Colgate: Respecting TheWorld Around Us

Living Our Values For Sustainability Vietnam

Colgate’s World of Respect

Respect is the cornerstone of Colgate’s global success. As a $9.9 billion consumer products company, we serve people around the world with well-known brands that make their lives healthier and more enjoyable. Wherever we do business, we work with respect for each other, our business partners, our environment, communities and other interested stakeholders. page ■2

Respect For We show our respect for each other, shareholders, consumers, customers and suppliers in all that we do. Our initiatives and policies reinforce our commitment to People these important stakeholders. page ■6

Respect For Upholding our global value of caring, we support community programs ranging from promoting good health and hygiene to encouraging education for children Communities and adults. page ■18

Respect For For Colgate, respecting the environment is an integral part of respecting the world around us. We have made steady progress in using precious resources more efficiently, Our Planet yet we acknowledge there is still much to be done. page ■24

Respect For Colgate strives to fulfill its responsibilities to people, communities and our planet as a member of the global community. We recognize that we must continuously improve Tomorrow our efforts. page ■30 A Message From Senior Management

Colgate’s success is founded on the Company’s core values of Caring, Continuous Improvement and Global Teamwork. Evident in all aspects of our business, these values are the driving force behind everything we do. They are the reason for our commitment to providing safe, high quality products that enhance the lives of consumers around the world. These values fuel our suc- cessful long-term efforts to increase shareholder return, and they guide our efforts to create a workplace where all Colgate people act with integrity and Reuben Mark with respect for one another. Given their overwhelming importance, our values are the logical focus for this report outlining Colgate’s social, environmental, and economic per- formance and our enduring respect for the people and the world around us. As we begin sharing this information more broadly, our goal is to communicate the nature of our business operations, our commitment to people and their development, the impact of our values on our activities, and our support for

William S. Shanahan the communities in which we live and work. As we expand our global data collection regarding our social, environmental, and economic performance as well as other sustainability indicators, we expect our reports to grow and evolve. We understand that our work is never done and that we have opportunities for improvement. In subsequent reports, we will update you on these areas and show you how our value of Continuous Improvement has made a difference to our business, people, communities and the world around us. In this first report about our values in action, you will see evidence of

Lois D. Juliber how Colgate people strive to simultaneously achieve business success and contribute to the global community. You will see that Colgate’s commitment to its values includes consistent programs and processes around the world creating a global culture based upon integrity. ■1 We strongly believe that our responsibility to promote shareholder interests includes our duty to act responsibly in all aspects of our business. Our values have been and will continue to be our guide in fulfilling these duties to share- holders, Colgate people, consumers and all who depend upon us. We welcome

Ronald T. Martin your interest in these most important aspects of our Company.

Reuben Mark William S. Shanahan Lois D. Juliber Ronald T. Martin Chairman & President Vice Chairman Vice President, Global Chief Executive Officer Business Practices & Corporate Social Responsibility Colgate’s World of Respect

Respect is the cornerstone of Colgate’s global success. As a $9.9 billion consumer products company, we serve people around the world with well-known brands that make their lives healthier and more enjoyable. Wherever we do business, we work with respect for each other, our business partners, our environment, communities and all of our stakeholders.

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Colgate traces its origins to 1806 when an company. The name was subsequently English immigrant, , started a changed to Colgate- Company. By starch, soap and candle business in New York that time, the Company was selling laundry City. The Company became Colgate-Palmolive- soap as well as many different kinds of toilet Peet in 1928 after joining with another soaps, perfume and dental products. The Company’s leadership in Oral Care goes back more than a century when, after selling dental cream in jars, Colgate made its product much Colgate Today more convenient by developing collapsible ■2 toothpaste tubes similar to those used today. ■ $9.9 billion in sales In 1976, the Company expanded beyond home and personal care products to include ■ Products sold in over 200 countries pet nutrition with the acquisition of Hill’s Pet and territories Products. Other acquisitions that followed included the liquid soap businesses sold under ■ Approximately 70% of sales from the name; ; the international operations Company and its brands; and , one of the largest producers of ■ Global market share leader in tooth- toothpaste in Latin America. In 1998, Colgate paste, hand dishwashing liquid, decisively became the toothpaste market leader liquid hand soap, liquid cleaners in the U.S., due to the success of Colgate Total, and specialty pet foods the first toothpaste approved by the U.S. Food & Drug Administration and accepted by the American Dental Association for protection against cavities, gingivitis and plaque. manner in every country where we operate. Our Vision and Values A global Code of Conduct is the foundation which guides our behavior. Our vision is simple: to be the best truly global Colgate has a Global Business Practices consumer products company. While working Department, headed by a senior executive toward this vision, we are guided by three officer, which oversees compliance with all core values: Caring, Global Teamwork and aspects of the Code and related monitoring Continuous Improvement. and enforcement. The Global Business Practices function also supports a global training effort Caring and maintains a telephone, facsimile and e-mail hotline through which employees and suppliers The Company cares about people — Colgate may report suspected violations of the Code of people, consumers, community members, Conduct. Anyone contacting the hotline may shareholders, business partners and other identify himself or herself or report anonymously. stakeholders. Colgate is committed to act with In addition, the Company has other auditing compassion, integrity and honesty in all situa- programs that address International Labour tions; to listen with respect to others and to Organization (ILO) issues, including a program value differences. The Company is also commit- to periodically audit all of its manufacturing ted to protect the global environment and and research facilities worldwide for compli- enhance the communities where people live ance with local law and Colgate standards gov- and work. erning environment and occupational health

Global Teamwork and safety. An independent third-party consult- ant, Environmental Resources Management, All Colgate people are part of a global team Inc., has reviewed and confirmed the reliability and recognize that by sharing ideas, technolo- and objectivity of this audit program. gies and talents, the Company can achieve and Colgate has demonstrated its leadership in sustain profitable growth. the area of human rights in many ways. The Company joined nine other multinational com- Continuous Improvement panies and organizations as a charter signatory to the Global Sullivan Principles. The former Colgate people are committed to getting better Council on Economic Priorities has recognized ■3 every day in all they do, as individuals and as Colgate for its accomplishments in the areas of teams. By better understanding the expecta- equal opportunity, charitable giving, environ- tions of consumers, customers and other stake- ment, the advancement of women and minori- holders, and continuously working to innovate ties, and the working environment. The U.S. and improve products, services and processes, Department of Labor has also recognized the Colgate will become the best. Company for its programs promoting the advancement of women, minorities and people with disabilities. Colgate has been recognized by Hispanic, Latina Style, Fortune and Working Mother magazines for providing a workplace Commitment to Ethical Business Practices that respects and values diversity. The Company Recognizing that corporate culture has a major has a long-standing commitment to human impact on results, Colgate has well-established, rights and fair workplace standards in its own consistent processes and procedures to ensure operations and those of its suppliers, and has a that business is conducted in a highly ethical well-developed compliance process. described below. We also work to make our Our Key Brands products readily available to our consumers and we constantly search for breakthrough technolo- gies, acquisitions and outstanding marketing ideas that can produce continuous growth.

Funding Growth Colgate’s ability to generate funds to reinvest in the business is critical to driving growth and delivering superior shareholder returns. Sustaining our current businesses, developing and launching new products and investing in future growth requires that we spend in a num- ber of critical areas, including advertising and promotion, consumer insight, research and development, information technology, training and people development and capital expendi- tures focused on supply chain savings. Every area of our Company can contribute to lowering costs or increasing revenues. We continuously challenge all activities to find ways of increasing revenue and reducing expenses or to obtain greater value for the funds that are spent.

Becoming the Best Place to Work Our third business strategy, Becoming the Best Categories Key Brands Place to Work, is a company-wide effort to Oral Care Colgate, Sorriso, Kolynos attract, retain and reward the best talent. At Personal Care Palmolive, Mennen, Speedstick, Softsoap, Colgate, our long history of profitable growth, product innovation, and global market leader- Household Surface Care Palmolive, , Murphy Oil Soap, , Fabuloso ship are the result of the quality and talent of Fabric Care Soupline, , Fab, Ajax our people. Pet Nutrition , Prescription Diet More than any program, service or benefit, Becoming the Best Place to Work represents a commitment by Colgate people to live our val- ues of Caring, Global Teamwork and Continuous Our Business Strategy Improvement, manage and treat one another with respect, and take personal responsibility for creating and sustaining a better workplace. Colgate is a truly global company doing busi- ness in more than 200 countries and territories. Our success is tied to the achievement of our Our Global Supply Chain simple, three-pronged operating strategy: Driving Growth, Funding Growth and Becoming the Best Place to Work. Colgate’s supply chain organization manages a process ranging from sourcing raw materials to Driving Growth delivering products to the store shelf. At Colgate, Driving growth of our core global brands is key we produce most of our products in Colgate- to Colgate’s success. We are tightly focused on owned factories around the world, where we ■4 five global businesses: Oral Care, Personal Care, continuously look for new ways to do things Household Surface Care, Fabric Care and Pet better, faster and safer. Nutrition. Today, the global brands within these categories account for 80% of the Company’s Funding Growth with Savings business, up from 24% in 1980. Aligned with the Company’s business strategy of We grow our business by delivering a funding growth, the supply chain continuously constant stream of innovative products that improves to generate funds for the Company. delight our consumers, create new segments To keep funds flowing for reinvestment and or meet existing needs in superior ways. We increased profitability, Colgate focuses its capital carefully align our resources for growth. Our cash spending on areas that improve margins Global Business Development, Research & and fund growth. Capital cash spending Development (R&D), Manufacturing and amounted to $366.6 million, or 4.1% of sales, in Information Technology functions are all 2000; $340.2 million, or 3.7% of sales, in 2001; part of one organization, the Global Growth and $343.7 million, or 3.7% of sales, in 2002. Group. Our supply chain organization works In recent years, key investments have on improving our speed to global markets as included high-speed manufacturing lines in North America, Europe, Latin America and Asia, which have accelerated product delivery bring- Financial Highlights ing a return on investment faster. Other invest- ments have increased vertical integration, such as in-house bottle-making for liquids in Latin An important measure of the Company’s suc- America. cess is its financial performance, which sup- We continue to gain efficiencies from ports general economic growth that benefits regionalization of manufacturing operations. all constituencies. Colgate has set records year For example, a toothpaste plant in Thailand after year in all key indicators. During the past services Southeast Asia and a toothbrush plant 19 years, the Company’s earnings have grown Increasing Supply Chain Efficiency in China services the world. A new regional at a compound average rate of nearly 14%. soap plant in the Asia-Pacific region is now Detailed financial and other Company infor- Focused Manufacturing supplying broad sections of the region better, mation is presented in an interactive format on faster and safer. In Brazil, our modern oral care the Investor Relations page of Colgate’s web- Since 1996, Colgate’s move ■ toward consolidating manufac- facility exports toothbrushes, dental floss and site, accessed at www.colgate.com. turing in fewer plants has toothpaste to over fifty countries. When consol- reduced the number of Colgate idation or restructuring results in a reduction in manufacturing facilities world- the workforce, significant efforts are expended wide from 112 to 77. to assist those Colgate people in identifying Achieving Outstanding other job opportunities. Financial Success 112 Additionally, the Company lowers total costs factories through innovative partnerships with suppliers; regional and global sourcing of raw materials, 10 Year Total Shareholder Return packaging and finished products; and improv- Over the past 10 years, Colgate has pro- 77 vided its shareholders with a higher return factories ing manufacturing systems. This reflects the than its competitors and the S&P 500. Company’s deep commitment to global team- work including alliances with business partners around the world to achieve common goals. Other cost-savings activities include driving out +281% product complexity with more product and +245% packaging standardization and capitalizing on 1996 2004 the Company’s partnership with the technology firm SAP to enable efficiencies that generate +186% savings. This informational technology standard has been implemented in countries represent- ing 95% of the business based on revenue. Colgate’s increasingly efficient supply chain has been a key contributor to the improvement in gross profit margin for the Company. Colgate’s gross profit margin improved over the years from 37.9% in 1984 to 55% in 2003. S&P 500 Peer Group Colgate

Financial Highlights

Dollars in Millions Except Per Share Amounts 2003 2002 2001

Worldwide Sales $9,903.4 $9,294.3 $9,084.3 ■5 Gross Profit Margin 55.0% 54.6% 53.4% Operating Profit $2,166.0 $2,013.1 $1,834.8 Operating Profit Margin 21.9% 21.7% 20.2% Net Income $1,421.3 $1,288.3 $1,146.6 Percent to Sales 14.4% 13.9% 12.6% Earnings Per Share, Diluted $2.46 $2.19 $1.89 Dividends Paid Per Share $0.90 $0.72 $0.675 Operating Cash Flow $1,767.7 $1,611.2 $1,503.9 Percent to Sales 17.8% 17.3% 16.6% Return on Capital 38.0% 34.6% 29.7%

Shareholder Information Number of Registered Common Shareholders 37,700 38,800 40,900 Number of Common Shares Outstanding (in millions) 533.7 536.0 550.7 Respect For People

We show our respect for each other, shareholders, consumers, suppliers, customers and other stakeholders in all that we do. Colgate people are at the heart of our success; they are our most important competitive advantage. Shareholders serve as one of the important sources of revenue necessary to support steady, continuous growth. Consumers are also important stakeholders. Because our business is consumer prod- ucts, our success depends upon their satisfaction. Colgate’s programs and policies are designed to respect all our stakeholders.

Global

day. Within six months of joining the Company, Respect for Colgate People all employees attend “Valuing Colgate People,” a course designed to help people of all back- grounds understand how to work better At Colgate, people make the difference. together in a team environment and to value Wherever we do business, Colgate people set the contributions of all Colgate people. They our Company apart from the competition; we learn that to care for Colgate people, con- drive product innovation, market leadership sumers, shareholders, business partners and and profitable growth. To succeed, the other stakeholders, we must act with compas- ■6 Company must attract and retain the best peo- sion, integrity and honesty in all situations, lis- ple. As Colgate strives toward being the best ten to others and value differences. They learn truly global consumer products company, we that all Colgate people are part of a global continue to put programs in place to create a team working together across countries and workplace that reflects our value of caring and throughout the world, sharing ideas, technolo- respect for Colgate people and develops their gies and talents. And they also learn that suc- skills to meet their potential. cess comes by getting a little better every day. To reinforce and enhance the corporate Guided by Values culture, Colgate first formalized its Code of and the Code of Conduct Conduct in 1987 to set the framework for To create a corporate culture firmly grounded worldwide principles which govern relation- in trust and integrity, the Company is guided ships with fellow employees, the Company, by our three overriding values: Caring, Global outside businesses, consumers, governments, Teamwork and Continuous Improvement. local communities and shareholders. The Code All Colgate people receive training on how clearly defines Colgate’s commitment to human to make these values part of their efforts every rights, including our policy to oppose and not to use child labor, defined as work by any per- “Becoming the Best Place To Work.” These Colgate’s Code of Conduct son younger than 16 years of age. The Code are listed in the table (below left). also states Colgate’s respect for employees’ law- To support this initiative, Colgate people The Code reinforces and ful freedom of association. The Colgate Code of share in the success they help to create enhances the Colgate culture. Conduct is regularly reviewed and updated to because Colgate’s compensation philosophy is The most recent update was meet changing needs. to reward excellence and pay-for-performance. issued in January 2004 in over 25 languages. Ensuring that the Code is understood and Whether it’s excellence on an individual, team, followed worldwide, the standards of business unit or global basis, the greater the conduct are communicated to employ- performance, the greater the reward. ees in more than 25 languages, in Incentives are centered on supporting the pamphlets as well as on the Colgate Company’s business goals of Driving Growth, Intranet. A letter from the Chairman Funding Growth and Becoming the Best reminds all employees of their responsi- Place to Work. bility to bring to the attention of their Recognizing the broad dimensions of per- managers any situation they believe to sonal life, the Company, in addition to encour- be in conflict with the Code. They are aging a balance between work and personal reminded that they can report question- life, offers a number of other employee benefits able or inappropriate conduct via the to help meet personal needs. The benefits vary Colgate Hotline and can do so anony- at different locations around the world due to mously if they choose. This 24-hour local customs and laws, but can include near- hotline is available for all employees and site backup childcare centers, emergency in- vendors to report any potential violations home care for dependent children and adults,

as well as to provide Colgate employees with academic advisory services, tuition and educa- Factors for Becoming the Best Place to Work ethics advice and clarification about how the tion assistance, personal services for legal, Code of Conduct might apply to specific situa- financial, health and wellness advice, and Fundamental Values tions. Additionally, all supervisors, managers counseling services among others. Some of Exciting Work and executives learn more about the these are leading edge, such as an on-site Motivating Environment Company’s ethical business standards in a lactation room and generous adoption Stimulating Careers mandatory course called “Business Integrity: assistance programs. Recognition and Rewards Colgate’s Values at Work.” Producing a written code of conduct is Encouraging Education and Training Keeping Connected not enough. The Global Business Practices Education and training programs are con- ■7 Department, headed by an executive officer, ducted continuously across the Colgate world. Our Core Values oversees compliance with the standards set A global training curriculum of more than 200 Caring forth in the Company’s Code of Conduct and courses promotes learning across all disciplines Global Teamwork Business Practices Guidelines. All reported viola- and at all levels. Guided by a mission of build- tions are promptly investigated and are treated ing skills to meet key business needs and sup- Continuous Improvement confidentially to the greatest extent possible. port personal development, education and Principles of Colgate people are assured they will not be training take place in a variety of ways. People Managing with Respect retaliated against as a result of reporting a enroll in established courses, which are identi- Communicating Effectively potential violation of the Code of Conduct. fied for each functional and leadership compe- Giving and Seeking Feedback tency, on Colgate’s Intranet. Overall, employees Becoming the Best Place to Work complete an average of about 40 hours of Valuing Unique Contributions Colgate’s goal of becoming the best place to training per year. Promoting Teamwork work is so important to achieving success that Colgate’s education and training philosophy Setting the Example it is now a fully developed global initiative. Six is guided by four principles: the programs must factors have been identified as essential for be Colgate-specific; share best practices; have a South Africa

Mexico

France

Malaysia

United States

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Taking place all over the world, education and training at Colgate happen in the classroom, on the job and through e-learning.