Bina H. Thompson - Vice President, Investor Relations Reuben Mark - Chairman of the Board, Chief Executive Officer Ian M. Cook - President, Chief Operating Officer

Bill Chappell - SunTrust Robinson Humphrey Bill Schmitz - Deutsche Bank Amy Chasen - Goldman Sachs Linda Bolton Weiser - Oppenheimer & Co. Lauren Lieberman - Lehman Brothers Connie Maneaty - Prudential Equity Group Bill Pecoriello - Morgan Stanley Wendy Nicholson - Citigroup John Faucher - J.P. Morgan Alice Longley - Buckingham Research Chris Ferrara - Merrill Lynch Justin Hott - Bear Stearns

Good day and welcome to today’s Colgate-Palmolive Company fourth quarter and year-end 2006 earnings conference call. Today’s call is being recorded and is being simulcast live at www.colgate.com. Just as a reminder, there will be a slight delay before the question-and-answer session begins due to the web simulcast. At this time, for opening remarks, I’d like to turn the program over to the Vice President of Investor Relations, Ms. Bina Thompson. Please go ahead, Madam. Bina H. Thompson: Thanks, Millicent. Good morning, everybody. Welcome to our fourth quarter and year-end earnings release conference call. With me this morning are Reuben Mark, Chairman and CEO; Ian Cook, President and COO; Steve Patrick, CFO; and Dennis Hickey, Corporate Controller. First, we will discuss our results for the fourth quarter and full year this morning, excluding after-tax charges related to the 2004 restructuring program and incremental stock compensation charges due to the adoption of FASB-123R, as well as a gain in the fourth quarter on the previously announced sale of our household bleach business in Canada, which was entirely offset by restructuring charges. These items were included in the reported numbers contained in this morning’s press release and accompanying financial statements. The reported GAAP results with reconciliations to the results excluding these items are included in the press release and posted on the investor relations page of our website at www.colgate.com. Comments about expectations will also exclude comparable charges. During the Q&A, we will answer any questions including or excluding these items as you may wish. While we’re certainly delighted with our above expectation fourth quarter results, a great finish to a strong year. And as we covered the numbers in considerable detail in the press release, I won’t spend much time on the overall corporate results, particularly as we have an ever-increasing number of participants who want to have the opportunity to ask a question. So I simply say that we’re pleased that our P&L and balance sheet are strong, and that the restructuring and business building program are proceeding as planned or better than planned. Our ability to generate savings from all areas of the business, facilitated by our ongoing funding the growth programs, the restructuring, and now more recently our global implementation of Colgate business planning, is allowing us to continue to appropriately build our business with increased advertising. This, of course, generates the good market share gains and volume increases that we’re seeing around the world. So let me turn to the divisions for just a moment, starting with North America. We’re quite pleased that our competitive plans and activities in the U.S. continue the success we saw in the third quarter. As referenced in the press release, our all outlet toothpaste market share, as measured by Nielsen, increased both for the full year and for the fourth quarter. Advertising support behind all our toothpaste business, but particularly behind Total, has been key to this good performance. Market shares increased quarter over quarter in the key categories of toothpaste, manual toothbrushes, dishwashing liquid, and bar soap. Overall consumption trends for our products in the quarter were strong across all trade channels, despite weakness in overall retail sales reported by some accounts at the end of the year. Inventories in the trade remain at a little over nine weeks, down slightly from the year-ago period. New products shipping in the first quarter combined with good going out market share should continue the positive momentum. One of the new products is Total Advanced Clean. This new product, priced in the super premium segment, combines a high performance cleaning silica with our patented therapeutic formula to help maintain a dentist clean feeling. In consumer testing, the purchase intent was the highest we have seen against all previous Colgate Total variants in market and initial trade reaction has been very positive. So we’ll start shipping at the end of February and we’ll support this new segment, as you can imagine, with strong advertising. Another new product is Colgate Max Fresh Burst. This toothpaste is infused with 50% more flavor for an invigorating feel of icy refreshment. This will be targeted at 18 to 34 year olds and will add to our already highly success existing Max Fresh equity, and this also ships at the end of February. Another new product is Palmolive Scrub Buster. This product is truly differentiated with a new, break-through bottle and graphics and an eye-catching micro-bead formula. Its distinctive shape will stand out on shelves and will work to interrupt shoppers’ grab-and-go routine. Volume growth in the first quarter in North America should be strong, roughly at fourth quarter levels. Volume for the full year is expected to be up at least mid-single digits, and operating profit is expected to be up nicely for the first quarter and full year. Europe -- our business in Europe South Pacific remains quite robust, despite the mature and somewhat stagnant economies in certain countries. The expectation is that there will be modest growth across the region in 2007, with some revival in consume confidence in larger markets in France, Germany and Italy. We also expect the Euro and Pound to remain fairly stable in value throughout 2007. As you know, our strategy, particularly in Western Europe and Australia, has been to drive margins up by launching value-added premium priced products. One of our new offerings in the toothbrush category is our Colgate Max Fresh Toothbrush, aligned with our highly successful Max Fresh toothpaste. This is priced in the super premium price segment and is targeted to consumers aged 18 to 24, communicating a new dimension of freshness. In the power brush category, which is a strong business for us across this region, we’ll be shipping 360 Degree MicroSonic in this quarter. This premium priced brush will build on the 360 Degree anchor brand, which has driven market shares in virtually every country where it’s been launched, and leads innovation in the hybrid category. In the home care category, building on the success of Ajax professional spray, we’re just about to launch Ajax professional bucket dilutable cleaner. This is priced at a premium for the base business, consistent with the other offerings in the Ajax professional line, and addresses the bucket dilutable cleaner segment that represents about 50% of all surface cleaners across Europe. Our strong new product pipeline, the expectation of stable economies and stable currencies, give us confidence that 2007 should be another good year for Europe. Volume growth for the first quarter and full year is expected to be at fourth quarter 2006 levels. Operating profit should be up strongly, up both absolutely and as percent of sales for the first quarter and full year as well. Turning then to Latin America, we’re very pleased with the continued strong performance in Latin America. Our focus on premium-priced, higher margin products, particularly in oral care, has led to the good share performance referenced in the press release. A complete re-launch of Colgate Total toothpaste across the region, supported by increased advertising, resulted in a record share of over almost 11% in the most recent periods, led by gains in all the major subsidiaries, Brazil, Mexico, Venezuela, and Colombia. In the personal care category, premium-priced milks, such as Palmolive Nutri-Milk, Protex Oats and Protex Propolis, have allowed us to achieve market leadership in Venezuela and Peru, and an overall regional share gain of one full point year over year. Our Mexican business continues to do very well, with strong volume and market share gains in toothpaste, toothbrushes, toilet soaps and dishwashing liquids. The currency has remained fairly stable and is expected to remain so through 2007, with only a modest devaluation forecast by year-end. The economy is strong. The country appears poised for further growth, with the uncertainty of the presidential election now behind it. Our second-largest Latin American business, Brazil, had a very good quarter and year, with record sales levels for both. For 2007, the main economic indicators and outlook continue to be favorable. Inflation is under control at 3% and interest rates continue gradually to decline, which should have a positive impact going forward. So, despite the inherently volatile nature of this part of the world, we’re encouraged with the prospects going forward. Volume growth is expected to be at least in the mid- to high-single digits for the first quarter and full year. Operating profit is expected to grow double-digits in the first quarter and full year as well. Greater Asia/Africa -- volume growth across this division was strong, and market share trends by country continue to be very healthy. In particular, India, Philippines, Thailand, and Russia showed share gains across almost all categories. In greater China, our business appears to be gaining some momentum. The re-launch of our lower-priced, anti-cavity toothpaste, as well as the launch of the Max Fresh toothpaste line extension in the premium segment, has resulted in our leading market share maintaining itself at over 30% in the most recent period. We strengthened our sales force to allow even better penetration into the smaller cities across this vast country, as well as to improve our visibility and support for indirect modern trade. As you may know, Thailand was one of our pilot subsidiaries for Colgate business planning, the global program to increase promotion efficiency, which has now been fully implemented there. Our learnings here have certainly contributed to what was a banner year for the subsidiary. Sales increased double-digit, our commercial spending was reduced, our SKU count was reduced, our profit increased strongly, and market shares reached records in toothpaste, toothbrushes and soap. All of this is encouraging as we continue to roll out CBP around the Colgate world. Looking forward to 2007, we expect another good year in greater Asia/Africa. Volume for the first quarter and full year should increase to the high-single digit range. Operating profit is expected to be up double-digits for both the first quarter and full year as well. Finally, Hill’s. Hill’s finished 2006 with excellent momentum in the business, which we expect to see continuing into 2007. Business is strong both domestically and internationally, fueled by our steady pipeline of new products across both the Science Diet and Prescription Diet lines. Consumption in the specialty channel remains strong, particularly in large format retailers here in the U.S. For 2007, we expect Hill’s volume in the first quarter to be at fourth quarter levels, with solid mid-single digit volume growth expected for the full year as well. Operating profit should increase double-digits for the first quarter and full year as well. So in summary, we’re very pleased with both our fourth quarter and full year results for 2006, and are encouraged by the strong momentum in our business everywhere. Although it’s still early days, 2007 has started out very well and we expect to deliver good top line growth, excellent gross margin increases, and double-digit earnings per share growth, both in the first quarter and for the full year 2007. So now let me turn the call over to both Reuben and Ian to respond to your questions. Millicent, can we go ahead with the questions?

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(Operator Instructions) Our first question will come from Bill Chappell, SunTrust Robinson Humphrey. Bill Chappell - SunTrust Robinson Humphrey: Good morning. First, on the trade promotion and ad spend in North America this past quarter, how do you expect that to play out over the next two, three quarters as you defend your turf in the market share? Should it go up, should it go down? Are we looking pretty much similar levels over the next couple of quarters?

The spending was high during the year, and noteworthy during the fourth quarter. Our expectations, our budget and our current estimate is that the gross to net level, that is to say, basically the price promotional aspects, will be declining, will be lower in the first quarter and throughout the year, than they were leaving this year, leaving 2006. As you know, this anti-competitive program that we’ve been on has been quite effective and I’m looking at certainly the latest market share of Total between 15 and 16, which is essentially the highest it’s ever been. Bill Chappell - SunTrust Robinson Humphrey: When I look at the accelerated SG&A or trade spending, has it all been in the oral care category or is it spread out on some other categories to gain share there as well?

It’s oral and personal as well, but primarily oral. Bill Chappell - SunTrust Robinson Humphrey: Okay, thanks.

We’ll go next to Bill Schmitz, Deutsche Bank. Bill Schmitz - Deutsche Bank: Good morning. Just to follow-up on the gross margin in the quarter, how much of that was -- maybe just go through that bridge again, how your gross margin impacts from input costs and the rest of those factors?

Sure. You mean the breakdown of gross profit, where it came from? Bill Schmitz - Deutsche Bank: Exactly.

Again, on a global basis, pricing contributed -- we’re starting with the base last year, Bill, of 56%, which was the biggest jump in any quarter of last year. It went up 100 basis points, whereas the rest of the quarters went out somewhere in some cases 10 basis points, in some cases 30, and so on. So we get three-tenths from pricing -- let me put it all in basis points. 30 basis points from pricing. Restructuring -- are we breaking down the restructuring specifically? 40 basis points from restructuring. 180 basis points from funding the growth savings, which are a whole panoply of, as you know, of programs that we have. A negative 1.6, or 160 basis points from material prices, which leaves a total net savings of 60 basis points, and there’s all other changes, which is a whole bunch of stuff, of negative 0.3. That gets you up to 56.6 and leads to the year of 110 basis points. Remember, we had raised our traditional 50 to 100 basis points target to 75 to 125 earlier last year, and in fact it was 110. I think the press release says that we should, we fully expect and have budgeted to be up the 110 or more. Bill Schmitz - Deutsche Bank: Great, thanks. The new factories in oral care that are coming online, what’s the timeframe for that? And what does that mean for gross margin? I imagine it’s obviously accretive.

Well, the new factories that are being built, really, construction is underway but it will really be 2008 and 2009 before the Polish factory is up. People are telling me third quarter. I don’t believe that, but -- we’d have to do it by factory. The Tennessee factory, which is replacing Jeffersonville, is when? That is at the end of this year. The Palmolive liquid, this is a Polish factory, in the third quarter of this year. What am I thinking of in 2008? I don’t know what I’m thinking about 2008. At any rate, but more importantly, I think in terms of where that takes us, it will -- we expect the margin growth for several reasons to be up -- I’m hesitant to say over 100 basis points, but the numbers say over 100 basis points in the first quarter. Let me back up for a moment. Well, let’s wait until the next question. I assume somebody else will ask about margin, because I have some very interesting things, I think, to say about gross profit. Bill Schmitz - Deutsche Bank: Okay, great. Thanks so much.

Why did I screw that up? Oh, no it’s -- okay. Anyway. Sorry, go on. Bill Schmitz - Deutsche Bank: No, thank you. That’s great.

Okay, thanks, Bill.

Our next question comes from Amy Chasen with Goldman Sachs. Amy Chasen - Goldman Sachs: Well, I wasn’t going to ask about gross margin, but now I’m intrigued, so I guess, Reuben, can you just tell us what you were talking about, and then I’ll ask my question?

Okay, great. It’s nice to intrigue you. The first general comment, and bear with me, Amy, a moment because it’s worth -- because when you look at the P&L and balance sheet, the only thing one could even question a bit I think in this quarter, which we view as a super duper quarter, is gross profit of 60. I would like to talk about that for a moment, quite obviously, candidly. The first general comment is that I’ve watched the gross margin over the last couple of decades go from 39% to 56%-plus. I can say, and obviously truthfully, and I might add there’s an internal disclosure committee that listens to every word of this and records it and makes sure that none of us say anything that’s not accurate, but we are now in the best position that we have ever been in terms of stuff humming along to help our gross profit. The restructuring is going well. Next year we’ll get more savings than we got this year. Next year we’ll be running somewhat ahead of what we had told the board externally, and the total savings from restructuring will be at the top-end, if not over the top-end, of the original 2004 expectations. We have, as you said, we’re building several greenfield factories, which apparently are going to be finished somewhat sooner than I expected. We have our normal funding the growth cost savings, which are going well. We have a whole program of logistical centralization, which is fascinating and we haven’t talked about much, but it means that we’re sort of revolutionizing our logistical system. We are mitigating the increase in cost of oil and we have the Colgate business planning that I think Bina mentioned, which essentially has no appreciable savings in 2006, and so -- turning up meaningful monies and showing up in volume in 2007 and 2008. Now, let me tell you specifically about the 60 basis points. There’s an official estimate that we go into, that we have going into each of these conference calls, as you can imagine, which is quite complex and has many pages in it. The actual official estimate for fourth quarter growth in gross profit, given the 100 basis point last year, was 60 basis points. When I was editing the commentary last time, I said I don’t think the U.S. is going to be spending all that money that they say they’re going to spend and I think we’ll do a little better, so we ended up talking about doing a little better -- my fault. I occasionally second-guess the numbers and this time, I didn’t happen to be right. But nonetheless, that’s why very carefully in the press release, [it highlighted] the two words, “as planned”, because the 60 -- and again, that has to be legally vetted and everything else -- that really was what we -- I guess what I’m saying, Amy, is that I don’t see any diminution in the trend in gross profit, and I will reiterate that I think it’s better than I have seen it ever before. Amy Chasen - Goldman Sachs: Okay, that’s great. Along those lines, on CVP, Bina mentioned a little bit about Thailand. Can you just extrapolate a little bit more on what you’ve seen from the test and maybe any early signs from the implementation? Could you also give us some idea of the quantification of those savings in ’07?

Okay, Ian, why don’t you take -- I’ll take the quantification, you take the effect of the program. Ian M. Cook: Amy, this is Ian. Obviously we had the two lead countries, Canada and Mexico. We’re now rolling it into a half a dozen more countries in 2007, and on top of that, have put the process of business planning and a return on investment tool kit out to all of our subsidiaries, so that they can focus on improving the return on their promotional spending. The two biggest things we have gotten from it in the lead markets and the other countries we are rolling out into, number one, the analysis of promotions that allows us to change our promotional programming to improve the return on investment which essentially increases average selling price and gross profit. We have seen that consistently across markets, that the analysis allows you to identify activity that is working well and activity that can be improved. Secondly, it’s improving our planning, because it is putting a process across the entire commercial organization at the front-end of an 18-month planning cycle, which is simply leading to better execution of those improved promotions, which also offers a return, which Reuben will now quantify.

As Ian and other people have told you, this is an end-to-end process, and I am still sure I will retire before I ever know what end-to-end means, but it is a very interesting thing and the company has embraced it. The results will show up, Amy, in extra volume. It will show up in lower gross to net, so we have a great deal of difficulty pushing the financial people in the company and in this room to come up with a number, because it’s the kind of thing that is very difficult to piece out. Nonetheless, I got them to agree the other day that we would expect a minimum in 2007 of $50 million plus from this, and that that should double in 2008. Now you’re going to ask me is that gross to net, and I’m going to respond -- I’m not going to respond. Amy Chasen - Goldman Sachs: But that doesn’t include the volume impact, or it does?

Again, it’s difficult to piece out, so I cannot say how much of that would drop, but the volume itself will then in turn generate the gross profit on each incremental dollar of volume and so on. While there wasn’t a great contribution this year, or in the fourth quarter, of this program, you can see that the things that we are doing in terms of increasing advertising spending and increasing the efficiency of it translates into darn good top-line growth. We don’t use the term organic, but our organic growth was I think 11.5% on an apples-to-apples basis. Top-line sales growth?

Nine.

What’s the 11.5?

That’s the total.

That’s the total.

Excluding foreign exchange.

Oh, yes. Yes, that is the total. It’s our organic growth including foreign exchange, but about 2.5 points of it is foreign exchange. Amy Chasen - Goldman Sachs: Great. Thank you.

I like to think of it as 11.5, but that’s --

Our next question comes from Linda Bolton Weiser with Oppenheimer. Linda Bolton Weiser - Oppenheimer & Co.: Thanks. I was just curious if you could comment on it looked like the receivables in inventories were up double-digits year over year. If you could comment on that. Also, if you would care to give some kind of a projection for operating cash flow in ’07. Do you think it will be in line with earnings growth? How does it fall out in terms of the cash charges related to the restructuring? Also, if you could comment on the use of cash in ’07 and possible level of share repurchase.

I think it’s -- when you talk about working capital, Linda, the working capital for the fourth quarter ’06 was 2.3% of sales. I mean, you would normally expect with a 9%, 10%, 11% sales growth, what happens is your receivables go up, but as a percent of sales, last year, the fourth quarter was -- I’m going to give you the full year. What’s the full year? Full year average was, 2005, 2.6%; and this year, 2.3%. Also, the thing that did go up, as I think noted in the commentary, Linda, was our inventories in conjunction with shutting down the two biggest factories in the United States and a number overseas, there was and is some build in inventory to protect the business. I think if you look carefully at the overall working capital, I think you’ll find that it’s very appropriate for the business I’m receiving a note which says, so that many companies, not that this matters in the least, but it says of receivables, that all companies may show a slight increase in receivables over and above the growth of the business, since the last two days of the year the bank was closed. That to a certain extent is what we discourage our operating people from talking about when they say “gee, business is slow because of the monsoon” or because of Mardi Gras or carnival or something, but be that as it may, on an overall year basis, our working capital as a percentage of sales is down somewhat, Linda. Linda Bolton Weiser - Oppenheimer & Co.: Okay, and then something about cash flow for ’07?

We expect operational cash flow next year to be up several digits. Linda Bolton Weiser - Oppenheimer & Co.: And do you think you’ll spend more or less on share repurchase in ’07 versus ’06?

The expectation -- we will have available perhaps just under $1 billion for share repurchase or any small, odd acquisitions that we might make. None are being planned, which indicates that we would probably buy back about the same in 2007 as we did in 2006. Linda Bolton Weiser - Oppenheimer & Co.: I guess that’s around $850 million.

Yes, about that. Linda Bolton Weiser - Oppenheimer & Co.: Okay, thanks.

Lauren Lieberman with Lehman Brothers, your line is open. Please go ahead. Lauren Lieberman - Lehman Brothers: Great, thanks. First, I wanted to know if you could tell us what advertising spending was in the quarter.

What advertising spending was in the quarter? You mean in comparison to last year? Lauren Lieberman - Lehman Brothers: Sure, or even just a dollar amount, either way.

Well, it increased 10%, Lauren. It increased 10% and a little more than that for the full year. Obviously it depends on if it increased, you know, depending on division, differently, but it did increase 11% and -- what else do you need? Let me see. This is the P&L item. I guess we don’t give out media, but that did increase in the quarter as well. Lauren Lieberman - Lehman Brothers: Okay, great. Then, just more broadly, I know Bina made some comments about, particularly about Brazil and Mexico, but there is a bit more political uncertainty throughout Latin America than there has been in a while, and also in Thailand and so on. So I just wanted to know how you and your people are thinking about the next year and the potential for some political unrest in some of these markets that have been very stable over the last couple of years.

Ian. Ian M. Cook: Our Latin American business has actually, as you know, performed very well in 2006, with certainly all of the major markets up strongly. Market shares have been up. Gross profit is up and EBIT is up. As we went through the planning process for 2007, we obviously reviewed in detail by each of the countries. As I think Bina said in her remarks, we see good progress in Mexico in terms of our categories, and Brazil had one of the best years its ever had in 2006, and we expect the growth in Latin America to continue in 2007 at the high-single digit rate. Lauren Lieberman - Lehman Brothers: Okay. Venezuela, there’s -- is it going to become the Venezuela National Toothpaste company?

Well, obviously it’s a whole different ballgame if industry in general is nationalized in any of these countries. You have to determine for yourself what the probability of that is. Right now, what’s happening in Venezuela is our business is good. There’s substantially more money in the hands of the people. Obviously the oil companies are not as happy as they could be, but we are relatively low profile, number one, and number two, the nationalization of non-government utilities, we consider to be quite a remote possibility. It’s always there. It happened in Cuba, but we think it unlikely. Also, I have here in folders the write-ups from each of the general managers of our Latin American companies, and I was looking at them earlier, and each one of them starts off that “inflation appears to be under control, the economy is doing well, things are relatively stable” and so on and so forth. We can separately take you through each of those, but again, inevitably something will happen in any developing country over the next decade or two -- something will happen. But we see very encouraging signs currently. Lauren Lieberman - Lehman Brothers: Okay, great. Then, just because you mentioned oil in Venezuela, what kind of level for oil prices are you using in your budgeting for ’07?

Okay, as we have told you, we budgeted oil at $65 a barrel. That led to an overall cost increase of 1.4% for the whole company. The biggest negative was not oil but Hill’s commodity pricing, because as you know, with ethanol and everything else, corn, and other agricultural products are extremely high. If oil is now whatever it is, $54 and change, if oil were $60 on average each year, and leaving Hill’s for a moment unchanged, although their negative may be a bit higher, that would mean that we would be at a 0.8 increase in weighted average of raw and packed materials. If it was $55, we would be 0.4, or looked at another way -- is this Lauren still on the call? Lauren Lieberman - Lehman Brothers: Yes, it is, thanks.

Lauren, that basically if oil stayed where it was, where it is now at $54, we would have a meaningful but not enormous savings versus the budget. That is to say, what we’re projecting for the increase in Hill’s would be less than the benefit from oil. That would, of course, be folded into our savings program and increase gross margin and so on, but I think the fact that we have built our budget, and it’s a pretty powerful budget, on $65 oil is good. One never knows, but I doubt if it’s going to average higher than $65. Lauren Lieberman - Lehman Brothers: Okay, thanks so much.

So it reflects a somewhat conservative posture. Lauren Lieberman - Lehman Brothers: Right.

Our next question comes from Connie Maneaty with Prudential. Connie Maneaty - Prudential Equity Group: Good morning. I liked your comment about seeing the potential for the gross margin not as good as it’s been. Very interesting, and I’m wondering if you think --

Are you saying you like it when I -- Connie Maneaty - Prudential Equity Group: Yes, I like it.

-- no organization and I’m wrong? Connie Maneaty - Prudential Equity Group: I like it. I guess I’m wondering, do you think you’ll get to your 60% gross margin target for 2010 faster than you expect, or do you think you’ll probably be raising that gross margin target?

With no disrespect, it will not be my responsibility then, so I’m willing to commit for Ian and the rest of the group in the room, definitely -- no, no, I’m joking. But we are running a bit ahead, because don’t forget, we raised the target from 50 to 100 to 75 to 125. Last year, we were 110. I think we’ll be perhaps somewhat more than that. This year, as we said in the press release, we’ll be at least that, and that should take us out -- if we can continue that pace, and don’t forget we’re not weighted down as much by low margin items like detergents, although we still have a couple hundred million dollars worth of sales. So I would say the probability is really quite reasonable. Connie Maneaty - Prudential Equity Group: What percentage of the gross margin savings do you think you’ll be reinvesting?

That’s always tough to say. Our historic rule of thumb has been half. Although our advertising levels are now getting up very healthy in many, many countries, and so there may not be a need to accelerate it as much as it has been. Connie Maneaty - Prudential Equity Group: Okay, and just one final question. You said something that you’re working on logistical savings to mitigate the cost of oil, and that you really hadn’t talked about that much in the past. Well, could you flesh it out a little bit? What does that mean?

In the last -- actually, in the last eight months or nine months, we went through an organizational change to alter our procurement and shipping so that it was far more globalized than it had been, and that there are major savings targets and they are being achieved, and there’s a whole new organization structure and it affects each subsidiary. I think that Bina and Hope could arrange for you or anybody who would want to, to sit down with our logistics people. I had breakfast -- actually four breakfasts, because there’s a lot of people in the department, over the last few weeks and fascinating -- fascinating stuff. Connie Maneaty - Prudential Equity Group: Great. Thank you.

I assume that many companies are doing similar things, but we are again, we have the advantage of being linked up with essentially all, literally on virtually 100% of our business linked with SAP, and therefore we’re -- and all the factories and everything else, and that makes it very meaningfully easier. Connie Maneaty - Prudential Equity Group: Great. Thank you.

Our next question comes from Bill Pecoriello with Morgan Stanley. Bill Pecoriello - Morgan Stanley: Good morning, everybody. Reuben, a question on the gross margin expansion for ’07, the 110-plus BPs. You gave us some of the pieces, the raw materials up 1.4% and the CPB $50 million. Could you walk us through the components of the contribution, raw materials, funding the growth, CPB in terms of the gross margin, in terms of the 110 BPs?

Well, I’d really love to do that and I promise it will be done after each quarter comes in. It’s a little bit crystal-balling -- matter of fact, more than a little bit crystal-balling to put those out in advance, or even to estimate them in advance. It all comes together with a list of 10,000 materials and 20,000 prices and everything else, and it comes out with a formal estimate that has been historically proven to be pretty accurate, except when I second-guessed it, and that the budget calls for a gross profit for the year north of 1% of 100 basis points, and it lays it out by quarter and so on. We certainly, as always, will show you when it comes in, but it is very difficult to project, because there are times when prices are raised and it has to be [inaudible] back in country X or when there’s a break on the price of oil or something else, so those kinds of projections are kind of tough to do. Bill Pecoriello - Morgan Stanley: Okay, and the timing on the raw material component this quarter, negative 160 BPs, similar to last quarter, and we see this delay in some of these derivatives, as oils come down. When do you expect to see that starting to flow through the P&L?

Bill, let me give you a more general response, is that we expect -- I will say this again, but for now the analysis supports what I’m saying. We would be surprised if right in the first quarter, we didn’t get more than the 60 basis points that we got this quarter. Bill Pecoriello - Morgan Stanley: Okay, great, and one other question, on the Colgate Total Advanced Clean that you announced, could you talk about how the -- you said super premium price, so how it’s priced relative to both Crest Pro Health, Colgate Total Advanced Fresh, and a significant push behind it, so just give us some more color on that new product? Ian M. Cook: Let me take that. It’s priced at the same level as Pro Health, so it is at a premium to Colgate Total. The support we have behind it is, as you would expect, quite strong, not simply in terms of dollars invested but also with the integrated marketing programs that we have behind these businesses, both against the dental profession and to the consumer, using the Internet and, of course, our spokesperson, Brooke Shields, who has been very effective for us in the fourth quarter of this year. Bill Pecoriello - Morgan Stanley: Great, and the consumer, the selling proposition in terms of the messaging, what is the focus on the brand? Ian M. Cook: Superior cleaning between dental visits, on top of all of the therapeutic benefits that you get from Colgate Total today. Bill Pecoriello - Morgan Stanley: Great. Thank you.

We’ll go now to Wendy Nicholson, Citigroup Investment. Wendy Nicholson - Citigroup: A couple of questions. First of all, on China specifically. I know your market shares are looking good there, but can you give us a sense of what the pricing environment has been like in China? Specifically, how much was your business up or down in sales and profits for the quarter?

Wendy, in greater China, which is what we usually talk about, the volume was up about 1% and sales were up about 2%. The profit as a percent of sales, the operating profit as a percent of sales, hang on -- let me make sure I use the right number -- stayed about the same as the previous quarter. For the year, it’s in the high-single digits as a percent of sales. As you know, we’re running that business at a meaningfully lower profitability than the rest of the businesses. Ian, do you have anything to add on pricing or anything else? Ian M. Cook: The pricing in the marketplace is quite stable, and I think our focus in China going forward, Wendy, is behind the two new initiatives we brought to the marketplace in the second-half of this past year. Late in the third quarter, an anti-cavity relaunch in the lower price points of the category, and then in the fourth quarter, a new variant of the Max Fresh product, which has been successful for us in China. So we will be focusing on building trial for both of those through 2007 and improving our visibility in the marketplace with the strengthened sales organization that we have and the focus on in-store merchandising. So that’s our focus going forward. Wendy Nicholson - Citigroup: Terrific. My second question has to do with the U.S. business and the profits being down year over year there. It just seems like that business has been increasingly volatile from an operating margin perspective over the last few quarters. Do you think that smoothes out in ’07? I guess with the big new launches coming out, I imagine you’re going to do a lot of spending. I know on the last quarter call, you said you thought the U.S. business was going to have operating margins up 100 basis points in ’07. Do you think that’s still a good target? Then, just secondarily and then I’m done, was the U.S. business gross margin up year over year or was it down with all the spending you did?

Let me respond to that, if I could, Wendy. In the last couple of years, the volume in the U.S., North America, which includes Canada and Puerto Rico, has been quite solid, as you know. It was 7% up in the full year 2005 and up 7% in the full year 2006. The last quarter was over 8%, actually, almost 9%. Operating profit went up slightly in the year. It went up -- we don’t give the numbers, or we do give the numbers? Yes? Okay -- from, as you see, $546 million to $550 million, and the difference, and I’ll tell you gross profit in a moment, but gross profit was flat on a percentage basis, almost precisely so that the growth, the revenue and the gross profit from the increased volume essentially went into advertising. Now, if we look at next year, that is expected -- we don’t feel we have to spend as much promotional money. We have a 16 share with Total and whatever our competitor has, they have. So that again, we would be surprised if their operating profit did -- and here, I’m taking the official estimates -- would not be up double-digit next year. That should start off pretty well in the first quarter, and I wouldn’t be surprised if it was double-digit in the first quarter. Wendy Nicholson - Citigroup: Why would you assume that your competitor would spend less next year than they did last year?

We’re not assuming anything. We have seen, we have very strong plans. Advertising is up -- let me tell you what it’s up. In the U.S., but it’s not up as much -- okay, so that is -- the advertising -- excuse me. The indication, for what it’s worth, is we are spending what is needed behind the appropriate categories. Not as much money is going into oral care on a relative basis as was this year because while the defense program is not over, you know and we know that this competitor was troubling is sitting at about a third of the share of Colgate Total, or a little less, and actually we have gained share year on year, 2006 versus 2005. So that we’re able to spread some of the money around a little more effectively, and as a result, the operating profit is expected to go up with an overall somewhat reduced spending level and a gross profit that is expected to be again at least 100 basis points higher. Wendy Nicholson - Citigroup: Okay. Thank you very much.

And we’ll go now to John Faucher with J.P. Morgan. John Faucher - J.P. Morgan: Yes, good morning, everyone. A question on Venezuela. If something happens there, do they get the PowerPoint slide, or do you guys get to keep the PowerPoint slide?

Actually, Mr. Chavez has made a personal request directly to Bina to send that down. John Faucher - J.P. Morgan: Excellent. A question for you on the funding the gross savings over the next couple of years. As you look at this, it seems like companies do really well on cost-savings when things are difficult. When the raw materials are going against them, when the trends are going against them. I guess we’re always skeptical in terms of how you keep that going all of a sudden when things are better and the rest of the numbers start to look good. Any thought in terms of how you keep the pressure up on the funding the growth side of the equation there?

Well, there are a lot of organizational methods to do that, John, and people’s pay for performance is tied into it. There are all kinds of cross-discipline checkpoints and everything else. But reading your report of this morning, they do that too and they see that the only negative one can find in an otherwise what they would perceive to be a damn good quarter is the fact that we came in at 60 basis points and the stock opens down. Obviously there are internal disciplines and mechanisms to make it happen but they know that that move from 39% to 56% is what has driven everything, market shares and everything else historically, and it’s still doing the same thing. Each subsidiary is seeing “gee, look what happens to my volume when I really can put more advertising money in, and the only place I’m going to get that advertising is from the penalty of cost savings programs”. I can tell you from my own experience as a general manager, everybody really has glommed on to this Colgate business planning, basically the return on investment for promotional spending, because that’s something that they can do themselves, generate the money and then spend part of it back on business building activities. John Faucher - J.P. Morgan: Thank you.

Alice Longley with Buckingham Research, your line is open. Alice Longley - Buckingham Research: Have you seen any improvements sequentially in shipping costs or packaging costs from the third into the fourth quarter, or even from the fourth into the first quarter?

Could you say that again? Alice Longley - Buckingham Research: Have you seen any improvement, and reversals in shipping costs or packaging costs?

I actually have something that may be helpful. I’m not sure it directly answers the question. I have a folder that’s amazingly labeled “Logistics”. Our logistics costs have gone up over a period of time. If you take the first quarter of 2005, our logistics costs was 7.5% of sales, and that it ended off the year at 7.7%. This year, we were also at 7.7%, which shows that A, while it’s slightly up, it indicates that we have been successful in offsetting the oil costs on an overall company basis. I don’t have 2007 on this chart, but it’s been essentially flat. The first quarter was 7.6% and the last quarter was 7.8%, so there’s a slight increase but not a heck of a lot. If one were guessing, I would guess that in the first quarter, it’s like it will be down as a percentage of sales, for no other reason than is driven by freight costs, which are in turn driven a lot by price of gas, and that will be down somewhat. Alice Longley - Buckingham Research: Do you have the number in front of you for the third quarter? I’m just wondering if the fourth quarter, what the fourth quarter looked like versus the third.

For 2006? Alice Longley - Buckingham Research: Yes.

Could you talk a little louder? You said yes, right? Alice Longley - Buckingham Research: Yes.

On a percentage of sales basis, I have the absolute numbers but they don’t really mean as much as the percentage of sales. In 2006, the second quarter was 7.7% and the third quarter was 7.7%, and the fourth quarter was 7.8%, which is not a terribly strong movement. Alice Longley - Buckingham Research: Okay, so trending up a little bit.

-- the 2007 first quarter estimates, but if I was guessing, it will be 7.5% or 7.6%. Alice Longley - Buckingham Research: Okay, and then for Hill’s, I know that grain costs spiked up. Some of them are up over 50% just in the latter part of 2006. What kind of pricing are you taking for Hill’s in ’07, in order to deal with grain costs?

In 2005, we took in Hill’s a 1.5% price increase, skewed towards the second-half of the year. In 2006, and this is again worldwide, they took a price increase of 4.3% for the full year. In 2007, my assumption is it’s somewhat less than what we got in 2006, but at the same time, net gross profit is budgeted up for next year, because we get the cumulative effect of all these price increases. Alice Longley - Buckingham Research: All right.

Is that what you wanted? Alice Longley - Buckingham Research: Yes, I’m just wondering if you might need more price in there because of the grain cost issue.

In this year -- Alice Longley - Buckingham Research: In ’07?

In the U.S. 2007, as of January 1, there was a 4% price increase announced for Science Diet and Prescription Diet. Alice Longley - Buckingham Research: Okay. Thank you.

Chris Ferrara with Merrill Lynch, please go ahead. Chris Ferrara - Merrill Lynch: Could you talk about advertising overall? I know in the ’04 program, you guys had said that 12% advertising was still the right number. I’m just wondering if that’s still what you’re thinking. Ian M. Cook: Yes, Chris, I think that would still be our internal aspiration. Obviously we have continued to step our way towards that with the increases in advertising that we have seen over the last several years, which has been taking the ratio to sales up consecutively. We see the same double-digit increase next year, which will further increase the ratio. But we’re not blindly headed to a 12%, even though we had set that to an aspirational goal. In addition to the increase in spending, we are very much focusing now on integrated marketing communications using all of the different media vehicles, including the retail outlet itself, available to you so that we work on the efficiency of the increased investment as well.

It should next year end up between 11% and 12%. Chris Ferrara - Merrill Lynch: Great, thanks. Also, the last few quarters you’ve talked about how the top account to your growth had been outpacing by a large margin the rest of the accounts, or the rest of your customers. Is that still the case for this quarter?

Yes, in the top 10 accounts, four -- why don’t I give you the full year, actually. Total top 10 were up: in cases, 9.2%; and in dollars, 9.8%, and total U.S. was up: cases, 7% for the full year; and 6%-plus in sales. So again, for the whole year, it’s well above the rest of the business. Chris Ferrara - Merrill Lynch: Got it. Thank you.

Why don’t we take one more question, if that’s okay?

Our final question will come from Justin Hott with Bear Stearns. Justin Hott - Bear Stearns: Thanks. Just keeping on that, in the prepared remarks, I believe you mentioned some weakness in key accounts. Could you tell us about that? Maybe give us a little more color? Also, give us some more information on Tom’s of Maine. Thanks.

Yes, I think what Bina was intending by that is we didn’t experience the weakness, is that there was some published, the sales at account X or account Y for their whole line of business was somewhat [weak]. Justin? Justin Hott - Bear Stearns: I’m having trouble hearing you, Reuben.

It really was not us. As indicated, our business in the fourth quarter domestically was quite good. Justin Hott - Bear Stearns: Are you gaining share in those key accounts?

It varies account by account, but generally -- Ian. Ian M. Cook: Yes would be the answer. In the major accounts, the consumption is up and usually outpacing the growth of the category in the accounts. As a general statement, we are growing market share in a broad-based way.

If you hang on just one minute, I can give you actually that, is that in the fourth quarter, our consumption -- again, this is Nielsen measurement -- what is it? Ian M. Cook: It’s a combination of Nielsen and all outlet retail sales.

Okay, it was up 6.1% for this measurement, so it was up and the categories were up meaningfully less. Justin Hott - Bear Stearns: And Tom’s of Maine?

Tom’s of Maine. It’s doing well. I have a folder here that says Tom’s of Maine, and you should know, Justin, that our Board of Directors would be pleased that on both sales and operating profit, Tom’s of Maine is doing better than the presentation that we made to our Board, which justified our partnership with Tom’s of Maine. Justin Hott - Bear Stearns: Reuben, since it’s the last question, any update you can give us on what we can be expecting on your future as well?

Well, my future, I think it’s -- Justin Hott - Bear Stearns: At the company, sorry about that.

I think it’s expected that Ian will take over as CEO during the course of this year. I think you’re aware of that. Also, it was not idle that we put in the press release that [Ian] is the CEO-designate, even though you really have to look the precise meaning of that word up, and everything is proceeding on stream. The expectation is that when Ian becomes CEO, I will remain as Chairman for a period, and so it’s right on track. Justin Hott - Bear Stearns: Thank you.

Thank you, Justin. I guess that brings us to the end. Many thanks, everyone, appreciate your support and look forward to a really good year with you. Bye-bye.

Thank you, everyone, for your participation in today’s conference call. You may disconnect at this time.

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