<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
Commission File Number 1-644
----------------
[LOGO] Colgate-Palmolive Company
(Exact name of registrant as specified in its charter)
DELAWARE 13-1815595
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 Park Avenue, New York, New York 10022
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code 212-310-2000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
$4.25 Preferred Stock, without par
value,cumulative dividend New York Stock Exchange
Common Stock, $1.00 par value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
At February 29, 2000 the aggregate market value of stock held by non-
affiliates was $30.2 billion. There were 577,857,544 shares of Common Stock
outstanding as of February 29, 2000.
DOCUMENTS INCORPORATED BY REFERENCE:
Documents Form 10-K Reference
Portions of Proxy Statement for the Part III, Items 10 through 13
2000 Annual Meeting
<PAGE>
PART I
ITEM 1. BUSINESS
(a) General Development of the Business
Colgate-Palmolive Company (together with its subsidiaries, the "Company"),
which was organized under the laws of the State of Delaware in 1923, is a
leading consumer products company whose products are marketed in over 200
countries and territories throughout the world.
For recent business developments, refer to the information set forth under
the captions "Results of Operations", "Liquidity and Capital Resources" and
"Outlook" in Part II, Item 7 of this report.
(b) Financial Information About Industry Segments
Worldwide net sales and earnings by geographic region and business segment
during the last three years appears under the caption "Results of Operations"
in Part II, Item 7 of this report on pages 6 and 7.
(c) Narrative Description of the Business
The Company manages its business in two distinct product segments: Oral,
Personal and Household Care, and Pet Nutrition. Colgate is a global leader in
Oral Care with the leading toothpaste brand in the U.S. and throughout many
parts of the world. Colgate's Oral Care products include toothbrushes,
toothpaste, mouth rinses and dental floss, and pharmaceutical products for
dentists and other oral health professionals. Significant recent product
launches in this segment include Colgate Total Fresh Stripe toothpaste, and
Colgate Actibrush and Colgate Navigator toothbrushes.
Colgate leads many segments of the Personal Care market with several
products including bar and liquid soaps, shampoos, conditioners, deodorants
and antiperspirants, and baby and shave products. Colgate is the market leader
in liquid soaps in the U.S. and globally is the market leader in male
deodorant sticks. Strong brands in this segment include Irish Spring, Softsoap
and Palmolive, which is available as a soap and, in many countries, as a
shampoo and conditioner. Colgate also manufactures and markets Mennen
deodorants, baby care products and men's toiletries.
Colgate manufactures and markets a wide array of products for Household
Care. Major products include Palmolive and Ajax dishwashing liquid and
antibacterial hand soaps and new Palmolive Spring Sensations. Colgate also
markets other household names in cleaning and laundry products such as Fab,
Ajax and Murphy's oil soap which is North America's leading wood floor
cleaner. In the Company's major markets outside the U.S., Colgate is number
one in fabric softeners with leading brands Suavitel in Latin America,
Soupline in Europe and Softlan in Asia.
Sales of Oral, Personal, Household and Fabric Care products accounted for
32%, 24%, 16% and 14% of total worldwide sales in 1999, respectively.
Geographically, Oral Care is a significant part of the Company's business in
Asia/Africa, comprising over 45% of sales in that region. See also Note 1 to
the Consolidated Financial Statements.
Colgate, through its Hill's Pet Nutrition subsidiary, sells high quality pet
nutrition products for dogs and cats. Hill's markets pet foods primarily under
two names: Science Diet, which is sold by authorized pet supply retailers,
breeders and veterinarians for every day nutritional needs, and Prescription
Diet for dogs and cats with disease conditions. Hill's sells its products in
68 countries and leads the premium pet food segment in Japan. Sales of Pet
Nutrition products accounted for 12% of total worldwide sales in 1999.
Research and Development
Strong research and development capabilities enable Colgate to support its
many brands with technologically sophisticated products for consumer's
personal needs and pet nutrition needs. During 1999, the Company spent $169.2
million on research and development activities.
2
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Distribution; Competition; Trademarks and Patents
The Company's products are generally marketed by a direct sales force at
each individual operating subsidiary or business unit. In some instances,
distributors or brokers are used. No single customer accounts for as much as
10% of the Company's sales.
Most raw materials are purchased from other companies and are available from
several sources. While it is generally the Company's policy to streamline
supply chain sources, raw materials used in the manufacture of the Company's
products are generally available in adequate supply. Raw material commodities
such as tallow and essential oils are subject to wide price variations. No one
of the Company's raw materials represents a significant portion of total
material requirements.
The Company's products are marketed under highly competitive conditions.
Products similar to those produced and sold by the Company are available from
competitors in the U.S. and overseas. Certain of the Company's competitors are
larger and have greater resources than the Company. Product quality, brand
recognition and acceptance and marketing capability largely determine success
in the Company's business segments.
Trademarks are considered to be of material importance to the Company's
business. The Company follows a practice of seeking trademark protection by
all available means in the United States and throughout the world where the
Company's products are sold. Principal global trademarks include Colgate,
Palmolive, Mennen, Protex, Ajax, Soupline, Suavitel, Fab, Science Diet and
Prescription Diet in addition to several regional trademarks. These trademarks
are of significant importance to the Company and its subsidiaries within their
markets. The Company's rights in these trademarks endure for as long as they
are used and registered. Although the Company owns a number of patents, no one
patent is considered significant to the business as a whole.
Employees
At year-end, the Company employed approximately 37,200 employees of which
approximately 80% were located outside the United States.
Environmental Matters
Compliance with environmental rules and regulations has not significantly
affected the Company's earnings or competitive position. Capital expenditures
for environmental control facilities totaled $18.2 million for 1999. For
future years, expenditures are expected to be in the same range. The Company
has programs that are designed to ensure that its operations and facilities
meet or exceed applicable rules and regulations. Please refer to Note 14 to
the Consolidated Financial Statements.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
For information concerning geographic area financial data refer to the
information set forth under the caption "Results of Operations" in Part II,
Item 7 of this report.
ITEM 2. PROPERTIES
The Company owns and leases a total of 304 manufacturing, distribution,
research and office facilities worldwide. Corporate headquarters is housed in
leased facilities at 300 Park Avenue, New York, New York.
In the United States, the Company operates 46 facilities, of which 20 are
owned. Major U.S. manufacturing and warehousing facilities used by the Oral,
Personal and Household Care segment are located in Kansas City, Kansas;
Morristown, New Jersey; Jeffersonville, Indiana, and Cambridge, Ohio. The Pet
Nutrition segment has major facilities in Bowling Green, Kentucky; Topeka,
Kansas; Commerce, California; and Richmond, Indiana.
3
<PAGE>
Research facilities are located throughout the world with the primary research
center for Oral, Personal and Household Care products located in Piscataway,
New Jersey and the primary research center for Pet Nutrition products located
in Topeka, Kansas.
Overseas, the Company operates 258 facilities, of which 98 are owned, in
over 70 countries. Major overseas facilities used by the Oral, Personal and
Household Care segment are located in Australia, Brazil, Canada, China,
Colombia, France, Italy, Mexico, Thailand, the United Kingdom and elsewhere
throughout the world. In some areas outside the United States, products are
either manufactured by independent contractors under Company specifications or
are imported from the United States or elsewhere.
All facilities operated by the Company are, in general, well maintained and
adequate for the purpose for which they are intended. The Company conducts
continuing reviews of its facilities with the view to modernization and cost
reduction.
ITEM 3. LEGAL PROCEEDINGS
On September 8, 1998, one of the Company's Brazilian subsidiaries, Kolynos
do Brasil Ltda. ("Kolynos"), received notice of an administrative proceeding
from the Central Bank of Brazil, citing Articles 1, 3, 9, 23 and 58 of Law No.
4131 dated September 3, 1962 and related circular letters, which address
foreign capital registration and foreign exchange transactions. The notice
primarily takes issue with certain filings made with the Central Bank in
connection with the financing of the acquisition of Kolynos in January 1995,
which is described in the Company's Form 8-K dated January 10, 1995. The
Central Bank's sole remedy is to seek to impose fines prescribed in the above-
referenced statutes and, in no way, challenges or seeks to unwind the
acquisition.
Management believes, based on the opinion of its Brazilian legal counsel,
that the filings challenged by the Central Bank fully complied with Brazilian
law and that the issues raised in the notice are without merit. The Company
intends to defend its position and cooperate with the Brazilian banking
authorities to seek a satisfactory resolution of this matter.
For information regarding legal matters refer to Note 14 of the Consolidated
Financial Statements included herein.
4
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of executive officers as of March 27, 2000:
<TABLE>
<CAPTION>
Date First
Elected
Name Age Officer Present Title
---- --- ---------- -------------
<C> <C> <C> <S>
Chairman of the Board and Chief
Reuben Mark.......... 61 1974 Executive Officer
William S. Shanahan.. 59 1983 President and Chief Operating Officer
Lois D. Juliber...... 51 1991 Executive Vice President
Chief of Operations, Developed Markets
David A. Metzler..... 57 1991 Executive Vice President
Chief of Operations, High Growth Markets
Stephen C. Patrick... 50 1990 Chief Financial Officer
John T. Reid......... 60 1997 Chief Technological Officer
Andrew D. Hendry..... 52 1991 Senior Vice President
General Counsel and Secretary
Robert J. Joy........ 53 1996 Vice President
Global Human Resources
Dennis J. Hickey..... 51 1998 Vice President and
Corporate Controller
Ian M. Cook.......... 47 1996 President
Colgate-North America
Michael J. Tangney... 55 1993 President
Colgate-Latin America
Javier G. Teruel..... 49 1996 President
Colgate-Europe
Robert C. Wheeler.... 58 1991 Chief Executive Officer
Hill's Pet Nutrition, Inc.
Steven R. Belasco.... 53 1991 Vice President
Taxation and Real Estate
Brian J. Heidtke..... 59 1986 Vice President,
Finance and Corporate Treasurer
Peter D. McLeod...... 59 1984 Vice President
Manufacturing Engineering Technology
John H. Tietjen...... 57 1995 Vice President
Global Business Development
Barrie M. Spelling... 56 1994 President
Global Oral Care
</TABLE>
Each of the executive officers listed above has served the registrant or its
subsidiaries in various executive capacities for the past five years.
The Company By-Laws, paragraph 38, states: The officers of the corporation
shall hold office until their respective successors are chosen and qualified
in their stead, or until they have resigned, retired or been removed in the
manner hereinafter provided. Any officer elected or appointed by the board of
directors may be removed at any time by the affirmative vote of a majority of
the whole board of directors.
5
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Refer to the information regarding the market for the Company's Common Stock
and the quarterly market price information appearing under the caption "Market
and Dividend Information" included herein; the information under "Capital
Stock and Stock Compensation Plans" in Note 5 to the Consolidated Financial
Statements included herein; and the "Number of shareholders of record" and
"Cash dividends declared and paid per common share" under the caption
"Historical Financial Summary" included herein.
ITEM 6. SELECTED FINANCIAL DATA
Refer to the information set forth under the caption "Historical Financial
Summary" included herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollars in Millions Except Per Share Amounts)
Results of Operations
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Worldwide Net Sales by Business Segment and
Geographic Region
Oral, Personal and Household Care
North America(/1/)............................ $2,143.7 $2,047.5 $1,992.5
Latin America................................. 2,356.7 2,407.9 2,363.8
Europe........................................ 2,028.8 2,067.7 2,078.8
Asia/Africa................................... 1,519.7 1,452.6 1,656.3
-------- -------- --------
Total Oral, Personal and Household Care......... 8,048.9 7,975.7 8,091.4
Total Pet Nutrition(/2/)........................ 1,069.3 995.9 965.3
-------- -------- --------
Total Net Sales................................. $9,118.2 $8,971.6 $9,056.7
======== ======== ========
</TABLE>
- --------
(/1/) Net sales in the United States for Oral, Personal and Household Care
were $1,880.8, $1,799.6 and $1,756.1 in 1999, 1998 and 1997,
respectively.
(/2/) Net sales in the United States for Pet Nutrition were $709.2, $688.6 and
$689.4 in 1999, 1998 and 1997, respectively.
Net Sales and Earnings Before Interest and Taxes (EBIT)
Worldwide net sales increased 2% to $9,118.2 in 1999 on volume growth of 5%.
Net sales would have grown 7% excluding foreign currency translation. Net
sales in the Oral, Personal and Household Care segment increased 1% on 4%
volume growth, while net sales in Pet Nutrition increased 7% on 8% volume
growth. In 1998, worldwide net sales decreased 1% to $8,971.6 on volume growth
of 3.5%, reflecting the negative impact of foreign currency translation.
EBIT rose from $1,423.0 to $1,566.2 in 1999. The 10% increase reflected the
Company's strong volume growth and cost-control initiatives that were
effective in increasing margins. EBIT increased 11% in 1998 to $1,423.0 from
$1,285.8 in 1997.
Gross Profit
Gross profit margin increased to 53.7%, above both the 1998 level of 52.2%
and the 1997 level of 50.7%. This favorable trend continues to reflect the
Company's financial strategy to improve all aspects of its supply chain
through global sourcing, restructuring and other cost-reduction initiatives,
as well as its emphasis on higher margin products.
6
<PAGE>
(Dollars in Millions Except Per Share Amounts)
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales were
level at 36% for the three-year period 1997 to 1999. The amounts include
higher advertising costs offset by the Company's continued focus on expense
containment.
Other Expense, Net
Other expense, net, consists principally of amortization of goodwill and
other intangible assets, minority interest in earnings of less-than-100%-owned
consolidated subsidiaries, earnings from equity investments, gain on sale of
real estate and non-core product lines, and other miscellaneous gains and
losses. Other expense, net, increased in 1999 from $61.2 to $73.6, primarily
due to one-time charges.
As part of the Company's ongoing program of product standardization and
organization redesign, the Company incurred one-time charges related to the
exiting of certain activities, such as the manufacture of aluminum tubes in
Brazil. These charges were offset by an aftertax gain of $17.6 recorded on the
sale of the U.S. Baby Magic brand and an aftertax gain of $11.4 on the sale of
real estate.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Worldwide Earnings by Business Segment and
Geographic Region
Oral, Personal and Household Care
North America.............................. $ 413.0 $ 395.5 $ 312.6
Latin America.............................. 535.7 502.0 483.0
Europe..................................... 342.0 317.5 283.5
Asia/Africa................................ 166.7 158.6 178.3
-------- -------- --------
Total Oral, Personal and Household Care...... 1,457.4 1,373.6 1,257.4
Total Pet Nutrition.......................... 219.9 173.8 162.5
Corporate.................................... (111.1) (124.4) (134.1)
-------- -------- --------
Earnings Before Interest and Taxes........... 1,566.2 1,423.0 1,285.8
Interest Expense, Net........................ (171.6) (172.9) (183.5)
-------- -------- --------
Income Before Income Taxes................... $1,394.6 $1,250.1 $1,102.3
======== ======== ========
</TABLE>
Segment Results
North America
North America achieved excellent results for the year. Net sales excluding
divestments grew 6% to $2,143.7 as unit volume rose 8% driven by innovative
new products. The launch of Colgate Total Fresh Stripe in the first quarter
strengthened the Company's No. 1 position in toothpaste. The introduction of
Speed Stick clear antiperspirant and Palmolive Spring Sensations dishwashing
liquid increased market shares in the personal and household care lines,
respectively. In 1998, North America posted overall sales growth excluding
divestments of 6% to $2,047.5 on volume growth of 5%.
EBIT for North America was up 4% to $413.0. The region achieved earnings
growth through volume gains, continued focus on cost-control and value-added
initiatives. EBIT in 1998 was up 27% to $395.5 due to higher margins on higher
volumes.
Latin America
Net sales in Latin America decreased 2% to $2,356.7 on 3% volume growth.
Strong growth in Mexico, Venezuela and Central America largely offset
challenging economic conditions in Brazil and Ecuador. The
7
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(Dollars in Millions Except Per Share Amounts)
continued success of products such as Colgate Double Cool Stripe toothpaste
and herbal toothpaste under the Sorriso and Kolynos brand names as well as the
introduction of Speed Stick gel and product extensions of Softsoap liquid soap
and Palmolive shower gels continue to strengthen market leadership. In 1998,
Latin America net sales increased 2% to $2,407.9 on 7% volume growth.
EBIT in Latin America increased 7% to $535.7 as a result of continued
efforts in cost reduction, selective selling price increases and lower
advertising expenditures in Brazil. EBIT in 1998 was up 4% to $502.0.
Europe
Net sales in Europe declined 2% to $2,028.8 on unit volume increases of 2%,
offset by negative foreign currency impact. The United Kingdom, Italy, the
Netherlands and Spain achieved the strongest sales growth and volume increases
in the region. Volume increases were driven by the relaunch of Colgate Total
toothpaste and new varieties of Palmolive shower gels and Palmolive liquid
soaps. In 1998, Europe net sales remained flat at $2,067.7, due primarily to
weak economic conditions in Russia, while volume grew 1%.
EBIT for Europe increased 8% to $342.0 despite the 2% decline in sales due
to higher margins and higher volumes. EBIT in 1998 rose 12% to $317.5.
Asia/Africa
Net sales in the Asia/Africa region increased 5% to $1,519.7 as volume
increased 7%. The strong performance is attributed to the economic recovery
within the ASEAN region and the significant growth in India and China, through
continued geographic expansion as well as new product launches. During 1999,
the Company achieved the No. 1 position in toothpaste in China. In 1998, net
sales in the Asia/Africa region decreased 12% to $1,452.6 as volume decreased
1%, reflecting the weaker ASEAN currencies.
EBIT grew 5% in Asia/Africa to $166.7 driven by increased volumes across the
region. EBIT in 1998 decreased 11% to $158.6 reflecting weakened economies in
the ASEAN countries and strong competition in India.
Pet Nutrition
Net sales for Hill's Pet Nutrition increased 7% to $1,069.3 on 8% volume
growth. Within the United States, sales increased due to the introduction of
new products including Science Diet Feline Hairball Control and new life-stage
variants launched in the fourth quarter. Strong growth occurred in Japan and
Europe due to the introduction of new feline varieties and improvements in the
entire dry cat food line, complemented by increased advertising. In 1998, net
sales for the Pet Nutrition segment increased 3% to $995.9 on 4% volume gains.
EBIT in the Pet Nutrition segment grew 27% to $219.9 driven by volume, cost-
improvement initiatives and the benefit of lower raw material costs. EBIT in
1998 increased 7% to $173.8 on both higher volumes and improved gross profit
margins.
Interest Expense, Net
Interest expense, net, was $171.6 compared with $172.9 in 1998 and $183.5 in
1997. The decline in net interest expense in 1998 was primarily the result of
lower average debt levels during the year compared with 1997 and a decrease in
interest rates.
Income Taxes
The effective tax rate on income was 32.8% in 1999 versus 32.1% in 1998 and
32.8% in 1997. Global tax planning strategies, including the realization of
tax credits, benefited the effective tax rate in all three years presented.
8
<PAGE>
(Dollars in Millions Except Per Share Amounts)
Net Income
Net income was $937.3 in 1999 or $1.47 per share on a diluted basis compared
with $848.6 in 1998 or $1.30 per share and $740.4 in 1997 or $1.13 per share.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Identifiable Assets
Oral, Personal and Household Care
North America................................... $2,581.6 $2,591.0 $2,553.2
Latin America................................... 1,941.7 2,128.3 2,204.8
Europe.......................................... 1,252.3 1,329.9 1,201.5
Asia/Africa..................................... 982.7 952.4 891.9
-------- -------- --------
Total Oral, Personal and Household Care........... 6,758.3 7,001.6 6,851.4
Total Pet Nutrition............................... 476.1 502.6 517.3
Total Corporate................................... 188.7 181.0 170.0
-------- -------- --------
Total Identifiable Assets(/1/).................... $7,423.1 $7,685.2 $7,538.7
======== ======== ========
</TABLE>
- --------
(/1/) Long-lived assets in the United States, primarily fixed assets and
goodwill, represented approximately one-third of total long-lived assets
of $4,952.3, $5,330.0 and $5,234.9 in 1999, 1998 and 1997, respectively.
Liquidity and Capital Resources
Net cash provided by operations increased 10% to $1,292.7 compared with
$1,178.8 in 1998 and $1,097.8 in 1997. The increases reflect the Company's
improved profitability, lower cash taxes and working capital management. Cash
generated from operations was used to fund capital spending, increase
dividends and repurchase common shares.
During 1999, long-term debt remained level at $2,582.2 and total debt
increased from $2,757.5 to $2,789.5 due to increased short-term borrowings.
As of December 31, 1999, $477.3 of domestic and foreign commercial paper was
outstanding. These borrowings carry a Standard & Poor's rating of A1 and a
Moody's rating of P1. The commercial paper as well as other short-term
borrowings are classified as long-term debt at December 31, 1999, as it is the
Company's intent and ability to refinance such obligations on a long-term
basis. The Company has additional sources of liquidity available in the form
of lines of credit maintained with various banks. At December 31, 1999, such
unused lines of credit amounted to $1,527.9.
As of December 31, 1998, $461.2 of domestic and foreign commercial paper was
outstanding. An unused line of credit of approximately $1,670.9 was available
in addition to $203.8 available under previously filed shelf registrations.
9
<PAGE>
(Dollars in Millions Except Per Share Amounts)
The ratio of net debt to total capitalization (defined as the ratio of the
book values of debt less cash and marketable securities ["net debt"] to net
debt plus equity) increased to 58% during 1999 from 55% in 1998. The ratio had
increased in 1998 from 53% in 1997. The increase in 1999 was primarily the
result of increased borrowings and lower equity levels related to foreign
exchange devaluation in Brazil.
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Capital Expenditures
North America......................................... $ 97.6 $ 90.1 $114.2
Latin America......................................... 118.2 99.2 105.2
Europe................................................ 60.8 83.7 104.6
Asia/Africa........................................... 57.0 80.5 104.9
------ ------ ------
Total Oral, Personal and Household Care................. 333.6 353.5 428.9
Total Pet Nutrition..................................... 21.1 20.7 29.8
Total Corporate......................................... 18.1 15.4 19.8
------ ------ ------
Total Capital Expenditures.......................... $372.8 $389.6 $478.5
====== ====== ======
Depreciation and Amortization
North America......................................... $ 97.4 $ 95.6 $ 87.1
Latin America......................................... 69.0 75.6 70.2
Europe................................................ 75.9 67.9 68.0
Asia/Africa........................................... 46.6 42.1 45.4
------ ------ ------
Total Oral, Personal and Household Care................. 288.9 281.2 270.7
Total Pet Nutrition..................................... 32.5 32.5 32.1
Total Corporate......................................... 18.8 16.6 17.1
------ ------ ------
Total Depreciation and Amortization................. $340.2 $330.3 $319.9
====== ====== ======
</TABLE>
Capital expenditures were 4%, 4% and 5% of net sales for 1999, 1998 and
1997, respectively. Capital spending continues to be focused primarily on
projects that yield high aftertax returns. The higher level in 1997 primarily
reflected capital spending relating to the Company's restructuring programs.
Capital expenditures for 2000 are expected to continue at the current rate of
approximately 4% of net sales.
Other investing activities in 1999, 1998 and 1997 included strategic
acquisitions and divestitures around the world. The aggregate purchase price
of all 1999, 1998 and 1997 acquisitions was $46.4, $22.6 and $20.3,
respectively. The U.S. Baby Magic brand was sold in 1999; the HandiWipes brand
was sold in 1998, and the Sterno fuel brand was sold in 1997. The aggregate
sale price of all 1999, 1998 and 1997 sales of brands was $94.7, $57.4 and
$101.4, respectively.
The Company repurchases common shares in open market and private
transactions to provide for employee benefit plans and to maintain its
targeted capital structure. Aggregate repurchases for 1999 were 12.8 million
shares, with a total purchase price of $624.4. In 1998, 14.3 million shares
were repurchased with a total purchase price of $542.5.
Dividend payments were $366.0, up from $345.6 in 1998 and $333.4 in 1997.
Common stock dividend payments increased to $.59 per share in 1999 from $.55
per share in 1998 and $.53 per share in 1997. The Series B Preference Stock
dividends were declared and paid at the rate of $4.96 per share in 1999 and
$4.88 per share in both 1998 and 1997.
Internally generated cash flows appear to be adequate to support currently
planned business operations, acquisitions and capital expenditures.
Significant acquisitions would require external financing.
10
<PAGE>
(Dollars in Millions Except Per Share Amounts)
The Company is a party to various superfund and other environmental matters
and is contingently liable with respect to lawsuits, taxes and other matters
arising out of the normal course of business. Management proactively reviews
and manages its exposure to, and the impact of, environmental matters. While
it is possible that the Company's cash flows and results of operations in
particular quarterly or annual periods could be affected by the one-time
impacts of the resolution of such contingencies, it is the opinion of
management that the ultimate disposition of these matters, to the extent not
previously provided for, will not have a material impact on the Company's
financial condition or ongoing cash flows and results of operations.
Status of Restructuring Reserve
In September 1995, a reserve of $460.5 was established to cover a worldwide
restructuring of manufacturing and administrative operations. The primary
elements of the reserve related to employee termination costs and expenses
associated with the realignment of the Company's global manufacturing
operations, as well as settlement of contractual obligations. The costs of
completing the restructuring activities to date approximated the original
estimate. As planned, the restructuring has produced savings that increase
pretax earnings by over $150.0 annually.
The planned restructuring projects, primarily in North America and Europe
but also affecting Hill's Pet Nutrition and Colgate locations in Asia/Africa
and certain Latin America locations, are substantially completed. The
remaining reserve amount of $5.4 relates to the consolidation of
administrative operations following the implementation of SAP computer systems
and related process changes in Europe.
Managing Foreign Currency and Interest Rate Exposure
The Company is exposed to market risk from foreign currency exchange rate
fluctuations and interest rates. To manage the volatility relating to foreign
currency exposures on a consolidated basis, the Company utilizes a number of
techniques, including selective borrowings in local currencies, purchases of
forward foreign currency exchange contracts, balance sheet management and
increases in selling prices.
The Company operates in over 200 countries and territories and is exposed to
currency fluctuation related to manufacturing and selling its products in
currencies other than the U.S. dollar. The major foreign currency exposures
involve the markets in Mexico, Brazil and France, each of which represents
individually 5% to 10% of worldwide sales. Each of the other countries'
operations represents less than 4% of worldwide sales. In the countries of
Mexico and France during the three-year period from 1997 to 1999, the
combination of selling price increases and cost containment measures have more
than offset the impact of foreign currency rate movements resulting in
increased gross profit margins during the periods presented. Profitability in
Brazil decreased in 1999 following increases in 1998 and 1997 as a result of a
devaluation of the Brazilian currency in January 1999.
The Company utilizes simple instruments such as interest rate swaps to
manage the Company's mix of fixed and floating rate debt. The Company's target
floating rate obligations as a percentage of the Company's global debt is set
by policy. As a matter of policy, the Company does not speculate in financial
markets and therefore does not hold or issue derivative financial instruments
for trading purposes.
Value at Risk
The Company's risk management procedures include the monitoring of interest
rate and foreign exchange exposures and the Company's offsetting hedge
positions utilizing analytical analyses of cash flows, market value,
sensitivity analysis and value-at-risk estimations. However, the use of these
techniques to quantify the market risk of such instruments should not be
construed as an endorsement of their accuracy or the accuracy of the related
assumptions. The Company utilizes a Value-at-Risk (VAR) model and an Earnings-
at-Risk (EAR) model that are intended to measure the maximum potential loss in
its interest rate and foreign exchange financial
11
<PAGE>
(Dollars in Millions Except Per Share Amounts)
instruments assuming adverse market conditions occur, given a 95% confidence
level. The models utilize a variance/covariance modeling technique. Historical
interest rates and foreign exchange rates from the preceding year are used to
estimate the volatility and correlation of future rates. The estimated maximum
potential one-day loss in fair value of interest rate or foreign exchange rate
instruments, calculated using the VAR model, is not material to the
consolidated financial position, results of operations or cash flows of the
Company.
The estimated maximum yearly loss in earnings due to interest rate or
foreign exchange rate instruments, calculated utilizing the EAR model, is not
material to the Company's results of operations. Actual results in the future
may differ materially from these projected results due to actual developments
in the global financial markets.
A discussion of the Company's accounting policies for financial instruments
is included in the Summary of Significant Accounting Policies in the notes to
the Consolidated Financial Statements, and further disclosure relating to
financial instruments is included in the Fair Value of Financial Instruments
note.
Year 2000 Update
The Company developed plans to address the possible exposures related to the
year 2000 on the Company's internal systems and equipment. In the critical
area of internal operating systems, the computer systems and embedded
microprocessors and control systems in all operations were either replaced
(including through conversion to SAP) or made compliant by December 31, 1999.
In addition, the other aspects of the year 2000 project plan were completed by
December 31, 1999.
The incremental cost, including external contractor costs, costs to modify
existing systems and costs of internal resources dedicated to preparing for
the year 2000, was approximately $30.0. These costs were charged to expense as
incurred and were incremental to the investment in SAP systems which was
previously planned and implemented.
No significant year 2000 problems have been encountered with the Company's
internal systems and equipment.
Conversion to the Euro Currency
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and
adopted the euro as their new common legal currency. As of that date, the euro
began trading on currency exchanges and the legacy currencies were to remain
legal tender in the participating countries for a transition period between
January 1, 1999 and January 1, 2002.
The Company is addressing most of the issues involved with the introduction
of the euro through its worldwide conversion to the SAP system. The more
important issues facing the Company include reassessing currency risk and
processing tax and accounting records.
Based upon progress to date, the Company believes that use of the euro will
not have a significant impact on the manner in which it conducts its business
affairs and processes its business and accounting records. Accordingly,
conversion to the euro is not expected to have a material effect on the
Company's financial condition, cash flows or results of operations.
Outlook
Looking forward into 2000, the Company is well positioned for strong growth
in most of its markets, particularly North America and Asia/Africa. However,
movements in foreign currency exchange rates can impact future operating
results as measured in U.S. dollars. In particular, economic uncertainty in
some countries in Latin America and the continued weakness in the euro may
impact the overall results of Latin America and Europe.
12
<PAGE>
(Dollars in Millions Except Per Share Amounts)
The Company expects the continued success of Colgate Total toothpaste, using
patented proprietary technology, to bolster worldwide oral care leadership and
expects new products in Oral Care and other categories to add potential for
further growth. Overall, subject to global economic conditions, the Company
does not expect the 2000 market conditions to be materially different from
those experienced in 1999 and the Company expects its positive momentum to
continue. Historically, the consumer products industry has been less
susceptible to changes in economic growth than many other industries, and
therefore the Company constantly evaluates projects that will focus operations
on opportunities for enhanced growth potential. Over the long term, Colgate's
continued focus on its consumer products business and the strength of its
global brand names, its broad international presence in both developed and
developing markets, and its strong capital base all position the Company to
take advantage of growth opportunities and to continue to increase
profitability and shareholder value.
Forward-Looking Statements
Readers are cautioned that the Results of Operations and other sections of
this report contain forward-looking statements that are based on management's
estimates, assumptions and projections. A description of some of the factors
that could cause actual results to differ materially from expectations
expressed in the Company's forward-looking statements set forth in the
Company's Form 8-K filed with the Securities and Exchange Commission on
November 13, 1998 under the caption "Cautionary Statement on Forward-Looking
Statements" is incorporated herein by reference. These factors include, but
are not limited to, the risks associated with international operations, the
activities of competitors, retail trade practices, the success of new product
introductions, cost pressures, manufacturing and environmental matters.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the "Index to Financial Statements" which is located on page 17 of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and executive officers of the registrant set
forth in the Proxy Statement for the 2000 Annual Meeting is incorporated
herein by reference, as is the text in Part I of this report under the caption
"Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the Proxy Statement for the 2000 Annual Meeting
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security ownership of management set forth in the Proxy Statement for
the 2000 Annual Meeting is incorporated herein by reference.
(b) There are no arrangements known to the registrant that may at a
subsequent date result in a change in control of the registrant.
13
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the Proxy Statement for the 2000 Annual Meeting
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
See the "Index to Financial Statements" which is located on page 17 of this
report.
(b) Exhibits. See the exhibit index which is included herein.
(c) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Colgate-Palmolive Company
(Registrant)
By: /s/ Reuben Mark
--------------------------------
Reuben Mark
Chairman of the Board
and Chief Executive Officer
Date: March 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 27, 2000 by the following persons on
behalf of the registrant and in the capacities indicated.
(a) Principal Executive Officer (c) Principal Accounting Officer
/s/ Reuben Mark /s/ Dennis J. Hickey
- ------------------------------------- -------------------------------------
Reuben Mark Dennis J. Hickey
Chairman of the Board and Chief Vice President and Corporate
Executive Officer Controller
(b) Principal Financial Officer (d) Directors:
/s/ Stephen C. Patrick Jill K. Conway, Ronald E. Ferguson,
- ------------------------------------- Ellen M. Hancock, David W. Johnson,
Stephen C. Patrick John P. Kendall, Richard J. Kogan,
Chief Financial Officer Reuben Mark, Howard B. Wentz, Jr.
/s/ Andrew D. Hendry
-------------------------------------
Andrew D. Hendry
as Attorney-in-Fact
15
<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
FINANCIAL STATEMENTS
For The Year Ended December 31, 1999
COLGATE-PALMOLIVE COMPANY
NEW YORK, NEW YORK 10022
16
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements
Consolidated Statements of Income for the years
ended December 31, 1999, 1998, and 1997................................... 18
Consolidated Balance Sheets at December 31, 1999 and 1998.................. 19
Consolidated Statements of Retained Earnings, Comprehensive Income
and Changes in Capital Accounts for the years ended
December 31, 1999, 1998 and 1997.......................................... 20
Consolidated Statements of Cash Flows for the years
ended December 31, 1999, 1998 and 1997.................................... 21
Notes to Consolidated Financial Statements................................. 22
Market and Dividend Information............................................ 38
Financial Statement Schedules for the years ended
December 31, 1999, 1998 and 1997:
Schedule II Valuation and Qualifying Accounts.............................. 39
Report of Independent Public Accountants................................... 42
Selected Financial Data
Historical Financial Summary............................................... 43
</TABLE>
All other financial statements and schedules not listed have been omitted
since the required information is included in the financial statements or the
notes thereto or is not applicable or required.
17
<PAGE>
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Income
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales............................................ $9,118.2 $8,971.6 $9,056.7
Cost of sales........................................ 4,224.0 4,290.3 4,461.5
-------- -------- --------
Gross profit....................................... 4,894.2 4,681.3 4,595.2
Selling, general and administrative expenses......... 3,254.4 3,197.1 3,237.0
Other expense, net................................... 73.6 61.2 72.4
Interest expense, net................................ 171.6 172.9 183.5
-------- -------- --------
Income before income taxes........................... 1,394.6 1,250.1 1,102.3
Provision for income taxes........................... 457.3 401.5 361.9
-------- -------- --------
Net income......................................... $ 937.3 $ 848.6 $ 740.4
======== ======== ========
Earnings per common share, basic..................... $ 1.57 $ 1.40 $ 1.22
======== ======== ========
Earnings per common share, diluted................... $ 1.47 $ 1.30 $ 1.13
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
18
<PAGE>
COLGATE-PALMOLIVE COMPANY
Consolidated Balance Sheets
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents................................ $ 199.6 $ 181.7
Marketable securities.................................... 35.6 12.8
Receivables (less allowances of $37.2 and $35.9,
respectively)........................................... 1,100.8 1,085.6
Inventories.............................................. 783.7 746.0
Other current assets..................................... 235.1 218.8
-------- --------
Total current assets................................... 2,354.8 2,244.9
Property, plant and equipment, net......................... 2,551.1 2,589.2
Goodwill and other intangibles, net........................ 2,185.4 2,524.1
Other assets............................................... 331.8 327.0
-------- --------
$7,423.1 $7,685.2
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Notes and loans payable.................................. $ 207.3 $ 175.3
Current portion of long-term debt........................ 338.9 281.6
Accounts payable......................................... 764.8 726.1
Accrued income taxes..................................... 116.6 74.2
Other accruals........................................... 845.9 857.2
-------- --------
Total current liabilities.............................. 2,273.5 2,114.4
Long-term debt............................................. 2,243.3 2,300.6
Deferred income taxes...................................... 398.6 448.0
Other liabilities.......................................... 674.0 736.6
Shareholders' Equity
Preferred stock.......................................... 366.5 376.2
Common stock, $1 par value (1,000,000,000 shares
authorized, 732,853,180 shares issued).................. 732.9 732.9
Additional paid-in capital............................... 1,063.2 824.6
Retained earnings........................................ 4,212.3 3,641.0
Cumulative translation adjustments....................... (1,136.2) (799.8)
-------- --------
5,238.7 4,774.9
Unearned compensation.................................... (348.6) (355.5)
Treasury stock, at cost.................................. (3,056.4) (2,333.8)
-------- --------
Total shareholders' equity............................. 1,833.7 2,085.6
-------- --------
$7,423.1 $7,685.2
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
19
<PAGE>
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Retained Earnings, Comprehensive Income and Changes
in Capital Accounts
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
Common Shares Additional Treasury Shares Cumulative Compre-
------------------- Paid-in --------------------- Retained Translation hensive
Shares Amount Capital Shares Amount Earnings Adjustment Income
----------- ------ ---------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1997................... 588,535,272 $732.9 $ 551.9 144,317,908 $1,468.8 $2,731.0 $ (534.7)
Net income.............. 740.4 $ 740.4
Other comprehensive
income:
Cumulative translation
adjustment............ (159.0) (159.0)
-------
Total comprehensive
income................. $ 581.4
=======
Dividends declared:
Series B Convertible
Preference Stock, net
of income taxes....... (20.6)
Preferred stock........ (.5)
Common stock........... (312.3)
Shares issued for stock
options................ 6,326,282 64.2 (6,326,282) 54.4
Treasury stock acquired. (5,591,852) 5,591,852 175.1
Other................... 1,535,688 44.8 (1,535,688) (18.0)
----------- ------ -------- ----------- -------- -------- ---------
Balance, December 31,
1997................... 590,805,390 $732.9 $ 660.9 142,047,790 $1,680.3 $3,138.0 $ (693.7)
----------- ------ -------- ----------- -------- -------- ---------
Net income.............. 848.6 $ 848.6
Other comprehensive
income:
Cumulative translation
adjustment............ (106.1) (106.1)
-------
Total comprehensive
income................. $ 742.5
=======
Dividends declared:
Series B Convertible
Preference Stock, net
of income taxes....... (20.4)
Preferred stock........ (.5)
Common stock........... (324.7)
Shares issued for stock
options................ 6,714,850 129.0 (6,714,850) 145.1
Treasury stock acquired. (14,298,912) 14,298,912 542.5
Other................... 2,198,152 34.7 (2,198,152) (34.1)
----------- ------ -------- ----------- -------- -------- ---------
Balance, December 31,
1998................... 585,419,480 $732.9 $ 824.6 147,433,700 $2,333.8 $3,641.0 $ (799.8)
----------- ------ -------- ----------- -------- -------- ---------
Net income.............. 937.3 $ 937.3
Other comprehensive
income:
Cumulative translation
adjustment............ (336.4) (336.4)
-------
Total comprehensive
income................. $ 600.9
=======
Dividends declared:
Series B Convertible
Preference Stock, net
of income taxes....... (20.5)
Preferred stock........ (.5)
Common stock........... (345.0)
Shares issued for stock
options................ 6,894,907 128.0 (6,894,907) 132.5
Treasury stock acquired. (12,849,744) 12,849,744 624.4
Other................... (601,597) 110.6 611,087 (34.3)
----------- ------ -------- ----------- -------- -------- ---------
Balance, December 31,
1999................... 578,863,046 $732.9 $1,063.2 153,999,624 $3,056.4 $4,212.3 $(1,136.2)
=========== ====== ======== =========== ======== ======== =========
</TABLE>
See Notes to Consolidated Financial Statements.
20
<PAGE>
COLGATE-PALMOLIVE COMPANY
Consolidated Statements of Cash Flows
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Operating Activities
Net income..................................... $ 937.3 $ 848.6 $ 740.4
Adjustments to reconcile net income to net cash
provided by operations:
Restructured operations...................... (35.6) (34.8) (48.5)
Depreciation and amortization................ 340.2 330.3 319.9
Income taxes and other, net.................. 122.3 60.7 18.5
Cash effects of changes in:
Receivables................................ (81.3) (15.2) (61.6)
Inventories................................ (82.8) (19.5) (50.9)
Payables and accruals...................... 92.6 8.7 180.0
-------- -------- --------
Net cash provided by operations............ 1,292.7 1,178.8 1,097.8
-------- -------- --------
Investing Activities
Capital expenditures........................... (372.8) (389.6) (478.5)
Payment for acquisitions, net of cash acquired. (44.1) (22.6) (31.5)
Sale of non-core product lines................. 89.9 57.4 96.4
Sale of marketable securities and investments.. 22.7 18.7 68.5
Other.......................................... (27.2) (15.8) 7.7
-------- -------- --------
Net cash used for investing activities....... (331.5) (351.9) (337.4)
-------- -------- --------
Financing Activities
Principal payments on debt..................... (491.0) (677.5) (670.7)
Proceeds from issuance of debt................. 555.5 762.9 350.4
Dividends paid................................. (366.0) (345.6) (333.4)
Purchase of common stock....................... (624.4) (542.5) (175.1)
Other.......................................... (14.2) (27.3) 15.8
-------- -------- --------
Net cash used for financing activities....... (940.1) (830.0) (813.0)
-------- -------- --------
Effect of exchange rate changes on cash and
cash equivalents.............................. (3.2) 1.7 (12.5)
-------- -------- --------
Net increase (decrease) in cash and cash equiv-
alents........................................ 17.9 (1.4) (65.1)
Cash and cash equivalents at beginning of year. 181.7 183.1 248.2
-------- -------- --------
Cash and cash equivalents at end of year....... $ 199.6 $ 181.7 $ 183.1
======== ======== ========
Supplemental Cash Flow Information
Income taxes paid................................ $ 292.4 $ 273.8 $ 261.3
Interest paid.................................... 210.9 202.8 230.6
Principal payments on ESOP debt, guaranteed by
the Company..................................... 6.7 6.1 5.5
</TABLE>
See Notes to Consolidated Financial Statements.
21
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements
Dollars in Millions Except Per Share Amounts
1. Nature of Operations
The Company manufactures and markets a wide variety of products in the U.S.
and around the world in two distinct business segments: Oral, Personal and
Household Care, and Pet Nutrition. Oral, Personal and Household Care products
include toothpaste, oral rinses and toothbrushes, bar and liquid soaps,
shampoos, conditioners, deodorants and antiperspirants, baby and shave
products, laundry and dishwashing detergents, fabric softeners, cleansers and
cleaners, bleaches and other similar items. These products are sold primarily
to wholesale and retail distributors worldwide. Pet Nutrition products include
pet food products manufactured and marketed by Hill's Pet Nutrition. The
principal customers for Pet Nutrition products are veterinarians and specialty
pet retailers. Principal global trademarks include Colgate, Palmolive, Mennen
Speed Stick, Protex, Ajax, Soupline, Suavitel, Fab, Science Diet and
Prescription Diet in addition to various regional trademarks.
The Company's principal classes of products accounted for the following
percentages of worldwide sales for the past three years:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Oral Care............................................... 32% 32% 31%
Personal Care........................................... 24 24 23
Household Surface Care.................................. 16 16 16
Fabric Care............................................. 14 15 16
Pet Nutrition........................................... 12 11 11
</TABLE>
2. Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Colgate-
Palmolive Company and its majority-owned subsidiaries. Intercompany
transactions and balances have been eliminated. Investments in companies in
which the Company's interest is between 20% and 50% are accounted for using
the equity method. The Company's share of the net income from such investments
is recorded as equity earnings and is classified as Other expense, net in the
Consolidated Statements of Income.
Revenue Recognition
Sales are recorded at the time products are shipped to trade customers. Net
sales reflect units shipped at selling list prices reduced by promotion
allowances.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent gains and losses at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Accounting Changes
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The statement establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
The statement requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge
22
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
accounting criteria are met. Statement No. 133 will be effective,
prospectively, for the Company's financial statements in the year 2001. The
statement is not expected to have a material impact on the Company's financial
position, results of operations or cash flows.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents. Investments in short-
term securities that do not meet the definition of cash equivalents are
classified as marketable securities. Marketable securities are reported at
cost, which approximates market.
Inventories
Inventories are valued at the lower of cost or market. The first-in, first-
out (FIFO) method is used to value most inventories. The remaining inventories
are valued using the last-in, first-out (LIFO) method.
Property, Plant and Equipment
Land, buildings, and machinery and equipment are stated at cost.
Depreciation is provided, primarily using the straight-line method, over
estimated useful lives ranging from 3 to 40 years.
Goodwill and Other Intangibles
Intangible assets principally consist of goodwill, which is amortized on the
straight-line method, generally over a period of 40 years. Other intangible
assets, principally non-compete agreements and customer lists, are amortized
on the straight-line method over periods ranging from 5 to 20 years depending
on their useful lives.
The recoverability of the carrying values of intangible assets is evaluated
periodically based on a review of forecasted operating cash flows and the
profitability of the related business. For the three-year period ended
December 31, 1999, there were no material adjustments to the carrying values
of intangible assets resulting from these evaluations.
Advertising
Advertising costs are expensed in the year incurred.
Income Taxes
Deferred taxes are recognized for the expected future tax consequences of
temporary differences between the amounts carried for financial reporting and
tax purposes. Provision is made currently for taxes payable on remittances of
overseas earnings; no provision is made for taxes on overseas retained
earnings that are deemed to be permanently reinvested.
Translation of Overseas Currencies
The assets and liabilities of subsidiaries, other than those operating in
highly inflationary environments, are translated into U.S. dollars at year-end
exchange rates, with resulting translation gains and losses accumulated in a
separate component of shareholders' equity. Income and expense items are
converted into U.S. dollars at average rates of exchange prevailing during the
year.
23
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
For subsidiaries operating in highly inflationary environments, inventories,
goodwill and property, plant and equipment are translated at the rate of
exchange on the date the assets were acquired, while other assets and
liabilities are translated at year-end exchange rates. Translation adjustments
for these operations are included in net income.
Prior to 1999, Mexico was a highly inflationary economy and the results of
the Company's Mexican operations were measured using the U.S. dollar as its
functional currency. Effective January 1, 1999, the Company ceased to account
for its Mexican operations as highly inflationary as historical inflation
levels had fallen sharply. The impact of the change was not material to the
Company's earnings.
During 1998, as required by generally accepted accounting principles, the
Company ceased to account for its Brazilian operations as highly inflationary.
The effect of this change was to reduce shareholders' equity by $98.4,
primarily related to the recognition of deferred tax benefits expected to be
realized in the future. Due to the devaluation of the Brazilian real during
1999, $242.4 was charged to cumulative translation adjustments which was, in
effect, a write-down of our foreign-currency-denominated assets (primarily
goodwill and property, plant and equipment). This will be accompanied by lower
amortization and depreciation expense in future periods.
Financial Instruments
The net effective cash payment of the interest rate swap contracts combined
with the related interest payments on the debt that they hedge are accounted
for as interest expense. Those interest rate instruments that do not qualify
as hedge instruments for accounting purposes are marked to market and recorded
at fair value.
Gains and losses from foreign exchange contracts that hedge the Company's
investments in its foreign subsidiaries are shown in the cumulative
translation adjustments account included in shareholders' equity. Gains and
losses from contracts that hedge firm commitments are recorded in the balance
sheets as a component of the related receivable or payable until realized, at
which time they are recognized in the statements of income. The contracts that
hedge anticipated sales and purchases do not qualify as hedges for accounting
purposes. Accordingly, the related gains and losses are calculated using the
current forward rates and are recorded in the Consolidated Statements of
Income as Other expense, net.
Segment Information
The Company operates in two product segments: Oral, Personal and Household
Care, and Pet Nutrition. The operations of the Oral, Personal and Household
Care segment are managed geographically in four reportable operating segments:
North America, Latin America, Europe and Asia/Africa.
Management measures segment profit as operating income, which is defined as
income before interest expense and income taxes. The accounting policies of
the operating segments are the same as those described in the summary of
significant accounting policies. Corporate operations include research and
development costs, unallocated overhead costs, and gains and losses on sales
of non-strategic brands and assets. Corporate assets include primarily real
estate and benefit plan assets.
The financial and descriptive information on the Company's geographic area
and industry segment data, appearing in the tables contained in management's
discussion of this report, is an integral part of these financial statements.
24
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
3. Acquisitions and Divestitures
During 1999, 1998 and 1997, the Company made several acquisitions totaling
$46.4, $22.6 and $20.3, respectively. Individually, none of these acquisitions
were significant.
The acquisitions were accounted for as purchases, and accordingly, the
purchase prices were allocated to the net tangible and intangible assets
acquired based on estimated fair values at the dates the acquisitions were
consummated. The results of operations of the acquired businesses have been
included in the Consolidated Financial Statements since the respective
acquisition dates. The inclusion of pro forma financial data for all
acquisitions would not have materially affected the financial information
included herein.
The aggregate sale price of all 1999, 1998 and 1997 divestitures was $94.7,
$57.4 and $101.4, respectively. In 1999, the U.S. Baby Magic brand and related
assets were sold for $90.0, and in 1998, the HandiWipes brand and related
assets were sold for $53.0. In 1997, the Sterno fuel brand and related assets
were sold for $70.0.
4. Long-Term Debt and Credit Facilities
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
Weighted
Average
Interest Rate Maturities 1999 1998
------------- ---------- -------- --------
<S> <C> <C> <C> <C>
Notes............................ 7.0% 2000-2028 $1,423.5 $1,382.4
Commercial paper and other short-
term borrowings, reclassified... 5.9 2000 477.3 461.2
ESOP notes, guaranteed by the
Company......................... 8.7 2001-2009 366.9 373.6
Payable to banks................. 6.5 2000-2007 313.7 361.8
Capitalized leases............... .8 3.2
-------- --------
2,582.2 2,582.2
Less: current portion of long-
term debt....................... 338.9 281.6
-------- --------
$2,243.3 $2,300.6
======== ========
</TABLE>
Commercial paper and certain other short-term borrowings are classified as
long-term debt as it is the Company's intent and ability to refinance such
obligations on a long-term basis. Scheduled maturities of debt outstanding at
December 31, 1999, excluding short-term borrowings reclassified, are as
follows: 2000--$338.9; 2001--$192.5; 2002--$135.0; 2003--$409.8; 2004--$205.1,
and $823.6 thereafter. The Company has entered into interest rate swap
agreements and foreign exchange contracts related to certain of these debt
instruments (see Note 11).
At December 31, 1999, the Company had unused credit facilities amounting to
$1,527.9. Commitment fees related to credit facilities are not material. The
weighted average interest rate on short-term borrowings, excluding amounts
reclassified, as of December 31, 1999 and 1998, was 7.8% and 6.2%,
respectively.
The Company's long-term debt agreements include various restrictive
covenants and require the maintenance of certain defined financial ratios with
which the Company is in compliance.
5. Capital Stock and Stock Compensation Plans
Preferred Stock
Preferred Stock consists of 250,000 authorized shares without par value. It is
issuable in series, of which one series of 125,000 shares, designated $4.25
Preferred Stock, with a stated and redeemable value of $100 per share,
25
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
has been issued. The $4.25 Preferred Stock is redeemable only at the option of
the Company. At December 31, 1999 and 1998, 115,510 and 122,620 shares of
$4.25 Preferred Stock, respectively, were outstanding.
Preference Stock
In 1988, the Company authorized the issuance of 50,000,000 shares of
Preference Stock, without par value. The Series B Convertible Preference
Stock, which is convertible into eight shares of common stock, ranks junior to
all series of the Preferred Stock. At December 31, 1999 and 1998, 5,446,442
and 5,598,808 shares of Series B Convertible Preference Stock, respectively,
were outstanding and issued to the Company's Employee Stock Ownership Plan.
Common Stock
On May 5, 1999, the Company's Board of Directors approved a two-for-one
common stock split effected in the form of a 100% stock dividend. As a result
of the split, shareholders received one additional share of common stock for
each share they held as of May 19, 1999, which was distributed June 30, 1999.
Par value remained at $1 per share. The Consolidated Financial Statements and
financial information contained elsewhere in this report have been restated to
reflect the effect of the common stock split for all periods presented.
Shareholder Rights Plan
Under the Company's Shareholder Rights Plan, each share of the Company's
common stock carries with it one Preference Share Purchase Right ("Rights").
The Rights themselves will at no time have voting power or pay dividends. The
Rights become exercisable only if a person or group acquires 15% or more of
the Company's common stock or announces a tender offer, the consummation of
which would result in ownership by a person or group of 15% or more of the
common stock. When exercisable, each Right entitles a holder to buy one two-
hundredth of a share of a new series of preference stock at an exercise price
of $220.00, subject to adjustment.
If the Company is acquired in a merger or other business combination, each
Right will entitle a holder to buy, at the Right's then current exercise
price, a number of the acquiring company's common shares having a market value
of twice such price. In addition, if a person or group acquires 15% or more of
the Company's common stock, each Right will entitle its holder (other than
such person or members of such group) to purchase, at the Right's then current
exercise price, a number of shares of the Company's common stock having a
market value of twice the Right's exercise price.
Further, at any time after a person or group acquires 15% or more (but less
than 50%) of the Company's common stock, the Board of Directors may, at its
option, exchange part or all of the Rights (other than Rights held by the
acquiring person or group) for shares of the Company's common stock on a one-
for-one basis.
The Company, at the option of its Board of Directors, may amend the Rights
or redeem the Rights for $.01 at any time before the acquisition by a person
or group of beneficial ownership of 15% or more of its common stock. The Board
of Directors is also authorized to reduce the 15% threshold to not less than
10%. Unless redeemed earlier, the Rights will expire on October 31, 2008.
Stock Repurchases
During 1998, the Company entered into a series of forward purchase
agreements on its common stock. These agreements are settled on a net basis in
shares of the Company's common stock. To the extent that the market price of
the Company's common stock on a settlement date is higher/(lower) than the
forward purchase
26
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
price, the net differential is received/(paid) by the Company. As of December
31, 1999, agreements were in place covering approximately $480.5 of the
Company's common stock (7.7 million shares) that had forward prices averaging
$62.56 per share. If these agreements were settled based on the December 31,
1999 market price of the Company's common stock ($65.00 per share), the
Company would be entitled to receive approximately 288,000 shares. During 1999
and 1998, settlements resulted in the Company receiving 2,322,701 and 642,662
shares, respectively, which were recorded as treasury stock.
Incentive Stock Plan
The Company has a plan which provides for grants of restricted stock awards
for officers and other executives of the Company and its major subsidiaries. A
committee of non-employee members of the Board of Directors administers the
plan. During 1999 and 1998, 692,238 and 570,154 shares, respectively, were
awarded to employees in accordance with the provisions of the plan.
Stock Option Plans
The Company's Stock Option Plans ("Plans") provide for the issuance of non-
qualified stock options to officers and key employees. Options are granted at
prices not less than the fair market value on the date of grant. At 1999 year-
end, 31,119,432 shares of common stock were available for future grants.
The Plans contain an accelerated ownership feature which provides for the
grant of new options when previously owned shares of Company stock are used to
exercise existing options. The number of new options granted under this
feature is equal to the number of shares of previously owned Company stock
used to exercise the original options and to pay the related required U.S.
income tax. The new options are granted at a price equal to the fair market
value on the date of the new grant and have the same expiration date as the
original options exercised.
Stock option plan activity is summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- --------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
----------- -------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
January 1.............. 42,786,246 $28 45,534,784 $23 42,830,396 $16
Granted................. 11,414,328 53 12,537,288 39 15,406,114 37
Exercised............... (14,586,597) 26 (14,917,508) 22 (12,190,554) 16
Canceled or expired..... (417,880) 49 (368,318) 21 (511,172) 19
----------- ----------- -----------
Options outstanding,
December 31............ 39,196,097 36 42,786,246 28 45,534,784 23
=========== =========== ===========
Options exercisable,
December 31............ 23,813,363 $28 26,688,764 $23 29,366,358 $19
=========== =========== ===========
</TABLE>
27
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
The following table summarizes information relating to currently outstanding
and exercisable options as of December 31, 1999:
<TABLE>
<CAPTION>
Weighted Average
Remaining Weighted Weighted
Contractual Life Options Average Options Average
Range of Exercise Prices in Years Outstanding Exercise Price Exercisable Exercise Price
------------------------ ---------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 8.04-$17.17........... 4 6,271,637 $15 6,271,637 $15
$17.53-$24.95........... 5 6,888,774 21 6,888,774 21
$24.98-$31.08........... 8 3,911,523 31 2,238,830 31
$31.33-$43.66........... 8 8,221,126 36 4,242,264 37
$43.67-$53.02........... 6 6,581,369 50 4,170,408 49
$53.06-$62.50........... 8 7,321,668 56 1,450 56
---------- ----------
6 39,196,097 $36 23,813,363 $28
========== ==========
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
options granted under the Plans. Accordingly, no compensation expense has been
recognized. Had compensation expense been determined based on the Black-
Scholes option pricing model value at the grant date for awards in 1999, 1998
and 1997 consistent with the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), the
Company's net income, basic earnings per common share and diluted earnings per
common share would have been $891.9, $1.49 per share and $1.40 per share,
respectively, in 1999; $803.5, $1.33 per share and $1.25 per share,
respectively, in 1998; and $716.1, $1.18 per share and $1.10 per share,
respectively, in 1997.
The weighted average Black-Scholes value of grants issued in 1999, 1998 and
1997 was $8.61, $6.24 and $3.93, respectively. The Black-Scholes value of each
option granted is estimated using the Black-Scholes option pricing model with
the following assumptions: option term until exercise ranging from 2 to 7
years, volatility ranging from 19% to 30%, risk-free interest rate ranging
from 5.0% to 6.2% and an expected dividend yield of 2.5%. The Black-Scholes
model used to determine the option values shown above was developed to
estimate the fair value of short-term freely tradable, fully transferable
options without vesting restrictions and was not designed to value reloads,
all of which significantly differ from the Company's stock option awards. The
value of this model is also limited by the inclusion of highly subjective
assumptions which greatly affect calculated values.
6. Employee Stock Ownership Plan
In 1989, the Company expanded its Employee Stock Ownership Plan ("ESOP")
through the introduction of a leveraged ESOP covering certain employees who
have met certain eligibility requirements. The ESOP issued $410.0 of long-term
notes due through 2009 bearing an average interest rate of 8.7%. The long-term
notes, which are guaranteed by the Company, are reflected in the accompanying
Consolidated Balance Sheets. The ESOP used the proceeds of the notes to
purchase 6.3 million shares of Series B Convertible Preference Stock from the
Company. The Stock has a minimum redemption price of $65 per share and pays
semiannual dividends equal to the higher of $2.44 or the current dividend paid
on eight common shares for the comparable six-month period.
Dividends on these preferred shares, as well as common shares also held by
the ESOP, are paid to the ESOP trust and, together with contributions, are
used by the ESOP to repay principal and interest on the outstanding notes.
Preferred shares are released for allocation to participants based upon the
ratio of the current year's debt service to the sum of total principal and
interest payments over the life of the loan. At December 31, 1999,
28
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
1,628,735 shares were allocated to participant accounts and 3,817,707 shares
were available for future allocation. Each allocated share may be converted by
the trustee into eight common shares but preferred shares generally convert
only after the employee ceases to work for the Company.
Dividends on these preferred shares are deductible for income tax purposes
and, accordingly, are reflected net of their tax benefit in the Consolidated
Statements of Retained Earnings, Comprehensive Income and Changes in Capital
Accounts.
Annual expense related to the leveraged ESOP, determined as interest
incurred on the notes, less employee contributions and dividends received on
the shares held by the ESOP, plus the higher of either principal repayments on
the notes or the cost of shares allocated, was $9.2 in 1999, $2.4 in 1998 and
$3.0 in 1997. Similarly, unearned compensation, shown as a reduction in
shareholders' equity, is reduced by the higher of principal payments or the
cost of shares allocated.
Interest incurred on the ESOP's notes amounted to $32.0 in 1999, $32.5 in
1998 and $33.0 in 1997. The Company paid dividends on the stock held by the
ESOP of $29.1 in 1999, $29.3 in 1998 and $29.8 in 1997. Company contributions
to the ESOP were $9.3 in 1999, $0 in 1998 and $1.0 in 1997. Employee
contributions to the ESOP were $.6 in 1999, $9.4 in 1998 and $8.2 in 1997.
7. Retirement Plans and Other Retiree Benefits
Retirement Plans
The Company, its U.S. subsidiaries and some of its overseas subsidiaries
maintain defined benefit retirement plans covering substantially all of their
employees. Benefits are based primarily on years of service and employees'
career earnings. In the Company's principal U.S. plans, funds are contributed
to the trusts in accordance with regulatory limits to provide for current
service and for any unfunded projected benefit obligation over a reasonable
period. To the extent these requirements are exceeded by plan assets, a
contribution may not be made in a particular year. Assets of the plans consist
principally of common stocks, guaranteed investment contracts with insurance
companies, investments in real estate funds and U.S. Government and corporate
obligations. Domestic plan assets also include investments in the Company's
common stock representing 10% and 7% of plan assets at December 31, 1999 and
1998, respectively.
Other Retiree Benefits
The Company and certain of its subsidiaries provide health care and life
insurance benefits for retired employees to the extent not provided by
government-sponsored plans. The Company utilizes a portion of its leveraged
ESOP, in the form of future retiree contributions, to reduce its obligation to
provide these postretirement benefits and offset its current service cost.
Postretirement benefits otherwise are not currently funded.
29
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
Summarized information of the Company's defined benefit retirement plans and
postretirement plans are as follows:
<TABLE>
<CAPTION>
Other Retiree
Pension Benefits Benefits
---------------------------------- ----------------
1999 1998 1999 1998 1999 1998
-------- ------ ------- ------- ------- -------
North America International
---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Change in Benefit
Obligation
Benefit obligation at
beginning of year....... $ 998.3 $976.6 $ 329.6 $ 278.8 $ 153.0 $ 143.7
Service cost............. 29.4 28.1 12.4 17.7 (5.0) (11.0)
Interest cost............ 65.9 68.9 19.0 18.2 14.5 14.7
Participant's
contribution............ 3.1 3.3 2.3 9.7 -- --
Acquisitions/plan
amendments.............. .2 1.5 .1 4.0 (.2) (3.7)
Actuarial (gain)/loss.... (96.7) 7.9 3.5 14.1 5.4 20.0
Foreign exchange impact.. (.7) (2.6) (38.3) 4.4 (.2) --
Benefits paid............ (80.3) (85.4) (17.6) (17.3) (11.4) (10.7)
-------- ------ ------- ------- ------- -------
Benefit obligation at end
of year................. $ 919.2 $998.3 $ 311.0 $ 329.6 $ 156.1 $ 153.0
-------- ------ ------- ------- ------- -------
Change in Plan Assets
Fair value of plan assets
at beginning of year.... $ 962.8 $907.3 $ 215.0 $ 193.4 $ -- $ --
Actual return on plan
assets.................. 179.7 133.1 35.6 18.5 -- --
Company contributions.... 7.7 6.9 13.6 16.6 11.4 10.7
Plan participant
contributions........... 3.1 3.3 2.3 9.7 -- --
Foreign exchange impact.. 2.1 (2.4) (25.1) (10.9) -- --
Acquisitions/plan
amendments.............. -- -- .9 5.0 -- --
Benefits paid............ (80.3) (85.4) (17.6) (17.3) (11.4) (10.7)
-------- ------ ------- ------- ------- -------
Fair value of plan assets
at end of year.......... $1,075.1 $962.8 $ 224.7 $ 215.0 $ -- $ --
-------- ------ ------- ------- ------- -------
Funded Status
Funded status at end of
year.................... $ 155.9 $(35.5) $(86.3) $(114.6) $(156.1) $(153.0)
Unrecognized net
transition
liability/(asset)....... .8 (6.6) .5 (2.5) -- --
Unrecognized net
actuarial (gain)/loss... (176.1) 19.0 (1.0) 16.4 (17.7) (22.5)
Unrecognized prior
service costs........... 33.8 39.9 4.0 3.9 (7.5) (8.3)
-------- ------ ------- ------- ------- -------
Net amount recognized.... $ 14.4 $ 16.8 $ (82.8) $ (96.8) $(181.3) $(183.8)
======== ====== ======= ======= ======= =======
Amounts Recognized in
Balance Sheet
Other assets............. $ 97.7 $ 93.3 $ 34.4 $ 40.9 $ -- $ --
Other liabilities........ (83.3) (76.5) (117.2) (137.7) (181.3) (183.8)
-------- ------ ------- ------- ------- -------
Net amount recognized.... $ 14.4 $ 16.8 $ (82.8) $ (96.8) $(181.3) $(183.8)
======== ====== ======= ======= ======= =======
Weighted Average
Assumptions
Discount rate............ 8.00% 7.25% 7.04% 6.82% 8.00% 7.25%
Long-term rate of return
on plan assets.......... 9.25% 9.25% 8.75% 8.92% -- --
Long-term rate of
compensation increase... 5.00% 5.00% 4.54% 4.44% -- --
ESOP growth rate......... -- -- -- -- 10.00% 10.00%
</TABLE>
30
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
Other
Pension Benefits Retiree Benefits
---------------------------------------------- ---------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------ ------ ------ ------ ------ ------ ----- ------ ------
North America International
---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Components of Net
Periodic Benefit Costs
Service cost............ $ 29.4 $ 28.1 $ 24.9 $ 12.4 $ 17.7 $ 16.6 $ 3.4 $ 4.0 $ 2.3
Interest cost........... 65.9 68.9 67.6 19.0 18.2 17.6 14.5 14.7 13.4
Annual ESOP allocation.. -- -- -- -- -- -- (8.4) (15.0) (10.1)
Expected return on plan
assets................. (85.5) (80.8) (77.0) (13.3) (13.9) (14.2) -- -- --
Amortization of
transition/prior
service costs.......... (1.0) (.9) 1.3 -- .1 .8 (.9) (.6) (.3)
Amortization of
actuarial loss/(gain).. 1.7 1.5 .7 .7 .5 .4 (.4) (1.0) (1.8)
------ ------ ------ ------ ------ ------ ----- ------ ------
Net periodic benefit
cost................... $ 10.5 $ 16.8 $ 17.5 $ 18.8 $ 22.6 $ 21.2 $ 8.2 $ 2.1 $ 3.5
====== ====== ====== ====== ====== ====== ===== ====== ======
</TABLE>
The accumulated benefit obligation and fair value of plan assets for the
pension plans with accumulated benefit obligations in excess of plan assets
were $203.7 and $9.7, respectively, as of December 31, 1999, and $206.9 and
$8.5, respectively, as of December 31, 1998. These amounts represent non-
qualified domestic plans and plans at foreign locations that are primarily
unfunded, as such book reserves equal to the unfunded amount have been
recorded.
The projected benefit obligation and fair value of plan assets for the
pension plans with projected benefit obligations in excess of plan assets were
$271.6 and $42.9, respectively, as of December 31, 1999, and $360.0 and
$110.1, respectively, as of December 31, 1998.
The assumed medical cost trend rate used in measuring the postretirement
benefit obligation was 5.50% for 2000 and years thereafter. Changes in this
rate can have a significant effect on amounts reported. The effect of a 1%
increase/decrease in the assumed medical cost trend rate would change the
accumulated postretirement benefit obligation by approximately $14.3; annual
expense would change by approximately $1.7.
8.Income Taxes
The provision for income taxes consists of the following for the years ended
December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
United States........................................... $130.5 $122.6 $ 91.0
International........................................... 326.8 278.9 270.9
------ ------ ------
$457.3 $401.5 $361.9
====== ====== ======
</TABLE>
The components of income before income taxes are as follows for the three
years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
United States..................................... $ 406.3 $ 362.0 $ 271.8
International..................................... 988.3 888.1 830.5
-------- -------- --------
$1,394.6 $1,250.1 $1,102.3
======== ======== ========
</TABLE>
31
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
The difference between the statutory U.S. federal income tax rate and the
Company's global effective tax rate as reflected in the Consolidated
Statements of Income is as follows:
<TABLE>
<CAPTION>
Percentage of Income Before Tax 1999 1998 1997
------------------------------- ---- ---- ----
<S> <C> <C> <C>
Tax at U.S. statutory rate................................. 35.0% 35.0% 35.0%
State income taxes, net of federal benefit................. .9 .7 .6
Earnings taxed at other than U.S. statutory rate........... (1.4) (2.6) (1.8)
Reversal of valuation allowance............................ (.2) (2.7) (1.5)
Other, net................................................. (1.5) 1.7 .5
---- ---- ----
Effective tax rate......................................... 32.8% 32.1% 32.8%
==== ==== ====
</TABLE>
In addition, net tax benefits (costs) of $169.0 in 1999 and $(18.5) in 1998
were recorded directly through equity which included tax benefits related to
employee benefit plans. The 1999 amount also reflects tax benefits related to
currency devaluation in Brazil whereas the 1998 amount reflects tax
adjustments recorded upon the change in accounting for Brazil as no longer
highly inflationary.
Differences between accounting for financial statement purposes and
accounting for tax purposes result in taxes currently payable being lower than
the total provision for income taxes as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Excess of tax over book depreciation.............. $ (11.6) $ (40.0) $ (12.7)
Net restructuring spending........................ (14.1) (13.6) (47.5)
Tax credit utilization............................ (39.0) (10.2) (11.5)
Other, net........................................ 16.0 (37.0) 16.7
------- ------- -------
$ (48.7) $(100.8) $ (55.0)
======= ======= =======
</TABLE>
The components of deferred tax assets (liabilities) are as follows at
December 31:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Deferred Taxes--Current:
Accrued liabilities..................................... $ 69.5 $ 73.8
Restructuring........................................... -- 14.1
Other, net.............................................. 39.7 22.5
------- -------
Total deferred taxes current............................ 109.2 110.4
------- -------
Deferred Taxes--Long-term:
Intangible assets....................................... (275.9) (328.5)
Property, plant and equipment........................... (254.2) (251.1)
Postretirement benefits................................. 57.0 62.6
Tax loss and tax credit carryforwards................... 140.4 176.9
Other, net.............................................. 71.1 14.9
Valuation allowance..................................... (137.0) (122.8)
------- -------
Total deferred taxes long-term.......................... (398.6) (448.0)
------- -------
Net deferred taxes.................................... $(289.4) $(337.6)
======= =======
</TABLE>
The major component of the 1999 and 1998 valuation allowance relates to tax
benefits in certain jurisdictions not expected to be realized.
32
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
Applicable U.S. income and foreign withholding taxes have not been provided
on approximately $728.7 of undistributed earnings of foreign subsidiaries at
December 31, 1999. These earnings are currently considered to be permanently
invested and are not subject to such taxes. Determining the tax liability that
would arise if these earnings were remitted is not practicable.
9. Supplemental Income Statement Information
<TABLE>
<CAPTION>
Other Expense, Net 1999 1998 1997
- ------------------ ------ ------ ------
<S> <C> <C> <C>
Amortization of intangibles............................. $ 75.6 $ 81.7 $ 86.5
Earnings from equity investments........................ (5.3) (5.3) (5.6)
Minority interest....................................... 30.4 28.1 29.1
Other................................................... (27.1) (43.3) (37.6)
------ ------ ------
$ 73.6 $ 61.2 $ 72.4
====== ====== ======
<CAPTION>
Interest Expense, Net 1999 1998 1997
- --------------------- ------ ------ ------
<S> <C> <C> <C>
Interest incurred....................................... $224.0 $216.8 $241.6
Interest capitalized.................................... (11.8) (12.3) (10.0)
Interest income......................................... (40.6) (31.6) (48.1)
------ ------ ------
$171.6 $172.9 $183.5
====== ====== ======
Research and development................................ $169.2 $166.0 $166.3
Media advertising....................................... 575.6 592.2 637.0
</TABLE>
10. Supplemental Balance Sheet Information
<TABLE>
<CAPTION>
Inventories 1999 1998
- ----------- ------ ------
<S> <C> <C>
Raw materials and supplies....................................... $259.6 $257.9
Work-in-process.................................................. 33.2 32.9
Finished goods................................................... 490.9 455.2
------ ------
$783.7 $746.0
====== ======
</TABLE>
Inventories valued under LIFO amounted to $168.1 and $162.2 at December 31,
1999 and 1998, respectively. The excess of current cost over LIFO cost at the
end of each year was $37.2 and $39.8, respectively. The liquidations of LIFO
inventory quantities increased income by $0, $1.3 and $0 in 1999, 1998 and
1997, respectively.
<TABLE>
<CAPTION>
Property, Plant and Equipment, Net 1999 1998
- ---------------------------------- -------- --------
<S> <C> <C>
Land........................................................ $ 128.4 $ 122.6
Buildings................................................... 708.0 705.0
Machinery and equipment..................................... 3,329.6 3,299.7
-------- --------
4,166.0 4,127.3
Accumulated depreciation.................................... (1,614.9) (1,538.1)
-------- --------
$2,551.1 $2,589.2
======== ========
<CAPTION>
Goodwill and Other Intangible Assets, Net 1999 1998
- ----------------------------------------- -------- --------
<S> <C> <C>
Goodwill and other intangibles.............................. $2,764.3 $3,080.8
Accumulated amortization.................................... (578.9) (556.7)
-------- --------
$2,185.4 $2,524.1
======== ========
</TABLE>
33
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
Other Accruals 1999 1998
- -------------- ------ ------
<S> <C> <C>
Accrued payroll and employee benefits............................ $341.4 $312.4
Accrued advertising.............................................. 268.3 232.6
Accrued interest................................................. 52.5 51.2
Accrued taxes other than income taxes............................ 52.8 72.0
Restructuring accrual............................................ 5.4 39.6
Other............................................................ 125.5 149.4
------ ------
$845.9 $857.2
====== ======
<CAPTION>
Other Liabilities 1999 1998
- ----------------- ------ ------
<S> <C> <C>
Minority interest................................................ $226.3 $230.5
Pension and other benefits....................................... 381.8 398.0
Other............................................................ 65.9 108.1
------ ------
$674.0 $736.6
====== ======
</TABLE>
11. Fair Value of Financial Instruments
The Company utilizes interest rate swap contracts and foreign currency
exchange contracts to manage interest rate and foreign currency exposures.
(See Management's Discussion and Analysis--Managing Foreign Currency and
Interest Rate Exposure for further discussion.) In assessing the fair value of
financial instruments at December 31, 1999 and 1998, the Company has used
available market information and other valuation methodologies. Some judgment
is necessarily required in interpreting market data to develop the estimates
of fair value, and, accordingly, the estimates are not necessarily indicative
of the amounts that the Company could realize in a current market exchange.
The carrying amounts of cash and cash equivalents, marketable securities,
long-term investments and short-term debt approximated fair value as of
December 31, 1999 and 1998. The estimated fair value of the Company's
remaining financial instruments at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
(Liabilities)/Assets
Long-term debt, including current
portion......................... $(2,582.2) $(2,616.5) $(2,582.2) $(2,800.0)
(including foreign exchange
contracts)
Other liabilities:
Interest rate contracts.......... -- (3.9) (2.4) (3.6)
Foreign exchange contracts....... (4.1) (6.8) (8.7) (13.0)
Equity:
Foreign exchange contracts....... .4 .6 (2.9) (2.7)
(to hedge investment in subsidi-
aries)
</TABLE>
As of December 31, 1999 and 1998, the Company had interest rate agreements
outstanding with an aggregate notional amount of $965.9 and $825.0,
respectively, with maturities through 2018.
As of December 31, 1999 and 1998, the Company had approximately $431.6 and
$411.1, respectively, of outstanding foreign exchange contracts. At December
31, 1999, approximately 7% of outstanding foreign exchange contracts served to
hedge net investments in foreign subsidiaries, 28% hedged intercompany loans
and 65% hedged third-party debt and other firm commitments.
34
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
The Company is exposed to credit loss in the event of nonperformance by
counterparties on interest rate agreements and foreign exchange contracts;
however, nonperformance by these counterparties is considered remote as it is
the Company's policy to contract with diversified counterparties that have a
long-term debt rating of A or higher. The amount of any such exposure is
generally the unrealized gain on such contracts, which at December 31, 1999
was not significant.
12. Restructured Operations
In September 1995, a reserve of $460.5 was established to cover a worldwide
restructuring of manufacturing and administrative operations. The primary
elements of the reserve related to employee termination costs and expenses
associated with the realignment of the Company's global manufacturing
operations, as well as settlement of contractual obligations. As planned, the
restructuring has produced savings that increase pretax earnings by over
$150.0 annually.
The planned restructuring projects, primarily in North America and Europe
but also affecting Hill's Pet Nutrition and Colgate locations in Asia/Africa
and certain Latin America locations, are substantially completed. The
remaining reserve amount of $5.4 relates to the consolidation of
administrative operations following the implementation of SAP and related
process changes in Europe.
A summary of the changes in the restructuring reserve is as follows:
<TABLE>
<CAPTION>
Manufacturing Contractual
Workforce Plants Settlements Total
--------- ------------- ----------- ------
<S> <C> <C> <C> <C>
Original reserve $210.0 $204.1 $46.4 $460.5
1995 activity....................... (4.2) (7.2) (13.5) (24.9)
1996 activity....................... (93.4) (118.6) (20.4) (232.4)
1997 activity....................... (45.0) (48.0) (11.0) (104.0)
1998 activity....................... (37.1) (22.5) -- (59.6)
------ ------ ----- ------
Balance at December 31, 1998........ $ 30.3 $ 7.8 $ 1.5 $ 39.6
1999 activity....................... (24.9) (7.8) (1.5) (34.2)
------ ------ ----- ------
Balance at December 31, 1999........ $ 5.4 $ -- $ -- $ 5.4
====== ====== ===== ======
</TABLE>
In total, the headcount reductions resulting from the restructuring projects
will total 4,907. The cumulative headcount reductions as of 1997, 1998 and
1999 were 3,133, 3,986 and 4,807, respectively. Factory closures and/or
reconfigurations totaled 25. The cumulative factory closures and/or
reconfigurations as of 1997, 1998 and 1999 were 20, 23 and 25, respectively.
The costs of completing the restructuring activities to date approximated the
original reserve. The headcount and factory totals were increased by 765 and
1, respectively, as a result of refinements of original estimates.
Of the restructuring reserve remaining as of December 31, 1999 and 1998,
$5.4 and $39.6, respectively, is classified as a current liability.
35
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
13. Earnings Per Share
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended For the Year Ended
1999 1998 1997
-------------------- -------------------- --------------------
Per Per Per
Income Shares Share Income Shares Share Income Shares Share
------ ------ ----- ------ ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income.............. $937.3 $848.6 $740.4
Preferred dividends..... (21.0) (20.9) (21.1)
------ ------ ------
Basic EPS............... 916.3 583.1 $1.57 827.7 590.0 $1.40 719.3 590.6 $1.22
===== ===== =====
Stock options........... 11.7 13.6 13.8
ESOP conversion......... 19.7 44.0 18.4 44.8 17.9 45.9
------ ----- ------ ----- ------ -----
Diluted EPS............. $936.0 638.8 $1.47 $846.1 648.4 $1.30 $737.2 650.3 $1.13
====== ===== ===== ====== ===== ===== ====== ===== =====
</TABLE>
14. Commitments and Contingencies
Minimum rental commitments under noncancellable operating leases, primarily
for office and warehouse facilities, are $65.9 in 2000, $60.6 in 2001, $52.7
in 2002, $44.2 in 2003, $38.5 in 2004 and $134.4 thereafter. Rental expense
amounted to $102.4 in 1999, $102.7 in 1998 and $94.4 in 1997. Contingent
rentals, sublease income and capital leases, which are included in fixed
assets, are not significant.
The Company has various contractual commitments to purchase raw materials,
products and services totaling $62.7 that expire through 2001.
The Company is a party to various superfund and other environmental matters
and is contingently liable with respect to lawsuits, taxes and other matters
arising out of the normal course of business. Management proactively reviews
and manages its exposure to, and the impact of, environmental matters and
other contingencies.
On September 8, 1998, one of the Company's Brazilian subsidiaries, Kolynos
do Brasil Ltda. ("Kolynos"), received notice of an administrative proceeding
from the Central Bank of Brazil. The notice primarily takes issue with certain
filings made with the Central Bank in connection with financing arrangements
related to the acquisition of Kolynos in January 1995. The Central Bank seeks
to impose fines prescribed by statute, and it, in no way, challenges or seeks
to unwind the acquisition. Management believes, based on the opinion of its
Brazilian legal counsel, that the filings challenged by the Central Bank fully
complied with Brazilian law and that the issues raised in the notice are
without merit.
While it is possible that the Company's cash flows and results of operations
in particular quarterly or annual periods could be affected by the one-time
impacts of the resolution of the above contingencies, it is the opinion of
management that the ultimate disposition of these matters, to the extent not
previously provided for, will not have a material impact on the Company's
financial condition or ongoing cash flows and results of operations.
36
<PAGE>
COLGATE-PALMOLIVE COMPANY
Notes to Consolidated Financial Statements--(continued)
(Dollars in Millions Except Per Share Amounts)
15. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1999
Net sales.................................. $2,175.3 $2,285.0 $2,314.0 $2,343.9
Gross profit............................... 1,165.9 1,221.3 1,253.6 1,253.4
Net income................................. 208.9 228.1 239.7 260.6
Earnings per common share:
Basic.................................... .35 .38 .40 .44
Diluted.................................. .32 .36 .38 .41
1998
Net sales.................................. $2,159.5 $2,256.5 $2,265.4 $2,290.2
Gross profit............................... 1,123.5 1,172.6 1,192.6 1,192.6
Net income................................. 196.0 203.5 214.9 234.2
Earnings per common share:
Basic.................................... .32 .34 .35 .39
Diluted.................................. .30 .31 .33 .36
</TABLE>
37
<PAGE>
COLGATE-PALMOLIVE COMPANY
Market and Dividend Information
The Company's common stock and $4.25 Preferred Stock are listed on the New
York Stock Exchange. The trading symbol for the common stock is CL. Dividends
on the common stock have been paid every year since 1895 and the amount of
dividends paid per share has increased for 37 consecutive years.
<TABLE>
<CAPTION>
Common Stock $4.25 Preferred Stock
Market Price --------------------------- ---------------------------
Quarter Ended 1999 1998 1999 1998
- ------------- ------------- ------------- ------------- -------------
High Low High Low High Low High Low
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31............... $47.06 $37.53 $43.90 $33.94 $89.50 $86.75 $79.50 $72.50
June 30................ 52.41 45.78 45.72 41.22 87.50 85.50 81.00 76.50
September 30........... 58.38 45.75 48.47 32.78 88.00 86.00 87.00 80.50
December 31............ 65.00 47.81 47.37 34.00 91.00 87.00 88.00 85.00
Closing Price.......... $65.00 $46.44 $87.00 $88.00
</TABLE>
Dividends Paid Per Share
<TABLE>
<CAPTION>
Quarter Ended 1999 1998 1999 1998
- ------------- ------ ------ ------- -------
<S> <C> <C> <C> <C>
March 31.......................................... $.1375 $.1375 $1.0625 $1.0625
June 30........................................... .1375 .1375 1.0625 1.0625
September 30...................................... .1575 .1375 1.0625 1.0625
December 31....................................... .1575 .1375 1.0625 1.0625
------ ------ ------- -------
Total........................................... $ .59 $ .55 $ 4.25 $ 4.25
====== ====== ======= =======
</TABLE>
38
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1999
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- ---------- ---------------- ---------- ---------
Additions
----------------
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Other Deductions of Period
----------- ---------- ---------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts............... $ 35.9 $10.2 $ -- $ 8.9(/1/) $ 37.2
====== ===== ===== ===== ======
Accumulated amortization
of goodwill and
other intangibles...... $556.7 $75.6 $ -- $53.4(/2/) $578.9
====== ===== ===== ===== ======
Valuation allowance for
deferred tax assets.... $122.8 $ -- $52.3(/3/) $38.1(/3/) $137.0
====== ===== ===== ===== ======
</TABLE>
- --------
NOTES:
(/1/) Uncollectible accounts written off and cash discounts allowed.
(/2/) Primarily due to the impact of exchange rate changes in Brazil.
(/3/) Increase/decrease in allowance for tax loss and tax credit carryforward
benefits which are more likely to not be utilized in the future.
39
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1998
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- ---------- ---------------- ---------- ---------
Additions
----------------
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Other Deductions of Period
----------- ---------- ---------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts............... $ 35.8 $12.3 $ -- $12.2(/1/) $ 35.9
====== ===== ===== ===== ======
Accumulated amortization
of goodwill and other
intangibles............ $475.0 $81.7 $ -- $ -- $556.7
====== ===== ===== ===== ======
Valuation allowance for
deferred tax assets.... $124.3 $ -- $69.6(/2/) $71.1(/2/) $122.8
====== ===== ===== ===== ======
</TABLE>
- --------
NOTES:
(/1/) Uncollectible accounts written off and cash discounts allowed.
(/2/) Increase/decrease in allowance for tax loss and tax credit carryforward
benefits which are more likely to not be utilized in the future.
40
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1997
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- ---------- ---------------- ---------- ---------
Additions
----------------
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Other Deductions of Period
----------- ---------- ---------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts............... $ 33.8 $14.0 $ -- $12.0(/1/) $ 35.8
====== ===== ===== ===== ======
Accumulated amortization
of goodwill and other
intangibles............ $387.0 $88.0 $ -- $ -- $475.0
====== ===== ===== ===== ======
Valuation allowance for
deferred tax assets.... $114.9 $ .6 $30.8(/2/) $22.0(/2/) $124.3
====== ===== ===== ===== ======
</TABLE>
- --------
NOTES:
(/1/) Uncollectible accounts written off and cash discounts allowed.
(/2/) Increase/decrease in allowance for tax loss and tax credit carryforward
benefits which are more likely to not be utilized in the future.
41
<PAGE>
Report of Independent Public Accountants
To the Board of Directors and Shareholders of
Colgate-Palmolive Company:
We have audited the accompanying consolidated balance sheets of Colgate-
Palmolive Company (a Delaware corporation) and subsidiaries as of December 31,
1999 and 1998, and the related consolidated statements of income, retained
earnings, comprehensive income and changes in capital accounts, and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements and the schedules referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Colgate-Palmolive Company
and subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
New York, New York
February 1, 2000
42
<PAGE>
COLGATE-PALMOLIVE COMPANY
Historical Financial Summary(/1/)
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Continuing
Operations
Net sales........ $9,118.2 $8,971.6 $9,056.7 $8,749.0 $8,358.2(/2/) $7,587.9 $7,141.3 $7,007.2 $6,060.3 $5,691.3
Results of
operations:
Net income...... 937.3 848.6 740.4 635.0 172.0(/2/) 580.2(/3/) 189.9(/4/) 477.0 124.9(/5/) 321.0
Per share,
basic.......... 1.57 1.40 1.22 1.05 .26(/2/) .96(/3/) .27(/4/) .73 .19(/5/) .57
Per share,
diluted........ 1.47 1.30 1.13 .98 .25(/2/) .89(/3/) .26(/4/) .68 .19(/5/) .53
Depreciation and
amortization
expense ........ 340.2 330.3 319.9 316.3 300.3 235.1 209.6 192.5 146.2 126.2
Financial
Position
Current ratio.... 1.0 1.1 1.1 1.2 1.3 1.4 1.5 1.5 1.5 1.4
Property, plant
and equipment,
net ............ 2,551.1 2,589.2 2,441.0 2,428.9 2,155.2 1,988.1 1,766.3 1,596.8 1,394.9 1,362.4
Capital
expenditures.... 372.8 389.6 478.5 459.0 431.8 400.8 364.3 318.5 260.7 296.8
Total assets..... 7,423.1 7,685.2 7,538.7 7,901.5 7,642.3 6,142.4 5,761.2 5,434.1 4,510.6 4,157.9
Long-term debt... 2,243.3 2,300.6 2,340.3 2,786.8 2,992.0 1,751.5 1,532.4 946.5 850.8 1,068.4
Shareholders'
equity.......... 1,833.7 2,085.6 2,178.6 2,034.1 1,679.8 1,822.9 1,875.0 2,619.8 1,866.3 1,363.6
Share and Other
Book value per
common share.... 3.14 3.53 3.65 3.42 2.84 3.12 3.10 4.05 3.13 2.53
Cash dividends
declared and
paid per common
share .......... .59 .55 .53 .47 .44 .39 .34 .29 .26 .23
Closing price.... 65.00 46.44 36.75 23.06 17.56 15.84 15.59 13.94 12.22 9.22
Number of common
shares
outstanding (in
millions)....... 578.9 585.4 590.8 588.6 583.4 577.6 597.0 641.0 589.4 532.8
Number of
shareholders of
record:
$4.25 Preferred. 275 296 320 350 380 400 450 470 460 500
Common.......... 44,600 45,800 46,800 45,500 46,600 44,100 40,300 36,800 34,100 32,000
Average number of
employees....... 37,200 38,300 37,800 37,900 38,400 32,800 28,000 28,800 24,900 24,800
</TABLE>
- -------
(/1/) All share and per share amounts have been restated to reflect the 1999,
1997 and the 1991 two-for-one stock splits.
(/2/) Income in 1995 includes a net provision for restructured operations of
$369.2. (Excluding this charge, earnings per share would have been $.89,
basic and $.84, diluted.)
(/3/) Income in 1994 includes a one-time charge of $5.2 for the sale of a non-
core business, Princess House.
(/4/) Income in 1993 includes a one-time impact of adopting new mandated
accounting standards, effective in the first quarter of 1993, of $358.2.
(Excluding this charge, earnings per share would have been $.84, basic
and $.79, diluted.)
(/5/) Income in 1991 includes a net provision for restructured operations of
$243.0. (Excluding this charge, earnings per share would have been $.64,
basic and $.60, diluted.)
43
<PAGE>
COLGATE-PALMOLIVE COMPANY
EXHIBITS TO FORM 10-K
YEAR ENDED DECEMBER 31, 1999
Commission File No. 1-644
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
3-A Restated Certificate of Incorporation, as amended. (Registrant
hereby incorporates by reference Exhibit 1 to its Form 8-K dated
October 17, 1991, File No. 1-644-2.)
3-B By-laws. (Registrant hereby incorporates by reference Exhibit 3-B
to Amendment No. 1 to its Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, File No. 1-644-2.)
4-A Rights Agreement dated as of October 23, 1998 between registrant
and First Chicago Trust Company of New York. (Registrant hereby
incorporates by reference Exhibit 1 to its Form 8-A dated October
23, 1998, File No. 1-644-2.)
4-B(a) Other instruments defining the rights of security holders,
including indentures.*
(b) Colgate-Palmolive Company Employee Stock Ownership Trust Note
Agreement dated as of June 1, 1989. (Registrant hereby
incorporates by reference Exhibit 4-B (b) to its Annual Report on
Form 10-K for the year ended December 31, 1989, File No. 1-644-2.)
10-A(a) Colgate-Palmolive Company Executive Incentive Compensation Plan,
amended and restated as of March 11, 1999. (Registrant hereby
incorporates by reference Appendix A to its 1999 Notice of Meeting
and Proxy Statement.
(b) Colgate-Palmolive Company Executive Incentive Compensation Plan
Trust, as amended. (Registrant hereby incorporates by reference
Exhibit 10-B (b) to its Annual Report on Form 10-K for the year
ended December 31, 1987, File No. 1-644-2.)
10-B(a) Colgate-Palmolive Company Supplemental Salaried Employees
Retirement Plan. (Registrant hereby incorporates by reference
Exhibit 10-E (Plan only) to its Annual Report on Form 10-K for the
year ended December 31, 1984, File No. 1-644-2.)
(b) Colgate-Palmolive Company Supplemental Salaried Employees
Retirement Plan Trust. (Registrant hereby incorporates by
reference Exhibit 10-C (b) to its Annual Report on Form 10-K for
the year ended December 31, 1987, File No. 1-644-2.)
10-C(a) Colgate-Palmolive Company Executive Severance Plan, as amended and
restated. (Registrant hereby incorporates by reference Exhibit 10-
E (a) to its Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998, File No. 1-644.)
(b) Colgate-Palmolive Company Executive Severance Plan Trust.
(Registrant hereby incorporates by reference Exhibit 10-E (b) to
its Annual Report on Form 10-K for the year ended December 31,
1987, File No. 1-644-2.)
10-D Colgate-Palmolive Company Pension Plan for Outside Directors, as
amended and restated.
10-E Colgate-Palmolive Company Stock Plan for Non-Employee Directors.
(Registrant hereby incorporates by reference Exhibit 10-G to its
Annual Report on Form 10-K for the year ended December 31, 1997,
File No. 1-644.)
10-F Colgate-Palmolive Company Restated and Amended Deferred
Compensation Plan for Non-Employee Directors, as amended.
(Registrant hereby incorporates by reference Exhibit 10-H to its
Annual Report on Form 10-K for the year ended December 31, 1997,
File No. 1-644.)
10-G Career Achievement Plan. (Registrant hereby incorporates by
reference Exhibit 10-I to its Annual Report on Form 10-K for the
year ended December 31, 1986, File No. 1-644-2.)
10-H Colgate-Palmolive Company 1987 Stock Option Plan, as amended.
(Registrant hereby incorporates by reference Exhibit 10-J to its
Annual Report on Form 10-K for the year ended December 31, 1997,
File No. 1-644.)
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10-I(a) Stock Incentive Agreement between Colgate-Palmolive Company and
Reuben Mark, Chairman and Chief Executive Officer, dated January
13, 1993, pursuant to the Colgate-Palmolive Company 1987 Stock
Option Plan, as amended. (Registrant hereby incorporates by
reference Exhibit 10-N to its Annual Report on Form 10-K for the
year ended December 31, 1993, File No. 1-644-2.)
(b) Stock Incentive Agreement between Colgate-Palmolive Company and
Reuben Mark, Chairman and Chief Executive Officer, dated November
7, 1997, pursuant to the Colgate-Palmolive Company 1997 Stock
Option Plan. (Registrant hereby incorporates by reference Exhibit
10-K(b) to its Annual Report on Form 10-K for the year ended
December 31, 1997, File No. 1-644.)
10-J Colgate-Palmolive Company Non-Employee Director Stock Option Plan,
as amended. (Registrant hereby incorporates by reference Exhibit
10-L to its Annual Report on Form 10-K for the year ended December
31, 1997, File No. 1-644.)
10-K(a) U.S. $800,000,000 Five Year Credit Agreement dated as of May 30,
1997. (Registrant hereby incorporates by reference Exhibit 10-N to
its Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, File No. 1-644.)
(b) Amendment dated as of April 1, 1998 to the Five Year Credit
Agreement dated as of May 30, 1997. (Registrant hereby
incorporates reference Exhibit 10-M(b) to its Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, File No. 1-644.)
10-L Colgate-Palmolive Company 1996 Stock Option Plan, as amended.
(Registrant hereby incorporates by reference Exhibit 10-N to its
Annual Report on Form 10-K for the year ended, December 31, 1997,
File No. 1-644.)
10-M Colgate-Palmolive Company 1997 Stock Option Plan. (Registrant
hereby incorporates by reference appendix A to its 1997 Notice of
Meeting and Proxy Statement.)
12 Statement re Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant.
23 Consent of Independent Public Accountants.
24 Powers of Attorney.
27 Financial Data Schedule.
</TABLE>
- --------
* Registrant hereby undertakes upon request to furnish the Commission with a
copy of any instrument with respect to long-term debt where the total amount
of securities authorized thereunder does not exceed 10% of the total assets
of the registrant and its subsidiaries on a consolidated basis.
The exhibits indicated above which are not included with the Form 10-K are
available upon request and payment of a reasonable fee approximating the
registrant's cost of providing and mailing the exhibits. Inquiries should be
directed to:
Colgate-Palmolive Company
Office of the Secretary (10-K
Exhibits)
300 Park Avenue
New York, New York 10022-7499
45
<PAGE>
Exhibit 10(D)
COLGATE-PALMOLIVE COMPANY
PENSION PLAN FOR OUTSIDE DIRECTORS
AS AMENDED AND RESTATED
Effective December 12, 1999
Article I
PURPOSE
The purpose of the Plan, which was first adopted effective April 1, 1983, is to
assist the Company in attracting and retaining qualified individuals to serve as
Outside Directors by providing such individuals with a competitive level of
pension benefits.
Article II
DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Change of Control" shall mean the happening of any of the following
events:
(a) An acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (1) the then outstanding shares
of the common stock, par value $1.00 per share of the Company (the "Outstanding
Company Common Stock"), or (2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); excluding, however, the
following: (i) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (1), (2) and (3) of
subsection (c) of this Section 2.2; or
(b) A change in the composition of the Board such that the individuals
who, as of February 17, 1994, constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for purposes of
this Section 2.2, that any individual who becomes a member of the Board
subsequent to February 17, 1994, whose election, or nomination for election by
the Company's stockholders, was
<PAGE>
approved by a vote of at least a majority of those individuals who are members
of the Board and who were also members of the Incumbent Board (or deemed to be
such pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided further, that any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent Board; or
(c) The approval by the stockholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company ("Corporate Transaction"); excluding; however, such
a Corporate Transaction pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of the
outstanding Common Stock and outstanding Company voting securities immediately
prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the outstanding
Common Stock and outstanding Company voting securities, as the case may be, (2)
no Person (other than the Company, any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Corporate Transaction)
will beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior to the
Corporate Transaction and (3) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(d) The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
2.3 "Committee" shall mean the committee referred to in Article V.
2.4 "Company" shall mean Colgate-Palmolive Company and any person, firm or
corporation which may hereafter succeed to the interests of the Company by
merger consolidation or otherwise.
2
<PAGE>
2.5 "Disability" shall mean an illness or other incapacity which qualifies an
Outside Director for disability benefits under the Social Security Act or which
the Board or Committee determines precludes such Outside Director from fully
discharging his or her responsibilities as a member of the Board.
2.6 "Electing Outside Director" shall mean an Outside Director who is eligible
to elect to have the terms of this Plan continue to apply to him or her after
December 31, 1996, and who so elects, according to the terms of Section 4.1(a).
2.7 "Non-Electing Outside Director" shall mean an Outside Director who is not
eligible to make the election pursuant to Section 4.1(a) or if eligible, does
not so elect.
2.8 "Outside Director" shall mean a member of the Board who is not, nor at any
time has been, an employee of the Company or any of its subsidiaries.
2.9 "Pension Benefit" shall mean the pension benefit determined in accordance
with Section 4.3.
2.10 "Pension Replacement Account" shall mean the account established for the
benefit of a Non-Electing Outside Director pursuant to Section 4.3(c) upon
termination of this Plan with respect to such Non-Electing Outside Director in
accordance with Article III.
2.11 "Plan" shall mean the Colgate-Palmolive Company Pension Plan for Outside
Directors, as amended from time to time.
2.12 "Retainer" shall mean the retainer determined in accordance with Section
4.3(a).
2.13 "Retired Outside Director" shall mean an Outside Director who retired and
began receiving a Pension Benefit prior to June 30, 1996, an Electing Outside
Director who has satisfied the eligibility requirements of Section 4.1 for a
Pension Benefit, or a Non-Electing Outside Director who has satisfied the
eligibility requirements of Section 4.1 for a Pension Replacement Account.
2.14 "Service" shall mean all periods of service as an Outside Director
(including any such periods prior to April 1, 1983) whether or not such service
is continuous.
Article III
PARTICIPATION
Each Outside Director who has joined the Board on or prior to January 1, 1996,
shall participate in the Plan, subject to its termination as of December 31,
1996 with respect to any Non-Electing Outside Director.
3
<PAGE>
Article IV
PENSION BENEFITS
4.1 Eligibility for Pension Benefits or Pension Replacement Account
---------------------------------------------------------------
(a) Each Outside Director who as of May 1, 1997, is within five years of
the stipulated retirement age set forth in Section 13(A) of the Company's By-
Laws may elect to remain covered by the terms of this Plan beyond December 31,
1996, and through the date of his or her retirement from the Board, in
accordance with this Section 4.1. Such election must be made no later than June
30, 1996, by written notice to the Committee. Each Outside Director who is
eligible to make such election and who so elects hereafter shall be referred to
as an "Electing Outside Director" and shall be eligible to receive a Pension
Benefit under this Plan pursuant to the terms of Sections 4.1 (b) through (e)
below.
Each Outside Director who is not eligible to make such an election or if
eligible, does not so elect, hereafter shall be referred to as a "Non-Electing
Outside Director" and, shall be eligible to have a Pension Replacement Account
eligible on his or her behalf upon termination of this Plan with respect to him
or her and shall be eligible ultimately to receive the balance in such account,
in accordance with the terms of this Section 4.1 and Section 4.3 below.
(b) Each Outside Director who has completed eight years of Service and
who retires from the Board by reason of age in accordance with the provisions of
the Company's By-Laws, as amended from time to time, shall be eligible upon such
retirement for a Pension Benefit, if an Electing Outside Director, or to receive
the balance credited to a Pension Replacement Account, if a Non-Electing Outside
Director.
(c) Each Outside Director who has completed five years of Service and who
retires from the Board by reason of Disability shall be eligible upon such
retirement for a Pension Benefit, if an Electing Outside Director, or for the
balance credited to a Pension Replacement Account, if a Non-Electing Outside
Director.
(d) If a Non-Electing Outside Director who has completed five years of
Service dies before he or she retires from the Board, the balance credited to
his or her Pension Replacement Account shall be payable to the beneficiary he or
she has designated prior to the Non-Electing Outside Director's death.
(e) Each Outside Director who has completed eight years of Service and who
retires from the Board other than by reason of age or Disability, but with the
written approval of the Committee, shall be eligible for a Pension Benefit, if
an Electing Outside Director, or the balance credited to a Pension Replacement
Account, if a Non-Electing Outside Director, upon attaining the age at which his
or her retirement
4
<PAGE>
from the Board would have been required in accordance with the Company's By-Laws
in effect at the time of his or her retirement.
4.2 Commencement of Pension Benefits or Payments from Pension Replacement
---------------------------------------------------------------------
Account
-------
(a) A Retired Outside Director's Pension Benefit (if an Electing Outside
Director) or the payment of the balance credited to the Pension Replacement
Account (if a Non-Electing Outside Director) shall commence as of the first day
of the calendar quarter next following the date he or she becomes a Retired
Outside Director. The balance credited in the Pension Replacement Account shall
be paid in accordance with Section 4.3.
(b) If a former Outside Director returns to membership on the Board, the
Pension Benefit (if a former Electing Outside Director) or the remaining unpaid
balance credited to his or her Pension Replacement Account (if a former Non-
Electing Outside Director) that is or may become payable to him or her shall
cease to be payable for so long as he or she continues to be a member of the
Board. Upon subsequent retirement, the Pension Benefits to which a former
Electing Outside Director is or may become entitled shall be redetermined
pursuant to this Article IV on the basis of the Company's By-Laws and a Retainer
not exceeding that described in Section 4.3(a). If a former Non-Electing
Outside Director, the remaining unpaid balance of his or her Pension Replacement
Account, if any, shall be payable.
4.3 Amount and Form of Pension Benefit; Pension Replacement Account
---------------------------------------------------------------
(a) A Retired Outside Director's Pension Benefit, if a former Electing
Outside Director or an Outside Director who retired prior to June 30, 1996,
shall be an annual cash benefit equal to 100% of the Retainer paid to him or her
while an Outside Director for the twelve months immediately preceding his or her
retirement from the Board; provided, however, that for purposes of determining
the size of the Pension Benefit of an Electing Outside Director who retires on
or after May 1, 1997, the Retainer shall be deemed not to exceed the sum of
$18,000 plus 275* shares of Company common stock.
"Retainer" shall mean all cash and property paid to an Outside Director for
services as an Outside Director, other than stock options granted and gains
realized in cash or property upon the exercise of such options, fees for
attendance at meetings of the Board and any committees thereof, fees for service
on any committee of the Board and reimbursement of expenses.
- ---------------------------
* Adjusted to 1,100 shares for the May 1997 and June 1999 stock splits.
5
<PAGE>
All property paid as part of the Retainer shall be valued by the Committee
at fair market value on the date of payment. In the case of Company common
stock, fair market value shall be the average of the high and low prices per
share of the Company's common stock as listed in the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Company's common stock is listed or on NASDAQ,
for the day on which the Outside Director is deemed to have received such stock.
In the absence of a reported sale, the average between the high and the low
prices on the most recent date on which a sale was reported shall be used.
(b) The Pension Benefit of a Retired Electing Outside Director shall be
payable in equal quarterly installments for his or her lifetime only. No death
or other survivor benefits are payable under the Plan.
(c) In connection with the termination of this Plan as of December 31,
1996 with respect to any Non-Electing Outside Director according to the terms of
Article III above, there shall be established a Pension Replacement Account as
of such date. The opening balance credited to the Pension Replacement Account
shall be based upon a cash amount necessary to provide a stream of future
payments to the Retired Non-Electing Outside Director that is substantially
equivalent to the Pension Benefit accrued under this Plan through December 31,
1996 (the "Accrued Amount"). The Accrued Amount shall be determined according
to a procedure developed by the Plan's outside advisors and approved by the
Committee, as set forth on Appendix A hereto.
The Pension Replacement Account shall be denominated in shares of Company
common stock. The opening balance shall be a credit equal to the number of
shares of such stock that could have been purchased with the Accrued Amount at
the average of the closing prices thereof on each business day during the
immediately preceding month. As of any dividend record date for the Company
common stock, the Pension Replacement Account will be credited with additional
shares equal to the number of shares of Company common stock that could have
been purchased, at the closing price of such shares on such date, with the
amount that would have been paid as dividends on that number of shares
(including fractions of a share) then attributed to the participant's Pension
Replacement Account. In the case of dividends paid in property other than cash,
the amount of the dividend shall be deemed to be the fair market value of the
property at the time of the payment of the dividend, as determined in good faith
by the Committee.
At the Committee's option, a "rabbi trust" may be established with an
independent trustee, and shares of Company common stock transferred thereto on
behalf of each Non-Electing Outside Director in an amount corresponding to the
balance in his or her Pension Replacement Account at the time of transfer.
Thereafter, any dividends paid on shares of Company common stock held in the
rabbi trust will also be deposited to the trust account and will be reinvested
by the trustee in Company common stock and held there until the date for payment
of each of the one or more
6
<PAGE>
remaining equal annual installments of the balance in the Pension Replacement
Account, as the Non-Electing Outside Director shall have specified by his
election pursuant to this Section 4.3(c).
Commencing the first day of the quarter following the Retired Non-Electing
Outside Director's retirement, the Pension Replacement Account shall be payable
in Common Shares in up to ten (10) equal annual installments or, at his or her
election made before June 30, 1996, in one installment payable as soon as
feasible following retirement. If the Retired Non-Electing Outside Director
dies prior to having received all annual installments, then the balance in the
Pension Replacement Account shall be payable to the beneficiary designated by
the Retired Non-Electing Outside Director prior to his or her death in
accordance with procedures established by the Committee.
Article V
ADMINISTRATION
5.1 Except as provided in Section 5.2, the Committee shall mean the Committee
on Directors of the Board or any successor committee of the Board. The
Committee shall have full power and authority to administer the Plan, including
the power to (i) promulgate forms to be used with respect to the Plan, (ii)
promulgate rules of Plan administration, (iii) settle any disputes as to rights
or benefits arising from the Plan, (iv) interpret the Plan and (v) make such
decisions or take such action as the Committee, in its sole discretion, deems
necessary or advisable to aid in the proper administration of the Plan. Any
decision made by the Committee shall be final and binding on all persons.
5.2 Following a Change of Control, the Committee shall be the Committee as
constituted immediately prior to the Change of Control with such changes in the
membership thereof as may be approved from time to time following the Change of
Control by a majority of the members of such Committee as constituted at the
applicable time. The Company shall have no right to appoint members to or to
remove members from the Committee following a Change of Control.
Article VI
FINANCING
The obligation to pay pension benefits or the balance in a Pension Replacement
Account under the Plan shall constitute a general obligation of the Company in
accordance with the terms of the Plan. A Director shall have only an unsecured
right to payment thereof out of the general assets of the Company.
7
<PAGE>
Article VII
MISCELLANEOUS
7.1 Right to Amend or Terminate. The Board reserves the right at any time and
---------------------------
from time to time to modify, suspend, amend, or terminate the Plan in whole or
in part; provided, however, that no such action shall adversely affect the
rights under the Plan of any Outside Director or former Outside Director who has
nine or more years of Service, or any Retired Outside Director.
7.2 Board Member Relationships. Nothing in the Plan shall give or be deemed to
--------------------------
give any Board member the right to be continued as a member of the Board, to
modify or affect the terms of Board membership or to interfere with the right of
stockholders of the Company to elect members of the Board.
7.3 Nonalienation of Benefits. To the extent permitted by law, no Pension
-------------------------
Benefits or Pension Replacement Account balance payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
garnishment, pledge or encumbrance. Any attempt to anticipate, alienate, sell,
transfer, assign, attach, pledge or encumber the same shall be void, and no
Pension Benefits or Pension Replacement Account balance payable under the Plan
shall be in any manner liable or subject to the debts, contracts, liabilities,
engagements or torts of any Outside Director or former Outside Director,
including any Retired Outside Director.
7.4 Payments to Incompetents. If a Retired Outside Director is deemed by the
------------------------
Committee or is adjudged to be legally incapable of giving valid receipt and
discharge for the Pension Benefit or Pension Replacement Account balance to
which he or she is entitled, such Pension Benefit or Pension Replacement Account
balance shall be paid to such person(s) as the Committee may designate or to a
duly appointed guardian. Any such payment shall be in complete discharge of the
liability of the Plan and the Company to the Retired Outside Director.
7.5 Benefit of Plan. The Plan shall be binding upon and shall inure to the
---------------
benefit of the Outside Directors, their heirs and legal representatives and the
Company and its successors. The term "successor" shall mean any person, firm,
corporation or other business entity that, at any time, whether by merger,
acquisition or otherwise, acquires all or substantially all of the stock, assets
or business of the Company.
7.6 Applicable Law. The Plan shall be subject to and construed in accordance
--------------
with the laws of the State of Delaware, without regard to the conflict of law
principles thereof.
<PAGE>
EXHIBIT 12
COLGATE-PALMOLIVE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Dollars in Millions Except Per Share Amounts
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
-----------------
<S> <C>
Income before income taxes................................... $1,394.6
Add:
Interest on indebtedness and amortization of debt expense and
discount or premium......................................... 212.2
Portion of rents representative of interest factor........... 33.7
Interest on ESOP debt, net of dividends...................... 2.9
Less:
Income of less than fifty-percent-owned subsidiaries......... (5.3)
--------
Income as adjusted........................................... $1,638.1
========
Fixed Charges:
Interest on indebtedness and amortization of debt expense and
discount or premium......................................... 212.2
Portion of rents representative of interest factor........... 33.7
Interest on ESOP debt, net of dividends...................... 2.9
Capitalized interest......................................... 11.8
--------
Total fixed charges.......................................... $ 260.6
========
Ratio of earnings to fixed charges........................... 6.3
========
</TABLE>
In June 1989, the Company's leveraged employee stock ownership plan (ESOP)
issued $410.0 long-term notes due through 2009 bearing an average interest
rate of 8.7%. These notes are guaranteed by the Company. Interest incurred on
the ESOP's notes was $32.0 in 1999. This interest is funded through preferred
and common stock dividends. The fixed charges presented above include interest
on ESOP indebtedness to the extent it is not funded through preferred and
common stock dividends.
1
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State in which
Incorporated or
Country
Name of Company in which Organized
- --------------- ----------------------
<S> <C>
Alexandril S.A........................................... Uruguay
Arkay Pty Limited........................................ Australia
Asia Pioneer Co., Ltd.................................... Hong Kong
Barbados Cosmetics Products Limited...................... Barbados
Baser Kimya Sanayii Ve Ticaret Anonim Sirketi............ Turkiye
Baser Turketim Pazarlama Ve Ticaret Anonim Sirketi....... Turkiye
Bella, S.A............................................... France
C-P Peru S.A............................................. Peru
Cachet Investments Limited............................... Jersey Islands, U.K.
Chemtech (BVI) Co. Ltd................................... British Virgin Islands
Chet (Chemicals) (Proprietary) Limited................... South Africa
CKS, Inc................................................. Delaware
Cleaning Dimensions, Inc................................. Delaware
Cobelsa S.A.............................................. Argentina
Colgalive, S.A........................................... Dominica Republic
Colgate (BVI) Limited.................................... British Virgin Islands
Colgate (Guangzhou) Co. Ltd.............................. China
Colgate (U.K.) Limited................................... United Kingdom
Colgate Flavors and Fragrances, Inc...................... Delaware
Colgate Holdings Limited................................. United Kingdom
Colgate, Inc............................................. Delaware
Colgate Music Direct..................................... Delaware
Colgate Oral Pharmaceuticals, Inc........................ Delaware
Colgate Sports Foundation, Inc........................... The Philippines
Colgate Venture Company, Inc............................. Delaware
Colgate-Palmolive........................................ France
Colgate-Palmolive........................................ Ireland
Colgate-Palmolive & Cia.................................. Colombia
Colgate-Palmolive A.B.................................... Sweden
Colgate-Palmolive A.G.................................... Switzerland
Colgate-Palmolive Adria d.o.o............................ Slovenia
Colgate-Palmolive (America), Inc......................... Delaware
Colgate-Palmolive A/S.................................... Denmark
Colgate-Palmolive Belgium S.A............................ Belgium
Colgate-Palmolive Beteiligungsverwaltungs GmbH........... Germany
Colgate-Palmolive (B) Sdn. Bhd........................... Brunei
Colgate-Palmolive (Blantyre) Limited..................... Malawi
Colgate-Palmolive Bolivia, Ltda.......................... Bolivia
Colgate-Palmolive (Borzesti) SRL......................... Romania
Colgate-Palmolive (Botswana) (Proprietary) Ltd........... Botswana
Colgate-Palmolive (Bulgaria) Ltd......................... Bulgaria
Colgate-Palmolive (C.A.) Inc. y Compania Limitada........ Guatemala
Colgate-Palmolive Cameroun S.A........................... Cameroon
Colgate-Palmolive Canada, Inc............................ Canada
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
State in which
Incorporated or
Country
Name of Company in which Organized
- --------------- ----------------------
<S> <C>
Colgate-Palmolive (Caribbean), Inc...................... Delaware
Colgate-Palmolive (Central America), Inc................ Delaware
Colgate-Palmolive Central European Management Inc....... Delaware
Colgate-Palmolive (Centro America) S.A.................. Guatemala
Colgate-Palmolive (Ceylon) Limited...................... Sri Lanka
Colgate-Palmolive Charitable Foundation................. Delaware
Colgate-Palmolive Chile S.A............................. Chile
Colgate-Palmolive, Cia.................................. Delaware
Colgate-Palmolive Co. (Jamaica) Ltd..................... Jamaica
Colgate-Palmolive Compania Anonima...................... Venezuela
Colgate-Palmolive Company, Distr........................ Puerto Rico
Colgate-Palmolive (Costa Rica), S.A..................... Costa Rica
Colgate-Palmolive Cote d'Ivoire, S.A.................... Ivory Coast
Colgate-Palmolive Czech Republic spol. s.r.o............ Czechoslovakia
Colgate-Palmolive de Paraguay, S.A...................... Paraguay
Colgate-Palmolive de Puerto Rico, Inc................... Delaware
Colgate-Palmolive del Ecuador, S.A...................... Ecuador
Colgate-Palmolive del Peru (Delaware) Inc. Secursal del
Peru................................................... Delaware
Colgate-Palmolive Deutschland Holding GmbH.............. Germany
Colgate-Palmolive Development Corp...................... Delaware
Colgate-Palmolive Distribution Co. (Pty) Ltd............ Botswana
Colgate-Palmolive (Dominica), Inc....................... Delaware
Colgate-Palmolive (Dominican Republic), Inc............. Delaware
Colgate-Palmolive (East Africa) Limited................. Kenya
Colgate-Palmolive (Eastern) Pte. Ltd.................... Singapore
Colgate-Palmolive (Egypt) S.A.E......................... Egypt
Colgate-Palmolive Enterprises, Inc...................... Delaware
Colgate-Palmolive Espana, S.A........................... Spain
Colgate-Palmolive Europe S.A............................ Belgium
Colgate-Palmolive (Far East) Sdn Bhd.................... Malaysia
Colgate-Palmolive (Fiji) Limited........................ Fiji Islands
Colgate-Palmolive (Finance) (Pty) Limited............... South Africa
Colgate-Palmolive G.m.b.H............................... Germany
Colgate-Palmolive Gabon................................. Gabon
Colgate-Palmolive Gesellschaft G.m.b.H.................. Austria
Colgate-Palmolive Global Trading Company................ Delaware
Colgate-Palmolive (Gulf States) Ltd..................... British Virgin Islands
Colgate-Palmolive (Guyana) Ltd.......................... Guyana
Colgate-Palmolive (H.K.) Limited........................ Hong Kong
Colgate-Palmolive (Hellas) S.A. I.C..................... Greece
Colgate-Palmolive Holding Argentina S.A................. Argentina
Colgate-Palmolive Holding Inc........................... Delaware
Colgate-Palmolive Hungary Trading Unlimited Partnership. Hungary
Colgate-Palmolive (Hungary) Manufacturing, Limited
Liability Company...................................... Hungary
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
State in which
Incorporated or
Country
Name of Company in which Organized
- --------------- ----------------------
<S> <C>
Colgate-Palmolive, Inc.................................. Delaware
Colgate-Palmolive (India) Limited....................... India
Colgate-Palmolive Industries (Private) Ltd.............. Zimbabwe
Colgate-Palmolive International Holdings B.V............ Netherlands
Colgate-Palmolive International Incorporated............ Delaware
Colgate-Palmolive Investment Co., Inc. ................. Delaware
Colgate-Palmolive Investments (BVI) Ltd................. British Virgin Islands
Colgate-Palmolive Investments, Inc...................... Delaware
Colgate-Palmolive Investments (PNG) Pty Ltd............. Papua New Guinea
Colgate-Palmolive Italia S.r.l.......................... Italy
Colgate-Palmolive (Latvia) SIA.......................... Latvia
Colgate-Palmolive Limited............................... New Zealand
Colgate-Palmolive, Ltda................................. Brazil
Colgate-Palmolive (Malaysia) Sdn Bhd.................... Malaysia
Colgate-Palmolive (Marketing) Sdn Bhd................... Malaysia
Colgate-Palmolive Mennen Limited........................ United Kingdom
Colgate-Palmolive (Middle East Exports) Ltd............. British Virgin Islands
Colgate-Palmolive (Mocambique) Limitada................. Mozambique
Colgate-Palmolive Morocco............................... Morocco
Colgate-Palmolive Nederland B.V......................... Netherlands
Colgate-Palmolive (Nepal) Private Limited............... Nepal
Colgate-Palmolive (New York), Inc....................... Delaware
Colgate-Palmolive (Nigeria) Services Ltd................ Nigeria
Colgate-Palmolive NJ, Inc............................... New Jersey
Colgate-Palmolive Nordic A/S............................ Denmark
Colgate-Palmolive Norge A/S............................. Norway
Colgate-Palmolive Senegal (ex NSOA) S.A................. Senegal
Colgate-Palmolive Participacoes e Investimentos
Imobiliarios, S.A...................................... Portugal
Colgate-Palmolive Philippines, Inc...................... The Philippines
Colgate-Palmolive Peru S.A.............................. Peru
Colgate-Palmolive (PNG) Pty Ltd......................... Papua New Guinea
Colgate-Palmolive (Poland) Sp. z 0.0.................... Poland
Colgate-Palmolive Pty Limited........................... Australia
Colgate-Palmolive (Pty) Limited......................... South Africa
Colgate-Palmolive (Research & Development), Inc......... Delaware
Colgate-Palmolive (Romania) SRL......................... Romania
Colgate-Palmolive, S.A.................................. Portugal
Colgate-Palmolive, S.A. de C.V.......................... Mexico
Colgate-Palmolive (Slovakia) sro........................ Slovakia
Colgate-Palmolive Sociedad Anonima Industrial y
Commercial............................................. Argentina
Colgate-Palmolive Son Hai Limited....................... Vietnam
Colgate-Palmolive S.p.A................................. Italy
Colgate-Palmolive SP.................................... Ukraine
Colgate-Palmolive Support Services...................... Ireland
Colgate-Palmolive Temizlik Urunleri Sanayi ve Ticart
S.A.................................................... Delaware
Colgate-Palmolive (Thailand) Ltd........................ Thailand
Colgate-Palmolive Transnational Inc..................... Delaware
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
State in which
Incorporated or
Country
Name of Company in which Organized
- --------------- ----------------------
<S> <C>
Colgate-Palmolive (Uganda) Limited....................... Uganda
Colgate-Palmolive (U.K.) Limited......................... United Kingdom
Colgate-Palmolive (Zimbabwe), Inc........................ Delaware
Consumer Viewpoint Center, Inc........................... New Jersey
Cosmeticos Grasse Ltda................................... Chile
Cotelle S.A.............................................. France
CP Adina S.A............................................. Colombia
CP Holding S.A........................................... France
CP Super Management Pty Ltd.............................. Australia
CPC Funding Company...................................... Delaware
CPIF, Inc................................................ Delaware
Delpha, S.A.............................................. France
Dental Pack Industria E Comercio Ltda.................... Brazil
Dentatech (BVI) Co. Ltd.................................. British Virgin Islands
DF Soap Co............................................... Delaware
DFW Co................................................... Cayman Islands
Dimac Development Corp................................... Delaware
Direct Development, Inc.................................. Massachusetts
Distribuidora Edison S.A................................. Argentina
Dominica Coconut Products Limited........................ Dominica
EKIB, Inc................................................ Delaware
ELM Company Limited...................................... Bermuda
Empresa de Maquilas, S.A. de C.V......................... Mexico
Endeavon (PNG) Pty Ltd................................... Papua New Guinea
Fundacion Colgate-Palmolive Dominicana, N/A, Inc......... Dominican Republic
Global Trading and Supply Company........................ Delaware
Hamol B.V................................................ Netherlands
Hamol, Ltd............................................... Delaware
Hao Lai Chemical Co. Ltd................................. Taiwan
Hawley & Hazel (BVI) Company Ltd......................... British Virgin Islands
Hawley & Hazel (Malaysia) Sdn Bhd........................ Malaysia
Hawley & Hazel Chemical Co. (H.K.) Ltd................... Hong Kong
Hawley & Hazel Chemical Co. Singapore (Pte.) Ltd......... Singapore
Hawley & Hazel Chemical Company (Zhongshou) Limited...... China
Hawley & Hazel China Investment Limited.................. China
Hawley & Hazel Investment Co., Ltd....................... Hong Kong
Hawley & Hazel Taiwan Corporation........................ Taiwan
Herrick International Limited............................ British Virgin Islands
Hill's Funding Company................................... Delaware
Hill's Pet Nutrition B.V................................. Netherlands
Hill's International Sales FSC B.V....................... Netherlands
Hill's Pet Nutrition Canada Inc.......................... Canada
Hill's Pet Nutrition de Puerto Rico, Inc................. Puerto Rico
Hill's Pet Nutrition Espana, S.L......................... Spain
Hill's Pet Nutrition GmbH................................ Germany
Hill's Pet Nutrition, Inc................................ Delaware
Hill's Pet Nutrition Ltd................................. United Kingdom
Hill's Pet Nutrition Manufacturing, B.V.................. Netherlands
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
State in which
Incorporated or
Country
Name of Company in which Organized
- --------------- ----------------------
<S> <C>
Hill's Pet Nutrition Pty Limited........................ Australia
Hill's Pet Nutrition Sales, Inc......................... Delaware
Hill's Pet Products (Benelux) S.A....................... Belgium
Hill's Pet Products de Mexico, S.A. de C.V.............. Mexico
Hill's Pet Products (NZ) Limited........................ New Zealand
Hill's Pet Products Manufacturing, B.V.................. Netherlands
Hill's Pet Products S.p.A............................... Italy
Hill's Pet Products SNC................................. France
Hill's Pet Products, Inc................................ Delaware
Hill's-Colgate (Japan) Ltd.............................. Japan
HL Soap Co.............................................. Delaware
HLP Co.................................................. Cayman Islands
Hopro Liquidating Corp.................................. Ohio
Industrial Jabonera Ecuatoriana S.A..................... Ecuador
Industrias Quimicas Associadas Multiquim, S.A........... Ecuador
Inmobiliara Hills, S.A. de C.V.......................... Mexico
Innovacion Creativa, S.A. de C.V........................ Mexico
Inter-Hamol, S.A........................................ Luxembourg
International Equitable Association (Industrial &
Commercial) Limited.................................... Nigeria
JG Soap Co.............................................. Delaware
JGP Co.................................................. Cayman Islands
JPK Co.................................................. Cayman Islands
JP Soap Co.............................................. Delaware
K.G. Caviar Im-Und Export, GmbH & Co.................... Germany
Kolynos Corporation..................................... Delaware
Kolynos do Brasil Ltda.................................. Brazil
Lournay Sales, Inc...................................... Delaware
Mennen de Nicaragua, S.A................................ Delaware
Mennen Guatemala, S.A................................... Guatemala
Mennen Interamerica Limited............................. Delaware
Mennen Investments Inc.................................. Delaware
Mennen Limited.......................................... Delaware
Mennen Products (Pty) Ltd............................... South Africa
Mennen South Africa, Ltd................................ Delaware
Mission Hill's Property Corporation..................... Delaware
Mission Hills, S.A. de C.V.............................. Mexico
New Science, Inc........................................ Delaware
Norwood International Incorporated...................... Delaware
ODOL Sociedad Anonima Industrial y Commercial........... Argentina
Olive Music Publishing Corporation...................... Delaware
Oraltech Company, Limited............................... British Virgin Islands
Palmolive (Guangzhou) Co. Ltd........................... China
Paramount Research, Inc................................. Delaware
Pet Chemicals Inc....................................... Florida
Polyana S.A............................................. Uruguay
Princess House de Mexico, S.A. de C.V................... Mexico
Productors Halogenados Copalven, C.A.................... Venezuela
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
State in which
Incorporated or Country
Name of Company in which Organized
- --------------- -----------------------
<S> <C>
P.T. Colgate-Palmolive Indonesia........................ Indonesia
P.T. Hawley & Hazel Indonesia........................... Indonesia
Purity Holding Company.................................. Delaware
Purity Music Publishing Corporation..................... Delaware
Refresh Company Limited................................. Dominica
Samuel Taylor Holdings B.V.............................. Netherlands
Siam Purity Distribution Co. Ltd........................ Thailand
Societe Industriale de Bourbon, S.I.B................... Reunion
Softsoap Enterprises, Inc............................... Massachusetts
Somerset Collections Inc................................ Massachusetts
Southhampton-Hamilton Company........................... Delaware
The Lournay Company, Inc................................ Delaware
The Murphy-Phoenix Company.............................. Ohio
VCA, Inc................................................ Delaware
Veterinary Companies of America, Inc.................... Delaware
Village Bath Products, Inc.............................. Minnesota
Vipont Pharmaceutical, Inc.............................. Delaware
XEB, Inc................................................ New Jersey
ZAO Colgate-Palmolive (Russia).......................... Russia
</TABLE>
6
<PAGE>
EXHIBIT 23
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation of
our report, dated February 1, 2000, included in this Form 10-K, into the
Company's previously filed Registration Statement File Nos. 2-76922, 2-96982,
33-17136, 33-27227, 33-34952, 33-15515, 33-48832, 33-48840, 33-58746, 33-61038,
33-78424, 33-58887, 33-58231, 33-64753, 333-38251, 333-45679 and 333-79411.
/s/ Arthur Andersen LLP
New York, New York
March 27, 2000
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, Jill K. Conway, do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ Jill K. Conway
-----------------------
Name: Jill K. Conway
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, Ronald E. Ferguson, do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ Ronald E. Ferguson
-----------------------
Name: Ronald E. Ferguson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, Ellen M. Hancock, do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ Ellen M. Hancock
-----------------------
Name: Ellen M. Hancock
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, David W. Johnson, do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ David W. Johnson
-----------------------
Name: David W. Johnson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, John P. Kendall, do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ John P. Kendall
-----------------------
Name: John P. Kendall
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, Richard J. Kogan, do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ Richard J. Kogan
-----------------------
Name: Richard J. Kogan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, Howard B. Wentz, Jr., do hereby make, constitute and appoint Andrew D.
Hendry and Michele C. Mayes, and each of them, as my attorneys-in-fact and
agents with full power of substitution for me and in my name, place and stead,
in any and all capacities, to execute for me and on my behalf the Annual Report
of Colgate-Palmolive Company on Form 10-K for the year ended December 31, 1999,
and any and all amendments thereto and any other documents in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing necessary and
proper to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents and/or any of them may lawfully do or
cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ Howard B. Wentz, Jr.
------------------------
Name: Howard B. Wentz, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, Reuben Mark, do hereby make, constitute and appoint Andrew D. Hendry
and Michele C. Mayes, and each of them, as my attorneys-in-fact and agents with
full power of substitution for me and in my name, place and stead, in any and
all capacities, to execute for me and on my behalf the Annual Report of Colgate-
Palmolive Company on Form 10-K for the year ended December 31, 1999, and any and
all amendments thereto and any other documents in connection therewith, and to
file the same with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing necessary and proper to be done in and
about the premises, as fully to all intents and purposes as I might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and/or any of them may lawfully do or cause to be done by virtue hereof.
In witness whereof, I have executed this Power of Attorney this 9th day
of March, 2000.
/s/ Reuben Mark
-----------------------
Name: Reuben Mark
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the annual
report on Form 10-K for the year ended December 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 200
<SECURITIES> 36
<RECEIVABLES> 1,138
<ALLOWANCES> 37
<INVENTORY> 784
<CURRENT-ASSETS> 2,355
<PP&E> 4,166
<DEPRECIATION> 1,615
<TOTAL-ASSETS> 7,423
<CURRENT-LIABILITIES> 2,274
<BONDS> 2,243
0
367
<COMMON> 733
<OTHER-SE> 734
<TOTAL-LIABILITY-AND-EQUITY> 7,423
<SALES> 9,118
<TOTAL-REVENUES> 9,118
<CGS> 4,224
<TOTAL-COSTS> 3,254
<OTHER-EXPENSES> 74
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172
<INCOME-PRETAX> 1,395
<INCOME-TAX> 457
<INCOME-CONTINUING> 937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 937
<EPS-BASIC> 1.57
<EPS-DILUTED> 1.47
</TABLE>
