-----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, UXBc0Q0XBu1QpbSQ3rNxaXtzBzUlrTeiOzNpZwq5tcCdPwr1UTYN+a8LHwkOIAKm PLbRMYuX5qAn6/6gZjGYlg== 0000950123-96-006380.txt : 19961113 0000950123-96-006380.hdr.sgml : 19961113 ACCESSION NUMBER: 0000950123-96-006380 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960927 FILED AS OF DATE: 19961112 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: 96658350 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 CHURCH & DWIGHT 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 27, 1996 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 November 1, 1996, there were 19,515,823 shares of Common Stock outstanding. ================================================================================ 1 of 9 2 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 27, Sept. 29, Sept. 27, Sept. 29, (In thousands, except per share data) 1996 1995 1996 1995 ================================================================================================================== NET SALES $137,090 $120,509 $393,265 $367,452 Cost of sales 78,204 71,274 224,886 215,220 ------------------------- ---------------------------- Gross profit 58,886 49,235 168,379 152,232 Selling, general and administrative expenses 51,856 43,830 148,135 140,352 Restructuring Charge - 3,987 - 3,987 ------------------------- ---------------------------- INCOME FROM OPERATIONS 7,030 1,418 20,244 7,893 Equity in joint venture income 1,061 1,116 3,643 5,798 Investment income 391 296 1,029 827 Gain on disposal of product lines - 103 - 308 Other income/(expense) (40) 226 (357) 303 Interest expense (74) (264) (317) (1,089) ------------------------- ---------------------------- Income before taxes 8,368 2,895 24,242 14,040 Income taxes 3,170 1,329 9,065 5,689 ------------------------- ---------------------------- NET INCOME 5,198 1,566 15,177 8,351 Retained earnings at beginning of period 175,120 170,385 169,438 167,901 ------------------------- ---------------------------- 180,318 171,951 184,615 176,252 Dividends paid 2,154 2,156 6,451 6,457 ------------------------- ---------------------------- Retained earnings at end of period $178,164 $169,795 $178,164 $169,795 ================================================================================================================== - ------------------------------------------------------------------------------------------------------------------ Weighted average shares outstanding 19,566 19,593 19,544 19,562 - ------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE: Net income per share $.27 $.08 $.78 $.43 ==================================================================================================================
2 of 9 3 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 27, December 31, 1996 1995 ------------------------------------ (Dollars in thousands) (Unaudited) =============================================================================================================== ASSETS =============================================================================================================== Current Assets Cash and cash equivalents $16,532 $11,355 Short-term investments 6,017 5,027 Accounts receivable 53,746 44,427 Inventories (Note 2) 45,592 41,349 Deferred income taxes 13,167 11,704 Prepaid expenses 3,952 5,313 ------------------------------------ Total Current Assets 139,006 119,175 - --------------------------------------------------------------------------------------------------------------- Property, Plant and Equipment (Note 3) 138,234 144,339 Note Receivable from Joint Venture 11,000 11,000 Equity Investment in Joint Venture 10,769 11,258 Long-Term Supply Contract 3,448 3,852 Goodwill 3,556 3,556 =============================================================================================================== Total Assets $306,013 $293,180 =============================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY =============================================================================================================== Current Liabilities Short-term borrowings $ - $ 5,000 Accounts payable and accrued expenses 90,971 86,815 Income taxes payable 8,766 5,286 ------------------------------------ Total Current Liabilities 99,737 97,101 - --------------------------------------------------------------------------------------------------------------- Long-Term Debt 7,500 7,500 Deferred Income Taxes 20,211 19,573 Deferred Liabilities 2,193 1,595 Nonpension Postretirement and Postemployment Benefits 13,971 13,729 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 33,258 33,061 Retained earnings 178,164 169,438 Cumulative translation adjustments (643) (686) ------------------------------------ 234,109 225,143 Less common stock in treasury, at cost - 3,812,271 shares in 1996 and 3,805,071 shares in 1995 71,159 70,501 Due from officers (549) (960) - --------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 162,401 153,682 =============================================================================================================== Total Liabilities and Stockholders' Equity $306,013 $293,180 ===============================================================================================================
3 of 9 4 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Nine Months Ended ------------------------------------ September 27, September 29, (Dollars in thousands) 1996 1995 ============================================================================================================= CASH FLOW FROM OPERATING ACTIVITIES ============================================================================================================= Net Income $15,177 $8,351 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 10,313 9,873 Deferred income taxes (826) 678 Equity in joint venture income (3,643) (5,798) Loss on asset disposals 224 99 Other 13 36 Change in assets and liabilities: (Increase) in short-term investments (990) (2,055) (Increase) in accounts receivable (9,305) (482) (Increase)/decrease in inventories (4,236) 9,392 Decrease/(Increase) in prepaid expenses 1,361 (265) Increase in accounts payable 4,148 2,252 Increase in income taxes payable 3,475 3,460 Increase in other liabilities 839 1,426 ============================================================================================================= NET CASH PROVIDED BY OPERATING ACTIVITIES 16,550 26,967 CASH FLOW FROM INVESTING ACTIVITIES - ------------------------------------------------------------------------------------------------------------- Additions to property, plant and equipment (4,005) (16,522) Proceeds from asset disposals - 230 Repayment of officer loans 412 - Purchase of officer loans - (2,744) Distributions from joint venture 4,133 6,720 ============================================================================================================= NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 540 (12,316) CASH FLOW FROM FINANCING ACTIVITIES - ------------------------------------------------------------------------------------------------------------- Short-term debt repayments (5,000) (5,000) Payment of cash dividends (6,451) (6,457) Proceeds from stock options exercised 858 1,275 Purchase of treasury stock (1,320) (512) ============================================================================================================= NET CASH USED IN FINANCING ACTIVITIES (11,913) (10,694) NET CHANGE IN CASH AND CASH EQUIVALENTS 5,177 3,957 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,355 4,659 ============================================================================================================= CASH AND CASH EQUIVALENTS AT END OF PERIOD $16,532 $8,616 =============================================================================================================
4 of 9 5 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The consolidated balance sheet as of September 27, 1996, the consolidated statements of income and retained earnings for the nine months ended September 27, 1996 and September 29, 1995, 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 27, 1996 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, 1995 annual report to shareholders. The results of operations for the period ended September 27, 1996 are not necessarily indicative of the operating results for the full year.
2. Inventories consist of the following: Sept. 27, Dec. 31, (in thousands) 1996 1995 =============================================================================================================== Raw materials and supplies $12,424 $11,066 Work in process 113 134 Finished goods 33,055 30,149 --------------------------- $45,592 $41,349 ===============================================================================================================
3. Property, Plant and Equipment consist of the following: Sept. 27, Dec. 31, (in thousands) 1996 1995 =============================================================================================================== Land $3,189 $3,188 Buildings and improvements 64,129 63,949 Machinery and equipment 152,803 151,965 Office equipment and other assets 14,680 14,633 Mineral rights 5,020 5,020 Construction in progress 3,898 1,145 --------------------------- 243,719 239,900 Less accumulated depreciation and amortization 105,485 95,561 --------------------------- Net Property, Plant and Equipment $138,234 $144,339 ===============================================================================================================
5 of 9 6 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. 27, Sept. 29, Sept. 27, Sept. 29, (in thousands) 1996 1995 1996 1995 ================================================================================================================= Net sales $9,072 $11,249 $29,156 $38,003 Gross profit 2,750 2,853 9,170 13,414 Net income 1,896 2,006 6,606 10,916 Company's share in net income 948 1,003 3,303 5,458 Elimination of Company's share of intercompany interest expense 113 113 340 340 ---------------------------- -------------------------- Equity in joint venture income $1,061 $1,116 $3,643 $5,798 =================================================================================================================
5. Restructuring Charge In 1993, 1994 and 1995, 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, 1995 Payments Sept. 27, 1996 - ----------------------------------------------------------------------------------------------------------- Fixed asset removal and demolition $ 587 $ 44 $ 543 Severance and related 1,765 1,484 281 Other 1,204 82 1,122 - ----------------------------------------------------------------------------------------------------------- $3,556 $1,610 $1,946
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 9 7 MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations For the quarter ended September 27, 1996, net income was $5.2 million or $.27 per share. This compares with $1.6 million or $.08 per share after a pre-tax restructuring charge of $4.0 million or the equivalent of $.13 per share, in the same period of 1995. For the first nine months of 1996, net income was $15.2 million or $.78 per share compared with $8.4 million or $.43 per share in 1995. Net sales in the quarter were $137.1 million, representing an increase of $16.6 million or 13.8% versus a year ago. This increase was due to substantially higher sales of ARM & HAMMER(R) Liquid Laundry Detergent, ARM & HAMMER Dental Care(R) and ARM & HAMMER Deodorant Anti-Perspirant. Specialty Products sales were flat. Net sales for the first nine months of 1996 were $393.3 million, a $25.8 million or 7.0% increase over the first nine months of 1995. The increase is primarily due to higher sales of ARM & HAMMER Liquid Laundry Detergent, which was relaunched earlier in the year, as well as higher sales of ARM & HAMMER Dental Care and the ARM & HAMMER Deodorant Anti-Perspirant line. These increases were partially offset by lower sales of ARM & HAMMER Carpet Deodorizer. Specialty Products sales were slightly higher, led by higher sales of MEGALAC(R) Rumen Bypass Fat, and the continued strong performance of the Company's Brotherton Speciality Products Ltd. subsidiary in the U.K. The Company's gross margin was 43.0% for the third quarter and 42.8% for the nine month period. This compares with 40.9% for the third quarter and 41.4% for the nine month period of 1995. The gross margin improvement is primarily a result of higher effective selling prices for liquid detergent, and lower manufacturing and distribution costs. This improvement was partially offset by a change in product mix and a third quarter special pack promotion for ARM & HAMMER Dental Care. Selling, general and administrative expenses increased $8.0 million in the current quarter versus a year ago. Increased promotional support behind ARM & HAMMER Powder and Liquid Laundry Detergent and ARM & HAMMER Dental Care, and higher advertising support for the personal care product lines were the primary reasons for the increase. General and administrative expenses continue to be lower than last year because of various cost reduction programs undertaken by the Company over the last 12 months. For the nine month period, selling, general and administrative expenses increased $7.8 million versus last year. This increase primarily reflects the costs of the relaunch of ARM & HAMMER Liquid Laundry Detergent. General and administrative costs were lower due to cost reduction programs referred to earlier. The Company's Armand Products Company saw sales decline 19.4% in the current quarter and 23.3% for the nine month period due to new competition coming into the marketplace, which has been anticipated for some time. Equity income in the current quarter was slightly below 1995, and 37.2% lower for the nine month period. Interest payments were significantly lower for both the third quarter and nine month period as a result of the repayment of short-term debt, while investment income increased slightly. Other expenses in 1996 included foreign exchange losses, primarily due to the devaluation of the Venezuela bolivar. The effective tax rate for the nine month period of 1996 was 37.4% as compared with 40.5% for 1995. This decrease is due to the utilization of foreign operating loss carryforwards in 1996 for which the benefits were not recognizable in 1995. Liquidity and Capital Resources The Company considers cash and short-term investments as the principal measurement of its liquidity. At September 27, 1996, cash including cash equivalents and short-term investments totaled $22.5 million compared to $16.4 million at December 31, 1995. During the first nine months of 1996, the Company generated $16.6 million of positive cash flow from operating activities and received $4.1 million in distributions from its Armand Products joint venture. Significant expenditures included additions to property, plant and equipment of $4.0 million, the repayment of its outstanding short-term debt of $5.0 million and the payment of cash dividends of $6.5 million. 7 of 9 8 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 27, 1996. 8 of 9 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, 1996 Zvi Eiref ------------------------- --------------------------------------- ZVI EIREF VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER DATE: November 7, 1996 Gary P. Halker ------------------------- --------------------------------------- GARY P. HALKER VICE PRESIDENT, CONTROLLER AND CHIEF INFORMATION OFFICER 9 of 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 16,532 6,017 55,062 1,316 45,592 139,006 243,719 105,485 306,013 99,737 7,500 0 0 23,330 139,071 306,013 393,265 393,265 224,886 224,886 0 150 317 24,242 9,065 15,177 0 0 0 15,177 .78 .78
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