CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For
the Three Months Ended March 27, 2009
(Unaudited)
|
|
Number
of Shares
|
|
|
Amounts
|
|
|
|
|
|
|
|
|
|
Church
& Dwight Co., Inc. Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Common
|
|
|
Treasury
|
|
|
Common
|
|
|
Treasury
|
|
|
Paid-In
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Noncontrolling
|
|
(in
thousands)
|
|
Stock
|
|
|
Stock
|
|
|
Stock
|
|
|
Stock
|
|
|
Capital
|
|
|
Earnings
|
|
|
Income
(Loss)
|
|
|
Interest
|
|
December
31, 2008
|
|
|
73,214 |
|
|
|
(3,141 |
) |
|
$ |
73,214 |
|
|
$ |
(37,304 |
) |
|
$ |
252,129 |
|
|
$ |
1,063,928 |
|
|
$ |
(20,454 |
) |
|
$ |
192 |
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
62,569 |
|
|
|
- |
|
|
|
7 |
|
Translation
adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,502 |
) |
|
|
(3 |
) |
Derivative
agreements,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes of $485
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
948 |
|
|
|
- |
|
Defined
Benefit Plans,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes of $9
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(9 |
) |
|
|
- |
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,309 |
) |
|
|
- |
|
|
|
- |
|
Stock
purchases
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock
based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expense
and stock option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan
transactions including
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related
income tax benefits of $1,293
|
|
|
- |
|
|
|
105 |
|
|
|
- |
|
|
|
1,031 |
|
|
|
4,757 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other
stock issuances
|
|
|
- |
|
|
|
10 |
|
|
|
- |
|
|
|
105 |
|
|
|
178 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
March
27, 2009
|
|
|
73,214 |
|
|
|
(3,026 |
) |
|
$ |
73,214 |
|
|
$ |
(36,168 |
) |
|
$ |
257,064 |
|
|
$ |
1,120,188 |
|
|
$ |
(24,017 |
) |
|
$ |
196 |
|
See Notes to
Condensed Consolidated Financial Statements.
CHURCH
& DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The
condensed consolidated balance sheets as of March 27, 2009 and December 31,
2008, the condensed consolidated statements of income for the three months ended
March 27, 2009 and March 28, 2008, the condensed consolidated statements of cash
flow for the three months ended March 27, 2009 and March 28, 2008 and the
condensed consolidated statement of stockholders’ equity for the three months
ended March 27, 2009 have been prepared by the Company. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position at March 27, 2009 and results
of operations and cash flow 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. These condensed consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 2008. The results of operations for the three month
period ended March 27, 2009 are not necessarily indicative of the operating
results for the full year.
The
Company’s fiscal year begins on January 1st and ends on December
31st. Quarterly periods are based on a 4 weeks - 4 weeks - 5 weeks
methodology. As a result, the first quarter can include a partial or
expanded week in the first four week period of the
quarter. Similarly, the last five week period in the fourth quarter
could include a partial or expanded week. Certain subsidiaries
operating outside of North America are included for periods beginning and ending
one month prior to the period presented, which enables timely processing of
consolidating results. There were no material intervening events that
occurred with respect to these subsidiaries in the one month period prior to the
period presented.
The
Company incurred research and development expenses in the first quarter of 2009
and 2008 of $10.9 million and $12.0 million, respectively. These
expenses are included in selling, general and administrative
expenses.
2.
|
Inventories
consist of the following:
|
|
|
March
27,
|
|
|
December
31,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Raw
materials and supplies
|
|
$ |
55,529 |
|
|
$ |
52,850 |
|
Work
in process
|
|
|
10,070 |
|
|
|
9,147 |
|
Finished
goods
|
|
|
134,283 |
|
|
|
136,896 |
|
Total
|
|
$ |
199,882 |
|
|
$ |
198,893 |
|
3.
|
Property,
Plant and Equipment consist of the
following:
|
|
|
March
27,
|
|
|
December
31,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Land
|
|
$ |
25,579 |
|
|
$ |
25,659 |
|
Buildings
and improvements
|
|
|
143,531 |
|
|
|
143,590 |
|
Machinery
and equipment
|
|
|
420,628 |
|
|
|
421,012 |
|
Office
equipment and other assets
|
|
|
38,496 |
|
|
|
41,169 |
|
Software
|
|
|
36,692 |
|
|
|
36,729 |
|
Mineral
rights
|
|
|
1,158 |
|
|
|
1,146 |
|
Construction
in progress
|
|
|
89,976 |
|
|
|
60,949 |
|
|
|
|
756,060 |
|
|
|
730,254 |
|
Less
accumulated depreciation and amortization
|
|
|
357,095 |
|
|
|
345,735 |
|
Net
Property, Plant and Equipment
|
|
$ |
398,965 |
|
|
$ |
384,519 |
|
Depreciation
and amortization of property, plant and equipment amounted to $14.5 million and
$9.5 million for the three months ended March 27, 2009 and March 28, 2008,
respectively. Interest charges capitalized in connection with construction
projects were $0.5 million and $0.1 million for the three months ended March 27,
2009 and March 28, 2008, respectively.
During
the second quarter of 2008, the Company announced it will be closing its North
Brunswick, New Jersey facility in 2009 and has been recording accelerated
depreciation charges on those facilities. The accelerated
depreciation charge, which was $4.5 million in the first quarter of 2009 (see
Note 16), is included in total depreciation expense.
4.
|
Earnings
Per Share (“EPS”)
|
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. The
following table sets forth a reconciliation of the weighted average number of
common shares outstanding to the weighted average number of shares outstanding
on a diluted basis.
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Weighted
average common shares outstanding - basic
|
|
|
70,234 |
|
|
|
66,343 |
|
Dilutive
effect of stock options
|
|
|
1,078 |
|
|
|
1,240 |
|
Dilutive
effect of convertible debt
|
|
|
- |
|
|
|
3,234 |
|
Weighted
average common shares outstanding - diluted
|
|
|
71,312 |
|
|
|
70,817 |
|
Antidilutive
stock options outstanding
|
|
|
712 |
|
|
|
490 |
|
5.
|
Stock-Based
Compensation
|
A summary
of option activity during the three months ended March 27, 2009 is as
follows:
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
(000)
|
|
|
Price
|
|
|
Term
|
|
|
$ |
(000)
|
|
Outstanding
at January 1, 2009
|
|
|
4,258 |
|
|
$ |
35.42 |
|
|
|
|
|
|
|
|
Exercised
|
|
|
(105 |
) |
|
|
19.22 |
|
|
|
|
|
|
|
|
Cancelled
|
|
|
(19 |
) |
|
|
47.98 |
|
|
|
|
|
|
|
|
Outstanding
at March 27, 2009
|
|
|
4,134 |
|
|
|
35.75 |
|
|
|
6.1 |
|
|
$ |
67,653 |
|
Exercisable
at March 27, 2009
|
|
|
2,097 |
|
|
$ |
25.88 |
|
|
|
4.3 |
|
|
$ |
53,583 |
|
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
Intrinsic
Value of Stock Options Exercised
|
|
$ |
3.3 |
|
|
$ |
6.0 |
|
Stock
Compensation Expense Related to Stock Option Awards
|
|
$ |
2.4 |
|
|
$ |
2.3 |
|
Stock
compensation expense related to restricted stock awards was $0.2 million in the
first quarter of 2009. This expense amounted to $0.1 million for the same period
of 2008.
6.
|
Fair
Value of Certain Instruments
|
Statement
of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,”
establishes a hierarchy that prioritizes the inputs (generally, assumptions that
market participants would use in pricing an asset or liability) used to measure
fair value based on the quality and reliability of the information provided by
the inputs, as follows:
Level 1:
Quoted market prices in active markets for identical assets or
liabilities.
Level 2:
Observable market based inputs or unobservable inputs that are corroborated by
market data.
Level 3:
Unobservable inputs that are not corroborated by market data.
The
following table summarizes the carrying amounts and fair values of certain
assets and liabilities:
|
|
March
27, 2009
|
|
(In
thousands)
|
|
Carrying
Amount
|
|
|
Quoted
Prices in Active Markets for Identical Assets (Level
1)
|
|
|
Significant
Other Observable Inputs (Level 2)
|
|
|
Significant
Unobservable Inputs (Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange contracts
|
|
$ |
523 |
|
|
$ |
- |
|
|
$ |
523 |
|
|
$ |
- |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate collars
|
|
$ |
6,953 |
|
|
$ |
- |
|
|
$ |
6,953 |
|
|
$ |
- |
|
Diesel
fuel contract
|
|
|
3,495 |
|
|
|
- |
|
|
|
3,495 |
|
|
|
- |
|
|
|
$ |
10,448 |
|
|
$ |
- |
|
|
$ |
10,448 |
|
|
$ |
- |
|
The fair
value of the foreign exchange contracts are based on observable forward rates in
commodity quoted intervals for the full term of the contract.
The fair
value of the diesel fuel contracts is based on home heating oil future prices
for the duration of the contract.
The fair
value for the interest rate collars was derived using the forward three month
LIBOR curve for the duration of the respective collars and a credit valuation
adjustment.
7.
|
Derivative
Instruments
|
Changes
in interest rates, foreign exchange rates, the Company's common stock, and
commodity prices expose the Company to market risk. The Company manages these
risks by the use of derivative instruments, such as cash flow hedges, diesel
hedge contracts, equity derivatives and foreign exchange forward
contracts. As a matter of policy, the Company does not use
derivatives for trading or speculative purposes.
On
January 1, 2009, the Company adopted FAS No. 161 “Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133.” FAS No. 161 requires enhanced disclosure of
derivatives and hedging activities on an interim and annual basis. The guidance
seeks to improve the transparency of financial reporting through enhanced
disclosures on: (a) how and why an entity uses derivative instruments;
(b) how derivative instruments and related hedged items are accounted for
under FAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” and its related interpretations; and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.
The
designation of a derivative instrument as a hedge and its ability to meet the
FAS No. 133 hedge accounting criteria determines how the change in fair
value of the derivative instrument will be reflected in the Condensed
Consolidated Financial Statements. A derivative qualifies for hedge accounting
if, at inception, the derivative is expected to be highly effective in
offsetting the hedged underlying’s cash flows or fair value and the
documentation standards of FAS No. 133 are fulfilled at the time the
Company enters into the derivative contract. A hedge is designated as a cash
flow hedge, fair value hedge, or a net investment in foreign operations hedge
based on the exposure being hedged. The asset or liability value of the
derivative will change in tandem with its fair value. Changes in fair value, for
the effective portion of qualifying hedges, are recorded in other comprehensive
income (“OCI”). The derivative’s gain or loss is released from OCI to match the
timing of the hedged underlying’s cash flows effect on earnings.
The
Company reviews the effectiveness of its hedging instruments on a quarterly
basis and recognizes in earnings current period hedge ineffectiveness and
discontinues hedge accounting for any derivative instrument that is no longer
considered to be highly effective. Changes in fair value for derivatives not
designated as hedges or those not qualifying for hedge accounting are recognized
in current period earnings. Upon termination of cash flow hedges, the Company
reclassifies gains and losses from other comprehensive income based on the
timing of the underlying cash flows, unless the termination results from the
failure of the intended transaction to occur in the expected timeframe. Such
untimely transactions require us to immediately recognize in earnings gains and
losses previously recorded in other comprehensive income.
During
the first quarter of 2009, the Company used the following derivative instruments
to mitigate risk:
Cash
Flow Hedges
The
Company has two cash flow hedge agreements, each covering $100.0 million of zero
cost collars, one effective as of September 29, 2006, and the other
effective as of December 29, 2006, to reduce the impact of interest rate
fluctuations on its term loan debt. The hedge agreements have terms
of five and three years, respectively,
each with a cap of 6.50% and a floor of 3.57%. The Company recorded a charge to
interest expense of $1.0 million in the first quarter of 2009 with respect to
the hedge agreements and estimates it will recognize approximately $2.8 million
in interest expense in the remainder of 2009. Changes in the fair
value of cash flow hedge agreements are recorded in Accumulated Other
Comprehensive Income on the balance sheet.
Foreign
Currency
The
Company is subject to exposure from fluctuations in foreign currency exchange
rates, primarily U.S. Dollar/Euro, U.S. Dollar/British Pound, U.S.
Dollar/Canadian Dollar, U.S. Dollar/Mexican Peso, U.S. Dollar/Australian Dollar,
U.S. Dollar/Brazilian Real and U.S. Dollar/Chinese Yuan.
The
Company, from time to time, enters into forward exchange contracts to hedge
anticipated but not yet committed sales or purchases denominated in the U.S.
Dollar, Canadian dollar, British pound and Euro. During the fourth quarter of
2008 and the first quarter of 2009, the Company’s Canadian subsidiary entered
into forward exchange contracts to protect the Company from the risk that dollar
net cash outflows would be adversely affected by changes in exchange
rates. The contracts expire by the end of 2009. The face value of the
unexpired contracts as of March 27, 2009 totaled $13.5 million. The
contracts qualified as foreign currency cash flow hedges in accordance with SFAS
No. 133, and, therefore, changes in the fair value through the end of the first
quarter 2009 were marked to market and recorded as Other Comprehensive Income.
The gain recorded, net of deferred taxes, was approximately $0.4
million.
Derivatives
not Designated as Hedging Instruments Under FAS No. 133
Diesel
Fuel Hedges
The
Company uses independent freight carriers to deliver its
products. These carriers charge the Company a basic rate per mile
that is subject to a mileage surcharge for diesel fuel price
increases. In July 2008 and April 2009, in response to increasing
fuel prices and a concomitant increase in mileage surcharges, the Company
entered into agreements with two providers to hedge approximately 36% if
its notional diesel fuel requirements for 2009 and approximately 15% of its 2010
requirements. It is the Company’s policy to use the hedges to
mitigate the volatility of diesel fuel prices and related fuel surcharges, and
not to speculate in the future price of diesel fuel. The hedge
agreements are designed to add stability to the Company’s product costs,
enabling the Company to make pricing decisions and lessen the economic impact of
abrupt changes in diesel fuel prices over the term of the contract.
Because
the diesel hedge agreements do not qualify for hedge accounting under SFAS No.
133, the Company is required to mark the agreements to market throughout the
life of the agreements. The change in the market value of the hedge
agreements resulted in a $0.1 million loss for the first quarter of 2009, which
is reflected in cost of sales. If future diesel prices were to change
by $0.10 per gallon, the impact on the Company’s financial statements for the
remainder of 2009 due to the hedge agreements would be approximately $0.2
million.
Equity
Derivatives
The
Company has entered into equity derivative contracts of its own stock in order
to minimize the impact on earnings resulting from fluctuations in the liability
to plan participants for contributions designated to notional investments in
Company stock under the Company’s deferred compensation plan as a result of
changes in quoted fair values.
The
following tables summarize the fair value of our derivative instruments, the
effect of derivative instruments on our Condensed Consolidated Statements of
Income and on comprehensive income, and the amounts reclassified from other
comprehensive income:
|
|
|
|
Fair
Value at
|
|
|
Fair
Value at
|
|
(In
millions)
|
|
Balance
Sheet Location
|
|
March
27, 2009
|
|
|
December
31, 2008
|
|
Derivatives
designated as hedging instruments under FAS No. 133
|
|
|
|
|
|
|
|
|
Asset
Derivatives
|
|
|
|
|
|
|
|
|
Foreign
exchange contracts
|
|
Accounts
receivable
|
|
$ |
0.5 |
|
|
$ |
0.4 |
|
Liability
Derivatives
|
|
|
|
|
|
|
|
|
|
|
Interest
rate collars
|
|
Accounts
payable and accrued expenses
|
|
$ |
1.8 |
|
|
$ |
- |
|
Interest
rate collars
|
|
Other
long-term liabilities
|
|
|
5.1 |
|
|
|
7.9 |
|
Total
liabilities under FAS No. 133
|
|
|
|
$ |
6.9 |
|
|
$ |
7.9 |
|
Derivatives
not designated as hedging instruments under FAS No. 133
|
|
|
|
|
|
|
|
|
|
|
Asset
Derivatives
|
|
|
|
|
|
|
|
|
|
|
Equity
derivatives
|
|
Accounts
receivable
|
|
$ |
0.3 |
|
|
$ |
- |
|
Liability
Derivatives
|
|
|
|
|
|
|
|
|
|
|
Equity
derivatives
|
|
Accounts
payable and accrued expenses
|
|
$ |
0.7 |
|
|
$ |
0.1 |
|
Diesel
fuel contract
|
|
Accounts
payable and accrued expenses
|
|
|
4.4 |
|
|
|
4.5 |
|
Total
liabilities outside FAS No. 133
|
|
|
|
$ |
5.1 |
|
|
$ |
4.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of Gain (Loss) Recognized
in Income
|
|
|
Amount
of Gain (Loss) Recognized
in Income
|
|
|
|
Location
of Gain (Loss)
|
|
Three
Months Ended
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
Recognized
in Income
|
|
March
27, 2009
|
|
|
March
28, 2008
|
|
Derivatives
not designated as hedging instruments under FAS No. 133
|
|
|
|
|
|
|
|
|
|
|
Equity
derivatives
|
|
Selling,
general and administrative expenses
|
|
$ |
(0.5 |
) |
|
$ |
(0.2 |
) |
Diesel
fuel contracts
|
|
Cost
of sales
|
|
|
(0.1 |
) |
|
|
1.9 |
|
Total
loss recognized in income
|
|
|
|
$ |
(0.1 |
) |
|
$ |
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
of Gain Recognized
in OCI
|
|
|
Amount
of Gain Recognized
in OCI
|
|
|
|
|
|
from
Derivatives
|
|
|
from
Derivatives
|
|
|
|
|
|
Three
Months Ended
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
|
|
March
27, 2009
|
|
|
March
28, 2008
|
|
Derivatives
in FAS No. 133 cash flow hedging relationship
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange contracts (net of taxes)
|
|
Other
comprehensive income
|
|
$ |
0.4 |
|
|
$ |
- |
|
Interest
rate collars (net of taxes)
|
|
Other
comprehensive income
|
|
|
0.6 |
|
|
|
2.2 |
|
Total
gain recognized in OCI
|
|
|
|
$ |
1.0 |
|
|
$ |
2.2 |
|
The amount of gain (loss)
reclassified from other comprehensive income for derivitave income was
immaterial for the three months ended March 27,
2009 and March 28, 2008.
On July
7, 2008, the Company purchased substantially all of the assets and certain
liabilities of Del Pharmaceuticals, Inc. (the “Orajel Acquisition”) for cash
consideration of $383.4 million including fees. Products acquired from Del
Pharmaceuticals, Inc. include the Orajel brand of oral analgesics and various
other over-the-counter brands. The Company paid for the acquisition
with proceeds of $250.0 million in additional bank debt and with available
cash. The Company is in the process of finalizing the purchase price
allocation.
9.
|
Goodwill
and Other Intangible Assets
|
The
following table provides information related to the carrying value of all
intangible assets excluding goodwill:
|
|
March
27, 2009
|
|
|
December
31, 2008
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
(In
thousands)
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
Amortizable intangible
assets:
|
|
Tradenames
|
|
$ |
115,811 |
|
|
$ |
(40,555 |
) |
|
$ |
75,256 |
|
|
$ |
115,976 |
|
|
$ |
(38,648 |
) |
|
$ |
77,328 |
|
Customer
Relationships
|
|
|
241,640 |
|
|
|
(27,335 |
) |
|
|
214,305 |
|
|
|
241,640 |
|
|
|
(24,045 |
) |
|
|
217,595 |
|
Patents/Formulas
|
|
|
27,370 |
|
|
|
(15,778 |
) |
|
|
11,592 |
|
|
|
27,220 |
|
|
|
(14,977 |
) |
|
|
12,243 |
|
Non
Compete Agreement
|
|
|
1,143 |
|
|
|
(835 |
) |
|
|
308 |
|
|
|
1,143 |
|
|
|
(807 |
) |
|
|
336 |
|
Total
|
|
$ |
385,964 |
|
|
$ |
(84,503 |
) |
|
$ |
301,461 |
|
|
$ |
385,979 |
|
|
$ |
(78,477 |
) |
|
$ |
307,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indefinite lived
intangible assets - Carrying value
|
|
Tradenames
|
|
$ |
502,446 |
|
|
|
|
|
|
|
|
|
|
$ |
502,671 |
|
|
|
|
|
|
|
|
|
Intangible
amortization expense amounted to $6.1 million for the first quarter of 2009 and
$4.8 million for the same period of 2008. The increase principally
reflects the customer relationship amortization related to the Orajel
Acquisition. The Company estimates that intangible amortization expense will be
approximately $23.0 million in each of the next five years.
The
changes in the carrying amount of goodwill for the three months ended March 27,
2009 are as follows:
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Balance
December 31, 2008
|
|
$ |
788,516 |
|
|
$ |
36,486 |
|
|
$ |
20,228 |
|
|
$ |
845,230 |
|
Goodwill
associated with the Orajel acquisition
|
|
|
13 |
|
|
|
- |
|
|
|
- |
|
|
|
13 |
|
Additional
contingent consideration
|
|
|
169 |
|
|
|
- |
|
|
|
- |
|
|
|
169 |
|
Balance
March 27, 2009
|
|
$ |
788,698 |
|
|
$ |
36,486 |
|
|
$ |
20,228 |
|
|
$ |
845,412 |
|
10.
|
Short-Term
Borrowings and Long-Term Debt
|
Short-term
borrowings and long-term debt consist of the following:
|
|
March
27,
|
|
|
December
31,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Short-term
borrowings
|
|
|
|
|
|
|
Securitization
of accounts receivable due in February 2010
|
|
$ |
30,000 |
|
|
$ |
1,000 |
|
Various
debt due to international banks
|
|
|
5,268 |
|
|
|
2,248 |
|
Total
short-term borrowings
|
|
$ |
35,268 |
|
|
$ |
3,248 |
|
Long-term
debt
|
|
|
|
|
|
|
|
|
Term
Loan facility
|
|
$ |
585,913 |
|
|
$ |
602,893 |
|
Senior
subordinated notes (6%) due December 22, 2012
|
|
|
250,000 |
|
|
|
250,000 |
|
Total
long-term debt
|
|
|
835,913 |
|
|
|
852,893 |
|
Less:
current maturities
|
|
|
95,631 |
|
|
|
71,491 |
|
Net
long-term debt
|
|
$ |
740,282 |
|
|
$ |
781,402 |
|
The
long-term debt principal payments required to be made are as
follows:
(In
thousands)
|
|
|
Due
by March 2010
|
|
$ |
95,631 |
Due
by March 2011
|
|
|
171,312 |
Due
by March 2012
|
|
|
187,862 |
Due
by December 2012
|
|
|
381,108 |
|
|
$ |
835,913 |
During
the first quarter of 2009, the Company’s net borrowings under its accounts
receivable securitization facility were $29.0 million. In the first
three months of 2009, the Company repaid approximately $17.0 million of its Term
Loan.
The
following table provides information relating to the Company’s accumulated
comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Foreign
|
|
|
Defined
|
|
|
|
|
|
Other
|
|
|
|
Currency
|
|
|
Benefit
|
|
|
Derivative
|
|
|
Comprehensive
|
|
(In
thousands) |
|
Adjustments
|
|
|
Plans
|
|
|
Agreements
|
|
|
Income
(Loss)
|
|
Balance
December 31, 2008
|
|
$ |
(7,173 |
) |
|
$ |
(8,567 |
) |
|
$ |
(4,714 |
) |
|
$ |
(20,454 |
) |
Comprehensive
income changes during
the three
months ended (net of tax of $ 494)
|
|
|
(4,502 |
) |
|
|
(9 |
) |
|
|
948 |
|
|
|
(3,563 |
) |
Balance
March 27, 2009
|
|
$ |
(11,675 |
) |
|
$ |
(8,576 |
) |
|
$ |
(3,766 |
) |
|
$ |
(24,017 |
) |
The
following table provides information related to the Company’s other
comprehensive income for the three months ended March 27, 2009 and March 28,
2008, respectively.
|
|
Three Months
Ended |
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Net
Income
|
|
$ |
62,569 |
|
|
$ |
56,191 |
|
Other
Comprehensive Income, Net of Tax:
|
|
|
|
|
|
|
|
|
Foreign
Exchange Translation Adjustments
|
|
|
(4,502 |
) |
|
|
(2,880 |
) |
Derivative
Agreements
|
|
|
948 |
|
|
|
(2,325 |
) |
Defined
Benefit Plan Adjustments
|
|
|
(9 |
) |
|
|
- |
|
Comprehensive
Income
|
|
|
59,006 |
|
|
|
50,986 |
|
Comprehensive
Income attributable to the noncontrolling interest
|
|
|
4 |
|
|
|
2 |
|
Comprehensive
Income attributable to Church & Dwight Co., Inc.
|
|
$ |
59,010 |
|
|
$ |
50,988 |
|
12.
|
Pension
and Postretirement Plans
|
The following table provides
information regarding the net periodic benefit cost for the Company’s pension
and postretirement plans for the three months ended March 27, 2009 and March 28,
2008:
|
|
Pension
Costs
|
|
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Components
of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
Service cost
|
|
$ |
388 |
|
|
$ |
723 |
|
Interest cost
|
|
|
1,648 |
|
|
|
1,937 |
|
Expected return on plan assets
|
|
|
(1,483 |
) |
|
|
(2,179 |
) |
Amortization of prior service cost
|
|
|
- |
|
|
|
4 |
|
Recognized actuarial (gain) or loss
|
|
|
339 |
|
|
|
(9 |
) |
Net periodic benefit cost
|
|
$ |
892 |
|
|
$ |
476 |
|
|
|
Postretirement
Costs
|
|
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Components
of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
Service
cost
|
|
$ |
82 |
|
|
$ |
187 |
|
Interest
cost
|
|
|
315 |
|
|
|
367 |
|
Amortization
of prior service cost
|
|
|
15 |
|
|
|
11 |
|
Recognized
actuarial (gain) or loss
|
|
|
2 |
|
|
|
- |
|
Net
periodic benefit cost
|
|
$ |
414 |
|
|
$ |
565 |
|
The
Company made cash contributions of approximately $4.1 million to its pension
plans during the first three months of 2009. The Company estimates it will be
required to make additional cash contributions to its pension plans during the
remainder of the year of approximately $1.7 million.
13.
|
Commitments,
contingencies and guarantees
|
a.
|
In December 1981, the Company
formed a partnership with a supplier of raw materials which mines and
processes sodium-based mineral deposits. The Company purchases
the majority of its sodium-based raw material requirements from the
partnership. This agreement terminates upon two years’ written
notice by either company. The Company has an annual commitment
to purchase 240,000 tons of sodium-based raw materials at the prevailing
market price. The Company is not engaged in any other material
transactions with the partnership or the Company’s partner.
|
b.
|
Our
distribution of condoms under the TROJAN and other trademarks is regulated
by the U.S. Food and Drug Administration (“FDA”). Certain of our
condoms, and similar condoms sold by our competitors, contain the
spermicide nonoxynol-9 (“N-9”). Some interested groups have issued
reports that N-9 should not be used rectally or for multiple daily acts of
vaginal intercourse. In late 2008, the FDA issued final
labeling guidance for latex condoms but excluded N-9 lubricated condoms
from the guidance. While we await further FDA guidance on N-9
lubricated condoms, we believe that our present labeling for condoms with
N-9 is compliant with the overall objectives of the FDA’s guidance, and
that condoms with N-9 will remain a viable contraceptive choice for those
couples who wish to use them. However, we cannot predict the nature
of the labeling that ultimately will be required by the FDA. If the FDA or
state governments eventually promulgate rules that prohibit or restrict
the use of N-9 in condoms (such as new labeling requirements), we could
incur costs from obsolete products, packaging or raw materials, and sales
of condoms could decline, which, in turn, could decrease our operating
income.
|
c.
|
As
of March 27, 2009, the Company had commitments to acquire approximately
$112.1 million of raw material, packaging supplies and services from its
vendors at market prices. The packaging supplies are in either
a converted or non-converted status. These commitments enable
the Company to respond quickly to changes in customer orders or
requirements.
|
d.
|
The
Company has $3.3 million of outstanding letters of credit drawn on several
banks which guarantee payment for such things as insurance claims in the
event of the Company’s insolvency. In addition, the Company
guarantees the payment of rent on a leased facility in
Spain. The lease expires in November 2012 and the accumulated
monthly payments from March 27, 2009 through the remainder of the lease
term will amount to approximately $2.7 million. Approximately
two thirds of the rental space is subleased to a third
party.
|
e.
|
In
connection with the Company’s acquisition of Unilever’s oral care brands
in the United States and Canada in October 2003, the Company is required
to make additional performance-based payments of a minimum of $5.0 million
and a maximum of $12.0 million over the eight year period following the
acquisition. The Company made cash payments of $0.2 million,
and accrued a payment of $0.2 million in the first three months of
2009. The payment and accrual were accounted for as additional
purchase price. The Company has paid approximately $9.2
million, exclusive of the $0.2 million accrual, in additional
performance-based payments since the
acquisition.
|
f.
|
The
Company filed suit against Abbott Laboratories, Inc. (“Abbott”) in April
2005 claiming infringement of certain patents resulting from Abbott’s
manufacture and sale of its Fact Plus pregnancy diagnostic test
kits. Following a trial in February 2008, the jury found that the
Company’s patents were valid and willfully infringed by Abbott during the
period from April 1999 through September 2003 and awarded damages to the
Company in the amount of $14.6 million. On June 23, 2008, the District
Court issued an opinion finding that Abbott’s conduct had been willful and
doubled the damages awarded to the Company to $29.2 million. There remain
two post-trial motions filed by the Company with the District Court with
respect to prejudgment interest and attorney’s fees. Abbott has filed an
appeal of the verdict that has been deactivated pending a ruling on the
post-trial motions. In June 2007, Abbott filed a separate suit against the
Company claiming infringement of certain patents that are licensed to
Abbott, also in relation to pregnancy diagnostic test kits. The
Company is vigorously defending that
action.
|
g.
|
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 financial position, results
of operations and cash flows.
|
14.
|
Related
Party Transactions
|
The
following summarizes the balances and transactions between the Company and each
of two 50% owned entities, Armand Products Company (“Armand”) and The ArmaKleen
Company (“ArmaKleen”):
|
|
Armand
|
|
|
ArmaKleen
|
|
|
|
Three
Months Ended
|
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
millions)
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Purchases
|
|
$ |
2.2 |
|
|
$ |
2.8 |
|
|
|
- |
|
|
|
- |
|
Sales
|
|
|
- |
|
|
|
- |
|
|
$ |
1.0 |
|
|
$ |
1.3 |
|
Outstanding
Accounts Receivable
|
|
$ |
0.3 |
|
|
$ |
0.8 |
|
|
$ |
0.9 |
|
|
$ |
1.0 |
|
Outstanding
Accounts Payable
|
|
$ |
0.3 |
|
|
$ |
1.1 |
|
|
|
- |
|
|
|
- |
|
Administration
& Management Oversight
Services
(1)
|
|
$ |
0.4 |
|
|
$ |
0.4 |
|
|
$ |
0.7 |
|
|
$ |
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Recorded as a reduction of selling, general and administrative
expenses.
|
|
|
|
|
|
|
|
|
|
15.
|
Sale
of Subsidiaries and Assets Held for
Sale
|
On
February 29, 2008, the Company sold its wholly-owned British subsidiary,
Brotherton Speciality Products Ltd. (“Brotherton”), for $11.2 million, net of
fees. The sale resulted in a pretax gain of $3.0 million, which was
recorded as a reduction of selling, general and administrative (“SG&A”)
expenses in the Specialty Products Division Segment.
The
Company has made available for sale certain non core personal care product
lines. The results of these product lines are included in both the Consumer
Domestic and Consumer International Segments. The Company anticipates proceeds
of approximately $30 million, which is included in other current assets on the
Company’s Consolidated Balance Sheet. The Company does not expect to record a
gain or loss on the sale.
On June
5, 2008, the Company announced plans to construct a new integrated laundry
detergent manufacturing plant and distribution center in York County,
Pennsylvania. Construction began in September 2008, and the facility is
scheduled to be operational by the end of 2009. The Company expects
to invest approximately $151.0 million in capital expenditures to build the York
County facility, of which $51.0 million was spent in 2008 and $14.7 million was
spent in the first quarter of 2009.
In
conjunction with the opening of the new facility, the Company will close its
existing laundry detergent manufacturing plant and distribution facility in
North Brunswick, New Jersey. The Company plans to provide severance
and transition benefits to approximately 270 affected employees at the North
Brunswick complex, as well as consideration for employment opportunities at
other Company operations.
The
Company expects to incur the following cash and non–cash costs relating to the
closing of the North Brunswick complex, which has been, or will be, included in
cost of sales for the Consumer Domestic segment:
Cash
Costs
Severance
- $4.2 million
Exit and
disposal costs - $6.6 million
Non
Cash Costs
Accelerated
Depreciation - $24.6 million
The
severance costs are being recognized ratably over the employees’ respective
service requirement. In 2008, the Company accrued $1.9 million for severance
costs. In the first quarter of 2009, the Company accrued an additional $0.5
million for severance costs. The exit and disposal costs include asset
disposition and lease related costs. The Company anticipates it will incur
approximately $3.0 million in exit and disposal costs in 2009 and the balance of
the exit and disposal costs in 2010.
Accelerated
depreciation charges are being recognized ratably over the remaining life of the
North Brunswick complex. The Company recorded a charge of $8.1 million related
to accelerated depreciation in 2008 and $4.5 million in the first quarter of
2009.
The
Company operates three reportable segments: Consumer Domestic, Consumer
International and Specialty Products Division (“SPD”). These segments
are determined based on differences in the nature of products and organizational
and ownership structures. The Company also has a Corporate
segment.
Segment
revenues are derived from the sale of the following products:
|
Segment
|
Products
|
|
Consumer
Domestic
|
Household
and personal care products
|
|
Consumer
International
|
Primarily
personal care products
|
|
SPD
|
Specialty
chemical products
|
The
Company had 50% ownership interests in Armand and ArmaKleen as of March 27,
2009. The Company’s 50% ownership interest in Esseco U.K. LLP
(“Esseco”) was divested in the first quarter of 2008 as part of the sale of
Brotherton. The equity in earnings of Armand and ArmaKleen for the
three months ended March 27, 2009 and March 28, 2008, and Esseco for the two
months ended February 29, 2008 (prior to the sale of Brotherton), is included in
the Corporate segment.
Some of
the subsidiaries that are included in the Consumer International segment
manufacture and sell personal care products to the Consumer Domestic
segment. These sales are eliminated from the Consumer International
segment results set forth below.
Segment
sales and income before income taxes for the three months ended March 27, 2009
and March 28, 2008 were as follows:
(In
thousands)
|
|
|
|
|
|
|
|
SPD
|
|
|
Corporate
|
|
|
Total
|
|
Net
Sales(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter 2009
|
|
$ |
438,090 |
|
|
$ |
82,760 |
|
|
$ |
60,017 |
|
|
$ |
- |
|
|
$ |
580,867 |
|
First
Quarter 2008
|
|
|
382,744 |
|
|
|
99,694 |
|
|
|
70,429 |
|
|
|
- |
|
|
|
552,867 |
|
Income
Before Income Taxes(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter 2009
|
|
$ |
79,934 |
|
|
$ |
10,717 |
|
|
$ |
6,136 |
|
|
$ |
2,705 |
|
|
$ |
99,492 |
|
First
Quarter 2008
|
|
|
67,831 |
|
|
|
7,252 |
|
|
|
9,941 |
|
|
|
2,380 |
|
|
|
87,404 |
|
(1)
|
Intersegment
sales from Consumer International to Consumer Domestic, which were $0.5
million and $2.1 million for the first quarter ended March 27, 2009 and
March 28, 2008, respectively, are not reflected in the
table.
|
(2)
|
In
determining Income Before Income Taxes, interest expense, investment
earnings, and other income (expense) were allocated among the segments
based upon each segment’s relative operating profit. The Corporate segment
income consists of equity in earnings of
affiliates.
|
The
following table sets forth product line revenues from external customers for the
three months ended March 27, 2009 and March 28, 2008.
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Household
Products
|
|
$ |
284,050 |
|
|
$ |
242,827 |
|
Personal
Care Products
|
|
|
154,040 |
|
|
|
139,917 |
|
Total
Consumer Domestic
|
|
|
438,090 |
|
|
|
382,744 |
|
Total
Consumer International
|
|
|
82,760 |
|
|
|
99,694 |
|
Total
SPD
|
|
|
60,017 |
|
|
|
70,429 |
|
Total
Consolidated Net Sales
|
|
$ |
580,867 |
|
|
$ |
552,867 |
|
Household
Products include deodorizing and cleaning products and laundry products.
Personal Care Products include condoms, pregnancy kits, oral care and skin care
products.
ITEM
2. MANAGEMENT’S DISCUSSION AND
ANALYSIS
Results of
Operations
Consolidated
Results
Net
Sales
Net Sales
for the quarter ended March 27, 2009 were $580.9 million, an increase of $28.0
million or 5.1% above last year’s first quarter. Of the increase,
4.5% is due to sales of products acquired in connection with the Company’s July
2008 acquisition of substantially all of the assets of Del Laboratories, Inc.
(the “Orajel Acquisition”), partially offset by the loss of sales due to the
divestiture in the first quarter of 2008 of Brotherton Speciality Products Ltd.
(“Brotherton”), a former United Kingdom subsidiary that was included in the
Company’s Specialty Products Division, and the third quarter 2008 divestiture of
the Company’s consumer products subsidiary in Spain. Foreign exchange
rates reduced the current quarter sales by 4.1%. The balance of the increase in
Net Sales is primarily due to higher prices, sales mix and higher unit
volumes.
Operating
Costs
The Company’s gross profit was
$249.4 million for the quarter ended March 27, 2009, a $25.3 million increase as
compared to the same period in 2008. Gross margin increased 240 basis
points to 42.9% in the first quarter as compared to 40.5% in the same quarter
last year. The
increase in gross margin includes higher margins associated with the sales of
products acquired in the Orajel Acquisition, lower commodity costs, the impact
of higher prices, liquid laundry detergent concentration and the benefits of
cost reduction programs. The gross profit increase was partially offset by a
$5.2 million charge related to the planned closing of an existing manufacturing
facility (see Note 16 to the condensed consolidated financial statements
included in this report) and the impact of foreign exchange
rates.
Marketing
expenses were $66.4 million in the first quarter, an increase of $12.9 million
as compared to the same period in 2008. The increased marketing spending
included expenditures for products acquired in the Orajel
Acquisition. Expenses for the Company's existing products increased
in support of ARM & HAMMER liquid laundry detergent, OXICLEAN powder and
liquid laundry additives and ARM & HAMMER dental care products. Marketing
expense as a percentage of net sales increased 170 basis points to 11.4% in the
first quarter as compared to 9.7% in last year’s first quarter.
Selling,
general and administrative expenses (“SG&A”) were $78.3 million in the first
quarter of 2009, an increase of $0.5 million as compared to the same period in
2008. The year over year increase reflected higher operating expenses
in 2009, principally to support higher sales, increased information systems
costs and amortization and operating costs related to the Orajel
Acquisition, offset by foreign exchange rate changes. In addition,
SG&A for the first quarter of 2008 included asset impairment charges of $5.6
million and a higher level of legal costs, primarily due to litigation against
Abbott Laboratories (see paragraph f in Note 13 to the condensed consolidated
financial statements included in this report) as well as a $3.0 million gain on
the divestiture of Brotherton.
Other
Income and Expense
Other
income was approximately $0.5 million in the first quarter of 2009 as compared
to $2.2 million in the same period of 2008. The change is primarily due to lower
foreign exchange gains.
Interest
expense in the three month period ended March 27, 2009 decreased $3.8 million
compared to the same period in 2008. The decline was due to lower interest rates
compared to the prior year partially offset by higher average debt outstanding
as a result of the Orajel acquisition.
Investment
income in the three month period ended March 27, 2009 decreased $2.2 million due
to lower interest rates, although there was a higher average cash balance for
investment as compared to the same period in 2008.
Taxation
The
effective tax rate in the first quarter of 2009 was 37.1% compared to 35.7% in
the prior year’s first quarter. The increase in the effective tax rate results
from a higher proportion of projected U.S. taxable income and higher state
taxes.
Segment
Results
The
Company operates three reportable segments: Consumer Domestic, Consumer
International and Specialty Products Division (“SPD”). These segments
are determined based on differences in the nature of products and organizational
and ownership structures. The Company also has a Corporate
segment.
|
Segment
|
Products
|
|
Consumer
Domestic
|
Household
and personal care products
|
|
Consumer
International
|
Primarily
personal care products
|
|
SPD
|
Specialty
chemical products
|
The
Company had 50% ownership interests in Armand Products Company (“Armand”) and
The ArmaKleen Company (“ArmaKleen”) as of March 27, 2009. The
Company’s 50% ownership interest in Esseco U.K. LLP (“Esseco”) was divested in
the first quarter of 2008 as part of the sale of Brotherton. The equity in
earnings of Armand and ArmaKleen for the three months ended March 27, 2009 and
March 28, 2008, and Esseco for the two months ended February 29, 2008 (prior to
the sale of Brotherton), is included in the Corporate
segment.
Some of
the subsidiaries that are included in the Consumer International segment
manufacture and sell personal care products to the Consumer Domestic
segment. These sales are eliminated from the Consumer International
segment results set forth below.
Segment
sales and income before income taxes for the three month period ended March 27,
2009 and March 28, 2008 were as follows:
|
|
Consumer
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
(In
thousands)
|
|
Domestic
|
|
|
International
|
|
|
SPD
|
|
|
Corporate
|
|
|
Total
|
|
Net
Sales(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter 2009
|
|
$ |
438,090 |
|
|
$ |
82,760 |
|
|
$ |
60,017 |
|
|
$ |
- |
|
|
$ |
580,867 |
|
First
Quarter 2008
|
|
|
382,744 |
|
|
|
99,694 |
|
|
|
70,429 |
|
|
|
- |
|
|
|
552,867 |
|
Income
Before Income Taxes(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter 2009
|
|
$ |
79,934 |
|
|
$ |
10,717 |
|
|
$ |
6,136 |
|
|
$ |
2,705 |
|
|
$ |
99,492 |
|
First
Quarter 2008
|
|
|
67,831 |
|
|
|
7,252 |
|
|
|
9,941 |
|
|
|
2,380 |
|
|
|
87,404 |
|
(1)
|
Intersegment
sales from Consumer International to Consumer Domestic, which were $0.5
million and $2.1 million for the first quarter ended March 27, 2009 and
March 28, 2008, respectively, are not included in the
table.
|
(2)
|
In
determining Income Before Income Taxes, interest expense, investment
earnings, and other income (expense) were allocated among the segments
based upon each segment’s relative operating profit. The Corporate segment
income consists of equity in earnings of
affiliates.
|
Product
line revenues for external customers for the three months ended March 27, 2009,
and March 28, 2008, were as follows:
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Household
Products
|
|
$ |
284,050 |
|
|
$ |
242,827 |
|
Personal
Care Products
|
|
|
154,040 |
|
|
|
139,917 |
|
Total
Consumer Domestic
|
|
|
438,090 |
|
|
|
382,744 |
|
Total
Consumer International
|
|
|
82,760 |
|
|
|
99,694 |
|
Total
SPD
|
|
|
60,017 |
|
|
|
70,429 |
|
Total
Consolidated Net Sales
|
|
$ |
580,867 |
|
|
$ |
552,867 |
|
Consumer
Domestic
Consumer
Domestic net sales in the first quarter of 2009 were $438.1 million, an increase
of $55.3 million or 14.5% as compared to the first quarter of
2008. Of the
increase, approximately 6% relates to sales of products acquired in the Orajel
Acquisition, with the remainder principally attributable to higher unit volumes,
with the balance due to higher prices and mix. At a product line level, sales of
XTRA liquid laundry detergent, ARM & HAMMER liquid laundry detergent,
OXICLEAN laundry additive, ARM & HAMMER powder laundry detergent and ARM
& HAMMER SUPER SCOOP cat litter were all higher than in the first quarter of
2008. Consumer Domestic net sales benefited from the May 2008 price increase on
ARM & HAMMER powder laundry detergent and the October 2008 price increase on
liquid laundry detergents, toothpaste and battery operated toothbrushes. The
increased net sales were offset partially by lower sales of household cleaners
and certain personal care products.
Consumer
Domestic Income Before Income Taxes for the first quarter of 2009 was $79.9
million, a $12.1 million increase as compared to the first quarter of 2008. The
impact of higher net sales, the shift to concentrated liquid laundry detergent,
the Orajel Acquisition, lower commodity costs and lower allocated interest
expense was offset partially by accelerated depreciation and other expenses
associated with the Company’s planned 2009 shutdown of its North Brunswick, New
Jersey facility (see Note 16 to the condensed consolidated financial statements
included in this report), and increased marketing and SG&A
costs.
Consumer
International
Consumer
International net sales were $82.8 million in the first quarter of 2009, a
decrease of $16.9 million or approximately 17.0% as compared to the first
quarter of 2008. This decrease includes the impact of unfavorable foreign
exchange rates of approximately 20% and the divestiture of the subsidiary in
Spain at the end of the third quarter of 2008, partially offset by lower trade
promotion costs and sales increases which occurred primarily in Canada and
Australia.
Consumer
International Income Before Income Taxes was $10.7 million in the first quarter
of 2009, an increase of $3.5 million as compared to the first quarter of 2008.
The increase includes higher prices in 2009. In addition, results for
the first quarter of 2008 reflected asset impairment charges of $5.6 million and
severance costs in one of the Company’s European subsidiaries.
Specialty
Products Division (SPD)
Specialty
Products net sales were $60.0 million in the first quarter of 2009, a decrease
of $10.4 million or 14.8% as compared to the first quarter of 2008. This
decrease in net sales includes the approximately 5% impact of unfavorable
foreign exchange rates and the approximately 6% impact of the sale of Brotherton
during the first quarter of 2008. A significant decline in U.S. milk
prices weakened the dairy market resulting in lower sales volumes in the animal
nutrition business, partially offset by higher prices of certain specialty
chemical products.
Specialty
Products Income Before Income Taxes was $6.1 million in the first quarter of
2009, a decrease of $3.8 million as compared to the first quarter of 2008. The
2008 results included a $3.0 million gain associated with the sale of
Brotherton. In addition, the balance of the decrease reflects lower sales,
higher raw material costs for certain animal nutrition and specialty chemical
products and higher SG&A expense.
Liquidity and Capital
Resources
As of
March 27, 2009, the Company had $280.2 million in cash, $85.0 million
available through its $115.0 million accounts receivable securitization
facility, approximately $96.0 million available under its $100.0 million
revolving credit facility and a $250.0 million accordion feature that enables
the Company to increase the principal amount of its term loan. To ensure
the safety of its cash resources, the Company invests its cash primarily in
government agency money market funds.
The
Company renewed its accounts receivable securitization facility in February
2009. This facility has been renewed annually and the Company anticipates that
this facility will be renewed in February 2010.
The
Company believes that its ability to access the sources of cash described above
has not been adversely affected by recent economic events. Therefore, the
Company currently does not anticipate that the credit environment will have a
material adverse effect on its ability to address its current and forecasted
liquidity requirements. The Company anticipates that its cash from operations,
along with its current borrowing capacity, will be sufficient to meet its
capital expenditure program costs (including the cash requirements related to
construction of its new laundry detergent and warehouse facility in York County,
Pennsylvania, discussed in this section under “Net Cash Used in Investing
Activities”), pay its common stock dividend at current rates and meet its
mandatory debt repayment schedule and minimum pension funding requirements over
the next twelve months. Nevertheless, the current economic environment presents
risks that could have adverse consequences that the Company does not currently
anticipate will occur. For further information, see “Economic conditions could
adversely affect our business” under “Risk Factors” in Item 1A of the
Company’s Annual Report on Form 10-K for the year ended December 31,
2008.
In
addition, the Company does not anticipate that current economic conditions will
adversely affect its ability to comply with the financial covenants in its
principal credit facilities because the Company currently is, and anticipates
that it will continue to be, above the minimum interest coverage ratio
requirement and below the maximum leverage ratio requirement. These ratios are
discussed in more detail in this section under the sub-heading, “Adjusted
EBITDA.”
Net Debt
The
Company had outstanding total debt of $871.2 million and cash of $280.2 million
(of which approximately $41.7 million resides in foreign subsidiaries) at March
27, 2009. Total debt less cash (“net debt”) was $591.0 million at
March 27, 2009. This compares to total debt of $856.1 million and cash of $198.0
million, resulting in net debt of $658.1 million at December 31,
2008.
The
Company entered into two cash flow hedge agreements each covering $100.0 million
of zero cost collars, one effective as of September 29, 2006, and the other
effective as of December 29, 2006, to reduce the impact of interest rate
fluctuations on its term loan debt. The hedge agreements have terms
of five and three years, respectively, each with a cap of 6.50% and a floor of
3.57%. The Company recorded a charge to interest expense of $1.0 million in the
first quarter of 2009 with respect to the hedge agreements. Changes in the fair
value of the hedge agreements are recorded in Accumulated Other Comprehensive
Income on the balance sheet.
Cash
Flow Analysis
|
|
Three
Months Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
(In
thousands)
|
|
2009
|
|
|
2008
|
|
Net
cash provided by operating activities
|
|
$ |
91,981 |
|
|
$ |
62,723 |
|
Net
cash (used in) provided by investing activities
|
|
$ |
(20,615 |
) |
|
$ |
4,184 |
|
Net
cash provided by (used in) financing activities
|
|
$ |
11,714 |
|
|
$ |
(108,834 |
) |
Net Cash
Provided by Operating Activities – The Company’s net cash provided by operating
activities in the first three months of 2009 increased $29.3 million to $92.0
million as compared to the same period in 2008. The increase was primarily due
to higher net income, higher non-cash expenses for depreciation and a smaller
increase in working capital (exclusive of cash), partially offset by the gain
recorded on the sale of Brotherton (see Note15) as well as the asset impairment
write-offs recorded in the first quarter of 2008.
For the
three months ending March 27, 2009, the components of working capital that
significantly affected operating cash flow are as follows:
|
Accounts
receivable increased $8.0 million due to business
growth.
|
|
Inventories
increased $2.4 million primarily to support higher anticipated
sales.
|
|
Accounts
payable and other accrued expenses decreased $11.8 million primarily due
to the timing of incentive and profit sharing payments which were offset
partially by increased marketing expense
accruals.
|
|
Taxes
payable increased $20.4 million due to higher tax expense associated with
increased earnings and the timing of
payments.
|
Net Cash
Used in Investing Activities – Net cash used in investing activities during the
first three months of 2009 was $20.6 million, reflecting $21.3 million of
property, plant and equipment expenditures (including $14.7 million for the York
County plant, discussed in the following paragraph), partially offset by a $1.3
million payment received on an outstanding note.
On June
5, 2008, the Company announced plans to construct a new laundry detergent
manufacturing plant and distribution center in York County, Pennsylvania and to
close its existing laundry detergent manufacturing and distribution facility in
North Brunswick, New Jersey. The Company anticipates that
capital expenditures in connection with construction of the new facility, which
is expected to be operational by the end of 2009, will be approximately
$151 million, and cash expenditures relating to the closing of the
North Brunswick facilities will be approximately $11 million. To build
the plant and distribution center, the Company spent approximately $51 million
in 2008, and approximately $15 million in the first quarter of 2009, and
anticipates spending an additional $85 million in the remainder of
2009. The Company estimates it also will spend approximately $3
million in 2009 and $8 million in 2010 in connection with closing the North
Brunswick facility. The costs will be funded using the Company’s
existing credit facilities and available cash. See Note 16 to the condensed
consolidated financial statements included in this report for additional
information.
Net Cash
Provided by Financing Activities – Net cash provided by financing activities
during the first three months of 2009 was $11.7 million. This reflects a net
increase in debt of $15 million. An increase in short term borrowings of $29.0
million associated with the Company’s accounts receivable
securitization facility and increases in international debt of $3.0 million,
were partially offset by mandatory payments on the Term Loan of $17.0 million.
Payments of cash dividends of $6.3 million were offset partially by proceeds of
and tax benefits from stock option exercises of $3.0 million.
Adjusted
EBITDA
Adjusted
EBITDA is a component of the financial covenants contained in the Company's
primary credit facility. Management believes that the presentation of
Adjusted EBITDA is useful to investors as a financial indicator of the Company's
ability to service its indebtedness. Adjusted EBITDA may not be comparable to
similarly titled measures used by other entities and should not be considered as
an alternative to cash flows from operating activities, which is determined in
accordance with accounting principles generally accepted in the United
States. Financial covenants include a total debt to Adjusted EBITDA
leverage ratio and an interest coverage ratio, which if not met, could result in
an event of default and trigger the early termination of the credit facility, if
not remedied within a specified period of time. The leverage ratio (total debt
to Adjusted EBITDA) was 1.9, which is below the maximum of 3.5 permitted under
the credit facility, and the interest coverage ratio (Adjusted EBITDA to total
interest expense) for the first quarter of 2009 was 10.8, which is above the
minimum of 3.0 permitted under the credit facility. The Company’s
obligations under the credit facility are secured by the assets of the
Company.
Recent Accounting
Pronouncements
In
December 2008, the FASB issued FASB Staff Position No. SFAS 132(revised 2003)-1,
“Employers’ Disclosures about Postretirement Benefit Plan Assets” (FSP FAS
132(R)-1), which requires employers to disclose information about fair value
measurements of plan assets that are similar to the disclosures about fair value
measurements required by SFAS No 157, “Fair Value Measurements” (“SFAS
157”). FSP FAS 132(R)-1 will become effective for the Company’s
annual financial statements for 2009. The Company currently is
evaluating the impact of this standard on our Consolidated Financial
Statements.
In April
2009, the FASB issued FASB Staff Position No SFAS 107-1 and APB No. 28-1,
“Disclosures about the Fair Value of Financial Instruments” (“FSP FAS 107-1 and
APB 28-1”), which requires quarterly disclosure of information about the fair
value of financial instruments within the scope of FASB Statement No.107,
“Disclosures about Fair Value of Financial Instruments.” FSP FAS 107-1 and APB
28-1 have an effective date requiring adoption for the Company’s second quarter
Form 10-Q.
ITEM
3. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK
Interest
Rate Risk
The
Company had outstanding total debt at March 27, 2009 of $871.2 million, of which
$250.0 million or 29% carries a fixed rate of interest. The remaining debt
balance is primarily comprised of $586.0 million in term loans under the
Company’s principal credit facilities, $30.0 million outstanding under a
receivables purchase agreement and $5.2 million in international debt. The
weighted average interest rate on these borrowings at March 27, 2009, excluding
deferred financing costs and commitment fees, was approximately
3.4%.
The
Company entered into two cash flow hedge agreements, each covering $100.0
million of zero cost collars, one effective as of September 29, 2006, and
the other effective as of December 29, 2006, to reduce the impact of interest
rate fluctuations on its term loan debt. The hedge agreements have
terms of five and three years, respectively, each with a cap of 6.50% and a
floor of 3.57%. The Company recorded a charge to interest expense of $1.0
million in the first quarter of 2009 and estimates it will recognize
approximately $2.8 million in interest expense in the remainder of 2009 with
respect to the hedge agreements. Changes in the hedging options’ fair
value are recorded in Accumulated Other Comprehensive Income on the balance
sheet.
If the
variable rate on the Company’s floating rate debt outstanding on March 27, 2009
were to change by 100 basis points from the March 27, 2009 level, annual
interest expense associated with the floating rate debt would change by
approximately $4.2 million.
Foreign
Currency
The
Company is subject to exposure from fluctuations in foreign currency exchange
rates, primarily U.S. Dollar/Euro, U.S. Dollar/British Pound, U.S.
Dollar/Canadian Dollar, U.S. Dollar/Mexican Peso, U.S. Dollar/Australian Dollar,
U.S. Dollar/Brazilian Real and U.S. Dollar/Chinese Yuan.
The
Company, from time to time, enters into forward exchange contracts to hedge
anticipated but not yet committed sales or purchases denominated in the U.S.
Dollar, Canadian dollar, British pound and Euro. During the fourth quarter of
2008 and the first quarter of 2009, the Company’s Canadian subsidiary entered
into forward exchange contracts to protect the Company from the risk
that dollar net cash outflows would be adversely affected by changes in exchange
rates. The contracts expire by the end of 2009. The face value of the
unexpired contracts as of March 27, 2009 totaled $13.5 million. The
contracts qualified for hedge accounting in accordance with SFAS No. 133, and,
therefore, changes in the fair value through the end of the first quarter 2009
were marked to market and recorded as Other Comprehensive Income. The gain
recorded, net of deferred taxes was approximately $0.4 million.
Diesel
Fuel Hedge
The
Company uses independent freight carriers to deliver its
products. These carriers charge the Company a basic rate per mile
that is subject to a mileage surcharge for diesel fuel price
increases. In July 2008 and April 2009, in response to increasing
fuel prices and a concomitant increase in mileage surcharges, the Company
entered into agreements with two providers to hedge approximately 36% if its
notional diesel fuel requirements for 2009 and approximately 15% of its 2010
requirements. It is the Company’s policy to use the hedges to
mitigate the volatility of diesel fuel prices and related fuel surcharges, and
not to speculate in the future price of diesel fuel. The hedge
agreements are designed to add stability to the Company’s product costs,
enabling the Company to make pricing decisions and lessen the economic impact of
abrupt changes in diesel fuel prices over the term of the contract.
Because
the diesel hedge agreements do not qualify for hedge accounting under Statement
of Financial Accounting Standards No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” the Company is required to mark the
agreements to market throughout the life of the agreements. The
change in the market value of the hedge agreements resulted in a $0.1 million
loss for the first quarter of 2009 which is reflected in cost of
sales. If future diesel prices were to change by $0.10 per gallon,
the impact on the 2009 financial statements due to the hedge agreements would be
approximately $0.2 million.
Equity
Derivatives
The
Company has entered into equity derivative contracts of its own stock in order
to minimize the impact on earnings resulting from fluctuations in the liability
to plan participants for contributions designated to notional investments in
Company stock under the Company’s deferred compensation plan as a result of
changes in quoted fair values.
ITEM
4. CONTROLS AND
PROCEDURES
a.
|
Evaluation
of Disclosure Controls and
Procedures
|
|
The
Company’s management, with the participation of the Company’s Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the Company’s disclosure control and procedures at the end of the
period covered by this report. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures as of the end of the period
covered by this report are functioning effectively to provide reasonable
assurance that the information required to be disclosed by the Company in
reports filed under the Securities Exchange Act of 1934 is (i) recorded,
processed, summarized and reported within the time periods specified in
the SEC’s rules and forms, and (ii) accumulated and communicated to the
Company’s management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding the
disclosure.
|
b.
|
Change
in Internal Control over Financial
Reporting
|
|
No
change in the Company’s internal control over financial reporting occurred
during the Company’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company’s
internal control over financial
reporting.
|
Cautionary Note on
Forward-Looking Statements
This
Report contains forward-looking statements, including, among others, statements
relating to short- and long-term financial objectives, sales and earnings
growth, earnings per share, margin improvement, price increases, marketing
spending, the Orajel Acquisition, assets held for sale, the shift to
concentrated liquid laundry detergent, the Company’s hedge programs, interest
rate collars, effective tax rate, capital expenditures, the timing
of the completion of the York County, Pennsylvania laundry detergent and
warehouse facility, capital expenditures relating to the new facility, facility
restructuring charges, the closing of the Company's facilities in North
Brunswick, New Jersey, the sufficiency of cash flow to meet capital expenditures
needs, the ability of the Company to comply with financial covenants, the effect
of the credit environment on liquidity and the Company’s ability to renew the
accounts receivable facility. These statements represent the
intentions, plans, expectations and beliefs of the Company, 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. Important factors that could cause actual
results to differ materially from those in the forward-looking statements
include a decline in market growth and consumer demand (including the effect of
political, economic and marketplace conditions and events on consumer demand);
unanticipated increases in raw material and energy prices; adverse developments
affecting the financial condition of major customers; competition; the impact of
retailer actions in response to changes in consumer demand and the economy,
including increasing shelf space of private label products; consumer reaction to
new product introductions and features; disruptions in the banking system and
financial markets and the outcome of contingencies, including litigation,
pending regulatory proceedings and environmental remediation.
The
Company undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make on related
subjects in our filings with the U.S. Securities and Exchange
Commission.
PART
II - OTHER INFORMATION
The Company, in the ordinary course of its business, is
the subject of, or 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 financial
position or results of operation.
In addition to the other information set forth in this
report, you should carefully consider the factors discussed in Item 1A, “Risk
Factors” in the Company’s Annual Report on Form 10-K for the year ended December
31, 2008, which could materially affect our business, financial condition or
future results.
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
The
Company’s Annual Meeting of Stockholders (the “Annual Meeting”) was held on
April 30, 2009. The following nominees were elected to serve on the Company’s
Board of Directors for a term of three years:
Nominees
|
|
For
|
|
Withheld
|
T.
Rosie Albright
|
|
59,305,319
|
|
256,933
|
Ravichandra
K. Saligram
|
|
59,309,249
|
|
253,003
|
Robert
K. Shearer
|
|
59,106,758
|
|
455,494
|
The
Company’s other directors whose term of office
continued after the meeting are: James R. Craigie,
Robert A. Davies, III, Rosina B. Dixon, M.D., Bradley C. Irwin, J. Richard
Leaman, Jr., Robert D. LeBlanc and Arthur B. Winkleblack. Robert A.
McCabe and John O. Whitney retired from the Company’s Board of Directors,
effective as of the Annual Meeting.
In
addition to the election of three directors, stockholders voted on a proposal to
ratify the appointment of Deloitte & Touche LLP as the independent
registered public accounting firm to audit the Company’s 2009 consolidated
financial statements. The voting results on the proposal were as
follows:
For
|
|
Against
|
|
Abstain
|
58,638,124
|
|
897,259
|
|
26,869
|
|
(3.1)
|
Certificate
of Amendment of Restated Certificate of Incorporation dated June 4, 2008,
as filed with the Secretary of the State of Delaware on June 4,
2008.
|
|
|
|
•
|
(3.2)
|
Restated
Certificate of Incorporation of the Corporation, as amended through June
4, 2008. |
|
|
|
|
(3.3)
|
By-laws
of the Company as amended, incorporated by reference to Exhibit 3.1 to the
Company’s current report on Form 8-K filed on February 3,
2009.
|
|
|
|
•
|
(11)
|
Computation
of earnings per share.
|
|
|
|
•
|
(31.1)
|
Certification
of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a)
under the Securities Exchange Act.
|
|
|
|
•
|
(31.2)
|
Certification
of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a)
under the Securities Exchange Act.
|
|
|
|
•
|
(32.1)
|
Certification
of the Chief Executive Officer of the Company pursuant to Rule 13a-14(b)
under the Exchange Act and 18 U.S.C. Section 1350.
|
|
|
|
•
|
(32.2)
|
Certification
of the Chief Financial Officer of the Company pursuant to Rule 13a-14(b)
under the Exchange Act and 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
•
|
Indicates
documents filed herewith.
|
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:
|
May
5, 2009
|
|
/s/
Matthew T. Farrell
|
|
|
|
MATTHEW
T. FARRELL
|
|
|
|
CHIEF
FINANCIAL OFFICER
|
|
|
|
|
DATE:
|
May
5, 2009
|
|
/s/
Steven J. Katz
|
|
|
|
STEVEN
J. KATZ
|
|
|
|
VICE
PRESIDENT AND
|
|
|
|
CONTROLLER
|
|
|
|
(PRINCIPAL
ACCOUNTING OFFICER)
|
EXHIBIT
INDEX
|
(3.1)
|
Certificate
of Amendment of Restated Certificate of Incorporation dated June 4, 2008,
as filed with the Secretary of the State of Delaware on June 4,
2008.
|
|
|
|
•
|
(3.2)
|
Restated
Certificate of Incorporation of the Corporation, as amended through June
4, 2008. |
|
|
|
|
(3.3)
|
By-laws
of the Company as amended, incorporated by reference to Exhibit 3.1 to the
Company’s current report on Form 8-K filed on February 3,
2009.
|
|
|
|
•
|
(11)
|
Computation
of earnings per share.
|
|
|
|
•
|
(31.1)
|
Certification
of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a)
under the Securities Exchange Act.
|
|
|
|
•
|
(31.2)
|
Certification
of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a)
under the Securities Exchange Act.
|
|
|
|
•
|
(32.1)
|
Certification
of the Chief Executive Officer of the Company pursuant to Rule 13a-14(b)
under the Exchange Act and 18 U.S.C. Section 1350.
|
|
|
|
•
|
(32.2)
|
Certification
of the Chief Financial Officer of the Company pursuant to Rule 13a-14(b)
under the Exchange Act and 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
•
|
Indicates
documents filed herewith.
|