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30% commitments or related party transactions that are considered material. The Company is not aware of factors that are reasonably likely to adversely affect liquidity trends, other than the factors discussed in the Forward-Looking Statements. 

## Purchase Commitments 

The Company has purchase commitments for materials, supplies, services and fixed assets as part of the normal course of business. In the aggregate, such commitments are not at prices in excess of current market rates. Due to the proprietary nature of many of the Company’s materials and processes, certain supply contracts contain penalty provisions for early termination. The Company does not expect changes in such provisions to materially affect results of operations or its financial condition. This conclusion is made based upon reasonably likely outcomes assumed by reference to historical experience and current business plans. 

As discussed previously, the Company’s primary source of liquidity is cash generated from operations. Additionally, the Company is able to support its short-term liquidity, if necessary, through agreements with a diverse group of creditworthy financial institutions. The Company has never drawn on these facilities and does not intend to do so in the foreseeable future. However, should the facilities be needed, when combined with cash on hand, the Company believes they would provide the Company with sufficient credit fund- ing to cover any short-term financing requirements. 

## Segment Results 

The following pages provide perspective on the Company’s business segments. Product-based segment results exclude items that are not included in measuring business perform- ance for management reporting purposes, most notably certain financing, investing, employee benefit and restructur- ing costs. 

Sales in companies over which the Company exerts signifi- cant influence, but does not control the financial and operating decisions, are reported for segment purposes in a manner similar to consolidated subsidiaries. Taxes are reflected in the business segments at estimated local statuto- ry tax rates. The effects of these conventions are eliminated in the corporate segment to adjust management reporting conventions to accounting principles generally accepted in the United States of America. 

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## Health Care 

Health care delivered exceptional results, as strength in the oral care and pharmaceutical businesses drove a 15% increase in unit volume and a 14% increase in net sales. Net sales were $4.98 billion in 2002. Excluding a 1% negative impact of foreign exchange, net sales grew 15%. Health care’s volume growth from high-margin products funded in- creased marketing investments and yielded a net earnings increase of 34% to $521 million. 

Oral care led the volume growth, up significantly versus 2001. The global Crest brand continued to grow behind strength across the portfolio, including Crest SpinBrush, Crest Whitestrips and the base dentifrice business. In 2002, Crest joined the ranks of the Company’s billion dollar brands. 

Pet health and nutrition volume increased 10% behind continued growth in the United States. Global growth was driven by new product innovation and expansion into new geographies and channels outside the United States in the second half of the year. 

Pharmaceuticals continued to deliver strong results with worldwide volume up 29%, behind the strength of Actonel, the Company’s post-menopausal osteoporosis drug. 

In 2001, health care unit volume increased 15%, driven by the excellent performance of the pet health and nutrition, pharmaceuticals and oral care businesses. Net sales were 

