-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M9Bjhcg1ijGXi+5HspiGQxwlzFUz6q1RyhbTb4l5QeKuuMs7BMZ+8sp9R8YPY2Vl KzaM8XQS+2nH2gJl0osQOA== 0000313927-96-000006.txt : 19960509 0000313927-96-000006.hdr.sgml : 19960509 ACCESSION NUMBER: 0000313927-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960329 FILED AS OF DATE: 19960508 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHURCH & DWIGHT CO INC /DE/ CENTRAL INDEX KEY: 0000313927 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 134996950 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10585 FILM NUMBER: 96557641 BUSINESS ADDRESS: STREET 1: 469 N HARRISON ST CITY: PRINCETON STATE: NJ ZIP: 08543-5297 BUSINESS PHONE: 6096835900 MAIL ADDRESS: STREET 1: 469 N HARRISON STREET CITY: PRINCETON STATE: NJ ZIP: 08543-5297 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarter ended March 29, 1996 Commission file No. 1-10585 CHURCH & DWIGHT CO., INC. (Exact name of registrant as specified in its charter) Delaware 13-4996950 (State of incorporation) (I.R.S. Employer Identification No.) 469 North Harrison Street, Princeton, N.J. 08543-5297 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (609) 683-5900 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of April 26, 1996, there were 19,530,823 shares of Common Stock outstanding. PART I - FINANCIAL INFORMATION CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited)
Three Months Ended March 29, 1996 March 31, 1995 (In thousands, except per share data) Net Sales $121,548 $117,963 Cost of sales 69,786 68,693 Gross profit 51,762 49,270 Selling, general and administrative expenses 47,032 49,520 Income/(Loss) from Operations 4,730 (250) Equity in joint venture income 1,272 2,429 Investment income 312 264 Gain on disposal of product lines - 102 Other income (expense) (13) 31 Interest expense (135) (438) Income before taxes 6,166 2,138 Income taxes 2,318 995 Net Income 3,848 1,143 Retained earnings at beginning of period 169,438 167,901 173,286 169,044 Dividends paid 2,148 2,148 Retained earnings at end of period $171,138 $166,896 Weighted average shares outstanding 19,526 19,533 Earnings Per Share: Net income per share $.20 $.06
2 of 8 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 29, 1996 December 31, 1995 (Dollars in thousands) (Unaudited) Assets Current Cash and cash equivalents $9,070 $11,355 Short-term investments 5,021 5,027 Accounts receivable 54,902 44,427 Inventories (Note 2) 45,739 41,349 Deferred income taxes 11,821 11,704 Prepaid expenses 5,277 5,313 Total Current Assets 131,830 119,175 Property, Plant and Equipment (Note 3) 142,084 144,339 Note Receivable from Joint Venture 11,000 11,000 Equity Investment in Joint Venture 11,149 11,258 Long-Term Supply Contract 3,717 3,852 Goodwill 3,556 3,556 Total Assets $303,336 $293,180 Liabilities and Stockholders' Equity Current Liabilities Short-term borrowings $10,000 $5,000 Accounts payable and accrued expenses 88,234 86,815 Income taxes payable 6,613 5,286 Total Current Liabilities 104,847 97,101 Long-Term Debt 7,500 7,500 Deferred Income Taxes 19,353 19,573 Deferred Liabilities 1,989 1,595 Nonpension Postretirement and Postemployment Benefits 13,879 13,729 Stockholders' Equity Preferred Stock - $1 par value Authorized 2,500,000 shares, none issued - - Common Stock - $1 par value Authorized 100,000,000 shares, issued 23,330,494 shares 23,330 23,330 Additional paid-in capital 33,074 33,061 Retained earnings 171,138 169,438 Cumulative translation adjustments (734) (686) 226,808 225,143 Less common stock in treasury, at cost - 3,802,771 shares in 1996 and 3,805,071 shares in 1995 70,491 70,501 Due from officers (549) (960) Total Stockholders' Equity 155,768 153,682 Total Liabilities and Stockholders' Equity $303,336 $293,180
3 of 8 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Three Months Ended March 29, 1996 March 31, 1995 (Dollars in thousands) Cash Flow From Operating Activities Net Income $3,848 $1,143 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 3,448 3,211 Deferred income taxes (334) 313 Equity in joint venture income (1,272) (2,429) Gain on asset disposals - (102) Other 5 8 Change in assets and liabilities: Decrease in short-term investments 6 2,976 (Increase) decrease in accounts receivable (10,505) 1,084 (Increase) decrease in inventories (4,399) 2,677 Decrease (increase) in prepaid expenses 35 (608) Increase in accounts payable 1,438 1,815 Increase in income taxes payable 1,334 682 Increase in other liabilities 544 340 Net Cash (Used In) Provided By Operating Activities (5,852) 11,110 Cash Flow From Investing Activities Additions to property, plant and equipment (1,101) (5,031) Distributions from joint venture 1,381 2,207 Repayment of officer loans 412 - Net Cash Provided By (Used In) Investing Activities 692 (2,824) Cash Flow From Financing Activities Short-term borrowing (repayments) 5,000 (4,000) Payment of cash dividends (2,148) (2,148) Proceeds from stock options exercised 68 217 Purchase of treasury stock (45) (31) Net Cash Provided by (Used In) Financing Activities 2,875 (5,962) Net Change In Cash and Cash Equivalents (2,285) 2,324 Cash And Cash Equivalents At Beginning Of Year 11,355 4,659 Cash And Cash Equivalents At End Of Period $9,070 $6,983
4 of 8 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated balance sheet as of March 29, 1996, the consolidated statements of income and retained earnings for the three months ended March 29, 1996 and March 31, 1995, and the consolidated statements of cash flow for the three months then ended have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flow at March 29, 1996 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 1995 annual report to shareholders. The results of operations for the period ended March 29, 1996 are not necessarily indicative of the operating results for the full year.
2. Inventories consist of the following: March 29, Dec. 31, (in thousands) 1996 1995 Raw materials and supplies $12,074 $11,066 Work in process 125 134 Finished goods 33,540 30,149 $45,739 $41,349
3. Property, Plant and Equipment consist of the following: March 29, Dec. 31, (in thousands) 1996 1995 Land $3,188 $3,188 Buildings and improvements 63,955 63,949 Machinery and equipment 152,055 151,965 Office equipment and other assets 14,727 14,633 Mineral rights 5,020 5,020 Construction in progress 1,995 1,145 240,940 239,900 Less accumulated depreciation, depletion and amortization 98,856 95,561 Net Property, Plant and Equipment $142,084 $144,339
5 of 8 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. Equity Investment in Joint Venture The following table reflects summarized financial information for the Armand Products Company joint venture. The Company accounts for its 50 percent interest in the joint venture under the equity method. Product and services are provided to the Armand Products Company by the joint venture partners at cost. As a result, the following information would not be indicative of the financial position or results of operation had the joint venture operated on a stand-alone basis.
Three Months Ended March 29, March 31, (in thousands) 1996 1995 Net sales $9,936 $13,298 Gross profit 3,178 5,447 Net income 2,318 4,632 Company's share in net income 1,159 2,316 Elimination of Company's share of intercompany interest expense 113 113 Equity in joint venture income $1,272 $2,429
5. Restructuring Charge In 1993, 1994 and 1995, the Company recorded restructuring charges in connection with a cost reduction program and the write-off of assets primarily related to discontinued products and plant consolidations. Components of the outstanding reserve balances included in accounts payable and accrued expenses consist of the following:
Reserves at Disposals/ Reserves at (in thousands) December 31, 1995 Payments March 29, 1996 Fixed asset removal and demolition $ 587 $ - $ 587 Severance and related 1,765 839 926 Other 1,204 36 1,168 $3,556 $875 $2,681
6. Due from Officers At December 31, 1995, $960,000 was due the Company from officers in connection with a stock repurchase plan. During the first quarter of 1996, $411,000 was paid back to the Company by three officers. Two officers borrowed funds to pay off their loans. The Company agreed to guarantee the loans, but would no longer be responsible for paying the interest costs. The remaining balance at March 29, 1996 of $549,000, which is presented in the stockholders' equity section of the balance sheet, includes a balloon payment due in five years with interest imputed at 6%. 7. Net income per share is computed based upon the weighted average number of common shares outstanding during the period. Common equivalent shares have been excluded because their effect was not material. 6 of 8 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations For the quarter ended March 29, 1996, net income was $3.8 million or $.20 per share. This compares with $1.1 million or $.06 per share for the first quarter of 1995. Net sales for the quarter were $121.5 million, representing an increase of $3.6 million or 3% versus the same period of 1995. The increase is primarily due to unit volume associated with the relaunch of ARM & HAMMERR Liquid Laundry Detergent as a 4/10-cup product and the introduction of ARM & HAMMER Deodorant, a line extension to the Deodorant Anti-Perspirant line. These increases were partially offset by lower unit volume of ARM & HAMMER Powder Laundry Detergent and ARM & HAMMER Dental CareR. Specialty Product sales increased as well, led by continued strong performance of the Company's Brotherton Speciality Products Ltd. subsidiary in the U.K. and higher sales of performance and agricultural grades of sodium bicarbonate, along with higher unit volume of MEGALACR Rumen Bypass Fat. Gross margin was 42.6% in the first quarter, as compared with 41.8% in the first quarter of 1995. This increase is a result of higher effective selling prices and lower distribution costs, partially offset by a weaker product mix. Selling, general and administrative expenses decreased $2.5 million to 38.7% of sales in the current quarter as compared to 42.0% last year. Selling expenses declined mostly due to lower advertising and promotion costs in support of ARM & HAMMER Dental Care, both in the United States and in the U.K., and ARM & HAMMER Deodorant Anti-Perspirant. These decreases were largely offset by increased slotting allowances and promotional support for the relaunch of ARM & HAMMER Liquid Detergent. General and administrative expenses were lower because of various cost reduction programs undertaken by the Company over the last twelve months. The Company's Armand Products Company joint venture saw sales decline $3.4 million or 25.3% resulting in a $1.2 million decrease in equity earnings compared to the first quarter of 1995. This is due to new competition coming into the marketplace, which has been anticipated for some time. Interest payments were significantly lower in the first quarter as compared to the first quarter of a year ago as a result of a decrease in short-term borrowing, while investment income was flat. The effective tax rate for the current quarter was 37.6%, down from 46.5% from a year ago. This decrease reflects the impact of a reduction of foreign operating losses for which tax benefits were not recognizable. Liquidity and Capital Resources The Company considers cash and short-term investments as the principal measurement of its liquidity. At March 29, 1996, cash, including cash equivalents and short-term investments totaled $14.1 million as compared to $16.4 million at December 31, 1995. During the first quarter of 1996, operating activities required $5.9 million of additional investment primarily in working capital. The Company received $1.4 million in distributions from its Armand Products joint venture and increased its short-term borrowings by $5.0 million. Significant expenditures include the payment of cash dividends of $2.1 million and additions to property, plant and equipment of $1.1 million. PART II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) (27) Financial Data Schedule (b) No reports on Form 8-K were filed for the three months ended March 29, 1996. 7 of 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHURCH & DWIGHT CO.,INC. (REGISTRANT) DATE: May 6, 1996 Zvi Eiref ZVI EIREF VICE PRESIDENT FINANCE DATE: May 6, 1996 Gary P. Halker GARY P. HALKER VICE PRESIDENT, CONTROLLER AND CHIEF INFORMATION OFFICER 8 of 8 EX-27 2
5 1000 3-MOS DEC-31-1996 JAN-01-1996 MAR-29-1996 9,070 5,021 56,192 1,290 45,739 131,830 240,940 98,856 303,336 104,847 7,500 23,330 0 0 132,438 303,336 121,548 121,548 69,786 69,786 0 50 135 6,166 2,318 3,848 0 0 0 3,848 .20 .20
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