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Colgate: Global Strategies, Local Strength 2010 Annual Report WorldReginfo - cdcd799b-f638-41fe-9693-d5fe5fc8fbf2 Colgate: Global Strategies, Local Strength u Succeeding With Consumers, The Profession And Our Customers u Innovating Everywhere u Effectiveness And Efficiency In Everything u Strengthening Leadership Worldwide Colgate-Palmolive Company is a $15.6 billion global company serving people in more than 200 countries and territories with consumer products that make lives healthier and more enjoyable. The Company focuses on strong global brands in its core busi- nesses – Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate follows a tightly defined strategy to grow market shares for key products, such as toothpaste, toothbrushes, bar and liquid soaps, deodorants/antiperspirants, dishwashing detergents, household cleaners, fabric conditioners and specialty pet food. Cover: Photo taken in Chengdu City, Sichuan Province, China Contents: 2 Financial Highlights 20 Colgate’s Corporate 4 Dear Colgate Shareholder Governance Commitment 8 Succeeding With Consumers 21 Your Board Of Directors 10 Succeeding With The Profession 22 Your Management Team 12 Succeeding With Our Customers 23 Non-GAAP Reconciliation 14 Innovating Everywhere Of Financial Measures 16 Effectiveness And Efficiency 24 Global Financial In Everything Review/Form 10-K 18 Strengthening Leadership IBC Shareholder Information Worldwide t Mexico WorldReginfo - cdcd799b-f638-41fe-9693-d5fe5fc8fbf2 Financial Highlights Net Sales ($ millions) 2006 $12,238 2006 2007 $13,790 2007 2008 $15,330 2008 2009 $15,327 2009 2010 $15,564 2010 Advertising ($ millions) (Dollars in Millions Except Per Share Amounts) 2010* 2009 Change 2006 $1,320 2005 2007 $1,546 Worldwide Sales 2006 $ 15,564 $ 15,327 +1.5% 2008 $1,650 Unit Volume 2007 +3.0% 2009 $1,534 Gross Profit Margin 2008 59.1% 58.8% +30 basis points 2010 $1,656 Operating Profit 2009 $ 3,489 $ 3,615 -3% Operating Profit Margin 22.4% 23.6% -120 basis points Net Income Attributable to Colgate-Palmolive Company $ 2,203 $ 2,291 -4% Dividends Paid (per common share) Net Income Attributable to Colgate-Palmolive Company Percent to Sales 14.2% 14.9% -70 basis points 2006 2006 $1.25 Diluted Earnings Per Share $ 4.31 $ 4.37 -1% 2007 2007 $1.40 Dividends Paid Per Share $ 2.03 $ 1.72 +18% 2008 2008 $1.56 Operating Cash Flow $ 3,211 $ 3,277 -2% 2009 2009 $1.72 Number of Registered Common Shareholders 29,900 30,600 -2% 2010 Number of Common Shares Outstanding (in millions) 495 494 – 2010 $2.03 Year-end Stock Price $ 80.37 $ 82.15 -2% Gross Profit Margin and Additional Information* (% of sales) Highlights 2006 54.8% u Worldwide sales rose 1.5% to an all-time record level. 56.4%* u South Africa 2007 56.2% 57.3%* u Gross profit margin increased 30 basis points to an all-time * Excludes restructuring and implementation-related charges related to the record high of 59.1%. 2008 56.3% 56.7%* 2004 Restructuring Program. A complete reconciliation between reported u Global advertising increased 8% to $1,656 million. 2009 58.8% results (GAAP) and results excluding charges under the 2004 Restructuring Program and other items (Non-GAAP), including a description of such items, u Operating cash flow declined only 2% when compared with 2010 59.1% is available on Colgate’s web site and on page 23 of this report. the record 42% growth achieved in 2009. u The quarterly dividend rate increased by 20% in 2010. Operating Profit and Additional Information* ($ millions) * 2010 excludes a one-time charge related to the transition to 2006 $2,218 $2,566* hyperinflationary accounting in Venezuela and certain other 2010 items. 2007 $2,720 $2,959* Years 2006-2008 exclude restructuring and implementation-related charges related to the 2004 Restructuring Program and other items that pertain 2008 $3,101 $3,265* only to 2006 and 2007. A complete reconciliation between reported results (GAAP) and results excluding these items (Non-GAAP), including a 2009 $3,615 description of such items, is available on Colgate’s web site and on page 23 2010 $3,489 $3,796* of this report. Diluted Earnings Per Share and Additional Information* * 2010 excludes a one-time charge related to the transition to 2006 $2.46 $2.91* hyperinflationary accounting in Venezuela and certain other 2010 items. * Net income attributable to Colgate-Palmolive Company and diluted earnings Years 2006-2008 exclude restructuring and implementation-related charges per share in 2010 include a one-time aftertax charge of $271 million ($0.53 per 2007 $3.20 $3.38* share) related to the transition to hyperinflationary accounting in Venezuela as related to the 2004 Restructuring Program and other items that pertain 2008 $3.66 $3.87* of January 1, 2010 and certain other items. A complete reconciliation between only to 2006 and 2007. A complete reconciliation between reported results (GAAP) and results excluding these items (Non-GAAP), including a reported results (GAAP) and results excluding the Venezuela hyperinflationary 2009 $4.37 charge and other items (Non-GAAP), including a description of such items, is description of such items, is available on Colgate’s web site and on page 23 available on Colgate’s web site and on page 23 of this report. 2010 $4.31 $4.84* of this report. 2 2010 Annual Report 2010 Annual Report 3WorldReginfo - cdcd799b-f638-41fe-9693-d5fe5fc8fbf2 A. Emerging markets, which now represent half of our global sales, have been a very important part of our growth for a long time, and we think our history there positions us well to accelerate that growth going forward. We have been in Latin America for over 75 years and in Greater Asia for over 50 years. By being there early, Colgate has built brand loyalty and, of course, Dear Colgate Shareholder... leading market positions. This is particularly true with toothpaste and the entire oral care category. Our deep understanding of local tastes and habits across categories, combined with our proven disciplined global execution, we believe, gives us a significant competitive edge. Additionally, as part of our global strategy, we have developed strong relationships with dental professionals. This strategy has con- tributed greatly to increasing professional recommendations for our brands. In Brazil, 77% of professionals are now recommending Colgate On the following pages, Ian Cook, Chairman, President and CEO, answers ahead of any other brand, in India 81% and in China 85%. questions often asked by our shareholders regarding our business results, key We are also committed to building consumption in emerging mar- strategic initiatives and the Company’s prospects for future growth.* kets by educating consumers in these areas of the world about better oral hygiene and skin cleansing habits because we know that once Q. Please comment on the Company’s 2010 global business results. people adopt those behaviors they stay with them for a lifetime. Indeed, A. We are pleased to have achieved another year of double-digit earnings per our “Bright Smiles, Bright Futures” oral health education program has now share growth in 2010, despite difficult economic conditions and aggressive com- reached over half a billion children in 80 countries since the program began petitive activity around the world. Global sales rose 1.5% to an all-time record twenty years ago. level, and global unit volume grew 3.0%. Advertising spending behind the Com- pany’s brands increased 8%, contributing to widespread market share gains in Q. Amid today’s heightened competitive environment, what is Colgate all of our core categories with our global leadership in toothpaste and manual doing to better connect with consumers? toothbrushes increasing to all-time highs in 2010. A. When we think about driving our growth with consumers, we focus on Operating profit, net income and diluted earnings per share all increased targeting our commercial investment to both build brands with our traditional versus last year’s record levels. Gross profit margin increased 30 basis points to marketing programs and build trial for the new products that we are bringing to a record 59.1%, driven primarily by the benefits of our many cost-saving pro- the marketplace. grams around the world, which enabled us to offset higher material costs and Over the last few years, we’ve found that engaging with consumers must increased promotional investments. include very powerful and effective in-store shopper marketing activities to com- We maintained our strong balance sheet and cash flow with working plement our advertising in traditional media outlets. Importantly, our integrated Ian Cook capital held at a very low 0.3% to sales, and cash from operations declined only marketing campaigns are making much greater use of digital tools, such as the Chairman, President and Chief Executive Officer 2% when compared with last year’s uniquely strong record level. Internet and social media, and even mobile applications. In some countries, as much as 15% of our media spending is on digital initiatives. As for in-store Q. Colgate has a long history of strong operating cash flow. What are your activity, one example is using a demonstrator to explain how Colgate priorities for uses of cash? Sensitive Pro-Relief toothpaste provides instant and lasting relief from A. At Colgate we maintain as sharp a focus on generating cash as we do on pain caused by tooth sensitivity, while distributing product samples achieving our profit goals. That has been the case for a very long time, allow- for consumers to try for themselves. ing us to make uninterrupted dividend payments to our shareholders every year As a result of these types of activities, Colgate’s long-term since 1895, with dividend payments increasing each year for the past 48 years. global market shares have strengthened despite periods of And that trend is continuing.

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