0000313927-95-000010.txt : 19950811 0000313927-95-000010.hdr.sgml : 19950811 ACCESSION NUMBER: 0000313927-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 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: 95560749 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 June 30, 1995 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 July 28, 1995, there were 19,579,570 shares of Common Stock outstanding. 1 of 9 PART I - FINANCIAL INFORMATION CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited)
Three Months Ended Six Months Ended June 30, July 1 June 30, July 1, (In thousands, except per share) 1995 1994 1995 1994 Net Sales $128,980 $130,656 $246,943 $242,167 Cost of sales 75,253 72,858 143,946 137,049 Gross profit 53,727 57,798 102,997 105,118 Selling, general and administrative expenses 47,002 49,393 96,522 94,935 Income from Operations 6,725 8,405 6,475 10,183 Equity in joint venture income 2,253 2,194 4,682 3,815 Investment income 267 175 531 364 Gain on disposal of product lines 103 102 205 205 Other income/(expense) 46 (50) 77 114 Interest expense (387) (244) (825) (268) Income before taxes 9,007 10,582 11,145 14,413 Income taxes 3,365 4,194 4,360 5,606 Net Income 5,642 6,388 6,785 8,807 Retained earnings at beginning of period 166,896 170,643 167,901 170,434 172,538 177,031 174,686 179,241 Dividends paid 2,153 2,141 4,301 4,351 Retained earnings at end of period $170,385 $174,890 $170,385 $174,890 Weighted average shares outstanding 19,559 19,673 19,546 19,872 Earnings Per Share: Net income per share $.29 $.32 $.35 $.44
2 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1995 1994 (Dollars in thousands) (Unaudited) Assets Current Assets Cash and cash equivalents $6,683 $4,659 Short-term investments 2,000 2,976 Accounts receivable 51,756 44,404 Inventories (Note 2) 50,492 54,683 Deferred income taxes 12,030 11,927 Prepaid expenses 6,854 5,663 Total Current Assets 129,815 124,312 Property, Plant and Equipment (Note 3) 143,972 138,460 Note Receivable from Joint Venture 11,000 11,000 Equity Investment in Joint Venture 13,962 13,868 Long-Term Supply Contracts 4,121 4,391 Intangibles, principally Goodwill 3,556 3,556 Total Assets $306,426 $295,587 Liabilities and Stockholders' Equity Current Liabilities Short-term borrowings $24,824 $25,000 Accounts payable and accrued expenses 77,232 72,974 Income taxes payable 3,696 1,802 Total Current Liabilities 105,752 99,776 Long-Term Debt 7,500 7,500 Deferred Income Taxes 21,022 19,994 Deferred Income 134 339 Deferred Liabilities 1,415 1,176 Nonpension Postretirement and Postemployment Benefits 13,511 12,861 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 32,752 32,823 Retained earnings 170,385 167,901 Cumulative translation adjustments (607) (741) 225,860 223,313 Less common stock in treasury, at cost - 3,750,924 shares in 1995 and 3,803,659 shares in 1994 68,768 69,372 Total Stockholders' Equity 157,092 153,941 Total Liabilities and Stockholders' Equity $306,426 $295,587
3 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Six Months Ended (Dollars in thousands) June 30, July 1 1995 1994 Cash Flow From Operating Activities Net Income $6,785 $8,807 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 6,434 6,256 Deferred income taxes 921 (1,799) Equity in joint venture income (4,682) (3,815) (Gain) on asset disposals (205) (205) Other 13 (217) Change in assets and liabilities: Decrease in short-term investments 976 3,001 (Increase) in accounts receivable (7,286) (11,280) (Increase)/decrease in inventories 4,246 (5,570) (Increase) in prepaid expenses (1,185) (641) Increase in accounts payable 4,196 702 Increase in income taxes payable 1,893 5,348 Increase in other liabilities 889 509 Net Cash Provided By Operating Activities 12,995 1,096 Cash Flow From Investing Activities Additions to property, plant and equipment (11,614) (13,117) Investment in subsidiary - (625) Distributions from joint venture 4,587 5,222 Net Cash Used In Investing Activities (7,027) (8,520) Cash Flow From Financing Activities Short-term borrowing/(repayments) (176) 24,300 Payment of cash dividends (4,301) (4,351) Proceeds from sale of common stock - 1,595 Proceeds from stock options exercised 564 458 Purchase of treasury stock (31) (14,469) Net Cash Provided by (Used In) Financing Activities (3,944) 7,533 Net Change In Cash and Cash Equivalents 2,024 109 Cash And Cash Equivalents At Beginning Of Year 4,659 5,581 Cash And Cash Equivalents At End Of Period $6,683 $5,690
4 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated balance sheet as of June 30, 1995, the consolidated statements of income and retained earnings for the six months ended June 30, 1995 and July 1, 1994, and the consolidated statements of cash flow for the six 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 June 30, 1995 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, 1994 annual report to shareholders. The results of operations for the period ended June 30, 1995 are not necessarily indicative of the operating results for the full year.
2. Inventories consist of the following: June 30, Dec. 31, 1995 1994 (in thousands) Raw materials and supplies $13,058 $12,237 Work in process 124 103 Finished goods 37,310 42,343 $50,492 $54,683
3. Property, Plant and Equipment consist of the following: June 30, Dec. 31, 1995 1994 (in thousands) Land $3,173 $3,107 Buildings and improvements 60,055 59,874 Machinery and equipment 137,938 135,188 Office equipment and other assets 13,420 13,324 Mineral rights 5,020 5,020 Construction in progress 14,480 5,859 234,086 222,372 Less accumulated depreciation and amortization 90,114 83,912 Net Property, Plant and Equipment $143,972 $138,460
5 of 9 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 Six Months Ended (in thousands) June 30, July 1, June 30, July 1, 1995 1994 1995 1994 Net sales $13,456 $12,021 $26,754 $22,824 Gross profit 5,114 4,973 10,561 8,791 Net income 4,278 4,160 8,910 7,176 Company's share in net income 2,139 2,080 4,455 3,588 Elimination of Company's share of intercompany interest expense 114 114 227 227 Equity in joint venture income $2,253 $2,194 $4,682 $3,815
5. Restructuring Charge In 1993 and 1994 the Company recorded restructuring charges in connection with a cost reduction program and the write-off of assets 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, 1994 Payments June 30, 1995 Fixed asset removal and demolition $992 $282 $710 Severance and related 2,154 1,843 311 Other 1,233 - 1,233 $4,379 $2,125 $2,254
6. Subsequent Event On July 27, 1995, the Company announced it will recognize in the third quarter a restructuring charge expected to be approximately $5.0 million pre-tax or $.15 per share primarily related to a reduction in workforce. It is anticipated that the charge will be fully recognized through operating cash flows over the ensuing twelve months. 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 9 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations For the quarter ended June 30, 1995, net income was $5.6 million or $.29 per share. This compares with $6.4 million or $.32 per share for the same period of 1994. For the first six months of 1995, net income was $6.8 million or $.35 per share compared with $8.8 million or $.44 per share for 1994. Net sales in the second quarter were $129.0 million, a 1.3 percent decline versus a year ago. Volume gains of ARM & HAMMERR Deodorant Anti-Perspirant and the national introduction of ARM & HAMMER PEROXICARER tartar control toothpaste were more than offset by volume declines of ARM & HAMMER Powder Laundry Detergent, ARM & HAMMER Carpet Deodorizer and price discounting of ARM & HAMMER Liquid Laundry Detergent. Specialty Products sales increased, led by the continued strong performance of the Company's Brotherton Specialty Products Ltd. subsidiary in the U. K., continued growth in the industrial cleaning group and performance sodium bicarbonate. These increases were partially offset by lower unit volume of MEGALACR Rumen Bypass Fat. Net sales for the first six months were $246.9 million, a 2.0 percent increase over the first six months of 1994. Unit volume gains on ARM & HAMMER Deodorant Anti-Perspirant and ARM & HAMMER DENTAL CARE more than offset price discounting of ARM & HAMMER Liquid Laundry Detergent. Specialty Products sales also increased for the first six months for the same reasons as the second quarter. The Company's gross margin for the second quarter and for the six month period was 41.7 percent. This compares with 44.2 percent and 43.4 percent in the corresponding quarter and six months of last year. The gross margin changes for both the quarter and the six month period are a result of higher manufacturing costs and increased price discounting of ARM & HAMMER Liquid Laundry Detergent. Selling, general and administrative expenses decreased $2.4 million or 4.8 percent in the current quarter compared to the same period a year ago. The reduction in cost was primarily a result of lower advertising of ARM & HAMMER Baking Soda and lower promotion of concentrated ARM & HAMMER Liquid Laundry Detergent, which was being introduced nationally in the same period of last year. These decreases were partially offset by introductory advertising and promotion in support of ARM & HAMMER PEROXICARE tartar control toothpaste. Selling, general and administrative costs increased in the first half of 1995 versus 1994 as a result of higher advertising and promotion costs associated with ARM & HAMMER DENTAL CARE and ARM & HAMMER Deodorant Anti-Perspirant partially offset by lower promotion costs of ARM & HAMMER Liquid Laundry Detergent, and lower ARM & HAMMER Baking Soda advertising. The Company's Armand Products Company joint venture has experienced sales growth of 12 percent and 17 percent in the current quarter and six month period respectively. In the current quarter, equity earnings increased slightly versus a year ago but is higher for the six month period by $.9 million. Interest payments were significantly higher in the second quarter and for the six month period compared to last year as a result of an increase in short-term borrowing. The effective tax rate for the first half of 1995 was 39.1 percent, up slightly from 38.9 percent in the first half of 1994. The increase reflects the impact 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 June 30, 1995, cash including cash equivalents and short-term investments totaled $8.7 million compared to $7.6 million at December 31, 1994. During the first half of 1995, the Company generated $13.0 million of positive cash flow from operating activities and received $4.6 million in distributions from its Armand Products joint venture. Significant expenditures included additions to property, plant and equipment of $11.6 million and the payment of cash dividends of $4.3 million. 7 of 9 PART II - Other Information Item 4. Results of Vote of Security Holders The Company's Annual Meeting of Stockholders was held on May 11, 1995. The following nominees were elected to the Company's Board of Directors for a term of three years. Nominee For Withhold Robert H. Beeby 42,604,767 275,301 J. Richard Leaman, Jr. 42,155,961 724,107 Dwight C. Minton 42,538,210 341,858 John O. Whitney 42,540,556 330,512 The results of voting on the following additional items were as follows: Proposal to amend the 1983 Stock Option Plan to increase the total number of shares authorized for issuance thereunder. For Against Abstained Broker Non-Votes 36,782,548 3,780,587 535,732 1,781,201 Approval of the appointment of Deloitte & Touche as independent auditors of the Company's 1995 financial statements. For Against Abstained Broker Non-Votes 41,246,683 1,122,024 511,361 0 To consider and act upon a stockholder proposal requesting that the Board of Directors take the steps necessary to provide for the election of Directors annually and not by class. For Against Abstained Broker Non-Votes 3,429,910 36,772,139 896,816 1,781,203 To consider and act upon a stockholder proposal requesting that the Board of Directors search for qualified minority candidates for nomination to the Board of Directors. For Against Abstained Broker Non-Votes 1,745,161 37,819,652 1,534,053 1,781,202 Item 6. Exhibits and Reports of Form 8-K (a) No reports on Form 8-K were filed for the three months ended June 30, 1995. 8 of 9 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: August 8, 1995 /s/ Anthony P. Deasey ANTHONY P. DEASEY VICE PRESIDENT FINANCE DATE: August 8, 1995 /s/ Gary P. Halker GARY P. HALKER CONTROLLER EX-27 2
5 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 6,683 2,000 52,794 1,038 50,492 129,815 234,086 90,114 306,426 105,752 7,500 23,330 0 0 133,762 306,426 246,943 246,943 143,946 143,946 0 117 825 11,145 4,360 6,785 4 0 0 6,785 .35 .35