Church & Dwight Reports Strong Fourth Quarter and Full Year 2002 Results; Reaffirms Long-Term Objectives.Business Editors PRINCETON Princeton, borough (1990 pop. 12,016) and surrounding township (1990 pop. 13,198), Mercer co., W central N.J.; settled late 1600s, borough inc. 1813, township est. 1838. A leading education center, it is the seat of Princeton Univ. , N.J.--(BUSINESS WIRE)--Feb. 10, 2003 Church & Dwight Dwight , Timothy 1752-1817. American clergyman, author, and educator who was a leading supporter of Federalism and served as president of Yale University (1795-1817). His grandson Timothy (1828-1916) was also president of Yale (1886-1899). Co., Inc. (NYSE NYSE See: New York Stock Exchange :CHD CHD coronary heart disease. ChD abbr. Latin Chirurgiae Doctor (Doctor of Surgery) CHD, n.pr See disease, coronary heart. CHD canine hip dysplasia. ) today reported fourth quarter net income of $15.5 million or $0.37 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $6.1 million or $0.15 per diluted share in the previous year. The previous year's results included accounting charges of $0.17 per share primarily related to the acquisition by the Company's affiliate, Armkel LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , of the former Carter-Wallace consumer products business. Adjusting for these charges, earnings per share increased by $0.05 per share or 16% to $0.37 in the fourth quarter of 2002 from an adjusted $0.32 in the comparable quarter of the prior year. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. A. Davies Da·vies , Arthur Bowen 1862-1928. American painter who was the chief organizer of the revolutionary Armory Show in 1913. , III, Chairman and Chief Executive Officer of Church & Dwight, commented, "With the final integration of the former USA Detergents and Carter-Wallace businesses in the second and third quarters, we were able to increase fourth quarter earnings while significantly raising our spending on marketing and new product development." Church & Dwight sales, excluding Armkel and other affiliates, increased 1.2% to $268.1 million from $264.9 million last year. Organic sales growth, adjusted for acquisitions and discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: product lines, was approximately 4%, with solid gains in personal care, laundry Laundry can be:
Before industrialization and specialty products, and flat deodorizer deodorizer or deodorant, substance used to absorb or eliminate offensive odors. Disinfectants such as hydrogen peroxide, chlorine, and chlorine compounds eliminate odors caused by microorganisms. and cleaning and international sales. Combined sales of Church & Dwight and affiliates increased 5.4% to $380.3 million, with organic growth in excess of 6%, primarily due to higher personal care sales for both Church & Dwight and Armkel. Due to the integration benefits referred to earlier, gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased to 30.2% from 27.8% in the same quarter a year earlier. This gain occurred despite the inclusion of approximately $4 million in equipment obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. charges related to process improvements at two plants, and downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges at two other plants. Without these charges, gross margin would have risen 3.8% to 31.6%. The $5 million increase in marketing spending for the quarter was due to higher advertising for deodorizer and personal care products, and the $1 million increase in selling, general and administrative expenses reflected higher research & development spending. For the full year, net income increased 42% to $66.7 million or $1.60 per share from $47.0 million or $1.15 per share in the previous year. This year's results included a $0.01 per share net charge related to the step-up step-up A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. of opening inventory values by Armkel and the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of profits under the Armkel joint venture agreement. The previous year's results included acquisition-related charges of $0.17 per share as well as intangibles amortization of $0.06 per share that was discontinued in 2002 with the adoption of accounting standard FAS 142. Adjusting for these charges, earnings per share increased $0.23 per share or 17% to $1.61 per share from $1.38 per share a year earlier. Full year sales, excluding Armkel and other affiliates, increased 9.1% to $1,047.1 million from $959.7 million in the previous year. Adjusting for acquisitions and discontinued product lines, as well as the reversal of prior year promotion liabilities of approximately $5 million, organic growth was approximately 2%, with higher deodorizer and cleaning, laundry and specialty products sales partially offset by lower personal care. Combined sales of Church & Dwight and affiliates increased 38.3% to $1,510.7 million primarily due to the Carter-Wallace acquisition in September September: see month. 2001. During the final quarter, the Company prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $25 million of its
term debt, bringing the total prepayment Prepayment1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. for the year to $45 million. At year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , the Company had outstanding long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $352 million, and cash less short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. of $60 million, for a net debt position of $292 million, a reduction of $74 million from the previous year-end. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
The Company has announced several new product initiatives. Early in 2003, the Company launched Arrid(R) Total Soft Solid and Invisible Solid antiperspirants targeted primarily to women, and broadened its Arm & Hammer(R) Ultramax(R) antiperspirant antiperspirant /an·ti·per·spir·ant/ (-per´spir-ant) inhibiting or preventing perspiration, or an agent that does this. an·ti·per·spi·rant n. line by adding a gel primarily targeted at men. To strengthen its toothpaste toothpaste, n See dentifrice. franchise, the Company introduced Arm & Hammer Complete Care, the first Arm & Hammer all-in-one toothpaste. In the laundry area, the Company launched Arm & Hammer Fresh'N Soft(R) Liquid Fabric Softener Fabric softener (also called Fabric Conditioner) is used to prevent static cling and make fabric softer. Popular brand names include Lenor, Lenor/Downy, Snuggle, and Comfort. as a companion product to the existing fabric softener dryer sheets. These products should all reach broad national distribution during the second quarter. In addition, beginning in the second quarter, the Company expects to introduce Brillo(R) Scrub'n'Toss(TM), a disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. cleaning pad, and Church & Dwight's first major extension to the Brillo line. Additional product initiatives will likely be announced later in the year. Armkel, LLC Armkel, LLC, the 50/50 joint venture between Church & Dwight and the private equity group, Kelso & Company, reported net income of $6.0 million in the seasonally low fourth quarter. This compares to a net loss of $15.6 million in the fourth quarter of 2001 when the Company commenced operations through the acquisition of the former Carter-Wallace consumer products business. The previous year's results included acquisition-related accounting charges of $15.1 million, without which the net loss would have been $0.5 million. Sales were $102.0 million, an 18.6% increase from the previous year's $86.0 million. Adjusting for discontinued product lines and foreign currency gains, organic sales growth was about 14%. Armkel estimates that about a third of this fourth quarter gain is due to weak sales in the previous year related to promotional activity by the predecessor company immediately before the acquisition. The remainder of the growth primarily represents increased sales of Trojan A program that appears legitimate, but performs some illicit activity when it is run. It may be used to locate password information or make the system more vulnerable to future entry or simply destroy programs or data on the hard disk. (R) condoms and First Response(R) pregnancy kits in the U.S., and solid gains in several foreign markets, particularly France and the United Kingdom. Building on the success of recent product introductions such as Trojan Extended Pleasure(TM) and Her Pleasure(TM), the Company will add new line extensions to the Trojan condom 1. condom - The protective plastic bag that accompanies 3.5-inch microfloppy diskettes. Rarely, also used of (paper) disk envelopes. Unlike the write protect tab, the condom (when left on) not only impedes the practice of SEX but has also been shown to have a high failure line in 2003. The Company has also launched a new upscale line of depilatories and skin care products in the U.S. under the Lineance(R) name, designed to complement the existing Nair(R) depilatories line. For the full year, net income was $31.2 million on sales of $424.6 million. Excluding a first quarter inventory step-up accounting charge of $8.1 million, net income would have been $39.3 million. Armkel had outstanding long-term debt of $431 million, and cash less short-term debt of $43 million, for a net debt position of $388 million at year-end. This compares with a net debt position of $390 million at the previous year-end. During the year, Armkel paid approximately $45 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , integration and other costs, primarily related to the closing of its Cranbury, N.J., facility and other operations. Based on the definition in its bank loan agreements, which includes the add-back of certain integration costs, Armkel's EBITDA is estimated at approximately $103 million for the year. Late in 2002, Armkel entered into an agreement to sell its Italian subsidiary to a group, comprising local management and private equity investors, for a price of approximately $22 million. Armkel Italy reported 2002 sales of $40.8 million and EBITDA of $4.4 million. Armkel U.S. will retain ownership of certain Italian pregnancy kit and oral care product lines with sales of approximately $3 million. The remainder of Armkel Italy's business includes a high percentage of distributor sales as well as hospital diagnostic and other products not related to Armkel's core business. The agreement is subject to regulatory approval in Europe and is expected to close around the end of February. Assuming the transaction is closed as scheduled, Armkel will reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you the Italian business as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. in its 2002 financial statements. Outlook Commenting on the outlook for 2003, Mr. Davies added, "Due to the timing of our new product introductions and other factors, we expect moderate earnings growth in the first half of the year. But the previously mentioned combination of higher margins and increased investment spending should enable us to achieve another year of solid earnings growth. At this early stage, before we can see the results of our major new product initiatives, we are comfortable with the current range of Wall Street analyst's estimates of $1.77-1.81 earnings per share for the full year." Looking ahead, Mr. Davies reaffirmed the Company's previously announced objectives for average annual growth during the period 2003-2005: organic sales growth for Church & Dwight and affiliates in excess of 5% a year; gross margin improvement of 100-150 basis points a year; and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth of 12.5%-15% per year. Church & Dwight will host a conference call to discuss fourth quarter and full year 2002 earnings with the investment community on February 10 at 12:30 p.m. (ET). To participate, dial in at 800-599-9816. A replay will be available two hours after the call at 888-286-8010, access code 74380, as well as the company's website. The International dial in number is 617-801-9702, access code 895045; and the international replay number is 617-801-6888, access code 74380. Also, you can participate via webcast by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's web site at www.churchdwight.com. Church & Dwight Co., Inc. is the manufacturer of household, personal care and specialty products, sold under the ARM & HAMMER brand name and other well-known trademarks. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating, among others, to short- and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. financial objectives, sales growth, cash flow and cost improvement programs. These statements represent the intentions, plans, expectations and beliefs of Church & Dwight, and are subject to risks, uncertainties and other factors, many of which are outside the Company's control and could cause actual results to differ materially from such forward-looking statements. The uncertainties include assumptions as to market growth and consumer demand (including the effect of political and economic events on consumer demand), raw material and energy prices, the financial condition of major customers, and the Company's determination and ability to exercise its option to acquire the remaining 50% interest in Armkel. With regard to the new product introductions referred to in this release, there is particular uncertainty relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc trade, competitive and consumer reactions. Other factors, which could materially affect the results, include the outcome of contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , including litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , pending regulatory proceedings, environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a and the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of assets. For a description of additional cautionary statements, see Church & Dwight's and Armkel's quarterly and annual reports filed with the SEC.
Church & Dwight Co., Inc. and Subsidiaries
Product Line Net Sales
Dollars in Thousands
SALES (EXCLUDING AFFILIATES)
Three Twelve
Months Ended Months Ended % Change
----------------- ------------------- ------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Qtr. YTD
2002 2001 2002 2001 Act. Act.
-------- -------- -------- -------- ----- -----
Deodorizer
and Cleaning $ 67,634 $ 71,272 $255,756 $236,549 -5.1% 8.1%
Laundry $101,430 $ 97,876 $400,476 $386,619 3.6% 3.6%
Personal Care $ 44,691 $ 41,615 $176,242 $122,160 7.4% 44.3%
International $ 7,960 $ 11,353 $ 31,642 $ 41,582 -29.9% -23.9%
-------- -------- -------- -------- ----- -----
Total
Consumer
Products $221,715 $222,116 $864,116 $786,910 -0.2% 9.8%
Specialty
Products
Division $ 46,383 $ 42,803 $183,033 $172,797 8.4% 5.9%
-------- -------- -------- -------- ----- -----
Total
Reported
Net Sales $268,098 $264,919 $1,047,149 $959,707 1.2% 9.1%
======== ======== ========== ======== ===== =====
SALES (INCLUDING AFFILIATES)(1)
Three Twelve
Months Ended Months Ended % Change
----------------- ------------------- ------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Qtr. YTD
2002 2001 2002 2001 Act. Act.
-------- -------- -------- -------- ----- -----
Deodorizer
and Cleaning $ 67,634 $ 71,272 $255,756 $236,549 -5.1% 8.1%
Laundry $101,430 $ 97,876 $400,476 $386,619 3.6% 3.6%
Personal Care $ 91,489 $ 79,421 $385,347 $159,966 15.2% NM
International $ 62,950 $ 59,581 $245,794 $ 89,810 5.7% NM
-------- -------- -------- -------- ----- -----
Total
Consumer
Products $323,503 $308,150 $1,287,373 $872,944 5.0% 47.5%
Specialty
Products
Division $ 56,803 $ 52,810 $223,375 $219,223 7.6% 1.9%
-------- -------- -------- -------- ----- -----
Total Net
Sales (Incl.
Affiliates) $380,306 $360,960 $1,510,748 $1,092,167 5.4% 38.3%
Less:
Unconsolidated
Affiliates $112,208 $ 96,041 $463,599 $132,460 16.8% NM
-------- -------- -------- -------- ----- -----
Total
Reported
Net Sales $268,098 $264,919 $1,047,149 $959,707 1.2% 9.1%
======== ======== ========== ======== ===== =====
NOTE: (1) These sales include the three 50/50 affiliates: Armkel,
Armand and Armakleen.
NM - Not meaningful
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except
per share data)
Three Months Ended Twelve Months Ended
--------------------- ---------------------
Unaudited Unaudited
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
--------- --------- ---------- --------
Net Sales $ 268,098 $ 264,919 $1,047,149 $959,707
Cost of sales 187,265 191,162 735,928 680,211
--------- --------- ---------- --------
Gross profit 80,833 73,757 311,221 279,496
Marketing expenses 24,458 19,563 86,195 74,803
Selling, general and
administrative expenses 31,530 30,625 120,512 111,832
Impairment
and other items -- (660) -- (660)
--------- --------- -------- --------
Income from Operations 24,845 24,229 104,514 93,521
Equity in earnings/
(loss) of affiliates 3,786 (9,264) 21,520 (6,195)
Other income
(expense), net (5,770) (4,212) (24,799) (9,582)
--------- --------- -------- --------
Income before
Minority interest
and taxes 22,861 10,753 101,235 77,744
Minority Interest 14 106 143 3,889
--------- --------- -------- --------
Income before taxes 22,847 10,647 101,092 73,855
Income taxes 7,307 4,534 34,402 26,871
--------- --------- -------- --------
Net Income $ 15,540 $ 6,113 $ 66,690 $ 46,984
--------- --------- -------- --------
Net Income
per share - Basic $0.39 $0.16 $1.68 $1.21
Net Income
per share - Diluted $0.37 $0.15(1) $1.60(2) $1.15(2)
--------- --------- -------- --------
Dividend per share $0.075 $0.075 $0.30 $0.29
--------- --------- -------- --------
Weighted
average shares
outstanding - Basic 39,875 39,105 39,630 38,879
Weighted
average shares
outstanding - Diluted 41,984 41,099 41,809 40,819
(1) Last year's fourth quarter includes a $0.15 per share
accounting charge related to the step-up of opening inventory
values by Armkel and $0.02 per share of goodwill amortization.
(2) This year includes a $.06 per share first quarter accounting
charge related to the step-up of opening inventory values by
Armkel as well as a $.05 per share second quarter gain related
to the allocation of profits of Armkel. Last year includes the
$0.15 per share accounting charge referred to in footnote 1,
$0.06 per share of goodwill amortization and a $0.02 per share
plant shutdown charge.
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Unaudited
(Dollars in thousands) Dec. 31, Dec. 31,
2002 2001
--------- --------
Assets
Current Assets
Cash, equivalents and securities $ 76,302 $ 52,446
Accounts receivable 100,252 106,291
Inventories 82,674 101,214
Other current assets 26,208 33,256
-------- --------
Total Current Assets $285,436 $293,207
-------- --------
Property, Plant and Equipment (Net) 240,007 231,449
Equity Investment in Affiliates 131,959 115,121
Intangibles and other assets 330,839 309,308
-------- --------
Total Assets $988,241 $949,085
-------- --------
Liabilities and Stockholders' Equity
Short-Term Debt $ 15,945 $ 11,580
Other Current Liabilities 175,222 184,436
-------- --------
Total Current Liabilities $191,167 $196,016
-------- --------
Long-Term Debt 352,488 406,564
Other Long-Term Liabilities 96,940 64,202
Stockholders' Equity 347,646 282,303
-------- --------
Total Liabilities and Stockholders' Equity $988,241 $949,085
-------- --------
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