Executive Overview

Colgate-Palmolive Company seeks to deliver strong, consistent business results and superior shareholder returns by providing consumers on a global basis with products that make their lives healthier and more enjoyable.

To this end, the Company is tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition. Within these segments, the Company follows a closely defined business strategy to develop and increase market leadership positions in key product categories. These product categories are prioritized based on their capacity to maximize the use of the organization's core competencies and strong global equities and to deliver sustainable long-term growth.

Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the business and financial results in each region. The Company competes in more than 200 countries and territories worldwide with established businesses in all regions contributing to the Company's sales and profitability. This geographic diversity and balance help to reduce the Company's exposure to business and other risks in any one country or part of the world.

The Oral, Personal and Home Care segment is operated through four reportable operating segments: North America, Latin America, Europe/South Pacific and Greater Asia/Africa, all of which sell to a variety of retail and wholesale customers and distributors. The Company, through Hill's Pet Nutrition, also competes on a worldwide basis in the pet nutrition market, selling its products principally through the veterinary profession and specialty pet retailers.

On an on-going basis, management focuses on a variety of key indicators to monitor business health and performance. These indicators include market share, sales (including volume, pricing and foreign exchange components), organic sales growth, gross profit margin, operating profit, net income and earnings per share, as well as measures used to optimize the management of working capital, capital expenditures, cash flow and return on capital. The monitoring of these indicators, as well as the Company's corporate governance practices (including the Company's Code of Conduct), are used to ensure that business health and strong internal controls are maintained.

To achieve its business and financial objectives, the Company focuses the organization on initiatives to drive and fund growth. The Company seeks to capture significant opportunities for growth by identifying and meeting consumer needs within its core categories, through its focus on innovation and the deployment of valuable consumer and shopper insights in the development of successful new products regionally, which are then rolled out on a global basis. To enhance these efforts, the Company has developed key initiatives to build strong relationships with consumers, dental and veterinary professionals and retail customers. Growth opportunities are greater in those areas of the world in which economic development and rising consumer incomes expand the size and number of markets for the Company's products.

The investments needed to fund this growth are developed through continuous, Company-wide initiatives to lower costs and increase effective asset utilization through which the Company seeks to become even more effective and efficient throughout its businesses. The Company also continues to prioritize its investments toward its higher margin businesses, specifically Oral Care, Personal Care and Pet Nutrition.

The Company operates in a highly competitive global marketplace and looking forward, expects global macroeconomic and market conditions to remain highly challenging. As previously disclosed in Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, with approximately 75% of its Net sales generated outside of the United States, the Company is exposed to changes in economic conditions, movements in commodity prices and foreign currency exchange rates, as well as political uncertainty in some countries, all of which could impact future operating results. Exchange control limitations or a significant devaluation in Venezuela (5% of Net sales) could adversely impact future results.

The benefits of recently easing commodity and oil prices have begun to flow through in 2009 and should build as the year goes on. It's the Company's belief that this, coupled with the higher pricing and our ongoing aggressive savings programs, should offset the expected impact of the stronger dollar during the year. The extent to which the Company is able to offset the effect of the strengthened U.S. dollar will be impacted by the sustainability of benefits from recent commodity cost declines and the Company's ability to successfully implement selling price increases and cost-savings initiatives. Moreover, difficult macroeconomic conditions and uncertainties in the global credit markets could negatively impact our suppliers, customers and consumers which could, in turn, have an adverse impact on our business.

The recent finalization of the 2004 Restructuring Program should enhance our ability to compete successfully in the current environment. As a result of the 2004 Restructuring Program, the Company streamlined its global supply chain, reallocated resources to enhance its sales, marketing and new product organizations in high-potential developing countries and other key markets and consolidated these organizations in certain mature markets. Savings are estimated to be in the range of $475 to $500 pretax ($350 to $375 aftertax) annually, substantially all of which will increase future cash flows. The savings and benefits from the 2004 Restructuring Program, along with the Company's other on-going cost-savings and growth initiatives, are anticipated to provide additional funds for investment in support of key categories and markets, new product development, while also supporting an increased level of profitability.

Accordingly, we believe we are well-prepared to meet the challenges ahead due to our strong financial condition, our experience operating in challenging environments and our continued focus on our strategic initiatives: getting closer to the consumer, the profession and our customers; effectiveness and efficiency in everything; innovation everywhere; and leadership. This focus, together with the strength of our global brand names and our broad international presence in both mature and developing markets, should position us well to increase shareholder value over the long-term.

Results of Operations

Worldwide Net sales were $3,502.8 in the first quarter of 2009, down 5.5% from the first quarter of 2008 as net selling price increases of 8.0% were more than offset by volume declines of 0.5% and a negative foreign exchange impact of 13.0%. The 2008 divestments of a non-core brand in Germany and the fabric care business in Senegal reduced sales growth for the first quarter of 2009 by 0.5% versus the comparable period of 2008. Excluding the impact of these divestments, Net sales decreased 5.0% on flat volumes. Organic sales (Net sales excluding foreign exchange, acquisitions and divestments) grew 8.0% in the first quarter of 2009.

Net sales in the Oral, Personal and Home Care segment were $2,996.4 in the first quarter of 2009, down 6.5% from the first quarter of 2008 as volume growth of 0.5% and net selling price increases of 7.0% were more than offset by a negative foreign exchange impact of 14.0%. Excluding the 0.5% impact of the above-described divestments, Net sales decreased 6.0% on volume growth of 1.0%. Organic sales grew 8.0% in the first quarter of 2009.

Net sales in North America increased 3.0% in the first quarter of 2009 to $729.7 as volume growth of 2.0% and net selling price increases of 3.0% were partially offset by a negative foreign exchange impact of 2.0%. Organic sales grew 5.0% in the first quarter of 2009. Products contributing to the growth in oral care included Colgate Max Fresh with Mouthwash Beads, Colgate Sensitive and Colgate Max White with Mini Bright Strips toothpastes, Colgate 360° Deep Clean, Colgate Max Fresh and Colgate Max White manual toothbrushes, Colgate 360° Sonic Power battery toothbrush and the new Colgate Wisp mini-brush. Successful new products in other categories contributing to growth included Softsoap Body Butter Apricot Scrub and Irish Spring Hair and Body and Cool Relief body washes, Softsoap Ensembles liquid hand soap, and Palmolive Pure + Clear and Ajax Lime with Bleach Alternative dish liquids. Operating profit in North America increased 17% in the first quarter of 2009 to $191.6, reflecting increased sales and moderating raw and packaging material costs, which more than offset increased advertising.

Net sales in Latin America decreased 3.5% in the first quarter of 2009 to $911.0 as volume growth of 1.5% and net selling price increases of 15.5% were more than offset by a negative foreign exchange impact of 20.5%. Organic sales grew 17.0% in the first quarter of 2009. Volume gains were led by Brazil, Venezuela, Colombia and Argentina. Products contributing to the growth in oral care included Colgate Total Professional Clean, Colgate Total Professional Sensitive and Colgate Max Fresh Night toothpastes, Colgate 360° Deep Clean and Colgate Max Fresh manual toothbrushes, and Colgate Plax Whitening and Colgate Plax Ice mouthwashes. Products contributing to growth in other categories included Palmolive bar soap and shower gel with ingredients from the Amazon, Protex Aloe bar soap, Lady Speed Stick Aloe Defense multi-form deodorants, Palmolive Caprice shampoo and Suavitel Magic Moments fabric conditioner. Operating profit in Latin America increased 9% to $306.2, reflecting higher pricing, a continued focus on cost-savings programs and lower advertising, partially offset by the negative impact of foreign exchange and higher raw and packaging material costs.

Net sales in Europe/South Pacific decreased 20.0% in the first quarter of 2009 to $719.1 as net selling price increases of 1.5% were more than offset by 4.0% volume declines and a 17.5% negative impact of foreign exchange. The 2008 divestment of a non-core brand in Germany reduced sales growth for the first quarter of 2009 by 0.5% versus the comparable period of 2008. Excluding the impact of this divestment, Net sales decreased 19.5% on volume declines of 3.5%. Organic sales decreased 2.0% in the first quarter of 2009. Volume gains in Australia, Romania, Czech Republic and Greece were more than offset by volume declines in France, Italy, Iberia, the United Kingdom and the GABA business. Successful products in oral care included Colgate Max Fresh, Colgate Max

White, Colgate Total Advanced Clean and Colgate Sensitive Enamel Protect toothpastes, Colgate 360° Deep Clean, Colgate Max Fresh and Colgate Max White manual toothbrushes, Colgate 360° Sonic Power battery toothbrush, Colgate Plax Alcohol Free and Colgate Plax Ice mouth rinse. Successful products in other categories included Ajax Professional bucket dilutable and Ajax Professional glass cleaners, Lady Speed Stick Aloe spray deodorant and Soupline Magic Moments fabric conditioner. Operating profit in Europe/South Pacific decreased 26% to $143.1, reflecting higher raw and packaging material costs and the negative impact of foreign exchange, partially offset by lower advertising.

Net sales in Greater Asia/Africa decreased 3.0% in the first quarter of 2009 to $636.6 as volume growth of 3.5% and net selling price increases of 7.5% were more than offset by a negative foreign exchange impact of 14.0%. The 2008 divestment of the fabric care business in Senegal reduced sales growth for the first quarter of 2009 by 0.5% versus the comparable period of 2008. Excluding the impact of this divestment, Net sales decreased 2.5% on volume growth of 4.0%. Organic sales increased 11.5% in the first quarter of 2009. Volume gains were led by India, Russia, Philippines, Vietnam, Turkey, South Africa, the Gulf States/Saudi Arabia region and the Greater China region. Successful new products driving the oral care growth included Colgate Total Professional Clean, Colgate Max White, Colgate Sensitive Enamel Protect and Darlie Sensitive Gum Protection toothpastes, Colgate 360° Deep Clean and Colgate Max Fresh manual toothbrushes and Colgate Plax Overnight Herbal Sensations mouthwash. New products contributing to growth in other categories included Palmolive Papaya Yogurt shower gel, bar soap and liquid hand soap, Protex Aloe and Protex Icy Cool shower creams and bar soaps and Lady Speed Stick Clinical deodorant. Operating profit in Greater Asia/Africa increased 19% to $151.6, reflecting higher pricing, a continued focus on cost-savings programs and lower advertising, partially offset by higher raw and packaging material costs and the negative impact of foreign exchange.

Net sales for Hill's Pet Nutrition increased 0.5% in the first quarter of 2009 to $506.4 as net selling price increases of 14.0% were partially offset by 7.0% volume declines and a negative foreign exchange impact of 6.5%. Organic sales grew 7.0% in the first quarter of 2009. Volume growth in Russia, Germany, Turkey, the Benelux countries and Austria was more than offset by volume declines in the United States, France, Switzerland, the United Kingdom and Canada. Successful products within the U.S. specialty pet channel included Science Diet Nature's Best Canine and Feline, Science Diet Mature Adult Canine, Science Diet Culinary Creations Feline and the relaunch of Science Diet Puppy and Kitten dry foods with improved formulas. Prescription Diet j/d Canine contributed to sales in the U.S. veterinary channel. Successful new products contributing to international sales included Science Plan Nature's Best Canine and Feline in Europe and the relaunch of Science Diet Puppy and Kitten foods in Japan. Operating profit increased 3% to $131.7, reflecting higher pricing partially offset by higher raw and packaging material costs.

Operating profit (loss) related to Corporate decreased to ($112.8) in the first quarter of 2009 from ($145.9) in the comparable 2008 period. There were no charges related to the 2004 Restructuring Program in the first quarter of 2009. Restructuring charges amounted to $38.4 in the first quarter of 2008.

For a table summarizing segment Net sales and Operating profit, please refer to Note 10, "Segment Information," of the Notes to Condensed Consolidated Financial Statements.

Restructuring and implementation-related charges for the three months ended March 31, 2008 are reflected in the following income statement categories:

           Cost of sales                                        $ 25.9
           Selling, general and administrative expenses           13.2
           Other (income) expense, net                            (0.7 )

           Total 2004 Restructuring Program charges, pretax     $ 38.4

           Total 2004 Restructuring Program charges, aftertax   $ 21.2

For additional information regarding the Company's 2004 Restructuring Program, refer to Note 7, "Restructuring and Related Implementation Charges," of the Notes to Condensed Consolidated Financial Statements.

Worldwide Gross profit margin increased to 57.5% in the first quarter of 2009 from 56.6% in the first quarter of 2008. Restructuring and implementation-related charges incurred under the 2004 Restructuring Program included in Cost of sales for the first quarter of 2008 were $25.9, which lowered the reported Gross profit margin by 70 basis points (bps) in the first quarter of 2008. Excluding the impact of the 2004 Restructuring Program, gross profit margin was 57.3% in the first quarter of 2008. On this basis, the increase in 2009 reflects higher pricing and a continued focus on cost-savings programs, partially offset by higher raw and packaging material costs.

Selling, general and administrative expenses as a percentage of Net sales decreased to 33.9% in the first quarter of 2009 from 36.3% in 2008. The 240 bps decrease in the first three months of 2009 was driven primarily by lower advertising, lower charges related to the 2004 Restructuring Program and a continued focus on cost-savings programs. In the first quarter of 2009, advertising decreased 23% to $317.1 as compared with $414.1 in 2008 due to lower media rates in many parts of the world and reduced levels of spending. In the first quarter of 2009, there were no restructuring charges. Restructuring charges included in Selling, general and administrative expenses in the first quarter of 2008 were $13.2.

Other (income) expense, net amounted to $15.3 in the first quarter of 2009 as compared with $5.2 in the first quarter of 2008. Other (income) expense, net for the first quarter of 2009 includes a $10.1 provision in Corporate related to legal and environmental costs.

Operating profit increased 9% to $811.4 in the first quarter of 2009 from $745.7 in 2008, benefiting from a decrease in restructuring charges compared to the first quarter of 2008. Restructuring charges were $38.4 for the first quarter of 2008.

Interest expense, net decreased to $21.2 in the first quarter of 2009, as compared with $33.7 in the comparable period of 2008, due to lower average interest rates and lower debt.

The quarterly provision for income taxes is determined based on the Company's estimated full year effective tax rate adjusted by the amount of tax attributable to infrequent and unusual items that are separately recognized on a discrete basis in the income tax provision in the quarter in which they occur. The Company's current estimate of its full year effective income tax rate before discrete period items is 32.1%, which is consistent with the first quarter 2008. The tax rate for the first quarter of 2008 of 31.4% includes the impact of the Company's 2004 Restructuring Program (70 bps).

Net income for the first quarter of 2009 increased to $507.9 from $466.5 in the comparable 2008 period, and earnings per common share on a diluted basis increased to $0.97 per share compared with $0.86 per share in the comparable 2008 period. Net income for the first three months of 2008 included $21.2 ($0.04 per share) of charges related to the Company's 2004 Restructuring Program.

Non-GAAP Financial Measures

Net sales and volume growth, both worldwide and in relevant geographic divisions, are discussed in this quarterly report on Form 10-Q both on a GAAP basis and excluding divestments (non-GAAP). Management believes these non-GAAP financial measures provide useful supplemental information to investors as they allow comparisons of Net sales and volume growth from on-going operations. This quarterly report on Form 10-Q also discusses organic sales growth (Net sales growth excluding the impact of foreign exchange, acquisitions and divestments) (non-GAAP). Management believes this measure provides investors with useful supplemental information regarding the Company's underlying sales trends by presenting sales growth excluding the external factor of foreign exchange, as well as the impact of acquisitions and divestments.

Worldwide Gross profit margin is discussed in this quarterly report on Form 10-Q both on a GAAP basis and excluding the impact of the 2004 Restructuring Program (non-GAAP). Management believes this non-GAAP financial measure provides useful supplemental information to investors regarding the underlying business trends and performance of the Company's on-going operations and is useful for period-over-period comparisons of such operations. The Company uses the above financial measures internally in its budgeting process and as a factor in determining compensation.

While the Company believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.

Liquidity and Capital Resources

Net cash provided by operations increased 21% to $690.2 in the first quarter of 2009, compared with $569.9 in the comparable period of 2008. The increase in 2009 reflects the Company's improved profitability and lower spending related to the 2004 Restructuring Program, partially offset by increased working capital. Overall, working capital increased to 1.4% of sales for the first quarter of 2009 as compared with 0.8% of sales for the first quarter of 2008. The Company defines working capital as the difference between current assets (excluding cash and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-term debt).

With the finalization of the 2004 Restructuring Program, cash spending decreased $41.4 in the first quarter of 2009 relative to the comparable period of 2008. Substantially all of the restructuring accrual at March 31, 2009 will be paid out before year end 2009. It is anticipated that cash requirements for the 2004 Restructuring Program will continue to be funded from operating cash flows.

Investing activities used $81.6 in the first quarter of 2009, compared with $63.9 in the comparable period of 2008 due to higher purchases of marketable securities in 2009 and lower proceeds from the sale of property and non-core product lines. Investing activities for the first quarter of 2008 include $12.8 of proceeds from the sale of certain assets, primarily related to the 2004 Restructuring Program. Capital spending decreased in the first quarter of 2009 to $73.2 from $85.3 in the comparable period of 2008 and continues to focus primarily on projects that yield high aftertax returns. Overall capital expenditures for 2009 are expected to be at an annual rate of approximately 4.5% of Net sales.

Financing activities used $455.1 of cash during the first quarter of 2009 compared with $299.5 in the comparable period of 2008. This increase is primarily due to a net decrease of debt and lower proceeds from stock option exercises, partially offset by lower repurchases of common stock.

Commercial paper outstanding was $696.5 and $589.3 as of March 31, 2009 and 2008, respectively. The average daily balances outstanding for commercial paper in the first quarters of 2009 and 2008 were $1,249.1 and $1,270.0, respectively. The Company regularly classifies commercial paper and certain current maturities of notes payable as long-term debt as it has the intent and ability to refinance such obligations on a long-term basis, including, if needed, by utilizing its lines of credit that expire in 2012. At March 31, 2009, $702.2 of such debt was classified as long-term debt. While uncertainties in the financial markets so far have not significantly affected the Company's access to credit due to its strong credit rating, future financing could become difficult or more expensive for the Company if market conditions further deteriorate.

The long-term notes of the Company's Employee Stock Ownership Plan (ESOP) that are guaranteed by the Company and certain bank borrowings both contain cross-default provisions. Noncompliance with these requirements could ultimately result in the acceleration of amounts owed. The Company is in full compliance with all such requirements and believes the likelihood of noncompliance is remote.

In the first quarter of 2009, the Company increased the annualized common stock dividend by 10% to $1.76 per share and the annualized Series B Convertible Preference Stock dividend to $14.08 per share effective in the second quarter of 2009. On January 30, 2008, the Board of Directors approved a new stock repurchase program (the 2008 Program) that authorizes the Company to purchase up to 30 million common shares.

For additional information regarding liquidity and capital resources, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

Cautionary Statement on Forward-Looking Statements

This quarterly report on Form 10-Q may contain forward-looking statements. Such statements may relate, for example, to sales or volume growth, profit and profit margin growth, earnings growth, financial goals, cost-reduction plans, estimated savings associated with the 2004 Restructuring Program, tax rates and new product introductions. These statements are made on the basis of the Company's views and assumptions as of this time and the Company undertakes no obligation to update these statements. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of those statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. Actual events or results may differ materially because of factors that affect international businesses, the current global credit crisis and economic downturn, as well as matters specific to us and the markets we serve, including currency rate fluctuations, changes in foreign or domestic laws, availability and cost of raw and packaging materials and changes in the policies of retail trade customers. For information about certain factors that could cause such differences, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2008, including the information set forth under the captions "Risk Factors" and "Cautionary Statement on Forward-Looking Statements."