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 March 31, 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 April 28, 1995, there were 19,544,095 shares of Common Stock
outstanding.
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PART I - FINANCIAL INFORMATION
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended
(In thousands, except per share data) March 31, April 1,
1995 1994
Net Sales $117,963 $111,511
Cost of sales 68,693 64,191
Gross profit 49,270 47,320
Selling, general and administrative expenses 49,520 45,542
Income/(Loss) from Operations (250) 1,778
Equity in joint venture income 2,429 1,621
Investment income 264 189
Gain on disposal of product lines 102 103
Other income 31 164
Interest expense (438) (24)
Income before taxes 2,138 3,831
Income taxes 995 1,412
Net Income 1,143 2,419
Retained earnings at beginning of period 167,901 170,434
169,044 172,853
Dividends paid 2,148 2,210
Retained earnings at end of period $166,896 $170,643
Weighted average shares outstanding 19,533 20,071
Earnings Per Share:
Net income per share $.06 $.12
</TABLE>
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
1995 1994
(Dollars in thousands) (Unaudited)
Assets
Current Assets
Cash and cash equivalents $6,983 $4,659
Short-term investments - 2,976
Accounts receivable 43,386 44,404
Inventories (Note 2) 51,908 54,683
Deferred income taxes 11,807 11,927
Prepaid expenses 6,402 5,663
Total Current Assets 120,486 124,312
Property, Plant and Equipment (Note 3) 140,506 138,460
Note Receivable from Joint Venture 11,000 11,000
Equity Investment in Joint Venture 14,091 13,868
Long-Term Supply Contracts 4,256 4,391
Intangibles, principally Goodwill 3,556 3,556
Total Assets $293,895 $295,587
Liabilities and Stockholders' Equity
Current Liabilities
Short-term borrowings $21,000 $25,000
Accounts payable and accrued expenses 74,844 72,974
Income taxes payable 2,489 1,802
Total Current Liabilities 98,333 99,776
Long-Term Debt 7,500 7,500
Deferred Income Taxes 20,193 19,994
Deferred Income 236 339
Deferred Liabilities 1,293 1,176
Nonpension Postretirement
and Postemployment Benefits 13,085 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 32,835 32,823
Retained earnings 166,896 167,901
Cumulative translation adjustments (608) (741)
222,453 223,313
Less common stock in treasury, at cost -
3,787,799 shares in 1995 and
3,803,659 shares in 1994 69,198 69,372
Total Stockholders' Equity 153,255 153,941
Total Liabilities and Stockholders' Equity $293,895 $295,587
</TABLE>
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
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Three Months Ended
March 31, April 1,
(Dollars in thousands) 1995 1994
Cash Flow From Operating Activities
Net Income $1,143 $2,419
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 3,211 3,143
Deferred income taxes 313 (2,054)
Equity in joint venture income (2,429) (1,621)
Gain on asset disposals (102) (103)
Other 8 (87)
Change in assets and liabilities:
Decrease in short-term investments 2,976 2,000
(Increase) decrease in accounts receivable 1,084 (3,102)
(Increase) decrease in inventories 2,805 (2,280)
(Increase) in prepaid expenses (736) (1,164)
Increase (decrease) in accounts payable 1,815 (1,714)
Increase in income taxes payable 682 5,584
Increase in other liabilities 340 225
Net Cash Provided By Operating Activities 11,110 1,246
Cash Flow From Investing Activities
Additions to property, plant and equipment (5,031) (5,763)
Distributions from joint venture 2,207 1,517
Net Cash Used In Investing Activities (2,824) (4,246)
Cash Flow From Financing Activities
Short-term borrowing/(repayments) (4,000) 8,000
Payment of cash dividends (2,148) (2,210)
Proceeds from stock options exercised 217 124
Purchase of treasury stock (31) (2,427)
Net Cash Provided by (Used In) Financing Activities (5,962) 3,487
Net Change In Cash and Cash Equivalents 2,324 487
Cash And Cash Equivalents At Beginning Of Year 4,659 5,581
Cash And Cash Equivalents At End Of Period $6,983 $6,068
</TABLE>
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated balance sheet as of March 31, 1995, the consolidated
statements of income and retained earnings for the three months ended March
31, 1995 and April 1, 1994, and the consolidated statements of cash flow for
the three 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 March 31, 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 March 31, 1995 are not necessarily indicative of the operating
results for the full year.
<TABLE>
<CAPTION>
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2. Inventories consist of the following: March 31, Dec. 31,
(in thousands) 1995 1994
Raw materials and supplies $12,068 $12,237
Work in process 131 103
Finished goods 39,709 42,343
$51,908 $54,683
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
3. Property, Plant and Equipment
consist of the following: March 31, Dec. 31,
(in thousands) 1995 1994
Land $3,110 $3,107
Buildings and improvements 59,895 59,874
Machinery and equipment 135,722 135,188
Office equipment and other assets 13,355 13,324
Mineral rights 5,020 5,020
Construction in progress 10,433 5,859
227,535 222,372
Less accumulated depreciation and amortization 87,029 83,912
Net Property, Plant and Equipment $140,506 $138,460
</TABLE>
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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.
<TABLE>
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Three Months Ended
March 31, April 1,
(in thousands) 1995 1994
Net sales $13,298 $10,803
Gross profit 5,447 3,818
Net income 4,632 3,016
Company's share in net income 2,316 1,508
Elimination of Company's share
of intercompany interest expense 113 113
Equity in joint venture income $2,429 $1,621
</TABLE>
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:
<TABLE>
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Reserves at Disposals/ Reserves at
(in thousands) December 31, 1994 Payments March 31, 1995
Fixed asset removal
and demolition $992 $144 $848
Severance and related 2,154 1,062 1,092
Other 1,233 - 1,233
$4,379 $1,206 $3,173
</TABLE>
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the quarter ended March 31, 1995, net income was $1.1 million or $.06
per share. This compares with $2.4 million or $.12 per share for the first
quarter of 1994.
Net sales for the quarter were $118.0 million, representing an increase of
$6.5 million or 5.8% versus the same period of 1994. The increase is
primarily due to unit volume associated with ARM & HAMMER (registered
trademark) Deodorant Anti-Perspirant, which was in the early stages of its
national introduction a year ago, and increased unit volume of ARM & HAMMER
Powder Laundry Detergent. These increases were partially offset by lower
sales of ARM & HAMMER Liquid Laundry Detergent and lower unit volume of
ARM & HAMMER DENTAL CARE (registered trademark). Specialty Product sales
increased as well, led by a strong performance of the Company's Brotherton
Speciality Products Ltd. subsidiary in the U.K., offset by weakness in the
agricultural business due to a very competitive low-end marketplace.
Gross margin was 41.8% in the first quarter, as compared with 42.4% in the
first quarter of 1994. This decline is primarily due to a weaker product
mix associated with lower unit volume of ARM & HAMMER DENTAL CARE, and to a
lesser extent, higher manufacturing costs.
Selling, general and administrative expenses were up $4.0 million or 8.7%
in the current quarter compared to a year ago mostly due to higher levels of
advertising and promotion in support of ARM & HAMMER DENTAL CARE and
ARM & HAMMER Deodorant Anti-Perspirant. This increase was somewhat offset
by lower promotion costs associated with concentrated ARM & HAMMER Liquid
Laundry Detergent which was first being introduced in the same period last
year.
The Company's Armand Products Company joint venture had a very strong
quarter with sales increasing by 23% resulting in a $.8 million increase in
equity earnings compared to the first quarter of 1994.
Interest payments were significantly higher in the first quarter as compared
to the first quarter of a year ago as a result of an increase in short-term
borrowing, while investment income was flat.
The effective tax rate for the current quarter was 46.5%, up from 36.9% from
a year ago. This 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 March 31, 1995, cash including cash
equivalents and short-term investments totaled $7.0 million as compared to
$7.6 million at December 31, 1994.
During the first quarter of 1995, the Company generated $11.1 million of
positive cash flow from operating activities and received $2.2 million in
distributions from its Armand Products joint venture. Significant
expenditures included additions to property, plant and equipment of $5.0
million, the payment of cash dividends of $2.1 million, and the repayment
of $4.0 million of short-term borrowings.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended March 31, 1995.
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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: May 5, 1995 /s/ Anthony P. Deasey
ANTHONY P. DEASEY
VICE PRESIDENT FINANCE
DATE: May 5, 1995 /s/ Mark L. Stolp
MARK L. STOLP
CONTROLLER
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<MULTIPLIER> 1,000
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 6,983
<SECURITIES> 0
<RECEIVABLES> 44,351
<ALLOWANCES> 965
<INVENTORY> 51,908
<CURRENT-ASSETS> 120,486
<PP&E> 227,535
<DEPRECIATION> 87,029
<TOTAL-ASSETS> 293,895
<CURRENT-LIABILITIES> 98,333
<BONDS> 7,500
<COMMON> 23,330
0
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<OTHER-SE> 129,925
<TOTAL-LIABILITY-AND-EQUITY> 293,895
<SALES> 117,963
<TOTAL-REVENUES> 117,963
<CGS> 68,693
<TOTAL-COSTS> 68,693
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 67
<INTEREST-EXPENSE> 438
<INCOME-PRETAX> 2,138
<INCOME-TAX> 995
<INCOME-CONTINUING> 1,143
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,143
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
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