-----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, SVoocSkt78ZkOI1/l9LEfFuKPevTyYPHQ8KS02ejAJQWl1B0vOVeJDrllaAv7fwN /RHWe49TwttJiC5KRDUvmQ== 0000313927-97-000118.txt : 19970807 0000313927-97-000118.hdr.sgml : 19970807 ACCESSION NUMBER: 0000313927-97-000118 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970627 FILED AS OF DATE: 19970806 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHURCH & DWIGHT CO INC /DE/ CENTRAL INDEX KEY: 0000313927 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] 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: 97652369 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 27, 1997 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 August 1, 1997, there were 19,434,039 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 27, June 28, June 27, June 28, 1997 1996 1997 1996 -------- -------- -------- -------- (In thousands, except per share data) Net Sales $141,850 $134,627 $271,471 $256,175 Cost of sales 81,069 76,896 155,830 146,682 ------- ------- ------- ------- Gross profit 60,781 57,731 115,641 109,493 Selling, general and administrative expenses 52,231 49,247 100,911 96,279 ------- ------- ------- ------- Income from Operations 8,550 8,484 14,730 13,214 Equity in earnings of affiliates 1,594 1,310 3,010 2,582 Investment income 393 326 808 638 Other income/(expense) 1,107 (304) 1,397 (317) Interest expense (87) (108) (169) (243) ------- ------- ------- ------- Income before taxes 11,557 9,708 19,776 15,874 Income taxes 4,277 3,577 7,269 5,895 ------- ------- ------- ------- Net Income 7,280 6,131 12,507 9,979 Retained earnings at beginning of period 185,152 171,138 182,069 169,438 ------- ------- ------- ------- 192,432 177,269 194,576 179,417 Dividends paid 2,144 2,149 4,288 4,297 ------- ------- ------- ------- Retained earnings at end of period $190,288 $175,120 $190,288 $175,120 ===================================================================== - --------------------------------------------------------------------- Weighted average shares outstanding 19,480 19,540 19,478 19,533 - --------------------------------------------------------------------- Earnings Per Share: Net income per share $.37 $.31 $.64 $.51 =====================================================================
2 OF 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 27, December 31, 1997 1996 -------- ------------ (Dollars in thousands) (Unaudited) ===================================================================== Assets ===================================================================== Current Assets Cash and cash equivalents $8,206 $22,902 Short-term investments 6,000 5,011 Accounts receivable 50,112 41,837 Inventories (Note 2) 52,419 48,887 Deferred income taxes 11,648 11,962 Prepaid expenses 4,715 4,920 Current portion of note receivable 2,023 - ------- ------- Total Current Assets 135,123 135,519 - ------------------------------------------------------------------- Property, Plant and Equipment (Note 3) 135,064 138,371 Note Receivable from Joint Venture 8,977 11,000 Equity Investment in Affiliates 26,520 16,211 Long-Term Supply Contract 3,044 3,314 Goodwill 3,556 3,556 =================================================================== Total Assets $312,284 $307,971 =================================================================== Liabilities and Stockholders' Equity =================================================================== Current Liabilities Accounts payable and accrued expenses $90,629 $93,375 Income taxes payable 5,170 5,379 ------- ------- Total Current Liabilities 95,799 98,754 - ------------------------------------------------------------------- Long-Term Debt 7,500 7,500 Deferred Income Taxes 19,806 20,005 Deferred Liabilities 3,296 2,392 Nonpension Postretirement and Postemployment Benefits 13,821 14,008 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 33,654 33,364 Retained earnings 190,288 182,069 Cumulative translation adjustments (358) (194) ------- ------- 246,914 238,569 Less common stock in treasury, at cost- 3,900,755 shares in 1997 and 3,878,435 shares in 1996 74,303 72,708 Due from officers (549) (549) - ------------------------------------------------------------------- Total Stockholders' Equity 172,062 165,312 =================================================================== Total Liabilities and Stockholders' Equity $312,284 $307,971 ===================================================================
3 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ (Unaudited) Six Months Ended ---------------------- (Dollars in thousands) June 27, June 28, 1997 1996 ============================================================================== Cash Flow From Operating Activities ============================================================================== Net Income $12,507 $9,979 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 6,875 6,864 Deferred income taxes 121 (239) Equity in income from affiliates (3,010) (2,582) Other (2) 23 Change in assets and liabilities: (Increase) in short-term investments (989) (22) (Increase) in accounts receivable (8,346) (6,901) (Increase) in inventories (3,578) (5,506) Decrease in prepaid expenses 199 409 (Decrease)/Increase in accounts payable (2,681) 2,671 (Decrease)/Increase in income taxes payable (193) 684 Increase in other liabilities 717 904 ============================================================================= Net Cash Provided By Operating Activities 1,620 6,284 Cash Flow From Investing Activities ============================================================================= Additions to property, plant and equipment (3,424) (2,510) Investment in affiliate (10,358) - Repayment of officer loans - 412 Distributions from affiliates 3,059 2,885 ============================================================================= Net Cash (Used In) Provided By Investing Activities (10,723) 787 Cash Flow From Financing Activities ============================================================================= Short-term debt repayments - (5,000) Payment of cash dividends (4,288) (4,297) Proceeds from stock options exercised 1,129 711 Purchase of treasury stock (2,434) (45) ============================================================================== Net Cash Used In Financing Activities (5,593) (8,631) Net Change In Cash and Cash Equivalents (14,696) (1,560) Cash And Cash Equivalents At Beginning Of Year 22,902 11,355 ============================================================================== Cash And Cash Equivalents At End Of Period $8,206 $9,795 ==============================================================================
4 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Unaudited) 1. The consolidated balance sheet as of June 27, 1997, the consolidated statements of income and retained earnings for the three and six months ended June 27, 1997 and June 28, 1996, and the consolidated statements of cash flow for the six months ended June 27, 1997 and June 28, 1996 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 27, 1997 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, 1996 annual report to shareholders. The results of operations for the period ended June 27, 1997 are not necessarily indicative of the operating results for the full year. 2. Inventories consist of the following: (in thousands) June 27, Dec. 31, 1997 1996 ============================================================================ Raw materials and supplies $14,907 $13,031 Work in process - 144 Finished goods 37,512 35,712 ----------------------- $52,419 $48,887 ============================================================================
3. Property, Plant and Equipment consist of the following: (in thousands) June 27, Dec. 31, 1997 1996 ============================================================================= Land $3,191 $3,195 Buildings and improvements 64,840 64,810 Machinery and equipment 155,877 155,635 Office equipment and other assets 11,887 11,835 Mineral rights 5,931 5,931 Construction in progress 4,559 1,641 ----------------------- 246,285 243,047 Less accumulated depreciation and amortization 111,221 104,676 ----------------------- Net Property, Plant and Equipment $135,064 $138,371 ============================================================================
5 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Unaudited) 4. Equity Investments 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 ------------------ -------------------- June 27, June 28, June 27, June 28, (in thousands) 1997 1996 1997 1996 ============================================================================== Net sales $10,724 $10,148 $20,862 $20,084 Gross profit 4,074 3,242 7,508 6,420 Net income 3,220 2,392 5,826 4,710 Company's share in net income 1,610 1,196 2,913 2,355 Elimination of Company's share of intercompany interest expense 114 114 227 227 ------------------ ------------------ Equity in joint venture income $1,724 $1,310 $3,140 $2,582 ==============================================================================
On June 3, 1997, the Company acquired a 40% interest in two Brazilian bicarbonate/carbonate-related chemical companies. The acquisition, costing approximately $10.4 million, was financed internally and is accounted for under the equity method of accounting. 5. 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. Accounting Change In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 - "Earnings per Share" ("SFAS 128") which specifies the computation, presentation and disclosure requirements for EPS. SFAS 128 replaces the presentation of primary and fully diluted EPS pursuant to Accounting Principles Board Opinion No. 15 - "Earnings per Share" ("APB 15") with the presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company is required to adopt SFAS 128 with its December 31, 1997 financial statements and restate all prior-period EPS data. The Company will continue to account for EPS under APB 15 until that time. Under SFAS 128, the Company's basic EPS for the three months ended June 27, 1997 and June 28, 1996 was $.37 and $.31 per share, respectively, and the Company's diluted EPS for the three months ended June 27, 1997 and June 28, 1996 was $.37 and $.31 per share, respectively. For the six month period basic EPS in 1997 and 1996 was $.64 and $.51 per share, respectively, and diluted EPS in 1997 and 1996 was also $.64 and $.51 per share, respectively. 7. Subsequent Event On July 10, 1997, the Company announced it will be acquiring a group of 5 household cleaning brands from The Dial Corporation for a purchase price of approximately $30 million. The brands involved are BRILLO Soap Pads and related products, PARSONS and BO-PEEP Ammonia, CAMEO Metal Polish, RAIN DROPS Water Softener and SNO BOL Cleaners. As of July 28, 1997, the Company has received FTC approval and is expected to close before the end of August. 6 of 9 MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ Results of Operations - --------------------- For the quarter ended June 27, 1997, net income was $7.3 million or $.37 per share. This compares with $6.1 million or $.31 per share for the same period of 1996. For the first six months of 1997, net income was $12.5 million or $.64 per share compared with $10.0 million or $.51 per share for 1996. Net sales in the quarter were $141.9 million, a $7.2 million or a 5.4% increase versus 1996. This increase was due to higher sales of ARM & HAMMER(R) Laundry Detergent products, partially offset by lower ARM & HAMMER(R) Dental Care sales. Specialty Products sales increased as well, primarily as a result of higher sales of MEGALAC(R) Rumen Bypass Fat, agricultural grades of sodium bicarbonate and the Company's U.K. subsidiary. These increases were partially offset by lower sales of performance grades of sodium bicarbonate. Net sales for the first six months of 1997 were $271.5 million or 6.0% ahead of 1996. The increase is primarily a result of higher sales of both ARM & HAMMER Powder and Liquid Laundry Detergent, ARM & HAMMER Dental Care and ARM & HAMMER Deodorant Anti-Perspirant. This increase was partially offset by lower sales of ARM & HAMMER Carpet and Room Deodorizer. Specialty Products sales were slightly higher for the same reasons as the current quarter. The Company's gross margin was 42.8 % and 42.6% for the current quarter and six month period, respectively. This compares with 42.9% and 42.7% for the same periods of last year. This flat margin is due to lower manufacturing and distribution costs offset by manufacturing costs of the ARM & HAMMER Dental Care buy-one-get-one free promotion and a less favorable sales mix. Selling, general and administrative expenses increased $3.0 million in the current quarter and $4.6 million for the six month period. Selling expenses for the quarter were higher due to increased advertising for ARM & HAMMER Dental Care, consumer promotion for ARM & HAMMER Deodorant Anti-Perspirant and test market expenses. These increases were partially offset by lower trade promotion for ARM & HAMMER Carpet and Room Deodorizer. General and administrative expenses increased in the quarter as a result of higher Information Systems expenses. Selling expenses for the six month period increased also as a result of higher advertising for Personal Care products, partially offset by lower promotion expenses for ARM & HAMMER Carpet and Room Deodorizer and ARM & HAMMER Liquid Laundry Detergent. General and administrative costs increased for the same reason as the current quarter. The Company's Armand Products Company joint venture saw sales increase 5.7% and 3.9% for the current quarter and the six month period while the Company's share of earnings increased 31.6% and 21.6% for the same periods over 1996. Interest expense decreased slightly versus last year as a result of having no short-term debt outstanding while investment income increased slightly. Other income increased significantly primarily as a result of a settlement from a long-standing class action suit against the Carbon Dioxide supply industry and foreign exchange gains. The effective tax rate for the first half of 1997 was 36.8% as compared to 37.1% for the same period of last year. Liquidity and Capital Resources - ------------------------------- The Company considers cash and short-term investments as the principal measurement of its liquidity. At June 27, 1997, cash, including cash equivalents and short-term investments totaled $14.2 million compared to $27.9 million at December 31, 1996. During the first half of 1997, the Company generated $1.6 million of positive cash flow from operating activities and received $3.1 million in distributions from its affiliates. Significant expenditures included additions to property, plant and equipment of $3.4 million, the payment of cash dividends of $4.3 million, the purchase of a 40% interest in two Brazilian chemical companies for $10.4 million, and the purchase of treasury stock of $2.4 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 8, 1997. The following nominees were elected to the Company's Board of Directors for a term of three years. Nominee For Withhold Robert A. Davies, III 35,643,371 518,290 John D. Leggett III, Ph.D. 35,671,827 489,834 Robert A. McCabe 35,670,820 490,841 Jarvis J. Slade 35,669,868 491,793 The results of voting on the following additional items were as follows: Approval of the appointment of Deloitte & Touche as independent auditors of the Company's 1997 financial statements. For Against Abstained Broker Non-Votes 35,944,863 144,430 72,368 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 4,111,310 29,395,254 554,771 2,100,326 To consider and act upon a stockholder proposal requesting that the Board of Directors commit to a program to diversify the members of the Board of Directors. For Against Abstained Broker Non-Votes 2,056,831 31,406,327 596,857 2,101,646 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) No reports on Form 8-K were filed for the three months ended June 27, 1997. 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 5, 1997 /s/Zvi Eiref -------------------------- ZVI EIREF VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER DATE: August 5, 1997 /s/Gary P. Halker -------------------------- GARY P. HALKER VICE PRESIDENT, CONTROLLER AND CHIEF INFORMATION OFFICER 9 of 9 EX-27 2
5 6-MOS DEC-31-1997 JAN-01-1997 JUN-27-1997 8,206 6,000 51,665 1,553 52,419 135,123 246,285 111,221 312,284 95,799 7,500 0 0 23,330 148,732 312,284 271,471 271,471 155,830 155,830 0 100 169 19,776 7,269 12,507 0 0 0 12,507 .64 .64
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