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 30, 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 July 28, 1995, there were 19,579,570 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 Six Months Ended
June 30, July 1 June 30, July 1,
(In thousands, except per share) 1995 1994 1995 1994
Net Sales $128,980 $130,656 $246,943 $242,167
Cost of sales 75,253 72,858 143,946 137,049
Gross profit 53,727 57,798 102,997 105,118
Selling, general and
administrative expenses 47,002 49,393 96,522 94,935
Income from Operations 6,725 8,405 6,475 10,183
Equity in joint venture income 2,253 2,194 4,682 3,815
Investment income 267 175 531 364
Gain on disposal of
product lines 103 102 205 205
Other income/(expense) 46 (50) 77 114
Interest expense (387) (244) (825) (268)
Income before taxes 9,007 10,582 11,145 14,413
Income taxes 3,365 4,194 4,360 5,606
Net Income 5,642 6,388 6,785 8,807
Retained earnings at
beginning of period 166,896 170,643 167,901 170,434
172,538 177,031 174,686 179,241
Dividends paid 2,153 2,141 4,301 4,351
Retained earnings at
end of period $170,385 $174,890 $170,385 $174,890
Weighted average shares
outstanding 19,559 19,673 19,546 19,872
Earnings Per Share:
Net income per share $.29 $.32 $.35 $.44
</TABLE>
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1995 1994
(Dollars in thousands) (Unaudited)
Assets
Current Assets
Cash and cash equivalents $6,683 $4,659
Short-term investments 2,000 2,976
Accounts receivable 51,756 44,404
Inventories (Note 2) 50,492 54,683
Deferred income taxes 12,030 11,927
Prepaid expenses 6,854 5,663
Total Current Assets 129,815 124,312
Property, Plant and Equipment (Note 3) 143,972 138,460
Note Receivable from Joint Venture 11,000 11,000
Equity Investment in Joint Venture 13,962 13,868
Long-Term Supply Contracts 4,121 4,391
Intangibles, principally Goodwill 3,556 3,556
Total Assets $306,426 $295,587
Liabilities and Stockholders' Equity
Current Liabilities
Short-term borrowings $24,824 $25,000
Accounts payable and accrued expenses 77,232 72,974
Income taxes payable 3,696 1,802
Total Current Liabilities 105,752 99,776
Long-Term Debt 7,500 7,500
Deferred Income Taxes 21,022 19,994
Deferred Income 134 339
Deferred Liabilities 1,415 1,176
Nonpension Postretirement
and Postemployment Benefits 13,511 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 32,752 32,823
Retained earnings 170,385 167,901
Cumulative translation adjustments (607) (741)
225,860 223,313
Less common stock in treasury, at cost -
3,750,924 shares in 1995 and
3,803,659 shares in 1994 68,768 69,372
Total Stockholders' Equity 157,092 153,941
Total Liabilities and Stockholders' Equity $306,426 $295,587
</TABLE>
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
(Dollars in thousands) June 30, July 1
1995 1994
<S> <C> <C>
Cash Flow From Operating Activities
Net Income $6,785 $8,807
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization 6,434 6,256
Deferred income taxes 921 (1,799)
Equity in joint venture income (4,682) (3,815)
(Gain) on asset disposals (205) (205)
Other 13 (217)
Change in assets and liabilities:
Decrease in short-term investments 976 3,001
(Increase) in accounts receivable (7,286) (11,280)
(Increase)/decrease in inventories 4,246 (5,570)
(Increase) in prepaid expenses (1,185) (641)
Increase in accounts payable 4,196 702
Increase in income taxes payable 1,893 5,348
Increase in other liabilities 889 509
Net Cash Provided By Operating Activities 12,995 1,096
Cash Flow From Investing Activities
Additions to property, plant and equipment (11,614) (13,117)
Investment in subsidiary - (625)
Distributions from joint venture 4,587 5,222
Net Cash Used In Investing Activities (7,027) (8,520)
Cash Flow From Financing Activities
Short-term borrowing/(repayments) (176) 24,300
Payment of cash dividends (4,301) (4,351)
Proceeds from sale of common stock - 1,595
Proceeds from stock options exercised 564 458
Purchase of treasury stock (31) (14,469)
Net Cash Provided by (Used In)
Financing Activities (3,944) 7,533
Net Change In Cash and Cash Equivalents 2,024 109
Cash And Cash Equivalents At Beginning Of Year 4,659 5,581
Cash And Cash Equivalents At End Of Period $6,683 $5,690
</TABLE>
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated balance sheet as of June 30, 1995, the
consolidated statements of income and retained earnings for the six
months ended June 30, 1995 and July 1, 1994, and the consolidated
statements of cash flow for the six 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 June 30, 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 June
30, 1995 are not necessarily indicative of the operating results
for the full year.
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<CAPTION>
2. Inventories consist of the following:
<S> <C> <C>
June 30, Dec. 31,
1995 1994
(in thousands)
Raw materials and supplies $13,058 $12,237
Work in process 124 103
Finished goods 37,310 42,343
$50,492 $54,683
</TABLE>
<TABLE>
<CAPTION>
3. Property, Plant and Equipment consist of the following:
<S> <C> <C>
June 30, Dec. 31,
1995 1994
(in thousands)
Land $3,173 $3,107
Buildings and improvements 60,055 59,874
Machinery and equipment 137,938 135,188
Office equipment and other assets 13,420 13,324
Mineral rights 5,020 5,020
Construction in progress 14,480 5,859
234,086 222,372
Less accumulated depreciation and amortization 90,114 83,912
Net Property, Plant and Equipment $143,972 $138,460
</TABLE>
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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.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
<S> <C> <C> <C> <C>
(in thousands) June 30, July 1, June 30, July 1,
1995 1994 1995 1994
Net sales $13,456 $12,021 $26,754 $22,824
Gross profit 5,114 4,973 10,561 8,791
Net income 4,278 4,160 8,910 7,176
Company's share in net income 2,139 2,080 4,455 3,588
Elimination of Company's
share of intercompany
interest expense 114 114 227 227
Equity in joint venture
income $2,253 $2,194 $4,682 $3,815
</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>
<CAPTION>
Reserves at Disposals/ Reserves at
(in thousands) December 31, 1994 Payments June 30, 1995
<S> <C> <C> <C>
Fixed asset removal
and demolition $992 $282 $710
Severance and related 2,154 1,843 311
Other 1,233 - 1,233
$4,379 $2,125 $2,254
</TABLE>
6. Subsequent Event
On July 27, 1995, the Company announced it will recognize in the
third quarter a restructuring charge expected to be approximately
$5.0 million pre-tax or $.15 per share primarily related to a
reduction in workforce. It is anticipated that the charge will be
fully recognized through operating cash flows over the ensuing
twelve months.
7. 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 June 30, 1995, net income was $5.6
million or $.29 per share. This compares with $6.4 million or $.32
per share for the same period of 1994. For the first six months of
1995, net income was $6.8 million or $.35 per share compared with
$8.8 million or $.44 per share for 1994.
Net sales in the second quarter were $129.0 million, a 1.3
percent decline versus a year ago. Volume gains of ARM & HAMMERR
Deodorant Anti-Perspirant and the national introduction of
ARM & HAMMER PEROXICARER tartar control toothpaste were more than
offset by volume declines of ARM & HAMMER Powder Laundry Detergent,
ARM & HAMMER Carpet Deodorizer and price discounting of
ARM & HAMMER Liquid Laundry Detergent. Specialty Products sales
increased, led by the continued strong performance of the Company's
Brotherton Specialty Products Ltd. subsidiary in the U. K.,
continued growth in the industrial cleaning group and performance
sodium bicarbonate. These increases were partially offset by lower
unit volume of MEGALACR Rumen Bypass Fat.
Net sales for the first six months were $246.9 million, a 2.0
percent increase over the first six months of 1994. Unit volume
gains on ARM & HAMMER Deodorant Anti-Perspirant and ARM & HAMMER
DENTAL CARE more than offset price discounting of ARM & HAMMER
Liquid Laundry Detergent. Specialty Products sales also increased
for the first six months for the same reasons as the second
quarter.
The Company's gross margin for the second quarter and for the
six month period was 41.7 percent. This compares with 44.2 percent
and 43.4 percent in the corresponding quarter and six months of
last year. The gross margin changes for both the quarter and the
six month period are a result of higher manufacturing costs and
increased price discounting of ARM & HAMMER Liquid Laundry
Detergent.
Selling, general and administrative expenses decreased $2.4
million or 4.8 percent in the current quarter compared to the same
period a year ago. The reduction in cost was primarily a result of
lower advertising of ARM & HAMMER Baking Soda and lower promotion
of concentrated ARM & HAMMER Liquid Laundry Detergent, which was
being introduced nationally in the same period of last year. These
decreases were partially offset by introductory advertising and
promotion in support of ARM & HAMMER PEROXICARE
tartar control toothpaste. Selling, general and administrative
costs increased in the first half of 1995 versus 1994 as a result
of higher advertising and promotion costs associated with
ARM & HAMMER DENTAL CARE and ARM & HAMMER Deodorant Anti-Perspirant
partially offset by lower promotion costs of ARM & HAMMER Liquid
Laundry Detergent, and lower ARM & HAMMER Baking Soda advertising.
The Company's Armand Products Company joint venture has
experienced sales growth of 12 percent and 17 percent in the
current quarter and six month period respectively. In the current
quarter, equity earnings increased slightly versus a year ago but
is higher for the six month period by $.9 million.
Interest payments were significantly higher in the second
quarter and for the six month period compared to last year as a
result of an increase in short-term borrowing.
The effective tax rate for the first half of 1995 was 39.1
percent, up slightly from 38.9 percent in the first half of 1994.
The 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 June 30, 1995, cash
including cash equivalents and short-term investments totaled $8.7
million compared to $7.6 million at December 31, 1994.
During the first half of 1995, the Company generated $13.0
million of positive cash flow from operating activities and
received $4.6 million in distributions from its Armand Products
joint venture. Significant expenditures included additions to
property, plant and equipment of $11.6 million and the payment of
cash dividends of $4.3 million.
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PART II - Other Information
Item 4. Results of Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on May
11, 1995. The following nominees were elected to the Company's
Board of Directors for a term of three years.
Nominee For Withhold
Robert H. Beeby 42,604,767 275,301
J. Richard Leaman, Jr. 42,155,961 724,107
Dwight C. Minton 42,538,210 341,858
John O. Whitney 42,540,556 330,512
The results of voting on the following additional items were
as follows:
Proposal to amend the 1983 Stock Option Plan to increase the
total number of shares authorized for issuance thereunder.
For Against Abstained Broker Non-Votes
36,782,548 3,780,587 535,732 1,781,201
Approval of the appointment of Deloitte & Touche as
independent auditors of the Company's 1995 financial statements.
For Against Abstained Broker Non-Votes
41,246,683 1,122,024 511,361 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
3,429,910 36,772,139 896,816 1,781,203
To consider and act upon a stockholder proposal requesting
that the Board of Directors search for qualified minority
candidates for nomination to the Board of Directors.
For Against Abstained Broker Non-Votes
1,745,161 37,819,652 1,534,053 1,781,202
Item 6. Exhibits and Reports of Form 8-K
(a) No reports on Form 8-K were filed for the three months
ended June 30, 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: August 8, 1995 /s/ Anthony P. Deasey
ANTHONY P. DEASEY
VICE PRESIDENT FINANCE
DATE: August 8, 1995 /s/ Gary P. Halker
GARY P. HALKER
CONTROLLER
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 6,683
<SECURITIES> 2,000
<RECEIVABLES> 52,794
<ALLOWANCES> 1,038
<INVENTORY> 50,492
<CURRENT-ASSETS> 129,815
<PP&E> 234,086
<DEPRECIATION> 90,114
<TOTAL-ASSETS> 306,426
<CURRENT-LIABILITIES> 105,752
<BONDS> 7,500
<COMMON> 23,330
0
0
<OTHER-SE> 133,762
<TOTAL-LIABILITY-AND-EQUITY> 306,426
<SALES> 246,943
<TOTAL-REVENUES> 246,943
<CGS> 143,946
<TOTAL-COSTS> 143,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 117
<INTEREST-EXPENSE> 825
<INCOME-PRETAX> 11,145
<INCOME-TAX> 4,360
<INCOME-CONTINUING> 6,785
<DISCONTINUED> 4
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,785
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
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