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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-10585
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CHURCH & DWIGHT CO., INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-4996950
(State of incorporation) (I.R.S. Employer Identification No.)
469 NORTH HARRISON STREET, PRINCETON, NEW JERSEY 08543-5297
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 683-5900
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, $1 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of February 23, 1996, 19,527,123 shares of Common Stock held by
non-affiliates were outstanding with an aggregate market value of approximately
$398 million. The aggregate market value is based on the closing price of such
stock on the New York Stock Exchange on February 23, 1996.
DOCUMENTS INCORPORATED BY REFERENCE:
PARTS II AND IV Portions of registrant's 1995 Annual Report to Stockholders.
PART III Portions of registrant's Notice of Annual Meeting to be
held on May 9, 1996 and Proxy Statement.
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TABLE OF CONTENTS
PART I
ITEM
PAGE
1. Business - 1 -
2. Properties - 6 -
3. Legal Proceedings - 6 -
4. Submission of Matters to a Vote of Security Holders - 6 -
PART II
5. Market for the Registrant's Common Equity and Related Stockholder Matters - 7 -
6. Selected Financial Data - 7 -
7. Management's Discussion and Analysis of Financial Condition and Results of Operations - 7 -
8. Financial Statements and Supplementary Data - 7 -
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure - 7 -
PART III
10. Directors and Executive Officers of the Registrant - 7 -
11. Executive Compensation - 7 -
12. Security Ownership of Certain Beneficial Owners and Management - 7 -
13. Certain Relationships and Related Transactions - 7 -
PART IV
14. Exhibits, Financial Statement Schedule and Reports on Form 8-K - 8 -
3
PART I
ITEM 1. BUSINESS
The Company was founded in 1846 and is the world's leading producer of
sodium bicarbonate, popularly known as baking soda, a versatile chemical which
performs a broad range of functions such as cleaning, deodorizing, leavening and
buffering. The Company specializes in sodium bicarbonate and sodium
bicarbonate-based products, along with other products which use the same raw
materials or technology or are sold into the same markets.
The Company sells its products, primarily under the ARM & HAMMER(R)
trademark, to consumers through supermarkets, drug stores and mass
merchandisers; and to industrial customers and distributors. ARM & HAMMER is the
registered trademark for a line of consumer products which includes ARM & HAMMER
Baking Soda, ARM & HAMMER DENTAL CARE(R), ARM & HAMMER Carpet Deodorizer, ARM &
HAMMER Deodorizing Air Freshener, ARM & HAMMER Powder and Liquid Laundry
Detergent and ARM & HAMMER Deodorant Anti-Perspirant with Baking Soda. The ARM &
HAMMER trademark is also used for a line of chemical products, the most
important of which are sodium bicarbonate, ammonium bicarbonate, sodium
sesquicarbonate, ARM & HAMMER MEGALAC(R) Rumen Bypass Fat and ARMEX(R) Blast
Media. In 1995, consumer products represented 78% and specialty products 22% of
the Company's sales. The Company does approximately 95% of its business in the
U.S. and Canada.
CONSUMER PRODUCTS
PRINCIPAL PRODUCTS
The Company's founders first marketed baking soda in 1846 for use in home
baking. The ARM & HAMMER trademark was adopted in 1867. Today, this product is
known for a wide variety of uses in the home, including as a refrigerator and
freezer deodorizer, scratchless cleaner and deodorizer for kitchen surfaces and
cooking appliances, bath additive, dentifrice, cat litter deodorizer, and
swimming pool pH stabilizer. The Company estimates that a majority of U.S.
households have a box of baking soda on hand. Although no longer the Company's
largest brand, ARM & HAMMER Baking Soda remains the leading brand in terms of
consumer recognition of the brand name and its reputation for quality and value.
The deodorizing properties of baking soda have since led to the development
of several other household products; ARM & HAMMER Carpet Deodorizer and ARM &
HAMMER Deodorizing Air Freshener are both available in a variety of fragrances.
In 1992, the Company launched ARM & HAMMER Cat Litter Deodorizer, a scented
baking soda product targeted to cat-owning households and veterinarians.
The Company's largest consumer business today is in the laundry detergent
market. The ARM & HAMMER brand name has been associated with this market since
the last century when ARM & HAMMER Super Washing Soda was first introduced as a
heavy-duty laundry and household cleaning product. The Company today makes
products for use in various stages of the laundry cycle.
ARM & HAMMER Laundry Detergents, in both powder and liquid forms, have been
available nationally since the early 1980's. The Company markets these brands as
value products, priced at a 15 to 20 percent discount from market leaders. In
1993, ARM & HAMMER Powder Laundry Detergent was restaged with a new formulation
containing ACTIVATED BAKING SODA(TM). At the same time, the Company introduced
ARM & HAMMER Free Powder Laundry Detergent, a perfume- and dye-free formulation.
Similarly, a companion product, ARM & HAMMER Liquid Laundry Detergent, was
converted to a new concentrated formula in 1993, and is also available in
regular and perfume- and dye-free forms. Late in 1995, this product was
reformulated to a newer level of concentration and is still available in regular
and perfume- and dye-free forms.
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In 1992, the Company completed the national expansion of another laundry
product, ARM & HAMMER FRESH & SOFT(R) Dryer Sheets. This product stops static
cling, and softens and freshens clothes. ARM & HAMMER Super Washing Soda is
promoted as a detergent booster and bleach substitute.
ARM & HAMMER Baking Soda has long been used as a dentifrice. Its mild
action cleans and polishes teeth, removes plaque and leaves the mouth feeling
fresh and clean. These properties have led to the development of a complete line
of sodium bicarbonate-based dentifrice products: ARM & HAMMER DENTAL CARE, The
Baking Soda Tooth Powder; ARM & HAMMER DENTAL CARE, The Baking Soda Toothpaste;
ARM & HAMMER DENTAL CARE Gel; ARM & HAMMER DENTAL CARE Tartar Control Formula;
and ARM & HAMMER DENTAL CARE Tartar Control Gel. Both the Toothpaste and Tooth
Powder have been in national distribution since 1988. ARM & HAMMER DENTAL CARE
Gel and ARM & HAMMER DENTAL CARE Tartar Control Formula were introduced in the
latter part of 1990 and 1991, respectively. ARM & HAMMER Tartar Control Gel was
launched nationally in 1992. Late in 1994, ARM & HAMMER PEROXICARE(R), a baking
soda and peroxide toothpaste was introduced nationally. Tartar Control
PEROXICARE was introduced in the second quarter of 1995.
Early in 1994, the Company launched nationally a new personal care product,
ARM & HAMMER Deodorant Anti-Perspirant with Baking Soda. This new product is
available in scented and unscented stick and roll-on forms. During the first
quarter of 1996, the Company will introduce nationally a line extension of its
deodorant anti-perspirant product. ARM & HAMMER Deodorant with Baking Soda will
be available in a variety of scented stick forms.
COMPETITION
The markets for retail consumer products are highly competitive. ARM &
HAMMER Baking Soda competes with generic and private label brands of grocery
chains. ARM & HAMMER DENTAL CARE products, ARM & HAMMER Carpet Deodorizer, ARM &
HAMMER Deodorant AntiPerspirant and ARM & HAMMER Deodorizing Air Freshener
compete with other nationally advertised brands.
The Company's laundry products, ARM & HAMMER Powder Laundry Detergent, ARM
& HAMMER Liquid Laundry Detergent, ARM & HAMMER Super Washing Soda, and ARM &
HAMMER FRESH & SOFT Dryer Sheets, all have small shares in large markets
dominated by major consumer packaged goods companies.
All of the Company's products are competitively priced and receive strong
support in the form of trade and consumer promotion. In addition, the Company
advertises certain products on national television.
DISTRIBUTION
The Company's consumer products are primarily marketed throughout the
United States and Canada and sold through supermarkets, mass merchandisers and
drugstores. The Company employs a regional sales force which operates primarily
through independent food brokers in each market. The products are stored in
public warehouses and either picked up by customers or distributed by
independent trucking companies.
SPECIALTY PRODUCTS
PRINCIPAL PRODUCTS
The Company's specialty products business primarily consists of the
manufacture and sale of sodium bicarbonate in a range of grades and granulations
for use in industrial and agricultural markets. In industrial markets, sodium
bicarbonate is used as a leavening agent for commercial baked goods, an antacid
in pharmaceuticals, a carbon dioxide release agent in fire extinguishers, and as
an alkaline agent in swimming pool chemicals, detergents and various textile and
tanning applications. A special grade of sodium bicarbonate, as well as sodium
sesquicarbonate, is sold to the animal feed market for use as a buffer, or
antacid, for dairy cattle.
- 2 -
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The Company is the sole U.S. producer of ammonium bicarbonate, which is
primarily used as a leavening agent in the food industry, and produces other
chemicals related to sodium bicarbonate.
During 1994, the Company increased its ownership position in Brotherton
Chemicals Ltd., a British producer of ammonium bicarbonate and other chemicals
sold to the food and agricultural markets, from 95% to 100%.
MEGALAC Rumen Bypass Fat is a nutritional supplement made from natural oils
which allows cows to maintain energy levels during the period of high-milk
production, resulting in improved milk yields and minimal weight loss. The
product and the trademark MEGALAC are licensed from a British company, Volac
Ltd.
ARMEX Blast Media is a small but developing product line of formulations
designed for the removal of a wide variety surface coatings. This product which
is used in conjunction with the Company's ACCUSTRIP SYSTEM(TM) Delivery Device
provides an environmentally safe alternative to existing processes such as sand
blasting and chemical stripping.
In 1986, the Company along with a subsidiary of Occidental Petroleum
Corporation formed Armand Products Company, an equally owned joint venture
partnership that produces and markets potassium carbonate and potassium
bicarbonate. Potassium chemicals have some characteristics akin to the Company's
existing product line, and the Company hopes to develop new applications in much
the same way it broadened the uses of sodium bicarbonate.
COMPETITION
The sodium bicarbonate industry continues to be affected by competition
from domestic sodium bicarbonate producers and imports. In agricultural markets,
sodium bicarbonate also competes with several alternative buffer products.
During 1992, the structure of the sodium bicarbonate industry changed as two
competitors merged and closed one production site in the process. North American
Chemicals continues to gain market penetration in the commodities sector of the
sodium bicarbonate market with nahcolite, a naturally-occurring form of
low-grade sodium bicarbonate. The Company's position in this market has
essentially remained the same despite these adverse conditions.
The Company competes primarily on the basis of its product quality, grade
availability and reliability of supply from a two-plant manufacturing system.
Pricing is a major competitive factor for animal feed and other less specialized
grades of sodium bicarbonate.
In 1994, two competitors added a combined total of 50,000 tons of potassium
carbonate capacity, thus ending Armand Products position as the sole North
American producer of potassium carbonate. A third competitor, with a capacity of
25,000 tons, started production late in 1995. These events have been anticipated
for some time, but it is impossible to predict the extent to which these
developments will impact this business.
DISTRIBUTION
The Company markets sodium bicarbonate and other chemicals to industrial
and agricultural customers throughout the United States and Canada. Distribution
is accomplished through regional sales offices and manufacturer's
representatives augmented by the sales personnel of independent distributors
throughout the country.
- 3 -
6
RAW MATERIALS AND SOURCES OF SUPPLY
The Company manufactures sodium bicarbonate for its consumer and industrial
markets at its two plants located at Green River, Wyoming and Old Fort, Ohio.
The production of sodium bicarbonate requires two basic raw materials, soda
ash and carbon dioxide. The primary source of soda ash used by the Company is
the mineral, trona, which is found in abundance in southwestern Wyoming, near
the Company's Green River plant. The Company has acquired a number of leases
allowing it to extract these trona deposits.
The Company is party to a partnership agreement with General Chemical
Corporation who mines and processes certain trona reserves owned by each of the
two Companies in Wyoming. Through the partnership and related agreements, the
Company obtains a substantial amount of its soda ash requirements, enabling the
Company to achieve some of the economies of an integrated business capable of
producing sodium bicarbonate and related products from the basic raw material.
The Company also has an agreement for the long term supply of trona from another
company.
The Company presently uses light soda ash in the manufacture of its ARM &
HAMMER Powder Laundry Detergent in its Syracuse, New York plant. Light soda ash
is obtained under a one-year supply agreement which is automatically renewable
on a year to year basis. This agreement terminates upon one year's written
notice by either company. At the Syracuse plant and the Green River, Wyoming
plant, the Company also produces laundry detergent powder employing a process
utilizing raw materials readily available from a number of sources.
The partnership agreement and other supply agreements between the Company
and General Chemical terminate upon two years notice by either company. The
Company believes that alternative sources of supply are available.
The Company obtains its supply of the second basic raw material, carbon
dioxide, in Green River and Old Fort, under long-term supply contracts. The
Company believes that its sources of carbon dioxide, and other raw and packaging
materials, are adequate.
During 1995, a liquid laundry detergent manufacturing line was constructed
in the Company's Syracuse, New York Plant. This new line is capable of producing
all of the Company's liquid laundry detergent requirements. Prior to this, all
of the Company's ARM & HAMMER Liquid Laundry Detergent was contract
manufactured. ARM & HAMMER FRESH & SOFT Dryer Sheets, ARM & HAMMER Deodorizing
Air Freshener and ARM & HAMMER Deodorant Anti-perspirant are also contract
manufactured for the Company under various agreements. Alternative sources of
supply are available in case of disruption or termination of the agreements.
The main raw material used in the production of potassium carbonate is
liquid potassium hydroxide. Armand Products obtains its supply of liquid
potassium hydroxide under a long-term supply arrangement.
PATENTS AND TRADEMARKS
The Company's ARM & HAMMER trademark is registered with the United States
Patent and Trademark Office and also with the trademark offices of many foreign
countries. It has been used by the Company since the late 1800's, and is a
valuable asset and important to the successful operation of the Company's
business.
SEASONALITY
It appears that the Company's sales are principally affected by marketing
and promotion activities rather than seasonal factors.
- 4 -
7
CUSTOMERS AND ORDER BACKLOG
No material part of the Company's business is dependent upon either a
single customer or a few customers.
The time between receipt of orders and shipment is generally short, and as
a result, backlog is not significant.
RESEARCH & DEVELOPMENT
The Company's Research and Development Department is engaged in work on
product development, process technology and basic research. During 1995,
$18,544,000 was spent on research activities as compared to $20,594,000 in 1994
and $21,172,000 in 1993.
ENVIRONMENT
Similar to other manufacturers, the Company's operations are subject to
federal, state and local regulations governing air emissions, waste and steam
discharges, and solid and hazardous waste management activities. The Company
continues to take all steps required to comply with such regulations. These
steps include annual environmental audits of each Company facility. The audits,
conducted by an independent engineering concern with expertise in the area of
environmental compliance, include site visits at each location, as well as a
review of documentary information, to determine compliance with such federal,
state and local regulations. The Company believes that existing promulgated
environmental regulations will not have any material adverse effect with regard
to the Company's capital expenditures, earnings or competitive position. No
material capital expenditures relating to environmental control are anticipated.
EMPLOYEES
At December 31, 1995 , the Company had 941 employees. The Company is party
to a labor contract with the United Steelworkers of America covering
approximately ninety hourly employees at its Syracuse, New York plant which
continues until July 1, 1997. Labor relations have been good.
LINES OF BUSINESS AND CLASSES OF PRODUCTS
The Company's operations constitute one business segment. The chart set
forth below shows the percentage of the Company's net sales contributed by each
group of products marketed by the Company during the period from January 1, 1991
through December 31, 1995.
% of Net Sales
------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Consumer Products 78 80 81 82 83
Specialty Products 22 20 19 18 17
- 5 -
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ITEM 2. PROPERTIES
The executive offices and research and development facilities are owned by
the Company and are located on 22 acres of land in Princeton, New Jersey, with
approximately 72,000 square feet of office and laboratory space. In addition,
the Company leases space in two buildings adjacent to this facility which
contain approximately 90,000 square feet of office space. The Company also
leases regional sales offices in various locations throughout the United States.
At Syracuse, New York the Company owns a 16 acre site on which a group of
connected buildings containing approximately 270,000 square feet of floor space
are located. This plant is used primarily for the manufacture and packaging of
consumer products. Adjacent to this, the Company also owns a one acre site where
it manufactures ammonium bicarbonate in a 14,000 square foot building. During
1996, the Company will cease production of ammonium bicarbonate and import its
requirements from its Brotherton Chemicals Ltd. U.K. subsidiary and other
manufacturers.
The Company's plant in Green River, Wyoming is located on 112 acres of land
owned by the Company. The plant and related facilities contain approximately
273,000 square feet of floor space. The plant was constructed in 1968 and has
since been expanded to a current capacity of 190,000 tons of sodium bicarbonate
per year.
The Company's plant in Old Fort, Ohio is located on 75 acres of land owned
by the Company. The plant and related facilities contain approximately 208,000
square feet of floor space. The plant was completed in 1980 and has since been
expanded to a capacity of 240,000 tons of sodium bicarbonate per year. The last
expansion was completed in the second quarter of 1995.
The Company maintains an operating facility in Taylors, South Carolina, for
the manufacturing and packaging of its dentifrice products in a 117,000 square
foot building. The facility is located on 6 acres of land owned by the Company.
In Ontario, Canada, the Company owns a 26,000 square foot distribution
center which was previously the site of a packaging plant servicing Canadian
markets. In 1994, the manufacturing activities were transferred to the Company's
United States facilities. The principal office of the Canadian subsidiary (which
is leased) is located in Toronto.
Brotherton Chemicals Ltd. operates a 71,000 square foot manufacturing
facility in Wakefield, England on about 7 acres of land.
The Company's Venezuela subsidiary, Industrias Bicarbon De Venezuela S.A.,
recently completed construction of a new 11,000 ton sodium bicarbonate plant.
The plant became operational in mid 1995.
The Armand Products partnership, in which the Company has a 50% interest,
owns and operates a potassium carbonate manufacturing plant located in Muscle
Shoals, Alabama. This facility contains approximately 53,000 square feet of
floor space and has a capacity of 103,000 tons of potassium carbonate per year.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to claims and litigation in the ordinary course of
its business, but does not believe that any such claim or litigation will have a
material adverse effect on the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the last quarter of the year ended December 31, 1995.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the New York Stock Exchange
(symbol: "CHD"). Refer to Page 17 of the Annual Report which is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Refer to Page 13 of the Annual Report which, in so far as the data for the
years 1991 through 1995 are concerned, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Refer to Financial Review Pages 14-17 of the Annual Report which are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to Pages 18-31 of the Annual Report which are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This item is omitted because the Company will file with the Commission a
definitive proxy statement pursuant to Regulation 14A not later than 120 days
after the close of the fiscal year ended December 31, 1995, which proxy
statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
This item is omitted because the Company will file with the Commission a
definitive proxy statement pursuant to Regulation 14A not later than 120 days
after the close of the fiscal year ended December 31, 1995, which proxy
statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This item is omitted because the Company will file with the Commission a
definitive proxy statement pursuant to Regulation 14A not later than 120 days
after the close of the fiscal year ended December 31, 1995, which proxy
statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is omitted because the Company will file with the Commission a
definitive proxy statement pursuant to Regulation 14A not later than 120 days
after the close of the fiscal year ended December 31, 1995, which proxy
statement is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements are incorporated herein by reference to
the Annual Report to Security Holders:
Page of
Annual Report
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Consolidated Statements of Income for each of the three 18
years in the period ended December 31, 1995
Consolidated Balance Sheets as of December 31, 1994 and 1995 19
Consolidated Statements of Cash Flow for each of the three 20
years in the period ended December 31, 1995
Consolidated Statements of Stockholders' Equity for each of 21
the three years in the period ended December 31, 1995
Notes to Financial Statements 22-31
Independent Auditors' Report 32
(a) 2. FINANCIAL STATEMENT SCHEDULE
Included in Part IV of this report:
Independent Auditors' Report on Schedule
For each of the three years in the period ended December 31, 1995:
Schedule II - Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of conditions under which
they are required or because the required information is given in the financial
statements or notes thereto.
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(a) 3. EXHIBITS
(3) (a) Restated Certificate of Incorporation including
amendments has previously been filed with the Securities and
Exchange Commission on the Company's Form 10-K for the year
ended December 31, 1989, which is incorporated by reference.
(b) By-Laws have previously been filed with the Securities and
Exchange Commission on the Company's Form 10-K for the year
ended December 31, 1985, which is incorporated herein by
reference.
(4) The Company is party to a Loan Agreement dated May 31, 1991
with the New Jersey Economic Development Authority. The
principal amount of the loan thereunder is less than ten
percent of the Company's consolidated assets. The Company
will furnish a copy of said agreement to the Commission upon
request.
(10) (a) Supply Agreement between Church & Dwight Co., Inc. and
ALCAD Partnership for supply of soda ash. This document is
not attached hereto but has been separately submitted to the
Securities and Exchange Commission which has approved the
Company's application under rule 24b-2 for privileged and
confidential treatment thereof.
COMPENSATION PLANS AND ARRANGEMENTS
(b) Indemnification Agreement for directors, and certain
officers, employees, agents and fiduciaries, which was
approved by stockholders at the Annual Meeting of
Stockholders on May 7, 1987, and was included in the
Company's definitive Proxy Statement dated April 6, 1987
which is incorporated herein by reference.
(c) Stockholder Rights Agreement dated April 27, 1989, between
Church & Dwight Co., Inc. and Chemical Bank, formerly
Manufacturers Hanover Trust Company, has been previously
filed on April 28, 1989 with the Securities and Exchange
Commission on the Company's Form 8-K, which is incorporated
herein by reference.
(d) The Company's 1983 Stock Option Plan, which was approved by
stockholders at the Annual Meeting of Stockholders on May 5,
1983, and was included in the Company's definitive Proxy
Statement dated April 4, 1983 which is incorporated herein
by reference.
(e) Restricted Stock Plan for Directors which was approved by
stockholders at the Annual Meeting of Stockholders on May 7,
1987, and was included in the Company's definitive Proxy
Statement dated April 6, 1987 which is incorporated herein
by reference.
(f) Church & Dwight Co., Inc. Deferred Compensation Plan and
Agreement for Officers Amended and Restated as of January 1,
1988 has previously been filed with the Securities and
Exchange Commission on the Company's Form 10-K for the year
ended December 31, 1987, which is incorporated herein by
reference.
(g) Deferred Compensation Plan for Directors has previously been
filed with the Securities and Exchange Commission on the
Company's Form 10-K for the year ended December 31, 1987,
which is incorporated herein by reference.
(h) Employment Service Agreement with Senior Management of
Church & Dwight Co., Inc. has previously been filed with the
Securities and Exchange Commission on the Company's Form
10-K for the year ended December 31, 1990, which is
incorporated herein by reference.
- 9 -
12
(i) The Stock Option Plan for Directors which was approved by
stockholders in May 1991, authorized the granting of options
to non-employee directors. The full text of the Church &
Dwight Co.,Inc. Stock Option Plan for Directors was
contained in the definitive Proxy Statement filed with the
Commission on April 2, 1991 and incorporated herein by
reference.
(j) A description of the Company's Incentive Compensation Plan
has previously been filed with the Securities and Exchange
Commission on the Company's Form 10-K for the year ended
December 31, 1992, which is incorporated herein by
reference.
(k) Church & Dwight Co., Inc. Executive Stock Purchase Plan has
previously been filed with the Securities and Exchange
Commission on the Company's Form 10-K for the year ended
December 31, 1993, which is incorporated herein by
reference.
(l) The 1994 Incentive Stock Option Plan has previously been
filed with the Securities and Exchange Commission on the
Company's Form 10-K for the year ended December 31, 1994,
which is incorporated herein by reference.
(11) Computation of earnings per share.
(13) 1995 Annual Report to Stockholders.
(21) List of the Company's subsidiaries.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31,1995.
Copies of exhibits will be made available upon request and for a
reasonable charge.
(d) FINANCIAL STATEMENTS OF SUBSIDIARIES NOT CONSOLIDATED
Armand Products Corporation Statements of Income and Partners' Capital for
each of the three years in the period ended December 31, 1995.
Armand Products Corporation Balance Sheets as of December 31, 1994 and 1995.
Armand Products Corporation Statements of Cash Flow for each of the three
years in the period ended December 31, 1995.
- 10 -
13
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Stockholders of
Church & Dwight Co., Inc.
Princeton, New Jersey
We have audited the consolidated financial statements of Church & Dwight Co.,
Inc. and subsidiaries as of December 31, 1995 and 1994, and for each of the
three years in the period ended December 31, 1995, and have issued our report
thereon dated January 24, 1996; such consolidated financial statements and
report are included in your 1995 Annual Report to Stockholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedule of Church & Dwight Co., Inc. and subsidiaries,
listed in Item 14. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
January 24, 1996
- 11 -
14
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
1995 1994 1993
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
--------------------------
Balance at beginning of year $ 912 $ 752 $ 777
--------------------------
Additions:
Charged to expenses and costs 478 700 184
--------------------------
Deductions:
Amounts written off 86 539 208
Foreign currency translation adjustment -- 1 1
--------------------------
86 540 209
--------------------------
BALANCE AT END OF YEAR $1,304 $ 912 $ 752
--------------------------
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ARMAND PRODUCTS COMPANY ( A PARTNERSHIP)
STATEMENTS OF EARNINGS AND CHANGES IN PARTNER'S CAPITAL
(Dollars in thousands)
YEARS ENDED DECEMBER 31, 1995 1994 1993
- -----------------------------------------------------------------------------------
NET SALES $ 50,539 $ 47,254 $ 39,701
Cost of Sales 33,242 29,108 23,688
----------------------------------
Gross Profit 17,297 18,146 16,013
Selling, General and Administrative Expenses 2,754 2,568 2,466
----------------------------------
INCOME FROM OPERATIONS 14,543 15,578 13,547
Interest Income 235 170 163
Interest Expense (908) (908) (693)
- -----------------------------------------------------------------------------------
NET INCOME $ 13,870 $ 14,840 $ 13,017
- -----------------------------------------------------------------------------------
PARTNERS' CAPITAL:
- -----------------------------------------------------------------------------------
Balance, Beginning of Year $ 27,737 $ 33,115 $ 35,964
Net Income 13,870 14,840 13,017
Return of Capital to Partners (5,600) (5,500) (2,000)
Distributions to Partners (13,490) (14,718) (13,866)
- -----------------------------------------------------------------------------------
BALANCE, END OF YEAR $ 22,517 $ 27,737 $ 33,115
- -----------------------------------------------------------------------------------
See notes to financial statements
16
ARMAND PRODUCTS COMPANY (A PARTNERSHIP)
BALANCE SHEETS
(Dollars in thousands)
DECEMBER 31, 1995 1994
- ----------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------
Cash and cash equivalents $ 771 $ 3,004
Accounts receivable (net of allowance of
$150 in 1995 and $150 in 1994) 5,596 6,100
Inventories 1,143 1,329
----------------------
TOTAL CURRENT ASSETS 7,510 10,433
- ----------------------------------------------------------------------
Property, plant and equipment (net) 27,718 28,070
Long-term supply contract 1,650 3,850
Intangibles 154 191
- ----------------------------------------------------------------------
TOTAL ASSETS $37,032 $42,544
- ----------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
- ----------------------------------------------------------------------
Accounts payable $ 3,088 $ 3,464
Accrued liabilities 427 343
----------------------
TOTAL CURRENT LIABILITIES 3,515 3,807
- ----------------------------------------------------------------------
Notes payable - Church & Dwight Company 11,000 11,000
Partners' capital 22,517 27,737
- ----------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $37,032 $42,544
- ----------------------------------------------------------------------
See notes to financial statements
17
ARMAND PRODUCTS COMPANY (A PARTNERSHIP)
STATEMENTS OF CASH FLOW
(Dollars in thousands)
YEARS ENDED DECEMBER 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
- --------------------------------------------------------------------------------------------------------------
NET INCOME $ 13,870 $ 14,840 $ 13,017
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 1,693 1,823 1,656
Supply contract amortization 2,200 2,200 2,200
Amortization of intangibles 37 38 38
Change in assets and liabilities net of effects of disposals:
Decrease(increase) in accounts receivable 504 (900) (193)
Decrease(increase) in inventories 186 505 (858)
(Decrease)increase in accounts payable
and accrued liabilities (292) 1,348 (145)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 18,198 19,854 15,715
CASH FLOW FROM INVESTING ACTIVITIES:
- --------------------------------------------------------------------------------------------------------------
Additions to property, plant and equipment (1,341) (927) (2,535)
- --------------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
- --------------------------------------------------------------------------------------------------------------
Return of capital to partners (5,600) (5,500) (2,000)
Distributions to partners (13,490) (14,718) (13,866)
- --------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (19,090) (20,218) (15,866)
- --------------------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,233) (1,291) (2,686)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,004 4,295 6,981
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 771 $ 3,004 $ 4,295
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION--
Cash paid during the year for interest
(net of amounts capitalized) $ 908 $ 681 $ 689
- --------------------------------------------------------------------------------------------------------------
See notes to financial statements
18
ARMAND PRODUCTS COMPANY
(A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
Armand Products Company (the "Partnership") was organized under the Uniform
Partnership Act of the State of Delaware on October 1, 1986 to engage in the
manufacture and sale of potassium carbonate and related products. The
Partnership shall continue to exist indefinitely, although its termination
may be effected by either of the Partners pursuant to the terms of the
Partnership Agreement. The two partners, Occidental Petroleum Corporation
and Church & Dwight Co., Inc. each own a 50% interest in the partnership.
The financial statements reflect the activities of Armand Products Company,
and do not include any assets, liabilities, revenues or expenses
attributable to the activities of the individual Partners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Cash and cash equivalents - Cash equivalents consist of highly liquid
short-term investments which mature within three months of purchase.
B. Inventories - Inventories consist of finished goods valued at the lower
of cost or market using the first-in, first-out method.
C. Property, plant and equipment - Property, plant and equipment and
additions thereto are stated at cost. Depreciation is provided on a
straight-line basis over the estimated lives of the assets.
D. Long-term supply contract - The long-term supply contract represents
advance payments under a multi-year contract with Occidental
Electrochemical Corporation ("OEC")(See note 5) for the purchase of raw
materials. Such advance payments are amortized on a straight-line basis
over a ten year period.
E. Intangibles - Intangibles represent purchased technology, customer
list, business data and a covenant not to compete related to the
Partnership's potassium bicarbonate business. Intangibles are being
amortized over a period of ten years.
F. Income taxes - The Partnership is not considered a taxable entity for
federal and state income tax purposes. Accordingly, no provision has
been made for income taxes, as it is the responsibility of the
individual Partners.
G. Allocation of profits and losses - The Partnership Agreement calls for
profits and losses to be divided equally between the Partners.
H. Revenue recognition - The Partnership recognizes revenues when product
is shipped to customers.
19
I. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of the Partnership's financial instruments at December 31, 1995 and 1994.
Statements of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments", defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties.
(dollars in thousands) 1995 1994
---------------------- ---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
Financial Assets:
Cash and cash equivalents $771 $771 $3,004 $3,004
Financial Liabilities:
Note payable to
Church & Dwight Company $11,000 $11,000 $11,000 $11,000
- ------------------------------------------------------------------------------------------------------
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments reflected in the Balance Sheet.
Cash and Cash Equivalents
The Partnership has included as part of cash equivalents short-term highly
liquid investments that are classified as trading securities. The cost of
the investments can be specifically identified and approximates fair value
because of the short maturity of the instruments.
Note Payable from Church & Dwight Company
The note payable represents a loan from Church & Dwight Company. The
Partnership believes that the note payable represents fair market value
because the terms and collateral would be similar to other instruments
available in the marketplace.
20
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at December 31, 1995
and 1994:
(dollars in thousands)
1995 1994
---- ----
Machinery and equipment $32,812 $32,747
Building and improvements 4,070 4,070
Construction in progress 2,026 750
------- -------
38,908 37,567
Less accumulated depreciation 11,190 9,497
------- -------
Property, plant and equipment (net) $27,718 $28,070
======= =======
5. RELATED PARTY TRANSACTIONS
Pursuant to the Partnership and related agreements, each of the Partners,
Oxy Carbonate, Inc. ("Oxy") and C&D Chemical Products, Inc. ("C&D"), either
directly or through affiliated companies, provide specific services on
behalf of the Partnership.
In 1986, the Partnership entered into a long-term supply agreement with OEC
for a key raw material. Under the terms of the supply agreement, the
Partnership expects to obtain its requirements of this raw material for a
ten year period.
In 1992, Church & Dwight Company, a company related to C&D through common
ownership, loaned the Partnership $11 million. The note, which is secured
by plant and equipment owned by the Partnership, bears interest at a rate
of 8.25 percent and is due in installments from January 1998 through June
2000.
Annual maturities of the note payable are as follows: (dollars in
thousands)
1998 $ 4,125
1999 5,500
2000 1,375
-------
$11,000
=======
21
The following summarizes the transactions and balances between the Partnership
and each of the Partners as of December 31, 1995, 1994 and 1993 (in thousands):
1995 1994 1993
---- ---- ----
Sales to Oxy $ 5,889 $ 3,440 $ 1,679
Sales to C&D 1,206 842 719
Purchases from Oxy 26,056 23,596 19,912
Administrative costs reimbursed to Oxy 487 411 375
Administrative costs reimbursed to C&D 2,049 2,025 2,056
Interest charged by C&D 908 908 908
Accounts receivable due from Oxy 514 881 598
Accounts receivable due from C&D 185 87 201
Accounts payable due to Oxy 2,456 2,362 1,713
Accounts payable due to C&D 817 962 482
Note Payable to C&D 11,000 11,000 11,000
22
INDEPENDENT AUDITOR'S REPORT
To the Partners of Armand Products Company
Princeton, New Jersey
We have audited the accompanying balance sheets of Armand Products Company (a
partnership) as of December 31, 1995 and 1994, and the related statements of
earnings, and changes in partners' capital, and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1994, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
January 24, 1996
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on February 21, 1996.
CHURCH & DWIGHT CO., INC.
By: /s/ Robert A. Davies, III
-------------------------------------
Robert A. Davies, III
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Robert A. Davies, III President and February 21, 1996
- ------------------------------
Robert A. Davies, III Chief Executive Officer
/s/ Zvi Eiref Vice President Finance, and February 21, 1996
- ------------------------------
Zvi Eiref Chief Financial Officer
(Principal Financial Officer)
/s/ Gary P. Halker Vice President February 21, 1996
- ------------------------------
Gary P. Halker Controller and Chief Information Officer
(Principal Accounting Officer)
24
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Cyril C. Baldwin, Jr. Director February 21, 1996
- ------------------------------
Cyril C. Baldwin, Jr.
/s/ William R. Becklean Director February 21, 1996
- ------------------------------
William R. Becklean
/s/ Robert H. Beeby Director February 21, 1996
- ------------------------------
Robert H. Beeby
/s/ Robert A. Davies, III Director February 21, 1996
- ------------------------------
Robert A. Davies, III
/s/ Rosina B. Dixon, M.D. Director February 21,1996
- ------------------------------
Rosina B. Dixon, M.D.
/s/ J. Richard Leaman, Jr. Director February 21, 1996
- ------------------------------
J. Richard Leaman, Jr.
/s/ John D. Leggett, III, Ph.D Director February 21, 1996
- ------------------------------
John D. Leggett, III, Ph.D.
/s/ Robert A. McCabe Director February 21, 1996
- ------------------------------
Robert A. McCabe
/s/ Dwight C. Minton Chairman February 21, 1996
- ------------------------------
Dwight C. Minton
/s/ Dean P. Phypers Director February 21, 1996
- ------------------------------
Dean P. Phypers
/s/ Jarvis J. Slade Director February 21, 1996
- ------------------------------
Jarvis J. Slade
/s/ John O. Whitney Director February 21, 1996
- ------------------------------
John O. Whitney
25
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
(3) (a) Restated Certificate of Incorporation including
amendments has previously been filed with the Securities and
Exchange Commission on the Company's Form 10-K for the year
ended December 31, 1989, which is incorporated by reference.
(b) By-Laws have previously been filed with the Securities and
Exchange Commission on the Company's Form 10-K for the year
ended December 31, 1985, which is incorporated herein by
reference.
(4) The Company is party to a Loan Agreement dated May 31, 1991
with the New Jersey Economic Development Authority. The
principal amount of the loan thereunder is less than ten
percent of the Company's consolidated assets. The Company
will furnish a copy of said agreement to the Commission upon
request.
(10) (a) Supply Agreement between Church & Dwight Co., Inc. and
ALCAD Partnership for supply of soda ash. This document is
not attached hereto but has been separately submitted to the
Securities and Exchange Commission which has approved the
Company's application under rule 24b-2 for privileged and
confidential treatment thereof.
COMPENSATION PLANS AND ARRANGEMENTS
(b) Indemnification Agreement for directors, and certain
officers, employees, agents and fiduciaries, which was
approved by stockholders at the Annual Meeting of
Stockholders on May 7, 1987, and was included in the
Company's definitive Proxy Statement dated April 6, 1987
which is incorporated herein by reference.
(c) Stockholder Rights Agreement dated April 27, 1989, between
Church & Dwight Co., Inc. and Chemical Bank, formerly
Manufacturers Hanover Trust Company, has been previously
filed on April 28, 1989 with the Securities and Exchange
Commission on the Company's Form 8-K, which is incorporated
herein by reference.
(d) The Company's 1983 Stock Option Plan, which was approved by
stockholders at the Annual Meeting of Stockholders on May 5,
1983, and was included in the Company's definitive Proxy
Statement dated April 4, 1983 which is incorporated herein
by reference.
(e) Restricted Stock Plan for Directors which was approved by
stockholders at the Annual Meeting of Stockholders on May 7,
1987, and was included in the Company's definitive Proxy
Statement dated April 6, 1987 which is incorporated herein
by reference.
(f) Church & Dwight Co., Inc. Deferred Compensation Plan and
Agreement for Officers Amended and Restated as of January 1,
1988 has previously been filed with the Securities and
Exchange Commission on the Company's Form 10-K for the year
ended December 31, 1987, which is incorporated herein by
reference.
(g) Deferred Compensation Plan for Directors has previously been
filed with the Securities and Exchange Commission on the
Company's Form 10-K for the year ended December 31, 1987,
which is incorporated herein by reference.
(h) Employment Service Agreement with Senior Management of
Church & Dwight Co., Inc. has previously been filed with the
Securities and Exchange Commission on the Company's Form
10-K for the year ended December 31, 1990, which is
incorporated herein by reference.
26
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
(i) The Stock Option Plan for Directors which was approved by
stockholders in May 1991, authorized the granting of options
to non-employee directors. The full text of the Church &
Dwight Co.,Inc. Stock Option Plan for Directors was
contained in the definitive Proxy Statement filed with the
Commission on April 2, 1991 and incorporated herein by
reference.
(j) A description of the Company's Incentive Compensation Plan
has previously been filed with the Securities and Exchange
Commission on the Company's Form 10-K for the year ended
December 31, 1992, which is incorporated herein by
reference.
(k) Church & Dwight Co., Inc. Executive Stock Purchase Plan has
previously been filed with the Securities and Exchange
Commission on the Company's Form 10-K for the year ended
December 31, 1993, which is incorporated herein by
reference.
(l) The 1994 Incentive Stock Option Plan has previously been
filed with the Securities and Exchange Commission on the
Company's Form 10-K for the year ended December 31, 1994,
which is incorporated herein by reference.
(11) Computation of earnings per share.
(13) 1995 Annual Report to Stockholders.
(21) List of the Company's subsidiaries.
(27) Financial Data Schedule