Colgate Palmolive Company Annual Report 1965

COLGATE ANNUAL PALMOLIVE REPORT COMPANY 1965 QE-CPCO0002705 Col~ia’~e Palmolive Company To the Stockholders: On February 24, 1966, the hourly workers at the Company’s plants in Jersey City, New Jersey; Jeffersonville, Indiana; and Kansas City, Kansas failed to report to work. Negotiations with the three unions continued until the day of the strike. The sole issue in dispute is wages, all other matters having been satisfactorily resolved. Nego- tiations continue under the auspices of the Federal Mediation and Conciliation Service. Very truly yours, Chairman of the Board and President New York, N. Y. March 15, 1966 QE-CPCO0002706 Colgate Palmolive Company Annual Report For the year ended December 31, 1965 Contents Hishlishts of the Year .............. 2 Chairman’s Letter ................ 3 Operational Review ................ 6 Financial Review ................ 15 Manasement .................... 1_6 Consolidated Balance Sheet ......... 18 Consolidated Income and Earned Surplus Accounts ......... 20 Notes to the Financial Statements ..... 21 Source and Application of Funds ...... 22 Auditors’ Opinion .................22 Historical Financial Summary ........ 23 Notice of Annual Meeting The annual meeting of stockholders will be held on Wednesday, April 27, 1966 at 10:00 a.m. in the Terrace Room of the Statler Hilton Hotel, Seventh Avenue and 33rd Street, New York, N. Y. Stockholderswho will be unable to attend this meeting are asked to sign and return their proxies promptly. QE-CPCO0002707 Highlights Colgate of the Palmolive Year Company GEORGE H LESCH, Chairman o! the Board and President 1965 1964 Consolidated Sales .......................................... $862,130,000 $806,581,000 Consolidated Net Income .................................... $ 28,020,000 $ 25,865,000 Per share of common stock ................................. $1.81 $1.65 Dividends Paid Per Share Preferred stock .......................................... $3.50 $3.50 Common stock .......................................... $.85 $.80 Stockholders’ Equity ......................................... $271,428,000 $265,09~000 Book value per share of common stock ........................ $17.13 $16.42 Consolidated Working Capital .................................. $169,086,000 $158,811,000 Ratio of current assets to current liabilities ..................... 2.3to 1 2.3to 1 QE-CPCO0002708 To the Stockholders: Sales and earnings increased in 1965 for the fifth consecutive year, attaining the highest levels in the Company’s one hundred and sixty year history. This sustained growth is primarily the result of the program initiated in 1961 to broaden and diversify our domestic and overseas product lines. Consolidated net income totaled $28.0 million or $1.81 per common share as com- pared with $25.9 million or $1.65 per share recorded in 1964. Earnings reflect a gain of $2.1 million or sixteen cents per share, equal to an 8% improvement over the prior year. World-wide sales were $862.1 million in 1965, surpassing the record set a year ago by $55.5 million or 7%. During the past five years, consolidated sales advanced 50% due largely to the introduction of new products. In 1965, these brands accounted for approximately 40% of domestic and 25% of foreign volume. In the same five year period, consolidated earnings rose $6.8 million or 32% despite the heavy research and advertising expenses necessary to develop and present these new brands to the market. The substantial accomplishments of your Company during the year are measured by more than the establishment of all-time sales and earnings records. Of special significance was the strengthening of all aspects of Company operations which expanded our ability to produce consumer goods that improve the health, well-being and appearance of people everywhere. Our long-standing objective is to develop and profitably manufacture products by means of modern research technology and rigid production standards, which not only provide quality and value, but fulfill specific personal and household needs. In line with this policy, five new brands -- Palmolive gold deodorant soap, Cue toothpaste, Ajax Window Cleaner, Respond Hair Spray and the 007 line of men’s toiletries -- entered the national market during 1965. Consumer enthusiasm for Pal- molive gold was particularly pleasing since volume from this brand was mainly respon- sible for a 20% sales gain in the total toilet soap category. The introduction of Respond Hair Spray with a special protein formula for a lustrous and natural hold was promoted QE-CPCO0002709 by a novel advertising campaign featuring a free refillable purse-size dispenser. Late in the year, additional entries were placed in the specialized field of men’s toiletries by the 007 line including an after shave lotion, cologne, deodorant and hair dressing. Cold Power, a new laundry detergent for cold water washing, achieved distribution in 85% of our sales territories by October 1965 and was expanded nationwide during the first quarter of 1966. Preliminary reports from the field indicate widespread consumer interest in this modern method of laundering. Shipments of Colgate 100, which was sold only in the eastern half of the United States during 1965, were extended to the remainder of the country early in January. In domestic operations, sales of powdered detergents were up 14% due to con- siderably higher revenue from Ajax Laundry Detergent and Fab, plus initial billings of Cold Power. Additional Fab volume is assignable to the reintroduction of this brand with a new improved borax formula. Other products recording notable increases were Rose Lotion Vel, Action bleach and Baggies. Shipments of Lakeside Laboratories, our ethical drug subsidiary, expanded 12% while earnings were 40% higher, primarily reflecting growing usage of Norpramin by physicians for the treatment of mental depression. All geographical divisions overseas recorded increased sales during 1965 with the European Division led by Germany, France and Denmark achieving the largest gain. Higher volume in Germany results principally from fluoride toothpaste, Coin dish- washing liquid and household cleansers. Paic and Noe detergents in France and Ajax Laundry Detergent in Denmark account mainly for the improvement in these countries. Increases by Australia and India in the Far East are attributable to sales of laundry powders and dental preparations, respectively. Our new laundry detergent bar was highly successful in Mexico and Central America during 1965, and distribution of this brand will be extended to other countries in South America and the Far East. As in this country, operations of foreign subsidiaries reflect greater consumer awareness of our brands, the introduction of new products and increased population. QE-CPCO0002710 In addition to these factors, the International Division is also provided with favorable marketing situations by the improving economic conditions in many countries, particularly in Asia, Africa and the Far East. As a result of our active interest in these opportunities, Colgate-Palmolive presently has operating subsidiaries and branches in fifty-four nations of the free world. To satisfy the increasing global demand for Colgate products, substantial capital expenditures for new and additional buildings and equip- ment were made during 1965 in many overseas countries. Funds for this purpose were generated predominately by earnings retained by subsidiaries and by local borrowing. Included among the major projects was the construction of an entire plant with production, warehousing and office facilities for the manufacture of toothpaste, detergents and toilet soaps in Kenya, where a subsidiary was recently organized. The plant, which is equipped with the most modern machinery and production systems, is de- signed to supply the current and long-term requirements of this rapidly developing country. On June 10, 1965, the Board of Directors authorized a three-for-two split of the common stock. At the same meeting, the Board raised the regular quarterly per share dividend to 22V2 cents on the shares outstanding after the split. This represents an increase of 12.5% or ten cents per share on an annual basis and is the third consecutive year that dividend payments were above the previous year. Noteworthy progress was realized during the past year in most phases of Company operations, enhancing our capability of meeting the challenges and opportunities of the future. I am fully confident that, with the continued enthusiastic efforts of all our loyal employees, the Company will register additional meaningful growth in the com- ing years. Very truly yours, New York, N.Y. Chairman of the Board and President March 9, 1966 QE-CPCO0002711 Every hour of the day, Colgate products extend a helping hand Operational to people everywhere. The illustrations in this report Review show the specialized uses of many of our brands. Marketing of this brand in January 1965 with an improved formula The national introduction of five new products and the containing borax. Cold Power is specially formulated for marked strengthening of our laundry detergent franchise washing in cold water. This modern method of laundering highlighted the Company’s domestic marketing efforts cleans clothes whiter and brighter as well as reducing during the year. wear, fading, shrinkage and wrinkling. These distinctive The addition of five new brands in 1965 placed Colgate benefits were proven by one of the most exhaustive test- entries in several product categories

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