Revenue  The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, the products or the services have been provided to the customer, the sales price is fixed or determinable, and collectibility is reasonably assured.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements." This guidance summarizes the SEC staff’s views in applying generally accepted accounting principles to revenue recognition in financial statements. This staff bulletin had no significant impact on the Company’s revenue recognition policy or results of operations.

Research and Development Costs  Product development costs are charged to operations during the period incurred.

Advertising  Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising expenses amounted to $701 million, $717 million and $756 million in 2000, 1999 and 1998, respectively.

Shipping and Handling Costs  Shipping and handling costs of $253 million, $252 million, and $269 million in 2000, 1999, and 1998, respectively, are included in selling, general and administrative expenses on the Consolidated Statement of Earnings.

Environmental Costs  Environmental expenditures that relate to current operations are expensed or capitalized, as appropriate, in accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 96-1, "Environmental Remediation Liabilities." Remediation costs that relate to an existing condition caused by past operations are accrued when it is probable that these costs will be incurred and can be reasonably estimated.

Income Taxes  Income tax expense is based on reported earnings before income taxes. Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes.

Earnings Per Share  Earnings per share is presented in accordance with the provisions of SFAS No. 128, "Earnings Per Share." Basic earnings-per-share computations are based on the weighted-average number of shares of common stock outstanding during the year. Diluted earnings-per-share calculations reflect the assumed exercise and conversion of employee stock options.

Stock-Based Compensation   The Company applies Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," which requires compensation costs to be recognized based on the difference, if any, between the quoted market price of the stock on the grant date and the exercise price.

In March 2000, the FASB issued FASB Interpretation (FIN) No. 44 "Accounting for Certain Transactions Involving Stock Compensation," which clarifies the application of APB No. 25 for certain issues. The interpretation was effective July 1, 2000, except for the provisions that relate to modifications that directly or indirectly reduce the exercise price of an award and the definition of an employee, which are effective after December 15, 1998. The adoption of FIN No. 44 had no significant impact on the Company’s financial statements.

Segment Reporting  The Company reports segment information in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Company has four operating segments. The basis for determining the Company’s operating segments is the manner in which financial information is used by the Company in its operations. Management operates and organizes itself according to business units which comprise unique products and services across geographic locations.

Reclassifications  Certain reclassifications of prior financial information and related footnote amounts have been made to conform with the 2000 presentation.