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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file Number 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
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As of May 1, 2001, there were 38,813,586 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
Three Months Ended
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March 30, Mar 31,
(In thousands, except per share data) 2001 2000
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Net Sales $256,527 $193,939
Cost of sales 162,429 109,462
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Gross Profit 94,098 84,477
Advertising, consumer and trade promotion expenses 46,133 44,464
Selling, general and administrative expenses 27,013 21,349
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Income from Operations 20,952 18,664
Investment earnings 405 319
Other income/(expense) (1,003) 250
Interest expense (670) (1,377)
Equity in earnings of affiliates 1,032 854
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Income before minority interest and taxes 20,716 18,710
Minority interest 1,984 55
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Income before taxes 18,732 18,655
Income taxes 6,585 6,923
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Net Income 12,147 11,732
Retained earnings at beginning of period 276,700 253,885
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288,847 265,617
Dividends paid 2,699 2,718
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Retained earnings at end of period $286,148 $262,899
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Weighted average shares outstanding - Basic 38,538 38,679
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Weighted average shares outstanding - Diluted 40,333 40,449
Earnings Per Share:
Net income per share - Basic $.32 $.30
Net income per share - Diluted $.30 $.29
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Dividends Per Share: $.07 $.07
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See Notes to Consolidated Financial Statements
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) Mar. 30, 2001 Dec. 31, 2000
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Assets (Unaudited)
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Current Assets
Cash and cash equivalents $ 18,774 $ 21,573
Short-term investments 1,994 2,990
Accounts receivable, less allowances of $2,146 and $2,052 85,205 64,958
Inventories (Note 2) 58,296 55,165
Deferred income taxes 11,560 11,679
Prepaid expenses 6,938 6,162
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Total Current Assets 182,767 162,527
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Property, Plant and Equipment(Net) (Note 3) 169,399 168,570
Equity Investment in Affiliates 19,781 19,416
Long-Term Supply Contracts 8,577 8,152
Goodwill and Other Intangibles 82,635 83,974
Other Assets 22,175 12,993
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Total Assets $485,334 $455,632
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Liabilities and Stockholders' Equity
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Current Liabilities
Short-term borrowings $ 12,500 $ 13,178
Accounts payable and accrued expenses 136,356 129,268
Current portion of long-term debt 685 685
Income taxes payable 8,795 6,007
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Total Current Liabilities 158,336 149,138
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Long-Term Debt 19,749 20,136
Deferred Income Taxes 21,041 17,852
Deferred and Other Long-Term Liabilities 13,494 15,009
Nonpension Postretirement and Postemployment Benefits 15,622 15,392
Minority Interest 5,111 3,455
Commitments and Contingencies
Stockholders' Equity
Preferred Stock - $1.00 par value
Authorized 2,500,000 shares, none issued - -
Common Stock - $1.00 par value
Authorized 100,000,000 shares, issued 46,660,988 shares 46,661 46,661
Additional paid-in capital 25,016 22,514
Retained earnings 286,148 276,700
Accumulated other comprehensive (loss) (6,355) (9,389)
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351,470 336,486
Common stock in treasury, at cost:
7,990,246 shares in 2001 and 8,283,086 shares in 2000 (99,489) (101,836)
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Total Stockholders' Equity 251,981 234,650
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Total Liabilities and Stockholders' Equity $485,334 $455,632
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See Notes to Consolidated Financial Statements
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Three Months Ended
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(Dollars in thousands) Mar. 30, 2001 Mar. 31, 2000
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Cash Flow From Operating Activities
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Net Income $12,147 $11,732
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization 6,241 5,597
Equity in earnings of affiliates (1,032) (854)
Deferred income taxes 601 372
Other (225) (8)
Change in assets and liabilities:
(Increase) in accounts receivable (20,767) (1,213)
(Increase) in inventories (3,539) (5,038)
(Increase) in prepaid expenses (862) (692)
Increase in accounts payable 11,049 9,490
Increase in income taxes payable 4,161 4,721
Increase/(decrease) in other liabilities 733 (593)
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Net Cash Provided By Operating Activities 8,507 23,514
Cash Flow From Investing Activities
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Short-term investments decrease/(increase) 997 (1,000)
Proceeds from sale of fixed assets 509 -
Additions to property, plant and equipment (7,749) (5,358)
Purchase of USAD stock (4,948) -
Distributions from affiliates 667 323
Purchase of supply contract (786) (2,680)
Other long-term assets (185) (1,910)
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Net Cash Used In Investing Activities (11,495) (10,625)
Cash Flow From Financing Activities
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Long-term debt (repayment) (273) (10,282)
Short-term debt (repayment)/borrowing (402) 7,587
Proceeds from stock options exercised 3,563 1,408
Purchase of treasury stock - (13,934)
Payment of cash dividends (2,699) (2,718)
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Net Cash Provided By (Used In) Financing Activities 189 (17,939)
Net Change In Cash and Cash Equivalents (2,799) (5,050)
Cash And Cash Equivalents At Beginning Of Year 21,573 19,765
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Cash And Cash Equivalents At End Of Period $ 18,774 $14,715
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See Notes to Consolidated Financial Statements
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of March 30, 2001, the consolidated
statements of income and retained earnings for the three months ended March 30,
2001 and March 31, 2000 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 30, 2001 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, 2000 annual
report to shareholders. The results of operations for the period ended March 30,
2001 are not necessarily indicative of the operating results for the full year.
2. Inventories consist of the following: Mar. 30, Dec. 31,
(In thousands) 2001 2000
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Raw materials and supplies $16,381 $18,696
Work in process 18 25
Finished goods 41,897 36,444
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$58,296 $55,165
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3. Property, Plant and Equipment consist of the following: Mar. 30, Dec. 31,
(In thousands) 2001 2000
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Land $ 5,460 $ 5,546
Buildings and improvements 78,007 78,781
Machinery and equipment 212,222 214,926
Office equipment and other assets 15,480 15,664
Software 5,343 5,355
Mineral rights 275 304
Construction in progress 13,813 6,463
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330,600 327,039
Less accumulated depreciation, depletion and amortization 161,201 158,469
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Net Property, Plant and Equipment $169,399 $168,570
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Earnings Per Share
Basic EPS is calculated based on income available to common shareholders and the
weighted-average number of shares outstanding during the reported period.
Diluted EPS includes additional dilution from potential common stock issuable
pursuant to the exercise of stock options outstanding
5. Recent Accounting Developments
The EITF issued EITF 00-14, "Accounting for Certain Sales Incentives". This
issue addresses the income statement classification for offers by a vendor
directly to end consumers that are exercisable after a single exchange
transaction in the form of coupons, rebate offers, or free products or services
disbursed on the same date as the underlying exchange transaction. The issue
requires the cost of these items to be accounted for as a reduction of revenues,
not included as a marketing expense as the Company does today. This
reclassification is approximately $20 million annually. The EITF will be
effective January, 2002 and there is no net income impact.
During the first quarter of 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities." Under this statement, all derivatives, whether designated
as hedging instruments or not, are required to be recorded on the balance sheet
at fair value. Furthermore, changes in fair value of derivative instruments not
designated as hedging instruments are recognized in earnings in the current
period.
The Company entered into interest rate swap agreements, which are considered
derivatives, to reduce the impact of changes in interest rates on its floating
rate short-term debt. The swap agreements are contracts to exchange floating
rate for fixed interest payments periodically over the life of the agreements
without the exchange of the underlying notional amounts. As of December 31, 2000
and March 30, 2001, the Company had swap agreements for a notional amount of $20
million, swapping debt with a three month libor rate for a fixed interest rate.
These swaps, which expire in May, 2002 were fair valued at March 30, 2001 and
January 1, 2001 and were recorded as a liability in the amount of $.6 million
and $.4 million, respectively. Because the amounts involved were not material to
its financial position or results of operations and cash flows, the Company did
not designate its interest rate swaps as hedging instruments, accordingly, the
changes in the value of these swaps of $.2 million during the quarter were
recorded as part of other expense.
6. USAD Acquisition
On April 2, 2001, the Company and USA Detergents, Inc. announced that they have
entered into a definitive agreement under which the Company will acquire USA
Detergents, its partner in the previously announced ARMUS LLC joint venture, for
$7 per share in an all-cash transaction.
This combination will increase the Company's laundry products sales to over $400
million a year, making it the third largest company in the $6 billion retail
U.S. laundry detergents business with three leading brands: ARM & HAMMER(R) and
XTRA(R) Liquid and Powder Laundry Detergents and NICE'N FLUFFY(R) Liquid Fabric
Softener.
The Company and USAD formed the ARMUS joint venture to combine their laundry
products businesses in June 2000. Under its terms, the Company has management
control of the venture and an option to buy USAD's interest in five years. The
venture became operational on January 1, 2001, and the companies have already
coordinated their sales and marketing, order processing and accounting, and
manufacturing operations. The final phase of the venture, which is the
consolidation of the warehousing and distribution operations, is in progress and
scheduled for completion in the fourth quarter of 2001.
As part of the ARMUS venture, the Company has already acquired 2.1 million
shares or 15% of USAD's stock for $15 million or $7 a share. The acquisition
agreement extends the same offer price to USAD's remaining stockholders. The
Company estimates the total transaction cost, including the assumption of debt,
at approximately $120 million, which brings the Company's total investment in
USAD, including the initial stock purchase, to $135 million before disposal of
unwanted assets. The Company intends to finance the acquisition with bank debt.
The Company currently intends to divest USAD's non-laundry business, which
accounted for less than 20% of USAD's sales in 2000, and other non-core assets
as soon as possible after the merger. The Company's and USAD's boards of
directors have unanimously approved the transaction, which is structured as a $7
per share cash tender offer for at least 51% of the outstanding USAD shares (on
a fully diluted basis, not including out of the money options), followed by a
merger at the same price per share. The consummation of the tender offer is
subject to customary conditions, including expiration of applicable waiting
periods under the antitrust/merger control laws of the United States.
If the transaction is not consummated under certain circumstances, the agreement
obligates USAD to pay the Company a fee of $4 million. USAD is also obligated,
if the transaction is not consummated under certain circumstances, to reimburse
the Company up to $2 million of expenses.
The final merger would require the approval of the USAD shareholders at a
special meeting called for such purpose unless the Company acquires at least 90%
of the USAD shares in the tender offer, in which case the merger can be effected
promptly after the consummation of the tender offer. If the Company acquires at
least 90% of the USAD shares in the tender offer, at the close of the tender
offer the Company would own a sufficient number of shares to approve the merger
without the approval of any other USAD shareholders.
The Company filed on April 12, 2001 a Tender Offer Statement with the SEC and
mailed a copy to each USAD shareholder. On the same day, USAD filed a
Solicitation/Recommendation Statement with the SEC that will also be mailed to
its shareholders. Under the terms of the definitive agreement, the offer is to
be held open for a minimum of thirty business days. The transaction is expected
to close late in the second calendar quarter of 2001.
7. Restructuring, Impairment and Other Items
During 2000, the Company recorded a pre-tax charge of $21.9 million relating to
three major elements: a $14.3 million book write-down of the Company's Syracuse
N.Y. manufacturing facility, a $2.1 million charge for potential carrying and
site clearance costs, and a $5.5 million severance charge related to both the
Syracuse shutdown and the sales force reorganization. The Company also incurred
plant and warehouse shutdown charges of $1.8 million in 2000 and $1.4 million in
the first quarter of 2001 and expects an estimated $1.6 million in integration
costs over the next 9 months. These additional charges will flow through cost of
sales and will bring the total one-time cost to approximately $27 million. The
cash portion of this one-time cost, however, will be less that $5 million after
tax.
Reserves at Payments & Reserves at
(In thousands) Dec. 31, 2000 Adjustments Mar. 30, 2001
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Severance and other charges $5,239 $ (823) $4,416
Site clearance costs 2,129 (77) 2,052
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$7,368 $ (900) $6,468
8. Segment Information
Segment sales and operating profit for the first quarter of 2001 and 2000 and
identifiable assets for the first quarter of 2001 and December 31, 2000 are as
follows:
Unconsolidated
(In thousands) Consumer Specialty Affiliates Corporate Total
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Net Sales
First quarter 2001 $213,364 $49,330 $(6,167) - $256,527
First quarter 2000 155,452 44,772 (6,285) - 193,939
Operating Profit
First quarter 2001 16,011 5,957 (1,016) - 20,952
First quarter 2000 12,738 6,755 (829) - 18,664
Identifiable Assets
First quarter 2001 322,646 141,669 - 21,019 485,334
December 31, 2000 282,678 143,112 - 29,842 455,632
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Consumer assets increased as a result of the ARMUS joint venture.
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Product line net sales data for the first quarter periods are as follows:
Oral and Deodorizing Uncon-
Personal and Specialty Animal Specialty solidated
Laundry Care Cleaners Chemicals Nutrition Cleaners Affiliates Total
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1st Qtr 2001 $118,087 $36,779 $58,498 $29,330 $17,805 $2,195 $(6,167) $256,527
1st Qtr 2000 58,163 41,570 55,719 26,695 15,841 2,236 (6,285) 193,939
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The Company has reclassified household cleaner sales with deodorizer sales due
to the Company's internal management structure. Previously, it was combined with
laundry products. Prior year sales have been restated.
9. Comprehensive Income
The following table presents the Company's Comprehensive Income for the three
months ending March 30, 2001 and March 31, 2000:
Three Months Ended
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March 30, March 31,
(In thousands) 2001 2000
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Net Income $12,147 $11,732
Other Comprehensive Income, net of tax:
Foreign exchange translation adjustments (1,589) 290
Available for Sale securities 4,623 -
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Comprehensive Income $15,181 $12,022
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10. Contingencies
The Company, in the ordinary course of its business, is the subject of, or a
party to, various pending or threatened legal actions. The Company believes that
any ultimate liability arising from these actions will not have a material
adverse effect on its consolidated financial statements.
11. Subsequent Event
On May 8, 2001, the Company announced that it has reached a definitive agreement
to acquire the consumer products business of Carter-Wallace, Inc. in a
partnership with the private equity group, Kelso & Company, for a total price of
$739 million, including the assumption of certain debt. Under the terms of its
agreements with Carter-Wallace and Kelso, the Company will acquire
Carter-Wallace's U.S. antiperspirant and pet care businesses outright for about
$128 million; and ArmKel, LLC, a 50/50 joint venture between the Company and
Kelso, will acquire the rest of Carter-Wallace's domestic and international
consumer products business for $611 million. The Company expects to account for
its interest in ArmKel on an equity accounting basis.
Carter-Wallace's consumer business is estimated to have sales of more than $500
million and EBITDA of approximately $100 million. Major brands include Arrid(R)
antiperspirants, Trojan(R) condoms, Nair(R) depilatories, First Response(R)
pregnancy test kits, Pearl Drops(R) toothpaste and Lambert Kay pet care
products. Approximately 60% of the sales are in the U.S., and the remaining 40%
abroad, including Canada and the U.K. where the Company also operates, as well
as Mexico, Western Europe and Australia.
Under the terms of its joint venture agreement with Kelso, the Company will have
a call option to acquire Kelso's interest in ArmKel in three to five years after
the closing, at fair market value subject to certain limits. If the Company does
not exercise its call option, there are provisions for the sale of the assets
after a certain period. The venture's Board will have equal representation from
both sides, with the Company appointing the Chairman.
The Company estimates its financing needs for the purchase of Carter-Wallace's
antiperspirant and pet care businesses and the initial capital contribution to
ArmKel at approximately $240 million. In addition, as previously announced, the
Company has $150 million of financing needs related to the USA Detergents
transaction and existing debt, making the total requirements approximately $400
million. The Company has obtained a commitment letter from JPMorgan for a fully
underwritten $500 million senior credit facility which will be syndicated in the
bank and institutional markets.
The ArmKel venture itself will be financed with $229 million in equity
contributions from the Company and Kelso and an additional $420 million in debt.
ArmKel has obtained a commitment letter from JPMorgan and Deutsche Bank for $505
million to finance the debt portion of the joint venture balance sheet. Any debt
on ArmKel's balance sheet will be without recourse to the Company.
The transaction is subject to approval by the Carter-Wallace stockholders, and
to regulatory approvals and other customary conditions, including the
satisfaction of bank financing conditions at the closing date. In addition,
simultaneous with this transaction, Carter-Wallace and its pharmaceutical
business will merge into a newly formed company set up by pharmaceutical
industry executives and backed by two well-known private equity firms. While the
Company and ArmKel are not affiliated with the pharmaceutical venture, ArmKel
has agreed to provide certain transitional services to help this venture with
the start-up of its operations at Carter-Wallace's main Cranbury, New Jersey
facility. The closing of the consumer products acquisition is conditioned on the
closing of the pharmaceutical company merger. The Company currently expects
these transactions to close late in the third quarter.
12. Reclassification
Certain prior year amounts have been reclassified in order to conform with the
current year presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the quarter ended March 30, 2001, net income was $12.1 million, equivalent
to basic earnings of $.32 per share, from $11.7 million or $.30 per share, in
last year's first quarter. Diluted earnings were $.30 per share compared to $.29
per share last year. This year's first quarter results included $1.4 million in
previously announced plant and warehouse shutdown costs related to the start-up
of the ARMUS venture, which became operational January 1, 2001. Last year's
first quarter results included a deferred compensation gain of $2.1 million
which the Company had previously excluded in reporting ongoing earnings.
Adjusting for these unusual items, diluted earnings increased 23% to $.32 per
share from $.26 per share in the same quarter last year.
Sales increased 32.3% to $256.5 million from $193.9 million in the same period
last year. Consumer products rose 37.3% primarily because of the addition of
USAD's XTRA(R) Laundry Detergent and NICE'N FLUFFY(R) Liquid Fabric Softener
brands. Deodorizers increased due to continued growth in cat litter; however,
personal care sales declined. Specialty products increased 12.2% due to growth
in animal nutrition and international operations.
Gross margin was 36.7% in the quarter, down from 43.6% a year ago. This reflects
the impact of the consolidation of the lower margin USAD brands, which accounts
for the majority of the decline. In addition, the plant and warehouse shutdown
costs and lower personal care sales also contributed to the decline.
Advertising, consumer and trade promotion expenses increased $1.7 million versus
2000. Increases in laundry products as a result of the USAD brands were
partially offset by reductions in deodorizers and cleaners.
Selling, general and administrative expenses increased from $21.3 million to
$27.0 million. Higher deferred compensation expenses, costs associated with the
ARMUS joint venture and higher professional costs were the main drivers of the
increase.
Earnings from affiliates were higher as a result of an increase in ArmaKleen
earnings.
Interest expense decreased from last year as a result of lower debt. Other
expenses increased as a result that during the first quarter of 2001, the
Company adopted Statement of Financial Accounting Standards ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities." Under this
statement, all derivatives, whether designated as hedging instruments or not,
are required to be recorded on the balance sheet at fair value. Furthermore,
changes in fair value of derivative instruments not designated as hedging
instruments are recognized in earnings in the current period. Because the
amounts involved were not material to its financial position or results of
operations and cash flows, the Company did not designate its interest rate swaps
as hedging instruments and changes in the value of these swaps of $.2 million
during the quarter were recorded as part of other expense. In addition, foreign
exchange losses associated with the Brazilian subsidiary also contributed to the
increase.
The effective tax rate for the quarter was 35.2%, down from 37.1% in last year's
first quarter which reflects a lower state tax rate.
Liquidity and Capital Resources
The Company considers cash and short-term investments as the principal
measurement of its liquidity. At March 30, 2001, cash including cash equivalents
and short-term investments totaled $20.8 million as compared to $24.6 million at
December 31, 2000.
During the first quarter of 2001, the Company generated $8.5 million of cash
flow from operating activities and received $3.6 million from stock option
exercises. Significant expenditures include the purchase of approximately
704,000 shares of USAD stock for $4.9 million, property plant and equipment
additions of $7.7 million and the payment of cash dividends of $2.7 million.
The Company estimates its financing needs for the purchase of Carter-Wallace's
antiperspirant and pet care businesses and the initial capital contribution to
ArmKel at approximately $240 million. In addition, as previously announced, the
Company has $150 million of financing needs related to the USA Detergents
transaction and existing debt, making the total requirements approximately $400
million. The Company has obtained a commitment letter from JPMorgan for a fully
underwritten $500 million senior credit facility which will be syndicated in the
bank and institutional markets.
Cautionary Note on Forward-Looking Statements
This report contains forward-looking statements relating, among others, to
financial objectives, sales growth and cost reduction programs. Many of these
statements depend on factors outside the Company's control, such as economic
conditions, market growth and consumer demand, competitive products and pricing,
raw material costs and other matters. With regard to new product introductions,
there is particular uncertainty related to trade, competitive and consumer
reactions. If the Company's assumptions are incorrect, or there is a significant
change in some of these key factors, the Company's performance could vary
materially from the forward-looking statements in this report.
PART II - Other Information
Item 5. Other Information
On May 8, 2001, the Company announced that it has reached a definitive agreement
to acquire the consumer products business of Carter-Wallace, Inc. in a
partnership with the private equity group, Kelso & Company, for a total price of
$739 million, including the assumption of certain debt. Under the terms of its
agreements with Carter-Wallace and Kelso, the Company will acquire
Carter-Wallace's U.S. antiperspirant and pet care businesses outright for about
$128 million; and ArmKel, LLC, a 50/50 joint venture between the Company and
Kelso, will acquire the rest of Carter-Wallace's domestic and international
consumer products business for $611 million. The Company expects to account for
its interest in ArmKel on an equity accounting basis.
Carter-Wallace's consumer business is estimated to have sales of more than $500
million and EBITDA of approximately $100 million. Major brands include Arrid(R)
antiperspirants, Trojan(R) condoms, Nair(R) depilatories, First Response(R)
pregnancy test kits, Pearl Drops(R) toothpaste and Lambert Kay pet care
products. Approximately 60% of the sales are in the U.S., and the remaining 40%
abroad, including Canada and the U.K. where the Company also operates, as well
as Mexico, Western Europe and Australia.
Under the terms of its joint venture agreement with Kelso, the Company will have
a call option to acquire Kelso's interest in ArmKel in three to five years after
the closing, at fair market value subject to certain limits. If the Company does
not exercise its call option, there are provisions for the sale of the assets
after a certain period. The venture's Board will have equal representation from
both sides, with the Company appointing the Chairman.
The Company estimates its financing needs for the purchase of Carter-Wallace's
antiperspirant and pet care businesses and the initial capital contribution to
ArmKel at approximately $240 million. In addition, as previously announced, the
Company has $150 million of financing needs related to the USA Detergents
transaction and existing debt, making the total requirements approximately $400
million. The Company has obtained a commitment letter from JPMorgan for a fully
underwritten $500 million senior credit facility which will be syndicated in the
bank and institutional markets.
The ArmKel venture itself will be financed with $229 million in equity
contributions from the Company and Kelso and an additional $420 million in debt.
ArmKel has obtained a commitment letter from JPMorgan and Deutsche Bank for $505
million to finance the debt portion of the joint venture balance sheet. Any debt
on ArmKel's balance sheet will be without recourse to the Company.
The transaction is subject to approval by the Carter-Wallace stockholders, and
to regulatory approvals and other customary conditions, including the
satisfaction of bank financing conditions at the closing date. In addition,
simultaneous with this transaction, Carter-Wallace and its pharmaceutical
business will merge into a newly formed company set up by pharmaceutical
industry executives and backed by two well-known private equity firms. While the
Company and ArmKel are not affiliated with the pharmaceutical venture, ArmKel
has agreed to provide certain transitional services to help this venture with
the start-up of its operations at Carter-Wallace's main Cranbury, New Jersey
facility. The closing of the consumer products acquisition is conditioned on the
closing of the pharmaceutical company merger. The Company currently expects
these transactions to close late in the third quarter.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
(11) Computation of earnings per share
b. No reports on Form 8-K were filed for the three months ended March 30,
2001.
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
EXHIBIT 11 - Computation of Earnings
Per Share (In thousands except
per share amounts)
Three Months Ended
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March 30, March 31,
2001 2000
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BASIC:
Net Income $12,147 $11,732
Weighted average shares outstanding 38,538 38,679
Basic earnings per share $.32 $.30
DILUTED:
Net Income $12,147 $11,732
Weighted average shares outstanding 38,538 38,679
Incremental shares under stock option plans 1,795 1,770
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Adjusted weighted average shares outstanding 40,333 40,449
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Diluted earnings per share $.30 $.29
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.
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(REGISTRANT)
DATE: May 8, 2001 /s/Zvi Eiref
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ZVI EIREF
VICE PRESIDENT FINANCE
DATE: May 8, 2001 /s/Gary P. Halker
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GARY P. HALKER
VICE PRESIDENT, CONTROLLER AND
CHIEF INFORMATION OFFICER