition, is there more advertising, is there more innovation just fighting for shelf and space or just -- I know your shares are good, but directionally what are you seeing there? And then just separately housekeeping on Hills, can you remind us what the split is U.S. versus international sales now for health and maybe in the quarter. How sales performance differed by region? Thank you.

The Brazil, I don’t actually recall Bina’s language, but frankly the Brazilian environment hasn’t become particularly more competitive and historically, it continues to be a competitive marketplace to be sure. But again back to my answer to Dara, with the programs we have and the innovation we have we see our market-share continuing to grow and at 72 as Bina said it's the highest in the last 20 years with our principal competitors both down. So frankly at this stage whatever the threats are in the marketplace, we seem to be meeting them. If we turn to your second question which was around Hill’s, I think it would be fair to say in broad terms that Hill’s is about 50-50 U.S. domestic, international business split.

And it trends internationally versus in U.S. in terms of growth for Hills, similar?

Similar. Yes, I mean the innovation moves from the U.S. around the world and I am pleased to say things like metabolic and metabolic plus are having similar impacts where ever we take them, so yes.

We’ll take our next question from Caroline Levy with CLSA.

I am sorry I hopped a little late, but I am wondering if you address Venezuela and the decision not just sort of take it to worst case scenario in the earnings did I miss something there?

No you didn’t Caroline and I am sure many of you have not yet had the chance to get to our [indiscernible] which was posted earlier this morning. But as you well know from the financial literature and the decisions that one makes in this space any decision that we would take to deconsolidated would be driven by our inability on an ongoing basis to get dollars or if we faced additional restrictions on our ability to make local operating decisions on the ground clearly these are things that we revisit quarter upon quarter and we duly did so for this quarter Caroline, but based on our facts and circumstances and the assessments we made we have chosen to keep reporting Venezuela this quarter and of course that is subject that we will revisit period-by-period as time goes on.

And off the 12% pricing in Latin America then can you say how much is Venezuela?

Well remember the government approved pricing that got in Venezuela which I think was around 70% plus, 74% if I remember correct me, that was in the fourth quarter of last year. So obviously you have the rollover effect. There is pricing obviously we get for the non-regulated businesses but I would tell you that we are getting pricing across Latin America from Mexico down to Argentina.

We’ll go next to Ali Dibadj with Bernstein.

I wanted to ask again about why you are confident that you’re striking the right balance in terms of volume versus margin for the long term? And so take maybe two metrics, one take as the move more and more to in store promotion, and in store displays, doesn’t that suggest that the consumer is making more and more decision at the shelf and that’s been a trend going on for a while. It seems like its accelerating. So does that reduce such a competitive advantage over the long term because I think it’s tough to really differentiate yourself as much in store as one could through traditional media as an example? Perhaps online -- although I’d say that the ROI there is still hefty because we know long term history. So, how you balance that? Is that -- are you setting yourself up in a tougher situation by pushing more in store for the long term given you’re trying to differentiate your brand?

Very good and deep question Ali, as usual. The answer is it’s not either-or and I think if you were to go back to again the days when many of us made our marketing bones, in store activity was pretty rudimentary there was a cardboard display stuck at the end of the shelf with a $0.99 off flag on it hardly brand building in nature and that is why everybody has this aversion if you will to in store investment versus the supposed quality of the engagement we get from their traditional media understanding that that will today is so fragmented that it is less precise than perhaps many of us believed historically. So, no, obviously, you don’t find yourself in a place where all of your engagement with consumer happens at the retail level. So with the data available to us today with the techniques available to us today with some of the in store engagement materials available to us today, which are brand and benefit and therapy open bracket Colgate specific including some times the coloring of the shelves but house oral care products at retail that is a wonderful environment to get consumers to make that final decision particularly if they are in a stressed highly devalued geography. You still have the advertising and we can debate traditional versus digital, but is making the awareness connection and seeking to provoke the trial, but you miss everything if you don’t engage with that consumer when they come to that store to make sure the trial engendered if the your product. So yes it is a balance so it is not a journey to everything at retail but I think the historical perceptions of what you can do at retail and frankly a prejudice that says what you do at retail is by definition not brand building I am afraid it’s a little bit old school.

So besides that I am old school there here --.

That’s allowed [ph] by the way.

But do you think -- so I understand engaging at shelf I mean you guys have seen it, you guys have done it very well the [indiscernible] side slightly all show. I struggle with that being not -- that being differentiated so feeling that that’s probably easier to copy with a little bit of spend in store, with a little bit of more discussion with the merchants in store, then really good copy and whether that’d be digital or not. And it just sounds like you don’t even think that’s the case, it’s not as copy able in store?

Ali, again, take Latin America think about our market share and think about how much of that shelf we have, then think about red, then think about a program that may take a local dentist with an incentive to go to a store and buy Colgate that is hitting you in the face with a therapeutic health message so you’re coming in provoked by the dentist and Colgate is engaging newer shelf, a competitor can spend more money, they’re not going to get that presence at retail. So I would argue it is differentiating and the presence you have at retail with the market shares we have in our specific categories come back to the more fragmented media market, you can argue which is more likely to get the consumers’ attention. Having said that I am still old school and I agree with you a good copy is very important part of a marketing mix, but it’s a marketing mix I would argue it is not simply more of the store, but everything on media. Things are much more balanced.

We’ll go next to Bill Schmitz with Deutsche Bank.

Good morning. You said about doing something in organic, it's been a while since you guys have looked at acquisitions and it seems like the industry is clearly changing very rapidly, there is not as amount of active business twist, there is big focus on cost cutting and it seems like you're pretty deeply penetrated and especially in oral care. So is there anything out there that you guys are thinking about this juncture that would making better leverage from your distribution infrastructure?

Yes, I mean it's clearly a very good question Bill and obviously were I to answer and I’d have to kill you. So I think the headline would be, I think we are very thoughtful and we’re very strategic about acquisition, you have seen that I think in those things that we have acquired. We are all with strategically open to the right acquisition at the right time. As you know these things are little bit of process of serendipity however much you move and peruse and then we are also very disciplined on valuations. You have to live with what you buy for the betterment of the company over the long haul. So I think my answer would be we’re as interested in acquisitions as were in Sanex and GABA and Tom’s and the laser brand in Myanmar and if more were to become available and the price was right, you’d see as this interested going forward as we have been over our recent past. But I wouldn’t make it a tilting point now versus previously.

Okay, great. Can I just have a follow-up, I am asking to read the tea leaves here, but are there any signs that we’re bottoming in emerging market, I know the category growth rates are still fairly healthy, but almost all that’s driven by price and mix. If people get some of the scan volume data flat up very slightly most of that inflation pricing with the absence of a local competitor. So like do you have any thoughts on kind of when we really start to see consumption come back?

I think in terms of physical consumption; first of all some of these markets are growing in volume terms, so it's not everywhere. But you're right, when pricing is very aggressive needs as must from a dollar point of view that tends to depress volume in s short haul so without being glib, I think my answer would be once the necessary wave of pricing is behind us and everybody else that’s taking pricing I think you can expect the balance between price and volume to move back more on to the volume side of the equation. When exactly that will be is difficult to tell I would certainly say it will be no earlier than next year.

We’ll go next to Jason English with Goldman Sachs.

Good morning. Thank you for question. I want to come back to the investment questions against the consumer. So a two part question; one it sounds like you really were in an environment where shifting more to trade makes sense given the sharper marketing components that ways and the engagement the consumer there and digital course playing a larger role. With that said, is it fair to assume that the measurable AMP line in your income statement we should expect that ratio to sales to remain lower than it has been historically? And secondly as you moved straight and move to essentially a counter revenue line item that we can’t see in the P&L, it becomes a little hard to measure for us to see. So can you give us a sense of if we were able to group of trade and measurably compete together and look at that as a percentage of sales how that maybe changing year-to-date for fair versus previous year?

The last one is difficult to do Jason because one comes off gross and the other is measured against net. What I can tell you is that what you are calling trade spending is up this year. But to come back to you more fundamental question, a few things; number one, this notion of shopper marketing is not the third quarter 2015 comment. We have been trying to make this point unsuccessfully for the last two to three years for the reasons ID tailed a little bit earlier. We believe well done it is part of building brands. Number two, you're right digital I think will become an important way to target and reach different consumer groups going forward and that carries with it a different dollar to the traditional media. But no, I would not take the notion this forever going forward our traditional media to sales percentage, the one you do see will be lower and stay lower. That as I said earlier in response to a question I think we’ll be the innovation spread and we have driven by the innovation spread that we have and as I said earlier even though we haven’t finished the budget process, actually we haven’t even started the budget process, but when you look at our innovation grid for the next three years starting in 2016, I think my expectation would be that you will see that ratio head back up a little bit in 2016. So it will move around I am just trying to assert that there is no good and bad, it’s all in the marketing mix and they are all legitimate ways of engaging with consumers. And particularly in volatile times with high devaluations that closure if you will with the consumer on sale in those high devalued emerging markets happen in that retail environment.

So can you help me understand why it’s hard to give us sense of the trade spend number? I mean you know the number instead of divided by growth, you could just divide it by net to give us the ratio. Am I over simplifying it by thinking about it that way?

No, you’re not. We haven’t done that, let us think about that, we could do that it is then a created number.

We’ll move next to Olivia Tong with Bank of America Merrill Lynch.

So just on advertising, you’ve mentioned it should go up next year. But do you think this level with abnormally low and you will see a big move upwards next year or is there plan for up but not materially so in 2016. And what are you seeing in terms of the decision on promo versus advertising from your major competitors. Because I asking in the context that Proctor sort of shifting some of their trying to realize more margin potentially as a detriment of sale in some cases? Thanks.

Well, first of all, I had tried to explain the third quarter this year. It is a quarter I wouldn’t have said about it, I don’t think it’s abnormally low and therefore as we approach our 2016 budget we’re saying oh we need to get it back up to X or Y level, I do believe, we do believe that with the richness of innovation we have the expectation will be that it will be up, how much it will be up, we will know when we finish our budgeted process. Now as you look around the world and something I elected not to say let’s one sounds defensive but as you go around the world in many parts of the world you continue to see many of our multinational competitors pull back on traditional advertising quite substantially and then many of that fee market, even if you take the old fashioned measure of share or voice, we remain just on the face of it quite competitive. Now, we have seen some collaborating signals of certain businesses exited by competitors in order to realize price you see the public information in India and you see that in the market place. But if we take the breadth of our business, there is nothing I would point to say, the shape of the promotional environment that we’re in has meaningfully changed.

So I can just move to restructuring. Are you pushing harder on the initiatives you’ve already outlined or these new areas that you will be exploring? And will this result in more savings starting in 2016 or is it just an extension to another year of savings? And as you think about reinvestment versus dropping to the bottom line, are there any shifts there in terms of how you think about this new tranche of restructuring savings.

Let’s take a step back Olivia. Clearly, when we began this program, which by the way is a lot shorter than many of our competitors. But when we began the program we had three key areas and we said at the beginning that it was a global growth and efficiency program and that it was a journey. So, we were establishing hubs and we were establishing business service centers and we were transferring lifting and shifting if you will capabilities to the new structure that we were building that was supported by SAP across out Company. So this gives us the opportunity to transform a little bit what, we are doing with the new structure that we are creating and do it in a time bound window of 2017 rather than extending it over a longer period. So it is very definitely still within the three areas that we defined at the beginning of the restructuring, no new areas. It is definitely one more year. And as we said in the release we’ll be coming back to you early in the New Year with flushed out ranges of costs for the program and savings. So on that one, we’ll back to you in the new-year.

We’ll go next to Steve Powers with UBS.

Great, thanks. I guess just to cleans up on topics already discussed on Venezuela acknowledging every situation is different, is it fair to assess at least the likelihood of deconsolidation rising on the margin, it feels that way from the outside. I just want to get your perspective on that? And second much to the restructuring that Olivia asked about, is there -- so should we’ll be thinking about more opportunity in this next wave building on the hunting, thread, shared services is there a focus area within the three that is going to be of weight or maybe -- I am just trying to get a sense for where the incremental focus will go either in terms of focus stream or geography?

On your Venezuela comment, all I can say Steve is that this is something we revisit quarter-by-quarter based on the facts and circumstances that present themselves in each of the quarters and we will continue to do that. So I really and specifically do not want to share how we’re thinking about it. We will be resolutely objective and make whatever decisions we think are appropriate based on the fact and circumstances at the time. Now when you turn to the restructuring, I would say simplistically and we will be back with richer commentary next year, I would say specifically what we’re talking about and activities that will be more transformational in how we used the hubs we have created and how we use the service centers we have created more fulsomely. And I hold it there at this stage. So it is greater utilization around the basic structures that we will have fully established by next year.

We’ll go next to Chris Ferrara with Wells Fargo.

The SG&A excluding advertising in the quarter, looks likes it picked up maybe by 100 basis points year-on-year. So can you go through a little bit what might have driven that, I mean is that some of the shift in store, there is some promotional activity?

Chris that is straight forward leverage, our overheads -- our drawn [ph] overheads were actually down year-on-year with the benefits we’re getting from the restructuring program. But there is a lot of overhead that is dollar denominated and when you have the downward pressure of 13% foreign exchange on the top-line you end up with a leverage negative and it is entirely traceable to that negative leverage.

I guess than the follow-up to that would be, why didn’t we see it nearly to that extent last quarter when it was publicly a pretty similar dynamic around the top-line drivers?

I don’t know, the only other mix in it is the mix of countries. So it may have been a country mix issue, we’ll have to get back to you on that, I don’t have the answer at my fingertips.

We’ll go next to Javier Escalante with Consumer Edge Research.

Good morning everyone. Actually my clarification has to do with Chris’ because it seems like headquartered expenses run the highest since 2009 and I was surprised because of the having and is this Forex or something else going on in that line? And I do have a question with regards to commercial spending and category growth if I can. Thank you.

What you called it, corporate overhead is flat. So as I answered before on this quarter, it's definitely a leverage. And your question on spending is?

Basically in the past and we know that the fact that this market shares are up across the board in oral care, it shouldn’t be a huge change. But especially in the past when advertising has been down there have been commentary regarding aggregate commercial spending which include trader spending. And trader spending is typically in magnitude two to three times advertising. So could you tell us whether the aggregate of commercial spending is up or not and in the case of category you mentioned that the category has kind of like bottomed out, this is in reference to Bill Schmitz question? So could you clarify whether is it that the category we’re seeing negative mix because of the price increases or actual volumes have slowdown? Because it seems as if considering all the market-share gains, all the pricing that you're taking in oral care the organics could have been better? So sorry for the too many questions. Thank you.

Well the oral care organic sales were better than the company average number one. Number two, in terms of total spending you're right, the trade spending as a ratio is a multiple of over three times the traditional advertising spending and relative to the category growth rates Bill’s question was to do with volume and my answer to the question was a balance between volume and price. And he was asking whether the volume was bottoming out and would come back and I think the answer we gave was you would expect that balance to come back once the higher pricing that has being taken had worked its way through and that we didn’t expect that to be earlier than 2016.

But if I may, so the question that I have is based on your assessment are you seeing, when you talk about volumes there is this interplay between mix and actual tonnage if you will. So my question is whether because of the price increases you were seeing negative mix within Colgate’s portfolio? Thank you.

And the answer is we’re not going to get into that level of detail.

We’ll go next to Joe Altobello with Raymond James.

Just had a question on pricing in Latin America, it sounds like in your answer to Javier that you’re waiting on some of your competitors to match on the price increases you guys have taken. And I am just curious when you talk about your competitors in Latin America, are they mostly local competitors who don’t have the same currency headwinds that you guys are facing right now, or are they multinationals who do have the same currency headwinds?

We have both, the locals tend to be more country specific, Columbia and Mexico. So they tend to be both. And if I said it then I apologize, I didn’t mean to say it. We’re not waiting on anybody. We have been taking pricing in Latin America and I would further say when you look at the breakdown of raw materials in today’s world many of those raw materials are dollar denominated, so even a local competitor is going to get hit with the local currency transaction impact of raw materials coming into the country. So I would say that the incentive to price is fairly elevated across the board.

Okay, that was my question, yeah. I was trying to get to when they would follow your lead essentially on the pricing side. And then on the follow up in terms of advertising spending, I know we’ve beaten this to death a little bit here. But can you give us a sense for what U.S. advertising did in the quarter year-over-year? Thanks.

Again we’re not going to get into that level of country by country detail.

We’ll go next to Lauren Lieberman with Barclays.

So if you could talk a little bit about Europe, actually, this is with organic sales being down this quarter, it’s actually the first time we’ve seen that in quite a while. So, big deceleration in volume and my understanding is there has been little bit of premium based innovation going into market, so just surprised to see volume which we know as volume and mix be so light. Could you talk a little bit about your, that would be great? Thank you.

I think when you look at the European environment obviously it’s our lowest growth area of the world. I think the good news is that although pricing has been consistently negative in Europe if you look at the three quarters this year it has become positively less negative, unfortunately we had the volume negative in the third quarter. And I would say -- we would say that that is going to come back and we’re certainly planning for positive organic growth going forward.

Were there any particular big buckets of product launches, appointment, it’s just that it’s a pretty significant change in trend on volume?

The only thing I would comment to Lauren is that we had a situation in our Europe West grouping which is essentially our Germanic grouping which had to do with the transfer to a new distribution center which disrupted the shipments of that operation specifically in the quarter. So I think I know Europe was in part affected by that on the volume side which we see, A, as one time and B, already corrected and coming back in the fourth quarter. But it did have an effect beyond the usual market travails in Europe.

And then just similarly on Latin America, it’s pretty rare to see volume go negative. I mean I understand the pricing environment obviously and that volumes have been light. But it is rare to see volume go negative. So just thoughts on what comes next there, understanding shares have been solid and market growth you said is kind of stuck in the single digit?

Again you’re right it has to do with the pricing. You can see that the pricing of course is more elevated than the prior two quarters in Latin America and we took strong pricing in Brazil which had an impact on volume and usually the way that works is that as I said earlier once the pricing works its way through than the volume comes back, the categories are still growing mid-single digit. So we hope things stay to the normal cycle of events.

Thank you. And then just so the call doesn’t end without anyone asking, could you share the gross margin bridge for the quarter? It will be great.

No.

But then my model breaks down.

Third quarter the prior year gross profit was 58.6%, we got 140 basis points positive from pricing, but our funding the growth savings and the restructuring, we got favorable 270 basis points, so funding the growth continuing to do very well. On material pricing there was a headwind of 390 basis points and so the offset of the resulting 120 basis points negative to the 140 on pricing gets you the plus 20 and meaningfully over half of the 390 basis points negative was to do with the transaction impact to foreign exchange.

We’ll move next to John Faucher with JP Morgan.

Yes, good morning and I guess its afternoon now. So I’ll try to keep this quick. One clarification which is I think you said that Venezuela pricing was up 74% and if I look at that that would be pretty much all of the Latin America pricing.

No, no, John sorry, what I said was the official price increase that we were granted was 74% in the fourth quarter of last year. So on some businesses, so that is --.

On some businesses, okay, I got it, that’s what I thought, I just want to make sure. And then as we look out, I know you guys don’t want to get into quarterly stuff here. If you look at it is a more difficult comparison as we look into the fourth quarter. Just sequentially, do you feel like more the pricing flows through and again not looking for specific guidance, but it seems like sort of the lower end of your four to seven range is probably the right way to be in the fourth quarter, is that the right way to think about it?

I am not sure, I would go all the way there John, I think we’re comfortable with the four to seven range, I think your sense of pricing is right. We still have recovery to move the gross margin because to get to flat on the year, we have to be as you’ll calculate from the squeeze, we have to be up on the quarter. So it will be within range, I think we are thinking if you take the nine months to it would be kind of around there.

We’ll go next to Alex Paterson with AGI.

Hi Ian, so just a couple of quick ones in the specialty pet channel, have you seen much in the way of a deflationary impact due to lower commodity cost which seem to be impacting the mass channel, has that flowed into that channel for you? And then secondly just curious about the cash you’ve been building and the cash sources are you able to repatriate like you’ve been able to do in the past the cash generation especially in emerging markets back to the U.S. whereas most of that locked into those markets?

On the first -- again without being glib, the answer is a simple, no. Particularly in our segment of the pet nutrition business which tends to be the more premium and so we have not seen it creep into specialty. Cash repatriation, Venezuela is Venezuela, absent Venezuela it's the same as it has always been. So we have the ability to repatriate sometimes timings is variable country-by-country but no change from prior.

We’ll take our last question from Mark Astrachan with Stifel.

So going back to the advertising, I guess the effectiveness of digital would seem to vary by category for various reason. So I am curious assuming if there is some truth to that, are there specific categories in which ads spend is still up year-on-year or up greater than it appears to be and maybe talk directionally about it category-by-category, if you can?

I probably could, but I am not going to. I don’t think Mark because we’re not going to get into that level of detail. I would say to your general point on digital, it’s less category specific, although the category maybe linked to the user, its more which use that you're trying to get to and how they access. We just went through an extensive review for example in Latin America, majority of viewers millennial. They happen to be a growing majority of parents. They happen to do an awful lot on Facebook and they happen to be avid viewers of YouTube video. So do you want to connect with that group then the best way to get your advertising message to that group is YouTube videos and to do so in a way that is purpose driven. So if you were to Google all of that you’d see some pretty interesting work from our point of view. But it tends to be more driven by the viewer than it does by the category. Okay. Well, good. Is that it?

That’s it.

Okay. Then, thank you all for your questions and thanks to all the Colgate people around the world that deliver the results. Thank you everybody.

That does conclude today’s conference. We thank you for your participation.