SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 10, 2004
Church & Dwight Co., Inc.
(Exact name of Registrant as Specified in Charter)
| Delaware | 1-10585 | 13-4996950 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 469 North Harrison Street, Princeton, New Jersey | 08543 | |
| (Address of principal executive offices) | Zip Code |
Registrant’s telephone, including area code: (609) 683-5900
N/A
(Former name and former address, if changed since last report)
ITEM 5. OTHER EVENTS.
Set forth below is unaudited capsule information for the quarter and six months ended July 2, 2004 and June 27, 2003:
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| (In thousands, except per share data) |
July 2, 2004 |
June 27, 2003 |
July 2, 2004 |
June 27, 2003 |
||||||||||||
| Net Sales |
$ | 340,785 | $ | 256,263 | $ | 636,776 | $ | 504,561 | ||||||||
| Cost of sales |
221,109 | 176,690 | 420,538 | 351,154 | ||||||||||||
| Gross profit |
119,676 | 79,573 | 216,238 | 153,407 | ||||||||||||
| Marketing expenses |
36,118 | 26,288 | 60,306 | 43,231 | ||||||||||||
| Selling, general and administrative expenses |
42,130 | 28,236 | 76,044 | 56,346 | ||||||||||||
| Income from Operations |
41,428 | 25,049 | 79,888 | 53,830 | ||||||||||||
| Equity in earnings of affiliates |
2,792 | 12,528 | 12,616 | 20,680 | ||||||||||||
| Other income (expense), net |
(14,755 | ) | (3,753 | ) | (18,397 | ) | (8,624 | ) | ||||||||
| Income before minority interest and taxes |
29,465 | 33,824 | 74,107 | 65,886 | ||||||||||||
| Income taxes |
9,885 | 9,192 | 24,615 | 20,299 | ||||||||||||
| Minority Interest |
7 | 6 | 13 | 15 | ||||||||||||
| Net Income |
$ | 19,573 | $ | 24,626 | $ | 49,479 | $ | 45,572 | ||||||||
| Net Income per share - Basic |
$ | 0.48 | $ | 0.61 | $ | 1.21 | $ | 1.14 | ||||||||
| Net Income per share - Diluted |
$ | 0.45 | $ | 0.59 | $ | 1.15 | $ | 1.09 | ||||||||
| Dividend per share |
$ | 0.08 | $ | 0.075 | $ | 0.16 | $ | 0.15 | ||||||||
| Weighted average shares outstanding - Basic |
41,064 | 40,132 | 40,973 | 40,039 | ||||||||||||
| Weighted average shares outstanding - Diluted |
43,232 | 42,072 | 43,115 | 41,967 | ||||||||||||
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
| (Dollars in thousands) |
July 2, 2004 |
June 27, 2003 | ||||
| Assets |
||||||
| Current Assets |
||||||
| Cash, equivalents and securities |
$ | 119,561 | $ | 54,011 | ||
| Accounts receivable |
206,093 | 102,383 | ||||
| Inventories |
157,981 | 86,535 | ||||
| Other current assets |
34,879 | 23,624 | ||||
| Total Current Assets |
518,514 | 266,553 | ||||
| Property, Plant and Equipment (Net) |
327,293 | 244,839 | ||||
| Equity Investment in Affiliates |
13,663 | 148,479 | ||||
| Intangibles and other assets |
995,307 | 332,796 | ||||
| Total Assets |
$ | 1,854,777 | $ | 992,667 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Short-Term Debt |
$ | 74,613 | $ | 66,481 | ||
| Other Current Liabilities |
260,567 | 170,425 | ||||
| Total Current Liabilities |
335,180 | 236,906 | ||||
| Long-Term Debt |
858,234 | 253,243 | ||||
| Other Long-Term Liabilities |
166,181 | 105,169 | ||||
| Stockholders’ Equity |
495,182 | 397,349 | ||||
| Total Liabilities and Stockholders’ Equity |
$ | 1,854,777 | $ | 992,667 | ||
SUPPLEMENTARY INFORMATION
Results for the quarter ended July 2, 2004 include pretax accounting charges of $12.1 million or $0.17 per share resulting from Church & Dwight’s acquisition of the remaining 50% interest in Armkel, LLC that it did not previously own, on May 28, 2004, which are described below. Results for the quarter ended June 27, 2003 included a net $0.13 per share gain primarily related to the settlement of litigation and the release of prior year tax reserves resulting from the settlement of a state tax dispute.
Second quarter 2004 sales include sales of $43.5 million for the former Armkel business since its acquisition, and sales of $28.1 million for the former Unilever oral care business in North America acquired late last year. For the first six months of 2004, sales increased, primarily due to combined sales of $101.7 million for the acquired Armkel and oral care businesses.
Second quarter 2004 gross profit margin of 35.1% was 4.0% higher than last year, mostly due to the addition of the higher margin Armkel and oral care businesses. This year’s results also include a $4.1 million pretax or $0.06 per share inventory step-up accounting charge related to the acquisition of the Armkel business. For the six months period ended July 2, 2004, gross margin was 34.0% compared to last year’s 30.4%.
Second quarter 2004 marketing spending, and selling, general and administrative expenses, were both significantly higher than last year primarily due to the Armkel and oral care acquisitions.
Second quarter 2004 income from operations of $41.4 million was $16.4 million higher than last year’s $25.0 million, mostly due to the Armkel and oral care acquisitions.
The $9.7 million reduction in earnings from affiliates for the second quarter of 2004 reflects Church & Dwight’s consolidation of the Armkel results since the date of acquisition, as well as the effect of a pre-acquisition $4.9 million impairment charge incurred by Armkel for a trademark used in its European business.
The $11.0 million increase in other expense for the three months ended July 2, 2004 includes an $8.0 million pretax or $0.11 per share accounting charge for the write-off of deferred financing costs incurred by Church & Dwight and Armkel on preexisting debt which was refinanced as part of the Armkel buyout. The remaining $3.0 million primarily consists of interest costs on the debt assumed by Church & Dwight after the buyout.
At quarter-end, the Company had total outstanding debt of $932.8 million, and cash of $119.6 million, for a net debt position of $813.2 million. During the past year, the Company has invested approximately $360 million in making the acquisitions of the Unilever oral care business in North America and the remaining 50% interest in Armkel.
SIGNATURE
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 hereunto duly authorized.
| CHURCH & DWIGHT CO., INC. | ||||
| Date: August 10, 2004 |
By: |
/s/ JAMES R. CRAIGIE | ||
| Name: |
JAMES R. CRAIGIE | |||
| Title: |
President and Chief Executive Officer | |||