November 28, 2007
Melissa N. Rocha, CPA
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 7010
100 F Street, NE
Washington, DC 20549
Re: | Church & Dwight Co., Inc |
Form 10-K for Fiscal Year Ended December 31, 2006 | |
File No. 001-10585 |
Dear Ms. Rocha:
Thank you for your prompt response to our letter dated November 2, 2007. As requested, we have provided the following related to your specific questions.
1. | Elaborate on your description of competitive activity as used in the intangible asset disclosure. |
In future filings, we will change our description from “competitive activity” to specifically state “lost distribution at key customer accounts”. Please see the revised disclosure.
The Company recorded trademark impairment charges within selling, general and administrative expenses as follows:
Segment: | 2007 | 2006 | 2005 | |||||||||
Consumer Domestic | $ | XX | $ | 11.0 | $ | 3.2 | ||||||
Consumer International | $ | XX | $ | 3.3 | $ | 3.1 | ||||||
Total | $ | XX | $ | 14.3 | $ | 6.3 |
The impairment charges were recorded as a result of lost distribution at key customer accounts causing lower forecasted sales and profitability. The amount of the impairment charge was determined by comparing the estimated fair value of the asset to its carrying amount. Fair value was estimated based on a “relief from royalty” discounted cash flow method. Under this method, the owner of an intangible asset must determine the arm's length royalty that likely would have been charged if the owner had to license that asset from a third party. The Company determined the remaining carrying value of all tradenames was recoverable based upon the forecasted cash flows and profitability of the brands.
During the fourth quarter of 2006, the Company determined that certain tradenames should be re-characterized from indefinite lived to finite lived assets. This conclusion was based upon recurring impairment charges, continued competition in the marketplace, and the determination of a key customer to discontinue a product sold under one of these tradenames. The carrying value of these tradenames as of December 31, 2006 was approximately $20.0 million, and is being amortized over lives ranging from 3 to 15 years beginning on January 1, 2007. These lives were determined based upon the estimated future cash flows of these brands.
2. | In respect to the guarantor financial information provided in the Company’s September 28, 2007 Form 10-Q, you asked that: |
a. | We review the requirements of Section 3-10 (I) (3), and provide draft condensed consolidated financial statements which include, in the parent column, the parent's equity income in the guarantor and non-guarantor subsidiaries. |
The Company has reviewed the requirement of Rule 3-10 (I) (3) and acknowledges the need to revise our presentation to include our 100% owned subsidiaries under the equity method of accounting. Please refer to the revised presentation.
b. | We explain the sales and cost of sales eliminations |
In response to your question, we have modified our presentation to appropriately reflect the elimination of intercompany sales and profit in inventory. We have also changed our allocation of income tax expense. Please refer to the revised presentation.
It is still the Company’s intent to incorporate these changes on a prospective basis in its 2007 Form 10-K as it will be available in the near future.
Thank you for your consideration. If you have any further questions or comments, please address them to Steven J. Katz, Vice President, Controller at (609)-497-7120.
Sincerely,
CHURCH & DWIGHT CO., INC
By: | /s/ Matthew T. Farrell |
Matthew T. Farrell
Executive Vice President Finance and Chief Financial Officer
Supplemental Financial Information of Guarantor and Non-Guarantor Operations
The Company’s 6% senior subordinated notes are fully and unconditionally guaranteed, by certain 100% owned domestic subsidiaries of the Company on a joint and several basis. The following information is presented in response to Rule 3-10 of Regulation S-X, promulgated by the Securities and Exchange Commission. The Guarantor subsidiaries’ net sales are principally to, and other operating activities are principally with, the Company, which is referred to in the table below as “Parent”.
Supplemental information for the condensed consolidated balance sheets at September 28, 2007 and December 31, 2006, and the condensed consolidated income statements for the three and nine months ended September 28, 2007 and September 29, 2006, and condensed consolidated statements of cash flows for the nine months ended September 28, 2007 and September 29, 2006 are summarized as follows (amounts in thousands):
Statements of Income | For the Three Months Ended September 28, 2007 | |||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net Sales | $ | 471,833 | $ | 34,820 | $ | 120,289 | $ | (46,504 | ) | $ | 580,438 | |||||||||
Cost of sales | 311,942 | 14,760 | 69,242 | (44,913 | ) | 351,031 | ||||||||||||||
Gross Profit | 159,891 | 20,060 | 51,047 | (1,591 | ) | 229,407 | ||||||||||||||
Marketing expenses | 52,544 | - | 17,156 | - | 69,700 | |||||||||||||||
Selling, general and administrative expenses | 45,789 | 10,868 | 14,435 | - | 71,092 | |||||||||||||||
Income from Operations | 61,558 | 9,192 | 19,456 | (1,591 | ) | 88,615 | ||||||||||||||
Equity in earnings of affiliates | 28,618 | - | 1,311 | (28,132 | ) | 1,797 | ||||||||||||||
Investment earnings | 1,053 | 215 | 696 | - | 1,964 | |||||||||||||||
Intercompany dividends/interest | (11,762 | ) | 10,319 | 1,443 | - | - | ||||||||||||||
Other income (expense), net | 1,020 | - | 312 | - | 1,332 | |||||||||||||||
Interest expense | (12,494 | ) | - | (1,995 | ) | - | (14,489 | ) | ||||||||||||
Income before minority interest and taxes | 67,993 | 19,726 | 21,223 | (29,723 | ) | 79,219 | ||||||||||||||
Minority interest | - | - | (9 | ) | - | (9 | ) | |||||||||||||
Income before income taxes | 67,993 | 19,726 | 21,232 | (29,723 | ) | 79,228 | ||||||||||||||
Income taxes | 15,259 | 7,161 | 5,665 | (573 | ) | 27,512 | ||||||||||||||
Net Income | $ | 52,734 | $ | 12,565 | $ | 15,567 | $ | (29,150 | ) | $ | 51,716 |
For the Three Months Ended September 29, 2006 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net Sales | $ | 425,438 | $ | 30,873 | $ | 102,839 | $ | (40,572 | ) | $ | 518,578 | |||||||||
Cost of sales | 282,765 | 13,058 | 60,146 | (40,351 | ) | 315,618 | ||||||||||||||
Gross Profit | 142,673 | 17,815 | 42,693 | (221 | ) | 202,960 | ||||||||||||||
Marketing expenses | 47,605 | - | 15,015 | - | 62,620 | |||||||||||||||
Selling, general and administrative expenses | 53,929 | 1,906 | 15,616 | - | 71,451 | |||||||||||||||
Income from Operations | 41,139 | 15,909 | 12,062 | (221 | ) | 68,889 | ||||||||||||||
Equity in earnings of affiliates | 24,155 | - | 1,344 | (23,622 | ) | 1,877 | ||||||||||||||
Investment earnings | 678 | 146 | 308 | - | 1,132 | |||||||||||||||
Intercompany dividends/interest | (10,611 | ) | 9,593 | 1,018 | - | - | ||||||||||||||
Other income (expense), net | (360 | ) | (2 | ) | (328 | ) | - | (690 | ) | |||||||||||
Interest expense | (12,764 | ) | - | (1,841 | ) | - | (14,605 | ) | ||||||||||||
Income before minority interest and taxes | 42,237 | 25,646 | 12,563 | (23,843 | ) | 56,603 | ||||||||||||||
Minority interest | - | - | (4 | ) | - | (4 | ) | |||||||||||||
Income before income taxes | 42,237 | 25,646 | 12,567 | (23,843 | ) | 56,607 | ||||||||||||||
Income taxes | 3,432 | 9,489 | 5,102 | (80 | ) | 17,943 | ||||||||||||||
Net Income | $ | 38,805 | $ | 16,157 | $ | 7,465 | $ | (23,763 | ) | $ | 38,664 |
For the Nine Months Ended September 28, 2007 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net Sales | $ | 1,344,519 | $ | 100,371 | $ | 330,765 | $ | (134,410 | ) | $ | 1,641,245 | |||||||||
Cost of sales | 894,780 | 42,375 | 190,115 | (132,001 | ) | 995,269 | ||||||||||||||
Gross Profit | 449,739 | 57,996 | 140,650 | (2,409 | ) | 645,976 | ||||||||||||||
Marketing expenses | 137,566 | - | 44,088 | - | 181,654 | |||||||||||||||
Selling, general and administrative expenses | 151,656 | 18,103 | 47,255 | - | 217,014 | |||||||||||||||
Income from Operations | 160,517 | 39,893 | 49,307 | (2,409 | ) | 247,308 | ||||||||||||||
Equity in earnings of affiliates | 82,011 | - | 4,227 | (80,421 | ) | 5,817 | ||||||||||||||
Investment earnings | 2,712 | 658 | 1,747 | - | 5,117 | |||||||||||||||
Intercompany dividends/interest | (33,896 | ) | 29,086 | 4,810 | - | - | ||||||||||||||
Other income (expense), net | 1,609 | - | (168 | ) | - | 1,441 | ||||||||||||||
Interest expense | (38,396 | ) | - | (5,510 | ) | - | (43,906 | ) | ||||||||||||
Income before minority interest and taxes | 174,557 | 69,637 | 54,413 | (82,830 | ) | 215,777 | ||||||||||||||
Minority interest | - | - | (21 | ) | - | (21 | ) | |||||||||||||
Income before income taxes | 174,557 | 69,637 | 54,434 | (82,830 | ) | 215,798 | ||||||||||||||
Income taxes | 35,667 | 25,278 | 18,372 | (867 | ) | 78,450 | ||||||||||||||
Net Income | $ | 138,890 | $ | 44,359 | $ | 36,062 | $ | (81,963 | ) | $ | 137,348 |
For the Nine Months Ended September 29, 2006 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net Sales | $ | 1,164,349 | $ | 94,984 | $ | 283,136 | $ | (122,916 | ) | $ | 1,419,553 | |||||||||
Cost of sales | 775,267 | 40,403 | 167,692 | (120,554 | ) | 862,808 | ||||||||||||||
Gross Profit | 389,082 | 54,581 | 115,444 | (2,362 | ) | 556,745 | ||||||||||||||
Marketing expenses | 111,545 | - | 38,629 | - | 150,174 | |||||||||||||||
Selling, general and administrative expenses | 145,036 | 6,260 | 47,410 | - | 198,706 | |||||||||||||||
Income from Operations | 132,501 | 48,321 | 29,405 | (2,362 | ) | 207,865 | ||||||||||||||
Equity in earnings of affiliates | 70,681 | - | 3,377 | (68,781 | ) | 5,277 | ||||||||||||||
Investment earnings | 1,999 | 508 | 1,122 | - | 3,629 | |||||||||||||||
Intercompany dividends/interest | (30,153 | ) | 27,379 | 2,774 | - | - | ||||||||||||||
Other income (expense), net | 2,819 | (2 | ) | (988 | ) | - | 1,829 | |||||||||||||
Interest expense | (31,950 | ) | - | (5,479 | ) | - | (37,429 | ) | ||||||||||||
Income before minority interest and taxes | 145,897 | 76,206 | 30,211 | (71,143 | ) | 181,171 | ||||||||||||||
Minority interest | - | - | (1 | ) | - | (1 | ) | |||||||||||||
Income before income taxes | 145,897 | 76,206 | 30,212 | (71,143 | ) | 181,172 | ||||||||||||||
Income taxes | 29,368 | 28,196 | 9,441 | (850 | ) | 66,155 | ||||||||||||||
Net Income | $ | 116,529 | $ | 48,010 | $ | 20,771 | $ | (70,293 | ) | $ | 115,017 |
September 28, 2007 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 92,369 | $ | 20,822 | $ | 65,295 | $ | - | $ | 178,486 | ||||||||||
Accounts receivable, less allowances | 308 | 1,782 | 269,712 | - | 271,802 | |||||||||||||||
Inventories | 150,141 | 6,393 | 74,016 | (10,400 | ) | 220,150 | ||||||||||||||
Deferred income taxes | 2,696 | - | 2,657 | - | 5,353 | |||||||||||||||
Note receivable – current | 1,263 | - | - | - | 1,263 | |||||||||||||||
Prepaid expenses | 6,172 | - | 4,558 | - | 10,730 | |||||||||||||||
Total Current Assets | 252,949 | 28,997 | 416,238 | (10,400 | ) | 687,784 | ||||||||||||||
Property, Plant and Equipment (Net) | 246,019 | 42,923 | 57,908 | - | 346,850 | |||||||||||||||
Note Receivable | 3,666 | - | 16 | - | 3,682 | |||||||||||||||
Long-term Supply Contracts | 2,716 | - | - | - | 2,716 | |||||||||||||||
Tradenames and Other Intangibles | 415,880 | 177,030 | 77,908 | - | 670,818 | |||||||||||||||
Goodwill | 675,605 | - | 12,932 | - | 688,537 | |||||||||||||||
Investments in Subsidiaries and Affiliates | 572,782 | - | (30,645 | ) | (532,152 | ) | 9,985 | |||||||||||||
Other Assets | 90,917 | 338 | 6,063 | (27,134 | ) | 70,184 | ||||||||||||||
Total Assets | $ | 2,260,534 | $ | 249,288 | $ | 540,420 | $ | (569,686 | ) | $ | 2,480,556 | |||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||
Short-term borrowings | $ | - | $ | - | $ | 117,009 | $ | - | $ | 117,009 | ||||||||||
Accounts payable and accrued expenses | 207,889 | 2,645 | 88,185 | - | 298,719 | |||||||||||||||
Current portion of long-term debt | 33,665 | - | - | - | 33,665 | |||||||||||||||
Due to/from Subsidiaries | 50,817 | (89,391 | ) | 64,063 | (25,489 | ) | - | |||||||||||||
Income taxes payable | 7,521 | - | 9,043 | (3,744 | ) | 12,820 | ||||||||||||||
Total Current Liabilities | 299,892 | (86,746 | ) | 278,300 | (29,233 | ) | 462,213 | |||||||||||||
Long-term Debt | 715,830 | - | - | - | 715,830 | |||||||||||||||
Deferred Income Taxes | 138,272 | - | 11,684 | - | 149,956 | |||||||||||||||
Deferred and Other Long Term Liabilities | 71,218 | 61 | 1,934 | - | 73,213 | |||||||||||||||
Pension, Postretirement and Postemployment Benefits | 33,425 | - | 16,528 | - | 49,953 | |||||||||||||||
Minority Interest | 4 | - | 162 | - | 166 | |||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||
Total Liabilities | 1,258,641 | (86,685 | ) | 308,608 | (29,233 | ) | 1,451,331 | |||||||||||||
Stockholders' Equity | ||||||||||||||||||||
Common Stock-$1.00 par value | 69,985 | 225,703 | 64,687 | (290,384 | ) | 69,991 | ||||||||||||||
Additional paid-in capital | 107,802 | 4,940 | 34,723 | (34,934 | ) | 112,531 | ||||||||||||||
Retained earnings | 874,831 | 105,330 | 97,502 | (212,190 | ) | 865,473 | ||||||||||||||
Accumulated other comprehensive income (loss) | (5,939 | ) | - | 34,900 | (2,945 | ) | 26,016 | |||||||||||||
1,046,679 | 335,973 | 231,812 | (540,453 | ) | 1,074,011 | |||||||||||||||
Common stock in treasury, at cost: | (44,786 | ) | - | - | - | (44,786 | ) | |||||||||||||
Total Stockholders’ Equity | 1,001,893 | 335,973 | 231,812 | (540,453 | ) | 1,029,225 | ||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 2,260,534 | $ | 249,288 | $ | 540,420 | $ | (569,686 | ) | $ | 2,480,556 |
December 31, 2006 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 22,111 | $ | 20,302 | $ | 68,063 | $ | - | $ | 110,476 | ||||||||||
Accounts receivable, less allowances | 1,511 | 1,357 | 228,535 | - | 231,403 | |||||||||||||||
Inventories | 140,023 | 6,221 | 56,647 | (7,991 | ) | 194,900 | ||||||||||||||
Deferred income taxes | 7,242 | - | 2,168 | - | 9,410 | |||||||||||||||
Prepaid expenses | 6,325 | - | 3,556 | - | 9,881 | |||||||||||||||
Total Current Assets | 177,212 | 27,880 | 358,969 | (7,991 | ) | 556,070 | ||||||||||||||
Property, Plant and Equipment (Net) | 242,296 | 43,482 | 54,706 | - | 340,484 | |||||||||||||||
Note Receivable | 4,928 | - | 298 | - | 5,226 | |||||||||||||||
Long-term Supply Contracts | 3,307 | - | - | - | 3,307 | |||||||||||||||
Tradenames and Other Intangibles | 427,538 | 177,068 | 74,681 | - | 679,287 | |||||||||||||||
Goodwill | 673,368 | - | 12,933 | - | 686,301 | |||||||||||||||
Investments in Subsidiaries and Affiliates | 516,637 | - | (35,121 | ) | (471,122 | ) | 10,394 | |||||||||||||
Other Assets | 68,455 | 411 | 13,576 | (29,357 | ) | 53,085 | ||||||||||||||
Total Assets | $ | 2,113,741 | $ | 248,841 | $ | 480,042 | $ | (508,470 | ) | $ | 2,334,154 | |||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||
Short-term borrowings | $ | 1,979 | $ | - | $ | 100,288 | $ | - | $ | 102,267 | ||||||||||
Accounts payable and accrued expenses | 209,927 | 2,589 | 78,029 | 1 | 290,546 | |||||||||||||||
Current portion of long-term debt | 38,144 | - | - | - | 38,144 | |||||||||||||||
Due to/from Subsidiaries | 15,773 | (69,242 | ) | 81,391 | (27,922 | ) | - | |||||||||||||
Income taxes payable | 8,769 | 3,845 | 3,710 | (2,877 | ) | 13,447 | ||||||||||||||
Total Current Liabilities | 274,592 | (62,808 | ) | 263,418 | (30,798 | ) | 444,404 | |||||||||||||
Long-term Debt | 792,925 | - | - | - | 792,925 | |||||||||||||||
Deferred Income Taxes | 117,581 | - | 16,688 | - | 134,269 | |||||||||||||||
Deferred and Other Long Term Liabilities | 45,639 | 36 | 1,088 | - | 46,763 | |||||||||||||||
Pension, Postretirement and Postemployment Benefits | 34,154 | - | 17,485 | - | 51,639 | |||||||||||||||
Minority Interest | 4 | - | 313 | - | 317 | |||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||
Total Liabilities | 1,264,895 | (62,772 | ) | 298,992 | (30,798 | ) | 1,470,317 | |||||||||||||
Stockholders' Equity | ||||||||||||||||||||
Common Stock-$1.00 par value | 69,985 | 225,703 | 60,685 | (286,382 | ) | 69,991 | ||||||||||||||
Additional paid-in capital | 85,459 | 4,940 | 34,728 | (34,728 | ) | 90,399 | ||||||||||||||
Retained earnings | 747,946 | 80,970 | 64,835 | (153,621 | ) | 740,130 | ||||||||||||||
Accumulated other comprehensive income (loss) | (5,708 | ) | - | 20,802 | (2,941 | ) | 12,153 | |||||||||||||
897,682 | 311,613 | 181,050 | (477,672 | ) | 912,673 | |||||||||||||||
Common stock in treasury, at cost: | (48,836 | ) | - | - | - | (48,836 | ) | |||||||||||||
Total Stockholders’ Equity | 848,846 | 311,613 | 181,050 | (477,672 | ) | 863,837 | ||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 2,113,741 | $ | 248,841 | $ | 480,042 | $ | (508,470 | ) | $ | 2,334,154 |
Statements of Cash Flow | For the Nine Months Ended September 28, 2007 | |||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash Flow From Operating Activities | ||||||||||||||||||||
Net Income | $ | 138,890 | $ | 44,359 | $ | 36,062 | $ | (81,963 | ) | $ | 137,348 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 35,061 | 2,686 | 5,350 | - | 43,097 | |||||||||||||||
Equity in earnings of affiliates | (82,011 | ) | - | (4,227 | ) | 80,421 | (5,817 | ) | ||||||||||||
Distributions from affiliates | 24,966 | - | 3,898 | (23,493 | ) | 5,371 | ||||||||||||||
Deferred income taxes | 19,594 | - | 1,690 | - | 21,284 | |||||||||||||||
Asset impairment charges and other asset write-offs | 1,409 | 518 | (3,129 | ) | - | (1,202 | ) | |||||||||||||
Non cash compensation expense | 8,991 | - | - | - | 8,991 | |||||||||||||||
Unrealized foreign exchange gain | (1,101 | ) | - | (1,207 | ) | - | (2,308 | ) | ||||||||||||
Other | 198 | - | - | - | 198 | |||||||||||||||
Change in assets and liabilities: | ||||||||||||||||||||
Accounts receivable | 1,202 | (425 | ) | (35,350 | ) | - | (34,573 | ) | ||||||||||||
Inventories | (11,220 | ) | (172 | ) | (12,777 | ) | 2,409 | (21,760 | ) | |||||||||||
Prepaid expenses | 154 | - | (679 | ) | - | (525 | ) | |||||||||||||
Accounts payable and accrued expenses | (2,338 | ) | 56 | 5,093 | - | 2,811 | ||||||||||||||
Income taxes payable | 7,225 | - | 5,262 | (867 | ) | 11,620 | ||||||||||||||
Excess tax benefit on stock options exercised | (5,509 | ) | - | - | - | (5,509 | ) | |||||||||||||
Intercompany activity | 37,919 | (23,655 | ) | (14,264 | ) | - | - | |||||||||||||
Other liabilities | 2,599 | 24 | (2,390 | ) | - | 233 | ||||||||||||||
Net Cash Provided By Operating Activities | 176,029 | 23,391 | (16,668 | ) | (23,493 | ) | 159,259 | |||||||||||||
Cash Flow From Investing Activities | ||||||||||||||||||||
Additions to property, plant and equipment | (26,751 | ) | (2,945 | ) | (6,539 | ) | - | (36,235 | ) | |||||||||||
Proceeds from sale of assets | - | - | 7,213 | - | 7,213 | |||||||||||||||
Intercompany Investing | 4,165 | - | - | (4,165 | ) | - | ||||||||||||||
Acquisitions (net of cash acquired) | (211 | ) | - | - | - | (211 | ) | |||||||||||||
Return of capital from equity affiliates | 900 | - | 900 | (900 | ) | 900 | ||||||||||||||
Contingent acquisition payments | (1,002 | ) | - | - | - | (1,002 | ) | |||||||||||||
Other | (484 | ) | 74 | 76 | - | (334 | ) | |||||||||||||
Net Cash Used In Investing Activities | (23,383 | ) | (2,871 | ) | 1,650 | (5,065 | ) | (29,669 | ) | |||||||||||
Cash Flow From Financing Activities | ||||||||||||||||||||
Long-term debt repayment | (81,575 | ) | - | - | - | (81,575 | ) | |||||||||||||
Short-term debt borrowings - net | - | - | 16,673 | - | 16,673 | |||||||||||||||
Bank overdrafts | (1,979 | ) | - | - | - | (1,979 | ) | |||||||||||||
Proceeds from stock options exercised | 10,367 | - | - | - | 10,367 | |||||||||||||||
Excess tax benefit on stock options exercised | 5,509 | - | - | - | 5,509 | |||||||||||||||
Purchase of treasury stock | (246 | ) | - | - | - | (246 | ) | |||||||||||||
Payment of cash dividends | (14,464 | ) | (20,000 | ) | (4,393 | ) | 24,393 | (14,464 | ) | |||||||||||
Intercompany financing | - | - | (4,165 | ) | 4,165 | - | ||||||||||||||
Net Cash Used In (Provided by) Financing Activities | (82,388 | ) | (20,000 | ) | 8,115 | 28,558 | (65,715 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | - | - | 4,135 | - | 4,135 | |||||||||||||||
Net Change in Cash and Cash Equivalents | 70,258 | 520 | (2,768 | ) | - | 68,010 | ||||||||||||||
Cash and Cash Equivalents at Beginning Of Period | 22,111 | 20,302 | 68,063 | - | 110,476 | |||||||||||||||
Cash and Cash Equivalents at End Of Period | $ | 92,369 | $ | 20,822 | $ | 65,295 | $ | - | $ | 178,486 |
For the Nine Months Ended September 29, 2006 | ||||||||||||||||||||
Guarantor | Non-Guarantor | Total | ||||||||||||||||||
Parent | Subsidiaries | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Cash Flow From Operating Activities | ||||||||||||||||||||
Net Income | $ | 116,529 | $ | 48,010 | $ | 20,771 | $ | (70,293 | ) | $ | 115,017 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 29,955 | 2,592 | 5,595 | 38,142 | ||||||||||||||||
Equity in earnings of affiliates | (70,681 | ) | - | (3,377 | ) | 68,781 | (5,277 | ) | ||||||||||||
Distributions from affiliates | 24,006 | - | 3,002 | (22,002 | ) | 5,006 | ||||||||||||||
Deferred income taxes | 16,362 | - | (2,228 | ) | - | 14,134 | ||||||||||||||
Asset impairment charges and other asset write-offs | 1,220 | - | 2,622 | - | 3,842 | |||||||||||||||
Non cash compensation expense | 7,761 | - | - | - | 7,761 | |||||||||||||||
Unrealized foreign exchange gain | (700 | ) | - | (859 | ) | - | (1,559 | ) | ||||||||||||
Other | (12 | ) | - | 174 | - | 162 | ||||||||||||||
Change in assets and liabilities: | - | |||||||||||||||||||
Accounts receivable | (14,582 | ) | (153 | ) | (16,592 | ) | - | (31,327 | ) | |||||||||||
Inventories | (11,838 | ) | 664 | (13,806 | ) | 2,362 | (22,618 | ) | ||||||||||||
Prepaid expenses | 2,535 | - | 834 | - | 3,369 | |||||||||||||||
Accounts payable and accrued expenses | (6,676 | ) | (285 | ) | 643 | - | (6,318 | ) | ||||||||||||
Income taxes payable | (4,927 | ) | 3,394 | 1,151 | (850 | ) | (1,232 | ) | ||||||||||||
Excess tax benefit on stock options exercised | (5,443 | ) | - | - | - | (5,443 | ) | |||||||||||||
Intercompany activity | 27,668 | (27,668 | ) | - | - | - | ||||||||||||||
Other liabilities | (3,737 | ) | 22 | (654 | ) | - | (4,369 | ) | ||||||||||||
Net Cash Provided By Operating Activities | 107,440 | 26,576 | (2,724 | ) | (22,002 | ) | 109,290 | |||||||||||||
Cash Flow From Investing Activities | ||||||||||||||||||||
Additions to property, plant and equipment | (25,395 | ) | (5,210 | ) | (2,595 | ) | - | (33,200 | ) | |||||||||||
Acquisitions (net of cash acquired) | (337,560 | ) | - | (88 | ) | - | (337,648 | ) | ||||||||||||
Intercompany Investing | 3,995 | - | - | (3,995 | ) | - | ||||||||||||||
Return of capital from equity affiliates | 1,043 | - | 1,043 | (1,043 | ) | 1,043 | ||||||||||||||
Proceeds from note receivable | 1,150 | - | - | - | 1,150 | |||||||||||||||
Contingent acquisition payments | (1,396 | ) | - | - | (1,396 | ) | ||||||||||||||
Other | 178 | - | (309 | ) | - | (131 | ) | |||||||||||||
Net Cash Used In Investing Activities | (357,985 | ) | (5,210 | ) | (1,949 | ) | (5,038 | ) | (370,182 | ) | ||||||||||
Cash Flow From Financing Activities | ||||||||||||||||||||
Long-term debt repayment | (22,204 | ) | - | (980 | ) | - | (23,184 | ) | ||||||||||||
Long-term debt Borrowings - net | 250,000 | - | - | - | 250,000 | |||||||||||||||
Short-term debt borrowings - net | - | - | 2,082 | - | 2,082 | |||||||||||||||
Bank overdrafts | (2,985 | ) | - | - | - | (2,985 | ) | |||||||||||||
Proceeds from stock options exercised | 9,667 | - | - | - | 9,667 | |||||||||||||||
Excess tax benefit on stock options exercised | 5,443 | - | - | - | 5,443 | |||||||||||||||
Payment of cash dividends | (12,297 | ) | (19,000 | ) | (4,045 | ) | 23,045 | (12,297 | ) | |||||||||||
Intercompany financing | - | - | (3,995 | ) | 3,995 | - | ||||||||||||||
Deferred financing costs | (2,019 | ) | - | - | - | (2,019 | ) | |||||||||||||
Net Cash Used In (Provided by) Financing Activities | 225,605 | (19,000 | ) | (6,938 | ) | 27,040 | 226,707 | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | - | - | 3,320 | 3,320 | ||||||||||||||||
Net Change in Cash and Cash Equivalents | (24,940 | ) | 2,366 | (8,291 | ) | - | (30,865 | ) | ||||||||||||
Cash and Cash Equivalents at Beginning Of Period | 48,809 | 17,110 | 60,759 | 126,678 | ||||||||||||||||
Cash and Cash Equivalents at End Of Period | $ | 23,869 | $ | 19,476 | $ | 52,468 | $ | - | $ | 95,813 |