-----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, AVL1G2hUPEJNe/CFB2GHvgb/zA7Y0Nlj23L31Z1xv+bimdNB3VkP/FdIRBOJd2S4 26U2MmFGg9joJE7VsHib2g== 0000313927-97-000128.txt : 19971110 0000313927-97-000128.hdr.sgml : 19971110 ACCESSION NUMBER: 0000313927-97-000128 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970926 FILED AS OF DATE: 19971107 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: SEC FILE NUMBER: 001-10585 FILM NUMBER: 97709691 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 26, 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 October 31, 1997, there were 19,445,239 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 Nine Months Ended -------------------- -------------------- Sept. 26, Sept. 27, Sept. 26, Sept. 27, (In thousands, except 1997 1996 1997 1996 per share data) ====================================================================== Net Sales $146,328 $137,090 $417,799 $393,265 Cost of sales 83,161 78,204 238,991 224,886 ------- ------- ------- ------- Gross profit 63,167 58,886 178,808 168,379 Selling, general and administrative expenses 53,864 51,856 154,775 148,135 ------- ------- ------- ------- Income from Operations 9,303 7,030 24,033 20,244 Equity in earnings of affiliates 1,242 1,061 4,252 3,643 Investment income 328 391 1,136 1,029 Other income/(expense) - (40) 1,397 (357) Interest expense (252) (74) (421) (317) ------- ------- ------- ------- Income before taxes 10,621 8,368 30,397 24,242 Income taxes 4,194 3,170 11,463 9,065 ------- ------- ------- ------- Net Income 6,427 5,198 18,934 15,177 Retained earnings at beginning of period 190,288 175,120 182,069 169,438 ------- ------- ------- ------- 196,715 180,318 201,003 184,615 Dividends paid 2,332 2,154 6,620 6,451 ------- ------- ------- ------- Retained earnings at end of period $194,383 $178,164 $194,383 $178,164 ==================================================================== - -------------------------------------------------------------------- Weighted average shares - Primary 19,439 19,566 19,465 19,544 Weighted average shares - Fully Diluted 20,067 19,566 20,078 19,544 - ------------------------------------------------------------------- Earnings Per Share: Primary $0.33 $0.27 $0.97 $0.78 Fully Diluted $0.32 $0.27 $0.94 $0.78 ===================================================================
2 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- September 26, December 31, 1997 1996 ------------- ------------ (Dollars in thousands) (Unaudited) =========================================================================== Assets =========================================================================== Current Assets Cash and cash equivalents $ 7,709 $22,902 Short-term investments 5,000 5,011 Accounts receivable 59,845 41,837 Inventories (Note 2) 57,948 48,887 Deferred income taxes 11,018 11,962 Prepaid expenses 4,615 4,920 Current portion of note receivable 3,066 - ------------------------- Total Current Assets 149,201 135,519 - ------------------------------------------------------------------------- Property, Plant and Equipment (Note 3) 143,322 138,371 Note Receivable from Joint Venture 7,934 11,000 Equity Investment in Affiliates 26,430 16,211 Long-Term Supply Contract 2,910 3,314 Intangibles and Other Assets 21,783 3,556 ========================================================================= Total Assets $351,580 $307,971 ========================================================================= Liabilities and Stockholders' Equity ========================================================================= Current Liabilities Accounts payable and accrued expenses $ 93,745 $ 93,375 Income taxes payable 5,098 5,379 Short term borrowings 32,000 - ------------------------ Total Current Liabilities 130,843 98,754 - ------------------------------------------------------------------------- Long-Term Debt 7,500 7,500 Deferred Income Taxes 19,821 20,005 Deferred Liabilities 3,534 2,392 Nonpension Postretirement and Postemployment Benefits 13,512 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 33,823 33,364 Retained earnings 194,383 182,069 Cumulative translation adjustments (575) (194) ------------------------ 250,961 238,569 Less common stock in treasury, at cost - 3,878,455 shares in 1997 and 3,878,435 shares in 1996 (74,042) (72,708) Due from officers (549) (549) - ------------------------------------------------------------------------- Total Stockholders' Equity 176,370 165,312 ========================================================================= Total Liabilities and Stockholders' Equity $351,580 $307,971 =========================================================================
3 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ (Unaudited) Nine Months Ended ------------------------------ September 26, September 27, (Dollars in thousands) 1997 1996 =========================================================================== Cash Flow From Operating Activities =========================================================================== Net Income $18,934 $15,177 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 10,433 10,313 Deferred income taxes 774 (826) Equity in joint venture income (4,252) (3,643) Loss on asset disposals - 224 Other (65) 13 Change in assets and liabilities net of effect of purchase of new product lines: Decrease/(increase) in short-term investments 11 (990) (Increase) in accounts receivable (18,161) (9,305) (Increase) in inventories (3,631) (4,236) Decrease in prepaid expenses 299 1,361 Increase in accounts payable 497 4,148 (Decrease)/increase in income taxes payable (240) 3,475 Increase in other liabilities 646 839 ======================================================================= Net Cash Provided By Operating Activities 5,245 16,550 Cash Flow From Investing Activities ======================================================================== Additions to property, plant and equipment (6,662) (4,005) Investment in affiliate (10,416) - Repayment of officer loans - 412 Distributions from joint venture 4,449 4,133 Purchase of other assets (875) - Acquisition of new product lines (31,439) - ======================================================================= Net Cash (Used In) Provided By Investing Activities (44,943) 540 Cash Flow From Financing Activities ======================================================================= Short-term debt borrowing (repayments) 32,000 (5,000) Payment of cash dividends (6,620) (6,451) Proceeds from stock options exercised 1,558 858 Purchase of treasury stock (2,433) (1,320) ======================================================================= Net Cash Provided By (Used In) Financing Activities 24,505 (11,913) Net Change In Cash and Cash Equivalents (15,193) 5,177 Cash And Cash Equivalents At Beginning Of Year 22,902 11,355 ======================================================================= Cash And Cash Equivalents At End Of Period $ 7,709 $16,532 ========================================================================
4 of 9 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Unaudited) 1. The consolidated balance sheet as of September 26, 1997, the consolidated statements of income and retained earnings for the three and nine months ended September 26, 1997 and September 27, 1996 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 26, 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 September 26, 1997 are not necessarily indicative of the operating results for the full year. 2. Inventories consist of the following: Sept. 26, Dec. 31, (in thousands) 1997 1996 =================================================================== Raw materials and supplies $15,890 $13,031 Work in process - 144 Finished goods 42,058 35,712 ------------------- $57,948 $48,887 ==================================================================
3. Property, Plant and Equipment consist of the following: Sept. 26, Dec. 31, (in thousands) 1997 1996 =================================================================== Land $ 3,263 $ 3,195 Buildings and improvements 66,493 64,810 Machinery and equipment 162,722 155,635 Office equipment and other assets 12,037 11,835 Mineral rights 5,931 5,931 Construction in progress 7,395 1,641 ------------------- 257,841 243,047 Less accumulated depreciation and amortization 114,519 104,676 ------------------- Net Property, Plant and Equipment $143,322 $138,371 ==================================================================
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 Nine Months Ended --------------------- --------------------- Sept. 26, Sept. 27, Sept. 26, Sept. 27, (in thousands) 1997 1996 1997 1996 ======================================================================= Net sales $10,004 $ 9,072 $30,866 $29,156 Gross profit 3,344 2,750 10,852 9,170 Net income 2,522 1,896 8,348 6,606 Company's share in net income 1,261 948 4,174 3,303 Elimination of Company's share of intercompany interest expense 113 113 340 340 ------------------ ------------------- Equity in joint venture income $ 1,374 $ 1,061 $ 4,514 $ 3,643 =======================================================================
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. Primary earnings 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. Fully diluted earnings per share reflects the impact of common equivalent shares due to shares issuable for stock options. 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 September 26, 1997 and September 27, 1996 was $.33 and $.27 per share, respectively, and the Company's diluted EPS for the three months ended September 26, 1997 and September 27, 1996 was $.32 and $.26 per share, respectively. For the nine month period basic EPS in 1997 and 1996 was $.97 and $.78 per share, respectively, and diluted EPS in 1997 and 1996 was $.95 and $.77 per share, respectively. 7. Acquisition On August 27, 1997, the Company closed on its previously announced acquisition of a group of five household cleaning brands from The Dial Corporation. The cost of the acquisition was approximately $31.4 million and the brands involved were BRILLO(R) Soap Pads and related products, PARSONS(R) and BO-PEEP(R) Ammonia, CAMEO(R) Metal Polish, RAIN DROPS(R) Water Softener and SNO BOL(R) Cleaners. The acquisition was financed through short-term borrowings. The allocation of the purchase price in these financial statements is preliminary and is expected to be finalized by December 31, 1997. 6 of 9 MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ Results of Operations - --------------------- For the quarter ended September 26, 1997, net income was $6.4 million or $.33 per primary share and $.32 per fully diluted share. This compares with $5.2 million or $.27 per share for the same period of 1996. For the first nine months of 1997, net income was $18.9 million or $.97 per primary share and $.94 per fully diluted share, compared with $15.2 million or $.78 per share for 1996. Net sales in the quarter were $146.3 million, a $9.2 million or a 6.7% increase versus 1996. This increase was due to higher sales of ARM & HAMMER(R) Laundry Detergent products, the addition of the product lines acquired during the quarter from The Dial Corporation, and the national introduction of ARM & HAMMER Super Scoop(TM),The Baking Soda Clumping Litter. These increases were partially offset by lower sales of ARM & HAMMER Dental Care(R) toothpaste. 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 liquid cleaners. These increases were partially offset by lower sales of performance grades of sodium bicarbonate. Net sales for the first nine months were $417.8 million or 6.2% ahead of 1996. The increase is primarily a result of higher sales of ARM & HAMMER Laundry Detergent products, the third quarter national introduction of ARM & HAMMER Super Scoop, The Baking Soda Clumping Litter, and the new products acquired from The Dial Corporation. These increases were partially offset by lower sales of ARM & HAMMER Carpet and Room Deodorizer. Specialty Products sales were higher for the same reasons as the current quarter. The Company's gross margin was 43.2% and 42.8% for the current quarter and nine month period, respectively. This compares with 43.0% and 42.8% for the same periods of last year. The slight improvement in the current quarter is a result of lower manufacturing costs, partially offset by a less favorable sales mix. The flat margin for the nine month period is a result of lower manufacturing costs offset by costs associated with the ARM & HAMMER Dental Care toothpaste buy-one-get-one free promotion and a less favorable sales mix. Selling, general and administrative expenses increased $2.0 million in the current quarter and $6.6 million for the nine month period. Selling expenses for the quarter decreased slightly as a result of lower promotion costs for ARM & HAMMER Dental Care toothpaste, partially offset by introductory costs for ARM & HAMMER Super Scoop, The Baking Soda Clumping Litter. General and administrative costs increased in the quarter primarily as a result of higher Information Systems expenses. Selling expenses for the nine month period increased as a result of higher advertising, introductory spending for ARM & HAMMER Super Scoop, The Baking Soda Clumping Litter, and higher test market costs. These increases were partially offset by lower promotion costs for ARM & HAMMER Dental Care toothpaste. General and administrative costs increased for the same reason as the current quarter. The Company's Armand Products joint venture saw sales increase 10.3% and 5.9% for the current quarter and the nine month period while equity in joint venture income increased 29.5% and 23.9% as compared to the same periods of 1996. Interest expense increased as a result of using short-term debt to finance the purchase of the five brands from The Dial Corporation. 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 nine month period was 37.7% as compared to 37.4% 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 September 26, 1997, cash, including cash equivalents and short-term investments totaled $12.7 million compared to $27.9 million at December 31, 1996. During the first nine months of 1997, the Company generated $5.2 million of positive cash flow from operating activities, received $4.4 million in distributions from its affiliates, borrowed $32.0 million of short-term debt and received $1.6 million from stock options exercised. Significant expenditures included the purchase of five brands from The Dial Corporation for $31.4 million, additions to property, plant and equipment of $6.7 million, the payment of cash dividends of $6.6 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 6. Exhibits and Reports on Form 8-K - ---------------------------------------- (a) No reports on Form 8-K were filed for the three months ended September 26, 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: November 7, 1997 Zvi Eiref ---------------------- -------------------------------- ZVI EIREF VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER DATE: November 7, 1997 Gary P. Halker ---------------------- -------------------------------- GARY P. HALKER VICE PRESIDENT, CONTROLLER AND CHIEF INFORMATION OFFICER 9 of 9 EX-27 2
5 1000 9-MOS DEC-31-1997 JAN-01-1997 SEP-26-1997 7,709 5,000 61,463 1,618 57,948 149,201 257,841 114,519 351,580 130,843 7,500 0 0 23,330 153,040 351,580 417,799 417,799 238,991 238,991 0 150 421 30,397 11,463 18,934 0 0 0 18,924 .97 .94
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