-----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, Dp7DuuM2Oj/gAAOjBn+hddEPKF+yHZNACSZNU6fC5HMblvvwyVz7C/tButV20xLr KHCuhEqq8SAAkZgHDqHQeQ== 0000313927-95-000016.txt : 19951119 0000313927-95-000016.hdr.sgml : 19951119 ACCESSION NUMBER: 0000313927-95-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950929 FILED AS OF DATE: 19951113 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: 95590915 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 September 29, 1995Commission 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 October 27, 1995, there were 19,608,251 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 Nine Months Ended Sept. 29, Sept. 30 Sept. 29, Sept. 30 1995 1994 1995 1994 (In thousands, except per share data) Net Sales $120,509 $132,581 $367,452 $374,748 Cost of sales 71,274 72,458 215,220 209,507 Gross profit 49,235 60,123 152,232 165,241 Selling, general and administrative expenses 43,830 57,422 140,352 152,357 Restructuring Charge (Note 5) 3,987 5,343 3,987 5,343 Income/(loss) from Operations 1,418 (2,642) 7,893 7,541 Equity in joint venture income 1,116 2,041 5,798 5,856 Investment income 296 199 827 563 Gain on disposal of product lines 103 103 308 308 Other income/(expense) 226 (154) 303 (40) Interest expense (264) (325) (1,089) (593) Income/(loss) before taxes 2,895 (778) 14,040 13,635 Income taxes 1,329 (519) 5,689 5,087 Net Income/(loss) 1,566 (259) 8,351 8,548 Retained earnings at beginning of period 170,385 174,890 167,901 170,434 171,951 174,631 176,252 178,982 Dividends paid 2,156 2,149 6,457 6,500 Retained earnings at end of period $169,795 $172,482 $169,795 $172,482 Weighted average shares outstanding 19,593 19,536 19,562 19,760 Earnings Per Share: Net income per share $.08 ($.01) $.43 $.43
2 of 11 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 29, December 31, 1995 1994 (Dollars in thousands) (Unaudited) Assets Current Assets Cash and cash equivalents $ 8,616 $ 4,659 Short-term investments 5,031 2,976 Accounts receivable 44,975 44,404 Inventories (Note 2) 45,767 55,078 Deferred income taxes 12,270 11,927 Prepaid expenses 5,545 5,268 Total Current Assets 122,204 124,312 Property, Plant and Equipment (Note 3) 144,943 138,460 Note Receivable from Joint Venture 11,000 11,000 Equity Investment in Joint Venture 12,946 13,868 Long-Term Supply Contracts 3,987 4,391 Intangibles, principally Goodwill 3,556 3,556 Total Assets $298,636 $295,587 Liabilities and Stockholders' Equity Current Liabilities Short-term borrowings $ 20,000 $ 25,000 Accounts payable and accrued expenses 75,331 72,974 Income taxes payable 5,147 1,802 Total Current Liabilities 100,478 99,776 Long-Term Debt 7,500 7,500 Deferred Income Taxes 21,019 19,994 Deferred Income 31 339 Deferred Liabilities 1,550 1,176 Nonpension Postretirement and Postemployment Benefits 13,914 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 33,008 32,823 Retained earnings 169,795 167,901 Cumulative translation adjustments (567) (741) 225,566 223,313 Less common stock in treasury, at cost 3,723,843 shares in 1995 and 3,803,659 shares in 1994 68,678 69,372 Due from officers (Note 7) 2,744 - Total Stockholders' Equity 154,144 153,941 Total Liabilities and Stockholders' Equity $298,636 $295,587
3 of 11 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Nine Months Ended (Dollars in thousands) September 29, September 30, 1995 1994 Cash Flow From Operating Activities Net Income $ 8,351 $ 8,548 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 9,873 8,916 Deferred income taxes 678 (2,204) Equity in joint venture income (5,798) (5,856) Loss on asset disposals 99 828 Other 36 (235) Change in assets and liabilities: (Increase)/decrease in short-term investments (2,055) 3,001 (Increase) in accounts receivable (482) (8,814) (Increase)/decrease in inventories 9,392 (9,209) (Increase) in prepaid expenses (265) (713) Increase in accounts payable 2,252 10,748 Increase in income taxes payable 3,460 5,410 Increase in other liabilities 1,426 1,220 Net Cash Provided By Operating Activities 26,967 11,640 Cash Flow From Investing Activities Additions to property, plant and equipment (16,522) (21,546) Proceeds from asset disposals 230 - Distributions from joint venture 6,720 7,430 Net Cash Used In Investing Activities (9,572) (14,741) Cash Flow From Financing Activities Short-term borrowing/(repayments) (5,000) 22,510 Payment of cash dividends (6,457) (6,500) Proceeds from sale of common stock - 1,595 Proceeds from stock options exercised 1,275 669 Purchase of Officer Loans (2,744) - Purchase of treasury stock (512) (14,632) Net Cash Provided by (Used In) Financing Activities (13,438) 3,642 Net Change In Cash and Cash Equivalents 3,957 541 Cash And Cash Equivalents At Beginning Of Year 4,659 5,581 Cash And Cash Equivalents At End Of Period $ 8,616 $ 6,122
4 of 11 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated balance sheet as of September 29, 1995, the consolidated statements of income and retained earnings for the nine months ended September 29, 1995 and September 30, 1994, and the consolidated statements of cash flow for the nine 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 September 29, 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 September 29, 1995 are not necessarily indicative of the operating results for the full year.
2. Inventories consist of the following: Sept. 29, Dec. 31, (in thousands) 1995 1994 Raw materials and supplies $12,740 $12,237 Work in process 105 103 Finished goods 32,922 42,738 $45,767 $55,078
3. Property, Plant and Equipment consist of the following: Sept. 29, Dec. 31, (in thousands) 1995 1994 Land $ 3,193 $ 3,107 Buildings and improvements 60,814 59,874 Machinery and equipment 138,961 135,188 Office equipment and other assets 13,630 13,324 Mineral rights 5,020 5,020 Construction in progress 16,597 5,859 238,215 222,372 Less accumulated depreciation and amortization 93,272 83,912 Net Property, Plant and Equipment $144,943 $138,460
5 of 11 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 Nine Months Ended (in thousands) Sept. 29, Sept. 30, Sept., 29 Sept. 30, 1995 1994 1995 1994 Net sales $11,249 $11,420 $38,003 $34,244 Gross profit 2,853 4,680 13,414 13,470 Net income 2,006 3,855 10,916 11,031 Company's share in net income 1,003 1,927 5,458 5,516 Elimination of Company's share of intercompany interest expense 113 114 340 340 Equity in joint venture income $ 1,116 $ 2,041 $ 5,798 $ 5,856
5. Restructuring Charge During the third quarter, the Company announced an immediate layoff of approximately 60 people in an effort to sufficiently reduce operating costs. These reductions, amounting to $3.5 million, together with the write-off of fixed assets of $.5 million relating to the expansion of the Princeton, N.J. headquarter facility, resulted in a pre-tax charge of $4.0 million in the quarter. It is anticipated that the charge related to the work force reduction will be fully recognized through operating cash flows over the ensuing twelve months. 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 balance included in accounts payable and accrued expenses consist of the following:
(in thousands) Reserves at Restructuring Disposals/ Reserves at Dec. 31, 1994 Charge Payments Sept. 29, 1995 Fixed asset removal and demolition $ 992 $ 498 $ 890 $ 600 Severance and related 2,154 3,554 2,757 2,951 Other 1,233 (65) -- 1,168 $4,379 $3,987 $3,647 $4,719
6. 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 11 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 7. Due from Officers and Subsequent Event The Stockholders' Equity section of the September 29, 1995 balance sheet includes $2.7 million of notes receivable from officers. During the third quarter, the Company paid off these officer loans which were previously held by financial institutions and guaranteed by the Company. The original loans were incurred by the officers in 1993 and 1994 to purchase 100,000 shares of the Company's Common Stock. In November 1995, the Board of Directors and Management approved a repurchase plan whereby 60,000 shares will be purchased from the officers at their cost. Such repurchase will result in the reduction of the notes receivable of $1.6 million and a pre-tax charge against earnings of approximately $600,000 which will be recognized in the fourth quarter of 1995. As part of the repurchase, the officers will pay off their remaining debt to the Company. If such officers borrow funds to pay off the loans, the Company will guarantee the loans, but the Company will no longer be responsible for paying the interest costs. Furthermore, as part of this transaction, the officers agree to the cancellation of their Employment Severance Agreements with the Company. 7 of 11 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations For the quarter ended September 29, 1995, net income was $1.6 million or $.08 per share. This compares with a net loss of $.3 million or $.01 per share for the third quarter of 1994. During this most recent quarter, the Company took a pre-tax charge against earnings of $4.0 million or the equivalent of $.13 per share relating to a restructuring charge. This primarily involved the immediate layoff of 60 people and, to a lesser extent, the write-off of fixed assets. During the third quarter of 1994, the Company also realized a pre-tax restructuring charge of $5.3 million or the equivalent of $.16 per share. For the first nine months of 1995, net income was $8.4 million or $.43 per share as compared with net income of $8.5 million or $.43 per share for the first nine months of 1994. Net sales in the third quarter amounted to $120.5 million, a 9.1 percent decline versus a year ago. This decline is primarily due to volume declines of ARM & HAMMERR Powder Laundry Detergent with Bleach and ARM & HAMMER PEROXICARER, which both benefited from introductory volumes during the third quarter of 1994. The Company also elected to scale back on less profitable international initiatives in the U.K., Ireland and Mexico. Specialty Products sales increased, led by continued growth of performance sodium bicarbonate and continued strong performance of the Company's Brotherton Speciality Products, Ltd. subsidiary in the U.K. Net sales for the first nine months were $367.5 million, a 1.9 percent decline versus the first nine months of 1994. Unit volume gains of ARM & HAMMER Deodorant Anti-Perspirant, which was introduced in the second quarter of 1994, were more than offset by unit volume declines of ARM & HAMMER Powder Laundry Detergent and price discounting of ARM & HAMMER Liquid Laundry Detergent. Specialty Products sales increased for the first nine months for the same reasons as the third quarter. The Company's gross margin was 40.9 percent in the third quarter and 41.4 percent for the first nine months of 1995. This compares with 45.3 percent and 44.1 percent in the corresponding quarter and nine months of last year. These lower margins primarily resulted from higher manufacturing costs in general and increased price discounting of ARM & HAMMER Liquid Laundry Detergent. Selling, general and administrative expenses decreased $13.6 million or 23.7 percent in the current quarter compared to the same period a year ago. The reduction is a result of lower promotion costs of both ARM & HAMMER Powder and Liquid Laundry Detergent, which had line extension introductions during the same period a year ago; lower advertising and promotion of ARM & HAMMER Deodorant Anti-Perspirant and ARM & HAMMER DENTAL CARE in the U.K.; and, lower litigation costs. Selling, general and administrative expenses decreased for the first nine months of 1995 versus the same period a year ago as a result of lower promotion costs of both ARM & HAMMER Powder and Liquid Laundry Detergent, lower advertising of ARM & HAMMER Baking Soda and lower litigation costs. These decreases were partially offset by an increase in advertising and promotion costs of ARM & HAMMER DENTAL CARE. The Company's Armand Products Company joint venture had higher unit volumes and lower pricing resulting in slightly lower sales in the current quarter but an 11 percent increase for the nine month period. In the current quarter, equity earnings decreased $.9 million, primarily as a result of higher manufacturing costs and lower prices. For the nine month period, equity earnings were virtually unchanged versus a year ago. Investment income was higher in both the current quarter and nine month period versus the corresponding periods of 1994 due to an increase in the amounts available for investment. Interest payments were slightly lower in the current quarter but significantly higher for the nine month period versus the same period of 1994 as a result of higher short-term borrowings. The effective tax rate for the first nine months of 1995 was 40.5 percent, up from 37.3 percent in 1994. The increase reflects the impact of foreign operating losses for which tax benefits were not recognizable in 1995. 8 of 11 MANAGEMENT'S DISCUSSION AND ANALYSIS Liquidity and Capital Resources The Company considers cash and short-term investments as the principal measurement of its liquidity. At September 29, 1995, cash, including cash equivalents and short-term investments totaled $13.6 million. During the first nine months of 1995, the Company generated $27.0 million of positive cash flow from operating activities and received $6.7 million in distributions from its Armand Products joint venture. Significant expenditures included additions to property, plant and equipment of $16.5 million, the partial repayment of short-term borrowing of $5.0 million, the payment of cash dividends of $6.5 million and the purchase of officer loans from banks of $2.7 million. 9 of 11 PART II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) No reports on Form 8-K were filed for the three months ended September 29, 1995. 10 of 11 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: /s/Zvi Eiref ZVI EIREF CHIEF FINANCIAL OFFICER DATE: /s/Gary P. Halker GARY P. HALKER VICE PRESIDENT, CONTROLLER AND CHIEF INFORMATION OFFICER 11 of 11 EX-27 2
5 1,000 9-MOS DEC-31-1995 SEP-29-1995 8,616 5,031 46,069 1,094 45,767 122,204 238,215 93,272 298,636 100,478 7,500 23,330 0 0 130,814 298,636 367,452 367,452 215,220 215,220 3,987 175 1,089 14,040 5,689 8,351 0 0 0 8,351 .43 .43
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