8-K/A 1 f8ka-rev.txt USAD ACQUISITION -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10585 Date of the report (Date of earliest event reported): May 21, 2001 ----------------------------------------- CHURCH & DWIGHT CO., INC. (Exact Name of Registrant as Specified in its Charter) Delaware 13-4996950 (State or Other Jurisdiction (I.R.S. Employer Identification No.) or Incorporation) 469 North Harrison Street, Princeton, New Jersey 08543 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (609) 683-5900 N/A (Former Name or Former Address, if Changed Since Last Report) ----------------------------------------- The Company is filing this amendment to its Form 8-K filed on June 5, 2001 to incorporate Item 7, Financial Statements and Exhibits with regard to the merger with USA Detergents. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (a) On May 18, 2001, Church & Dwight Co., Inc., a Delaware corporation, through its wholly owned subsidiary, US Acquisition Corp., a Delaware corporation, completed its previously disclosed tender offer for the outstanding shares of common stock of USA Detergents, Inc., a Delaware corporation. The details of the tender offer were disclosed in a Tender Offer Statement on Schedule TO, filed with the SEC on April 12, 2001 and subsequently amended (the "Schedule TO"). According to the Depositary's final report, 11,318,679 shares were validly tendered and not withdrawn as of the expiration of the tender offer, representing approximately 79.7% of the outstanding USA Detergents shares. Church & Dwight Co., also owns 2,142,857 USA Detergents shares aquired prior to the tender offer, representing approximately 15% of the outstanding USA Detergents shares. On May 21, 2001, US Acquisition Corp. accepted for payment all of the shares validly tendered according to the terms of the tender offer. When combined with the shares accepted in the tender offer, US Acquisition Corp. beneficially owned a total of 13,461,536 shares representing 94.8% of the outstanding shares. On May 25, 2001, Church & Dwight Co. completed a short-form merger of US Acquisition Corp. with and into USA Detergents. Subsequently pursuant to a short-form merger of US Acquisition Corp. with and into USA Detergents, the Company became the owner of 100% of outstanding shares of USA Detergents. The source of funds used to acquire the USA Detergents shares was previously disclosed in the Schedule TO and the definitive agreement relating to the financing used to acquire the USA Detergents shares is filed as Exhibit 10 to this Current Report on Form 8-K. (b) USA Detergents is a manufacturer and marketer of laundry and household cleaning products. Church & Dwight Co. currently intends to devote the USA Detergents assets to the continuation of the business operations of USA Detergents, substantially, as they were conducted prior to the completion of the merger. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of businesses acquired. Audited consolidated balance sheets of USA Detergents Inc, as of December 31, 2000 and 1999, and the audited statements of operations, stockholders equity and cash flows for the years ended December 31, 2000, 1999 and 1998 which were filed with the Commission on April 2, 2001 are incorporated by reference. Unaudited consolidated balance sheet of USA Detergents as of March 31, 2001 and the consolidated statements of operations and cash flows for the quarter ended March 31, 2001 and 2000, which were filed with the Commission on May 21, 2001, are incorporated by reference. (b) Pro forma financial information The unaudited pro forma statement of consolidated statement of income for the year ended December 31, 2000 is attached on page 3. The unaudited pro forma statement of consolidated statement of income for the quarter ended March 31, 2001 and an unaudited consolidated balance sheet at March 31, 2001, along with a description of all pro forma adjustments, are attached as pages 4 through 7. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA The unaudited pro forma statement of income for the year ended December 31, 2000 gives effect to the acquisition of all the common stock of USA Detergents as if it had occurred on January 1, 2000. The unaudited pro forma statement of income for the quarter ended March 30, 2001 gives effect to the acquisition of all the common stock of USA Detergents as if it had occurred on January 1, 2000. The pro forma consolidated balance sheet as of March 30, 2001 gives effect to the acquisition as if it occurred on March 30, 2001, based on the purchase method of accounting. The Company believes the accounting used for the pro forma adjustments provides a reasonable basis on which to present the unaudited pro forma consolidated financial statements. The pro forma adjustments do not include any synergies expected to be derived from the merger. The pro forma statements of consolidated income and pro forma consolidated balance sheets are unaudited and were derived by adjusting the historical consolidated financial statements of the Company and USA Detergents. The unaudited pro forma consolidated financial statements are provided for informational purposes only and should not be construed to be indicative of the Company's consolidated results of income or financial position had the transaction been consummated on the dates assumed and do not project the Company's consolidated results of income or consolidated financial position for any future date or period. The unaudited pro forma consolidated financial statements and accompanying notes thereto should be read in conjunction with the Church & Dwight historical consolidated financial statements and the notes thereto included in Church & Dwight's Annual Report on Form 10-K for year ended December 31, 2000 as well as USA Detergents' historical consolidated financial statements as of December 31, 2000 and 1999 and for the three years in the period ended December 31, 2000 which are incorporated by reference.. Church & Dwight Co., Inc and Subsidiaries Unaudited Pro Forma Consolidated Statement of Income For the Year Ended December 31, 2000
Historical ----------------------- Pro forma Pro forma (Dollars in thousands,except per share data) CHD USAD Adjustments Results ------------------------------------------------------------------------------------------------------------------------------------ NET SALES $795,725 $249,004 $ - $1,044,729 Cost of Sales 450,321 171,911 116 (e) 622,348 ------------------------------------------------------------------------------------------------------------------------------------ GROSS PROFIT 345,404 77,093 (116) 422,381 Marketing & G&A 271,332 72,418 3,119 (d) 346,869 Impairment & Other Items 21,911 1,690 - 23,601 ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM OPERATIONS 52,161 2,985 (3,235) 51,911 Equity Income 3,011 - - 3,011 Other income/(expense) (3,011) (3,631) (5,474) (f) (12,428) (312) (g) ------------------------------------------------------------------------------------------------------------------------------------ Income before taxes 52,161 (646) (9,021) 42,494 Taxes 18,315 125 3,392 (h) 15,048 Minority Interest 287 - - 287 ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME $ 33,559 $ (771) $ (5,629) $ 27,159 ------------------------------------------------------------------------------------------------------------------------------------ Weighted average shares outstanding - Diluted 39,933 39,933 EPS - Diluted $ 0.84 $ 0.68 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ See notes to unaudited pro forma consolidated financial statements
Church & Dwight Co., Inc and Subsidiaries Unaudited Pro Forma Consolidated Statement of Income For the Quarter Ended March 30, 2001
Historical ----------------------- Pro forma Pro forma (Dollars in thousands,except per share data) CHD USAD Adjustments Results ------------------------------------------------------------------------------------------------------------------------------------ NET SALES $ 256,527 $ 68,886 $ (1,954) (m) $ 267,318 (56,141) (k) Cost of Sales 162,429 61,291 29 (o) 167,608 (56,141) (k) ------------------------------------------------------------------------------------------------------------------------------------ GROSS PROFIT 94,098 7,595 (1,983) 99,710 Marketing & G&A 73,146 10,539 780 (n) 84,465 ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM OPERATIONS 20,952 (2,944) (2,763) 15,245 Equity Income 1,032 - - 1,032 Other income/(expense) (1,268) (766) (78) (p) (3,570) (1,458) (q) ------------------------------------------------------------------------------------------------------------------------------------ Income before minority interest and taxes 20,716 (3,710) (4,299) 12,707 Minority Interest 1,984 - (1,954) (m) 30 ------------------------------------------------------------------------------------------------------------------------------------ Income before taxes 18,732 (3,710) (2,345) 12,677 Taxes 6,585 75 (882) (r) 5,778 ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME $ 12,147 $ (3,785) $ (1,463) (s) $ 6,899 ------------------------------------------------------------------------------------------------------------------------------------ Weighted average shares outstanding - Diluted 40,333 40,333 EPS - Diluted $ 0.30 $ 0.17 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ See notes to unaudited pro forma consolidated financial statements
Church & Dwight Co., Inc and Subsidiaries Unaudited Pro Forma Consolidated Balance Sheet March 30, 2001
Historical ----------------------- Pro forma Pro forma (Dollars in thousands) CHD USAD Adjustments Results ------------------------------------------------------------------------------------------------------------------------------------ CURRENT ASSETS: Cash and Short-Term Investments $ 20,768 $ - $ - $ 20,768 Restricted Funds - 2,002 - 2,002 Accounts Receivable 85,205 23,013 - 90,018 (18,200) (I) Inventories 58,296 12,370 (1,000) (a3) 69,666 Deferred Taxes 11,560 42 - 11,602 Prepaids and other current assets 6,938 7,884 (701) (a4) 14,121 ------------------------------------------------------------------------------------------------------------------------------------ Total Current Assets 182,767 45,311 (19,901) 208,177 ------------------------------------------------------------------------------------------------------------------------------------ Property, Plant and Equipment (Net) 169,399 44,806 - 215,940 1,735 (a2) Equity Investment in Affiliates 19,781 - - 19,781 Long-Term Supply Contracts 8,577 - - 8,577 Goodwill and Other Intangibles 82,635 - (5,025) (b) 171,169 93,559 (a) Other Assets 22,175 1,599 935 (a) 11,125 (1,084) (a5) (12,500) (b) ------------------------------------------------------------------------------------------------------------------------------------ TOTAL ASSETS $ 485,334 $ 91,716 $ 57,719 $ 634,769 ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES AND EQUITY ------------------------------------------------------------------------------------------------------------------------------------ CURRENT LIABILITIES: Short-Term Borrowings $ 12,500 $ - $ - $ 12,500 Current Portion of Long-Term Debt 685 18,026 (18,026) (c) 685 Cash Overdraft - 4,113 - 4,113 Accounts Payable and Accrued Expenses 136,356 51,922 3,800 (a6) 175,832 (16,246) (I) Income Taxes Payable 8,795 - - 8,795 ------------------------------------------------------------------------------------------------------------------------------------ Total Current Liabilities 158,336 74,061 (30,472) 201,925 ------------------------------------------------------------------------------------------------------------------------------------ Long-Term Debt 19,749 - 112,027 (a) 134,548 18,026 (c) (15,254) (b) Deferred Taxes 21,041 - (5,226) (a7) 14,976 (839) (b) Deferred and Other Long-Term Liabilities 13,494 498 - 13,992 Nonpension Postretirement and Postemployment Benefits 15,622 - - 15,622 Minority Interest 5,111 - (1,954) (I) 3,157 Total Stockholders' Equity 251,981 17,157 (17,157) (a1) 250,549 (1,432) (b) ------------------------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 485,334 $ 91,716 $ 57,719 $ 634,769 ------------------------------------------------------------------------------------------------------------------------------------ See notes to unaudited pro forma consolidated financial statements
Church & Dwight Co., Inc and Subsidiaries Notes to Unaudited Pro Forma Consolidated Financial Statements (a) For purposes of these pro forma consolidated financial statements, Church & Dwight determined that the value of the total purchase consideration(including fees) of approximately $112,027,000, which includes the 2.1 million shares previously purchased. This is comprised of the following: 100% of the common stock outstanding of USA Detergents 14,192,776 shares @ $7.00 per share $99,349,000
The Company has also agreed to pay the difference between the exercise price and $7.00 on approximately 1.8 million in-the-money USAD options. This, in addition to any taxes due, is approximately $7,000,000. The following is a summary of the calculation of the purchase price, as described above, as well as the allocation of the purchase price to the fair value of the net assets acquired:
Shares Price/share Dollars ---------- ----------- -------------- Total number of shares acquired: 14,192,776 $ 7.00 $ 99,349,000 Spread on 1.8 million in-the-money USAD options 7,000,000 Direct merger costs 5,678,000 -------------- Total Purchase Price 112,027,000 Less: Fair value of net assets acquired 17,533,000 Deferred Financing costs associated with the merger to be amortized over 3 years. 935,000 ------------- Excess purchase price over net assets acquired $ 93,559,000 The book value of the net assets acquired as of March 31, 2001 were $17,157,000. The fair value of the net assets are estimated to be $17,533,000. The following is a reconciliation between the two: (a1) Book value of net assets acquired: $ 17,157,000 (a2) Adjustment to Plant, Property and Equipment to fair value 1,735,000 (a3) Inventory fair value adjustment (1,000,000) (a4) Prepaid expenses fair value adjustment (701,000) (a5) Other assets fair value adjustment (1,084,000) (a6) Accrued expense fair value adjustment (3,800,000) (a7) Deferred tax adjustment 5,226,000 ---------------- $ 17,533,000
(b) In conjunction with the Armus LLC joint venture, Church & Dwight acquired 10% of the outstanding common stock of USA Detergents and had a contract to purchase an additional 5% on or about January 1,2001. The stock was classified as an "available for sale " security and marked to market through other comprehensive income (loss). The forward contract for the additional 5% was treated the same way. This journal entry eliminates the 10% of the USA Detergents stock the Company previously purchased and the forward contract for an additional 5%, that was purchased during the first quarter 2001. (c) USA Detergents at March 31, 2001 did not comply with the covenants as detailed in their lending agreements with Finova. As a result, all their long-term debt became a current liability and was reclassified as such. With the completion of the merger, Church & Dwight assumes that USA Detergent will comply with the debt provisions thus, the debt is being reclassified as long-term. (d) To record excess purchase price amortization expense Excess purchase price $ 93,559,000 Amortization period - 30 years Annual amortization $ 3,118,633 (e) To record additional depreciation expense of Property, plant and equipment due to fair value adjustment $ 1,735,000 Depreciation period - 15 years Annual depreciation $ 115,666 (f) To record additional interest expense as a result of the merger. Full Year 2000 ------------- Average debt excl. mortgage $134,246,000 @ 6% $8,054,760 Mortgage debt $10,650,000 @ 10% 1,050,000 Eliminate USAD interest expense (3,631,000) ----------- $5,473,760 1st Quarter 2001 ----------- Average debt excl. mortgage $130,782,000 @ 6% $1,961,700 Mortgage debt $10,650,000 @ 10% 262,500 Eliminate USAD interest expense (766,000) ----------- $1,458,200 (g) To record amortization of deferred financing costs. (h) To record tax impact of pro forma adjustments at 37.6%. (I) To eliminate intercompany accounts receivable/accounts payable. (j) No journal entry. (k) To eliminate intercompany sales. (m) To eliminate USA Detergents portion of the Armus JV profit. (n) To record first quarter excess purchase price amortization. (o) To record first quarter additional depreciation due to fair value adjustment. (p) To record first quarter deferred financing cost amortization. (q) To accrue additional interest expense associated with the acquisition. (r) To record tax effect of pro forma adjustments. (s) To record net income effect of pro forma adjustments. New Accounting Pronouncements In July 2001, the FASB issued SFAS No. 141, "Business Combinations" which establishes new standards for accounting and reporting requirements for business combinations and will require that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method will be prohibited. The Company expects to adopt this statement for transactions that occur after June 30, 2001. This tranaction, as noted, is based on the purchase method of accounting. In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which supersedes APB Opinion No. 17, "Intangible Assets". Under its changes, SFAS No. 142 establishes new standards for goodwill acquired in a business combination and eliminates amortization of goodwill and instead sets forth methods to periodically evaluate goodwill for impairment. The Company expects to adopt this statement upon its effective date. Goodwill amortization relating to this transaction will continue through December 31, 2001. Starting with fiscal year 2002, Goodwill will be tested for any impairment under the rules set forth. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registration has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized. CHRUCH & DWIGHT CO., INC. a Delaware Corporation Date: August 3, 2001 By: /s/ Robert A. Davies III -------------- --------------------------------------- Robert A. Davies III Chief Executive Officer