Financial Statement Model for Colgate General assumptions Company Name Nonrecurring items Pre-tax Colgate 12/31/06 $ 67.42 1/30/07 Latest Fiscal yesr...

Financial Statement Model for Colgate General assumptions Nonrecur ing items Select scenario Company Name Colgate Pre-tax 2004 2005 2006 1 Strong case Latest Fiscal yesr end (mm/d /y ) 12/31/06 Nonrecur ing expense/(income) in COGS 3.4 100.2 196.2 2 Base case Cur ent share price $67.42 Nonrecuring expense/(income) in SG&A and other 24.2 (35.9) 206.8 3 Weak case Cur ent date 1/30/07 Nonrecur ing expense/(income) in nonoperating (income)/los After-tax-LEAVE BLANK IF NO AFTER-TAX DATA-PROVIDED BY CO. EXPLICITY Firstcal Consensus EPS estimates Nonrecur ing items in COGS 2.4 79.5 142.1 12/31/06 $2.91 Nonrecur ing items in SG&A 13.6 (16.7) 142.6 12/31/07 $3.27 Nonrecur ing items in nonoperating (income)/los 12/31/08 $3.62 Total nonrecur ing charges per share $0.03 $0.1 $0.52 Expected EPS growth rate 10.00% Circularity breaker Circularity reference breaker of =1, on=0 1 Income Statement Ac tual Projected Annual Forcast 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 12/31/20 4 12/31/20 5 12/31/06 12/31/20 7 12/31/20 8 12/31/20 9 12/31/2010 12/31/201 12/31/2012 12/31/2013 12/31/2014 12/31/2015 Total revenues $10,584.2 $11,396.9 $12,237.7 $12,727.2 $13,8 0.0 $14,712.8 $15,595.6 $16,531.3 $17,523.2 $18,574.6 $19,689.0 $20,870.4 Cost of go ds sold - REPORTED 4,747.2 5,191.9 5,536.1 Cost of go ds sold - PRO FORMA 4,743.8 5,091.7 5,339.9 5,5 2.0 5,704.7 5,973.4 6,253.8 6,546.4 6,939.2 7,35 .5 7,796.9 8,264.7 SG&A and Other - REPORTED 3,714.9 3,990.0 4,541.1 SG&A AND Other - PRO FORMA 3,690.7 4,025.9 4,334.3 4,715.8 5,098.7 5,403.7 5,727.0 6,068.9 6,43 .0 6,819.0 7,2 8.1 7,6 1.8 Operating profit - EBIT 2,149.7 2,279.3 2,563.5 2,826.6 3,076.7 3,3 5.7 3,614.8 3,916.0 4,151.0 4,40 .0 4,6 4.0 4,943.9 Interest expense 119.7 136.0 158.7 157.4 148.0 140.1 128.4 1 2.3 96.2 89.2 89.2 89.2 Nonoperating income / (los ) - REPORTED - - - Nonoperating income / (los ) - PRO FORMA - - - - - - - - - - - - Pretax income - EBT 2,030.0 2,143.3 2,404.8 2,669.2 2,928.7 3,195.6 3,486.3 3,803.7 4,054.8 4,310.8 4,574.8 4,854.6 Taxes - REPORTED 675.3 727.6 648.4 Taxes - PRO FORMA 687.0 729.1 766.7 851.04 93 .76 1,018.85 1,1 1.56 1,212.74 1,292.79 1,374.42 1,458.60 1,547.82 Equity in income of af iliates, after tax (enter as +) 5.6 1.3 2.3 2.5 2.7 2.9 3.0 3.2 3.4 3.6 3.8 4.1 Minority interest expense, after tax (enter as =) (31.8) (35.9) (38.9) (42.0) (45.1) (48.3) (51.4) (54.5) (57.8) (61.2) (64.9) (68.8) Net Income $1,317.0 $1,379.6 $1,601.5 $1,778.7 $1,952.5 $2,131.3 $2,326.4 $2,539.7 $2,707.6 $2,878.8 $3,055.1 $3,242.1 Common dividends( Statement of cash flow) 536.2 607.2 677.8 752.8 826.3 902.0 984.6 1,074.9 1,145.9 1,218.4 1,293.0 1,372.1 Pro Forma EBITDA Reconciliation EBIT 2,149.7 2,279.3 2,563.5 2,826.6 3,076.7 3,3 5.7 3,614.8 3,916.0 4,151.0 4,40 .0 4,6 4.0 4,943.9 Depreciation & amortization( Statement of cash flow) 327.8 329.3 328.7 351.7 372.8 395.2 418.9 4 4.0 470.7 498.9 528.8 560.6 EBITDA 2,477.5 2,608.6 2,892.2 3,178.3 3,449.5 3,730.9 4,033.7 4,360.0 4,621.6 4,898.9 5,192.9 5,504.5 Pro Forma Basic EPS Reconciliation Prefer ed dividends 25.9 28.2 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 28.7 Net income for basic EPS 1,291.1 1,351.4 1,572.8 1,750.0 1,923.8 2,102.6 2,297.7 2,511.0 2,678.9 2,850.1 3,026.4 3,213.4 Basic shares outstanding 530.9 520.5 515.2 508.7 49 .7 491.6 484.2 47 .5 471.4 465.8 460.8 456.2 Basic EPS $2.43 $2.60 $3.05 $3.4 $3.85 $4.28 $4.75 $5.26 $5.68 $6.12 $6.57 $7.04 Pro Forma Diluted EPS Reconciliation Adjustment to net income for diluted EPS calc. - - - - - - - - - - - - Net income for diluted EPS 1,317.0 1,379.6 1,601.5 1,778.7 1,952.5 2,131.3 2,326.4 2,539.7 2,707.6 2,878.8 3,055.1 3,242.1 Stock options, restricted stock, and converts 38.4 36.0 35.3 35.3 35.3 35.3 35.3 35.3 35.3 35.3 35.3 35.3 Diluted shares outstanding 569.3 5 6.5 5 0.5 54 .0 535.0 526.9 519.5 512.8 506.7 501.1 496.1 491.5 Diluted EPS $2.31 $2.48 $2.91 $3.27 $3.65 $4.04 $4.48 $4.95 $5.34 $5.74 $6.16 $6.60 Firstcal consensus EPS 2.91 3.27 3.62 3.98 4.38 4.82 5.30 5.83 6.41 7.05 Model variance from consensus $(0.0 ) $(0.0 ) $0.03 $0.06 $0.10 $0.13 $0.04 $(0.09) $(0.25) $(0.46) Income statement assumptions Revenue growth (%) 7.7% 7.4% 7.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Gros profit margin (%) 5 .2% 5 .3% 56.4% 57.6% 58.9% 59.4% 59.9% 60.4% 60.4% 60.4% 60.4% 60.4% SG&A and Other margin 34.9% 35.3% 35.4% 36.0% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% EBIT (Operating profit) margin (%) 20.3% 20.0% 20.9% 21.6% 2 .2% 2 .7% 23.2% 23.7% 23.7% 23.7% 23.7% 23.7% Ef ective tax rate (%) 3 .8% 34.0% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% D&A growth (%) 0.5% -0.2% 7.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Income in equity af ilates growth (%) (76.9%) 76.8% 8.0% 7.5% 7.0% 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% Minority interest growth (%) 13.2% 8.1% 8.0% 7.5% 7.0% 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% Dividend payout ratio 40.7% 4 .0% 42.3% 42.3% 42.3% 42.3% 42.3% 42.3% 42.3% 42.3% 42.3% 42.3% Select a case (1=strong 2=base 3=weak) 2 Balance Sheet 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 Cash and equivalents (Inc. investment securities) $340.7 $489.5 $261.9 $27 .6 $294.3 $31 .9 $3 0.6 $505.8 $1,064.7 $1,696.9 $2,408.2 Ac ounts receivable 1,309.4 1,523.2 1,629.8 1,727.6 1,831.3 1,941.1 2,057.6 2,181.1 2,31 .9 2,450.7 2,597.7 Inventories 855.8 1,008.4 1,048.5 1,07 .3 1,128.0 1,181.0 1,236.2 1,310.4 1,389.0 1,472.4 1,560.7 Defer ed income taxes - - - - - - - - - - - Prepaid expenses - - - - - - - - - - - Other cur ent as ets 251.2 279.9 279.9 279.9 279.9 279.9 279.9 279.9 279.9 279.9 279.9 Equity in af iliates - - 2.5 5.2 8.0 1 .0 14.3 17.7 21.3 25.1 29.2 PP&E 2,544.1 2,696.1 3,016.1 3,354.3 3,71 .8 4,089.6 4,489.2 4,91 .7 5,358.5 5,831.1 6,3 1.1 Go dwil 1,845.7 2,081.8 2,081.8 2,081.8 2,081.8 2,081.8 2,081.8 2,081.8 2,081.8 2,081.8 2,081.8 Intangibles 783.2 831.1 814.1 797.1 780.1 763.1 746.1 729.1 712.1 695.1 678.1 Other non-cur ent as tes 577.0 228.0 2 8.0 2 8.0 2 8.0 2 8.0 2 8.0 2 8.0 2 8.0 2 8.0 2 8.0 Total Assets $8,507.1 $9,138.0 $9,362.6 $9,828.7 $10,343.1 $10,887.5 $11,463.7 $12,245.4 $13,447.3 $14,761.0 $16,194.7 Ac ounts payable $876.1 $1,039.7 $1,081.0 $1,110.7 $1,163.0 $1,217.6 $1,274.6 $1,351.1 $1,432.2 $1,518.1 $1,609.2 Ac rued expenses - - - - - - - - - - - Taxes payable 215.5 161.5 179.3 196.7 214.6 234.1 255.4 272.3 289.5 307.2 326.0 Other cur ent liabilities (non-debt) 1,123.2 1,317.1 1,317.1 1,317.1 1,317.1 1,317.1 1,317.1 1,317.1 1,317.1 1,317.1 1,317.1 Cur ent portion of long-term debt 356.7 776.7 164.1 232.2 296.4 26.6 - - - - - Short term debt (Revolving credit facility) 171.5 174.1 665.3 694.8 710.2 697.2 312.5 - - - - Long term debt 2,918.0 2,720.4 2,556.3 2,324.1 2,027.7 2,001.1 2,001.1 2,001.1 2,001.1 2,001.1 2,001.1 Convertible debt - - - - - - - - - Defer ed income taxes 554.7 309.9 344.0 377.4 411.8 449.3 490.2 522.5 555.5 589.5 625.6 Other non-cur ent liabilities 838.0 1,115.9 1,115.9 1,115.9 1,115.9 1,115.9 1,115.9 1,115.9 1,115.9 1,115.9 1,115.9 Total liabilities 7,053.7 7,615.3 7,423.0 7,368.9 7,256.7 7,058.9 6,766.8 6,580.0 6,711.3 6,849.0 6,994.9 Minority interest 103.3 111.8 153.8 198.9 247.2 298.6 353.1 410.9 472.2 537.1 605.9 Convertible Prefer ed Stock 253.7 222.7 222.7 222.7 222.7 222.7 222.7 222.7 222.7 222.7 222.7 Common Stock and APIC 1797.3 1951 2178.7 2406.4 2634.1 2861.8 3089.5 3317.2 3544.9 3772.6 4000.3 Treasury stock (contra ac ount) (7581.0) (8073.9) (8,923.9) (9,773.9) (10,623.9) (11,473.9) (12,323.9) (13,173.9) (14,023.9) (14,873.9) (15,723.9) Comprehensive (ac umulated) los (1804.7) (2081.2) (2081.2) (2081.2) (2081.2) (2081.2) (2081.2) (2081.2) (2081.2) (2081.2) (2081.2) Other equity ac ount (283.3) (251.4) (251.4) (251.4) (251.4) (251.4) (251.4) (251.4) (251.4) (251.4) (251.4) Retained earnings 8968.1 9643.7 10,640.9 11,738.3 12,938.9 14,252.0 15,688.1 17,221.1 18,852.7 20,586.2 22,427.4 Total Shareholders' Equity 1453.4 1522.7 1,939.6 2,459.8 3,086.4 3,828.6 4,696.9 5,665.4 6,736.0 7,912.0 9,199.8 Total Liabilities + Shareholders' Equity $8,507.1 $9,138.0 $9,362.6 $9,828.7 $10,343.1 $10,887.5 $11,463.7 $12,245.4 $13,447.3 $14,761.0 $16,194.7 Balance Check - - - 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Supporting Schedules 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Working Capital 1.Grow with revenues (default) 2.Over ide i: Days of reveues (Avg. col ection period (DSO) 41.9 45.4 3. Over ide i : Absolute projection Ac ounts receivable 1309.4 1523.2 1629.8 1727.6 1831.3 1941.1 2057.6 2181.1 2311.9 2450.7 2597.7 1. Grow with COGS (default) 2. Over ide i: Inventory Days 61.3 68.9 3. Over ide i : Absolute projection Inventories 855.8 1008.4 1,048.5 1,077.3 1,128.0 1,181.0 1,236.2 1,310.4 1,389.0 1,472.4 1,560.7 1. Grow with SG&A (default) 2. Over ide: Absolute projection Prepaid expenses - - - - - - - - - - - 1. Straight-line (default) 2. Over ide: Absolute projection Other cur ent as ets 251.2 279.9 279.9 279.9 279.9 279.9 279.9 279.9 279.9 279.9 279.9 1.Grow with COGS (default) 2. Over ide i: Payables Payment Period 62.8 71.1 3. Over ide i : Absolute projection Ac ounts payable 876.1 1,039.7 1,081.0 1,110.7 1,163.0 1,217.6 1,274.6 1,351.1 1,432.2 1,518.1 1,609.2 1.Grow with SG&A (default) 2. Over ide: Absolute projection Ac rued expenses - - - - - - - - - - - 1.Grow with taxes (default) 2. Over ide: Absolute projection Taxes payable 215.5 161.5 179.3 196.7 214.6 234.1 255.4 272.3 289.5 307.2 326.0 1. Straight-line (default) 2. Over ide: Absolute projection Other cuurent liabilities (non-debt) 1123.2 1317.1 1317.1 1317.1 1317.1 1317.1 1317.1 1317.1 1317.1 1317.1 1317.1 Intangible assets Purchase of intangilbe as ets Amortization (enter as -) (15.6) (16.3) (17.0) (17.0) (17.0) (17.0) (17.0) (17.0) (17.0) (17.0) (17.0) Intangibles 783.2 831.1 814.1 797.1 780.1 763.1 746.1 729.1 712.1 695.1 678.1 PP&E CAPEX % Rev. Capital expenditures 5.0% 389.2 476.4 636.4 694.0 735.6 779.8 826.6 876.2 928.7 984.5 1043.5 Recur ing as et sales (enter as -) - - - - - - - - - Depreciation (313.7) (312.4) (334.7) (355.8) (378.2) (401.9) (427.0) (453.7) (481.9) (511.8) (543.6) PP&E 2,544.10 2696.1 3016.1 3354.3 3711.8 4089.6 4489.2 4911.7 5358.5 5831.1 6331.1 Diluted Shares outstanding Treasury share $repurchases (796.2) (884.7) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) Value of shares is ued 61.2 227.7 227.7 227.7 227.7 227.7 227.7 227.7 227.7 227.7 227.7 Expected average share price 58.73 6 .0 73.06 80.37 8 .40 97.24 106.97 1 7.6 129.43 142.37 Consensus EPS growth 12.4% 10.7% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Shares repurchased (12.9) (1 .6) (10.6) (9.6) (8.7) (7.9) (7.2) (6.6) (6.0) Shares is ued 3.5 3.1 2.8 2.6 2.3 2.1 1.9 1.8 1.6 End of period basic shares outstanding 513.4 504.0 495.5 487.7 480.7 474.3 468.5 463.2 458.4 454.0 Weighted average basic shares outstanding 520.5 515.2 508.7 49 .7 491.6 484.2 47 .5 471.4 465.8 460.8 456.2 Investments in af il iates (Equity method) Equity in income of af iliates 2.5 2.7 2.9 3.0 3.2 3.4 3.6 3.8 4.1 Dividends (enter as -) Equity in af iliates (from balance she t) - - 2.5 5.2 8.0 1 .0 14.3 17.7 21.3 25.1 29.2 Minority interest (Consolidation method) Minority interest expense 35.9 38.9 42.0 45.1 48.3 51.4 54.5 57.8 61.2 64.9 68.8 Dividends (enter as-) Minority interest (from balance she t) 103.3 1 1.8 153.8 198.9 247.2 298.6 353.1 410.9 472.2 537.1 605.9 Cash Flow Statement 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Net Income $1,7 8.7 $1,952.5 $2,131.3 $2,326.4 $2,539.7 $2,707.6 $2,878.8 $3,05 .1 $3,242.1 Depreciation & amortization 351.7 372.8 395.2 418.9 4 4.0 470.7 498.9 528.8 560.6 Changes in working capital Ac ounts receivable (106.6) (97.8) (103.7) (109.9) (1 6.5) (123.5) (130.9) (138.7) (147.0) Inventories (40.1) (28.8) (50.7) (53.0) (5 .3) (74.2) (78.6) (83.3) (8 .3) Defer ed tax as ets - - - - - - - - - Prepaid expenses - - - - - - - - - Other cur ent as ets - - - - - - - - - Ac ount payable 41.3 29.7 52.3 54.6 57.0 76.5 81.1 85.9 91.1 Ac rued expenses - - - - - - - - - Taxes payable 17.8 17.4 17.9 19.5 21.3 16.9 17.2 17.7 18.8 Other cur ent liabilities - - - - - - - - - Defer ed tax liabilities 34.1 3 .4 34.4 37.5 40.9 32.4 3 .0 34.0 36.1 Equity income in af iliates (2.5) (2.7) (2.9) (3.0) (3.2) (3.4) (3.6) (3.8) (4.1) Dividends received from af iliates - - - - - - - - - Minority interest expense 42.0 45.1 48.3 51.4 54.5 57.8 61.2 64.9 68.8 Cash from operations 2,1 6.4 2,321.7 2,52 .1 2,742.4 2,982.4 3,160.7 3,357.0 3,560.7 3,7 8.0 Purchase of fixed as ets (capital expenditures) (636.4) (694.0) (735.6) (7 9.8) (826.6) (876.2) (928.7) (984.5) (1,043.5) Proce ds from sale of fixed as ets - - - - - - - - - Purchases of intangible as ets - - - - - - - - - purchases/Proce ds from other long-term as ets - - - - - - - - - Cash from investing (636.4) (694.0) (735.6) (7 9.8) (826.6) (876.2) (928.7) (984.5) (1,043.5) Convertible prefer ed stock - - - - - - - - - Common stock and APIC 2 7.7 2 7.7 2 7.7 2 7.7 2 7.7 2 7.7 2 7.7 2 7.7 2 7.7 Treasury stock repurchases (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) (850.0) Comprehensive ac umulated los - - - - - - - - - Other equity ac ount - - - - - - - - - Common and prefer ed dividends (781.5) (85 .0) (930.7) (1,013.3) (1,103.6) (1,174.6) (1,247.1) (1,321.7) (1,40 .8) Dividends to minority interests - - - - - - - - - Increases / (decreases) in debt (285.5) (134.6) (216.8) (309.4) (41 .3) (312.5) - - - Cash from financing (1,689.2) (1,612.0) (1,769.8) (1,945.0) (2,137.1) (2,109.4) (1,869.4) (1,94 .0) (2,023.1) Total increase/decrease of cash (2 7.6) 15.7 16.7 17.7 18.7 175.1 5 9.0 632.2 71 .3 Debt Cur ent portion of LTD 356.7 7 6.7 164.1 232.2 296.4 26.6 Reclas ification of LTD to CP of LTD (164.1) (232.2) (296.4) (26.6) - - - - - Discretionary (paydown)/bor owing of long term debt Long term debt 2,918.0 2,720.4 2,556.3 2,324.1 2,027.7 2,001.1 2,001.1 2,001.1 2,001.1 2,001.1 2,001.1 Discretionary (paydown)/bor owing of convertible dabt Convertible debt - - - - - - - - - - - Calculation of short term debt Cash @ begin ning of the year (end of last year ) 489.5 261.9 27 .6 294.3 31 .9 3 0.6 505.8 1,064.7 1,696.9 Plus: Fre cash flows prior to debt during year % of sales 57.8 150.4 23 .5 327.1 430.0 487.6 5 9.0 632.2 71 .3 Les : Minimum cash balance 2.0% 261.9 27 .6 294.3 31 .9 3 0.6 350.5 371.5 393.8 417.4 Total cash available / (debt required) for short term debt paydown (491.2) (29.5) (15.4) 13.0 384.7 467.8 693.2 1,303.1 1,9 0.8 Short term debt 171.5 174.1 665.3 694.8 710.2 697.2 312.5 - - - - Interest expense Cur ent portion of long-term debt 356.7 7 6.7 164.1 232.2 296.4 26.6 - - - - - Short term debt 171.5 174.1 6 5.3 694.8 710.2 697.2 312.5 - - - - Long term debt 2,918.0 2,720.4 2,5 6.3 2,324.1 2,027.7 2,0 1.1 2,0 1.1 2,0 1.1 2,0 1.1 2,0 1.1 2,0 1.1 Convertible debt - - - - - - - - - - - Total debt 3,4 6.2 3,671.2 3,385.7 3,251.1 3,034.3 2,724.9 2,313.6 2,0 1.1 2,0 1.1 2,0 1.1 2,0 1.1 Interest expense 136.0 158.7 157.4 148.0 140.1 128.4 1 2.3 96.2 89.2 89.2 89.2 Average interest rate 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Ratio analysis 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Capital Structure Market Debt / Equity 9.4% 8.3% 7.2% 5.9% 4.6% 3.7% 3.4% 3.1% 2.9% Financial Risk Ratios EBITDA / Total Interest 20.2x 23.3x 26.6x 31.4x 38.8x 48.0x 54.9x 58.2x 61.7x (EBITDA - Capex) / Total Interest 16.2x 18.6x 21.4x 25.3x 31.5x 38.9x 4 .5x 47.2x 50.0x Total Debt / EBITDA 1.1x 0.9x 0.8x 0.7x 0.5x 0.4x 0.4x 0.4x 0.4x Total Debt / Total Capitalization (Bk. Equity) 63.6% 56.9% 49.6% 41.6% 33.0% 26.1% 22.9% 20.2% 17.9% Net Debt / EBITDA 1.0x 0.9x 0.7x 0.6x 0.5x 0.3x 0.2x 0.1x NM Interest Coverage (EBIT/Interest expense) 18.0x 20.8x 23.8x 28.1x 34.9x 43.1x 49.3x 52.3x 5 .4x Internal Liquidity Cur ent Ratio (Cur . As ets / Cur . Liab.) 1.2x 1.3x 1.3x 1.3x 1.4x 1.5x 1.7x 1.9x 2.1x Cash Ratio (Cash / Cur ent Liab.) 0.1x 0.1x 0.1x 0.1x 0.1x 0.2x 0.4x 0.5x 0.7x Operating Ef iciency Return on Capital (ROIC) 34.6% 36.2% 36.8% 37.5% 38.2% 37.6% 35.8% 3 .4% 31.3% Dupont Analysis Operating Profit Margin 22.2% 22.2% 22.7% 23.2% 23.7% 23.7% 23.7% 23.7% 23.7% As et Turnover (Sales/ As ets) 1.4x 1.4x 1.4x 1.4x 1.4x 1.4x 1.4x 1.3x 1.3x Interest (inc. interest income)/ Sales 1.2% 1.1% 1.0% 0.8% 0.7% 0.5% 0.5% 0.5% 0.4% Equity multiplier (As ets / Equity) 4.8x 4.0x 3.4x 2.8x 2.4x 2.2x 2.0x 1.9x 1.8x Tax Retention Rate 68.1% 68.1% 68.1% 68.1% 68.1% 68.1% 68.1% 68.1% 68.1% ROE 95.2% 82.3% 71.4% 62.7% 55.7% 49.1% 43.8% 39.6% 36.1% Operating scenarios - sensitivity analysis Revenue growth (%) Strong case 1.0% 1 8.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Base case 2 7.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Weak case 1.0% 3 6.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Gros Profit margin (%) Strong case 0.5% 1 58.1% 59.4% 59.9% 60.4% 60.9% 60.9% 60.9% 60.9% 60.9% Base case 2 57.6% 58.9% 59.4% 59.9% 60.4% 60.4% 60.4% 60.4% 60.4% Weak case 0.5% 3 57.1% 58.4% 58.9% 59.4% 59.9% 59.9% 59.9% 59.9% 59.9% SG&A and Other margin (%) Strong case 1.0% 1 35.0% 35.7% 35.7% 35.7% 35.7% 35.7% 35.7% 35.7% 35.7% Base case 2 36.0% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% Weak case 1.0% 3 37.0% 37.7% 37.7% 37.7% 37.7% 37.7% 37.7% 37.7% 37.7% Taxes 1. Straight line (default) 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 31.9% 2. Over ide i. Use marginal tax rate 3. Overide i: Absolute projection Capex as a % of revenues Strong case 1.0% 1 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Base case 2 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Weak case 1.0% 3 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% Income in equity af iliates growth (%) Strong case 2.0% 1 10.0% 9.5% 9.0% 8.5% 8.0% 8.0% 8.0% 8.0% 8.0% Base case 2 8.0% 7.5% 7.0% 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% Weak case 2.0% 3 6.0% 5.5% 5.0% 4.5% 4.0% 4.0% 4.0% 4.0% 4.0% Minority interest growth (%) Strong case 2.0% 1 10.0% 9.5% 9.0% 8.5% 8.0% 8.0% 8.0% 8.0% 8.0% Base case 2 8.0% 7.5% 7.0% 6.5% 6.0% 6.0% 6.0% 6.0% 6.0% Weak case 2.0% 3 6.0% 5.5% 5.0% 4.5% 4.0% 4.0% 4.0% 4.0% 4.0% Data table Display First Forecasted EPS based on various revenue growth as umptions (column) and gros profit margin as umptions (row) Increment 1.0% Gros Profit Margin 20 7 $3.27 5 .6% 56.6% 57.6% 58.6% 59.6% 9.0% 3.27 3.27 3.27 3.27 3.27 8.0% 3.27 3.27 3.27 3.27 3.27 Revenue Growth Range for 20 7 7.0% 3.27 3.27 3.27 3.27 3.27 6.0% 3.27 3.27 3.27 3.27 3.27 5.0% 3.27 3.27 3.27 3.27 3.27 4.0% 3.27 3.27 3.27 3.27 3.27

Restructuring Activity - Note 4 (Page 46) 2004 2005 2006 Pre-tax Nonrecurring expense/(income) in COGS $3.4 4.9% $100.2 54.8% $196.2 49.6% Nonrecurring expense/(income) in SG&A and Other 65.3 95.1% 82.6 45.2% 199.2 50.4% Nonrecurring expense/(income) in nonoperating (income)/loss 0.0% 0.0% 0.0% Total pre-tax nonrecurring charges 68.7 100.0% 182.8 100.0% 395.4 100.0% After-tax - LEAVE BLANK IF NO AFTER-TAX DATA PROVIDED BY CO. EXPLICITLY Nonrecurring items in COGS $2.4 $79.5 $142.1 Nonrecurring items in SG&A 45.6 65.6 144.2 Nonrecurring items in nonoperating (income)/loss - - - Total after-tax nonrecurring charges $48.0 $145.1 $286.3 After tax $48.0 $145.1 $286.3 Supplemental Income Statement Information - 10-K (Page 13) and Note 15 (Page 68) Other (income) expense (net) Minority interest 47.9 55.3 57.5 Equity (income) (8.5) (2.0) (3.4) Gains on sales of non-core product lines, net (26.7) (147.9) (46.5) Restructuring activities 2.8 - - Pension and other retiree benefits - 34.0 - Stock option compensation expense - Note 8 (Page 52) (42.3) (42.9) - Effective Tax Rate - Note 11 (Page 61) 33.7% 35.0% 32.4% Total adjustments Before Tax COGS Note 4 $3.4 $100.2 $196.2 OTHER Restructuring - SG&A and Other Note 4 65.3 82.6 199.2 Minority interest Note 15 47.9 55.3 57.5 Equity (income) Note 15 (8.5) (2.0) (3.4) Gains on sales of non-core product lines, net Note 15 (26.7) (147.9) (46.5) (38.2) Restructuring activities Note 15 2.8 - - Pension and other retiree benefits Note 15 - 34.0 - Note 15 Total 15.5 (60.6) 7.6 Stock option expense Note 8 (56.6) (57.9) - OTHER TOTAL $24.2 $(35.9) $206.8 Total before tax adjustments $27.6 $64.3 $403.0 After tax COGS $2.4 $79.5 $142.1 OTHER Restructuring - SG&A and Other 45.6 65.6 144.2 Stock option expense (42.3) (42.9) - Gains on sales of non-core product lines 2006 (38.2) Other 10.3 (39.4) 36.6 OTHER TOTAL $13.6 $(16.7) $142.6 Total after tax adjustments $16.0 $62.8 $284.7 Morgan Stanley Calcs 2006 2007 2008 2009 2010 2011 Revenue 12,238.0 13,118.0 13,913.0 14,752.0 15,637.0 16,570.0 Growth % 7% 6% 6% 6% 6% Gross Profit 6,898 7,558 8,190 8,758 9,361 10,002 GP Margin % 56.4% 57.6% 58.9% 59.4% 59.9% 60.4% SG&A 4,388 4,782 5,172 5,483 5,811 6,156 SG&A Margin % 35.9% 36.5% 37.2% 37.2% 37.2% 37.2% SG&A Adjusted 36.0% 36.7% 36.7% 36.7% 36.7% - Morgan Stanley does not exclude minority interest and equity income from SG&A while our model does. Must adjust MS to reflect our assumptions. Minority interest adjustment Minority interest 2006 57.5 Equity income (3.4) 54.1 SG&A Adjustment 0.0044 Balance Sheet Data Minority interest = part of Other Liabilities. Note 16, Page 69. 2005 $103.3 2006 $111.8