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EX-32.1 - SECTION 906 CEO CERTIFICATION - CHURCH & DWIGHT CO INC /DE/exh321-906ceo.htm
EX-32.2 - SECTION 906 CFO CERTIFICATION - CHURCH & DWIGHT CO INC /DE/exh322-906cfo.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - CHURCH & DWIGHT CO INC /DE/exh311-302ceo.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - CHURCH & DWIGHT CO INC /DE/exh312-302cfo.htm
EX-11 - EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE - CHURCH & DWIGHT CO INC /DE/exh11eps.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
     

FORM 10-Q

     

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 25, 2009

Commission file number 1-10585
     
 
Logo 
CHURCH & DWIGHT CO., INC.
(Exact name of registrant as specified in its charter)
     

Delaware
13-4996950
     (State or other jurisdiction
(I.R.S. Employer Identification No.)
     of incorporation or organization)
 

469 North Harrison Street, Princeton, N.J. 08543-5297
(Address of principal executive office)

Registrant's telephone number, including area code:  (609) 683-5900
     

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x   No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes o No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer     x    Accelerated filer o    Non-accelerated filer o    Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x
 
As of October 30, 2009, there were 70,345,063 shares of Common Stock outstanding.


 
 
 

 

 
PART I
 

 
PART II
 
 
 
 
- 2 -
 


PART I - FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
   
Three Months Ended
   
Nine Months Ended
 
   
September 25,
   
September 26,
   
September 25,
   
September 26,
 
(Dollars in thousands, except per share data)
 
2009
   
2008
   
2009
   
2008
 
Net Sales
  $ 646,157     $ 630,672     $ 1,850,143     $ 1,777,498  
Cost of sales
    361,272       379,578       1,034,349       1,059,818  
Gross Profit
    284,885       251,094       815,794       717,680  
Marketing expenses
    100,225       79,740       260,302       212,395  
Selling, general and administrative expenses
    86,759       85,806       253,929       245,092  
Patent litigation settlement, net
    (20,000 )     -       (20,000 )     -  
Income from Operations
    117,901       85,548       321,563       260,193  
Equity in earnings of affiliates
    2,704       2,443       9,401       6,975  
Investment earnings
    289       1,110       1,095       5,636  
Other income (expense), net
    382       (2,884 )     1,673       (586 )
Interest expense
    (8,609 )     (11,577 )     (26,589 )     (34,720 )
Income before Income Taxes
    112,667       74,640       307,144       237,498  
Income taxes
    42,643       25,651       116,387       86,546  
Net Income
    70,024       48,989       190,757       150,952  
Noncontrolling interest
    (4 )     -       4       7  
Net Income attributable to Church & Dwight Co., Inc.
  $ 70,028     $ 48,989     $ 190,753     $ 150,945  
Weighted average shares outstanding - Basic
    70,419       68,400       70,332       67,106  
Weighted average shares outstanding - Diluted
    71,624       71,271       71,443       71,045  
Net income per share - Basic
  $ 0.99     $ 0.72     $ 2.71     $ 2.25  
Net income per share - Diluted
  $ 0.98     $ 0.69     $ 2.67     $ 2.16  
Cash dividends per share
  $ 0.14     $ 0.09     $ 0.32     $ 0.25  
 
See Notes to Condensed Consolidated Financial Statements.
 
 
- 3 -
 


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

   
September 25,
   
December 31,
 
 (Dollars in thousands, except share and per share data)  
2009
   
2008
 
Assets
           
Current Assets
           
Cash and cash equivalents
  $ 419,242     $ 197,999  
Accounts receivable, less allowances of $6,195 and $5,427
    234,281       211,194  
Inventories
    227,307       198,893  
Deferred income taxes
    17,322       15,107  
Prepaid expenses
    11,424       10,234  
Other current assets
    30,700       31,694  
Total Current Assets
    940,276       665,121  
Property, Plant and Equipment, Net
    441,682       384,519  
Equity Investment in Affiliates
    12,298       10,061  
Tradenames and Other Intangibles
    798,541       810,173  
Goodwill
    841,095       845,230  
Other Assets
    88,018       86,334  
Total Assets
  $ 3,121,910     $ 2,801,438  
Liabilities and Stockholders' Equity
               
Current Liabilities
               
Short-term borrowings
  $ 33,593     $ 3,248  
Accounts payable and accrued expenses
    386,476       310,622  
Current portion of long-term debt
    143,911       71,491  
Income taxes payable
    13,097       1,760  
Total Current Liabilities
    577,077       387,121  
Long-term Debt
    658,043       781,402  
Deferred Income Taxes
    206,960       171,981  
Deferred and Other Long Term Liabilities
    101,815       93,430  
Pension, Postretirement and Postemployment Benefits
    33,672       35,799  
Total Liabilities
    1,577,567       1,469,733  
Commitments and Contingencies
               
Stockholders' Equity
               
Preferred Stock-$1.00 par value
               
    Authorized 2,500,000 shares, none issued
    -       -  
Common Stock-$1.00 par value
               
    Authorized 300,000,000 shares, issued 73,213,775 shares
    73,214       73,214  
Additional paid-in capital
    268,773       252,129  
Retained earnings
    1,232,205       1,063,928  
Accumulated other comprehensive income (loss)
    5,117       (20,454 )
Common stock in treasury, at cost:
               
  2,892,061 shares in 2009 and 3,140,931 shares in 2008
    (35,169 )     (37,304 )
Total Church & Dwight Co., Inc. Stockholders' Equity
    1,544,140       1,331,513  
Noncontrolling interest
    203       192  
Total Stockholders' Equity
    1,544,343       1,331,705  
Total Liabilities and Stockholders’ Equity
  $ 3,121,910     $ 2,801,438  
 
See Notes to Condensed Consolidated Financial Statements.
 
 
- 4 -
 


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

   
Nine Months Ended
 
   
September 25,
   
September 26,
 
(Dollars in thousands)
 
2009
   
2008
 
Cash Flow From Operating Activities
           
Net Income
  $ 190,753     $ 150,945  
Adjustments to reconcile net income to net cash provided by operating activities:
 
    Depreciation and amortization
    64,891       52,018  
    Equity in earnings of affiliates
    (9,401 )     (6,975 )
    Distributions from unconsolidated affiliates
    7,165       6,686  
    Deferred income taxes
    31,095       9,405  
    Asset impairment charges and other asset write-offs
    5,160       7,498  
    Gain on sale of assets
    -       (4,184 )
    Non cash compensation expense
    11,025       9,331  
    Unrealized foreign exchange (loss) gain and other
    (2,975 )     582  
Change in assets and liabilities:
               
    Accounts receivable
    (9,397 )     (12,294 )
    Inventories
    (21,891 )     (7,617 )
    Prepaid expenses
    (498 )     (8,950 )
    Other  current assets--patent litigation settlement
    (27,000 )     -  
    Accounts payable and accrued expenses
    55,803       16,606  
    Income taxes payable
    11,823       8,436  
    Excess tax benefit on stock options exercised
    (2,122 )     (5,547 )
    Other liabilities
    4,399       6,189  
Net Cash Provided By Operating Activities
    308,830       222,129  
Cash Flow From Investing Activities
               
Proceeds from sale of assets
    30,125       15,617  
Additions to property, plant and equipment
    (87,181 )     (43,621 )
Acquisitions (net of cash acquired)
    -       (383,241 )
Proceeds from note receivable
    1,324       1,263  
Contingent acquisition payments
    (579 )     (768 )
Change in other long-term assets
    468       (170 )
Net Cash Used In Investing Activities
    (55,843 )     (410,920 )
Cash Flow From Financing Activities
               
Long-term debt borrowings
    -       250,000  
Long-term debt repayment
    (50,938 )     (27,073 )
Short-term debt borrowings, net
    29,542       (97,300 )
Proceeds from stock options exercised
    5,079       10,503  
Excess tax benefit on stock options exercised
    2,122       5,547  
Payment of cash dividends
    (22,476 )     (16,811 )
Purchase of treasury stock
    (389 )     -  
Deferred financing costs
    -       (8,356 )
Net Cash (Used In) Provided by Financing Activities
    (37,060 )     116,510  
Effect of exchange rate changes on cash and cash equivalents
    5,316       (1,839 )
Net Change In Cash and Cash Equivalents
    221,243       (74,120 )
Cash and Cash Equivalents at Beginning of Period
    197,999       249,809  
Cash and Cash Equivalents at End of Period
  $ 419,242     $ 175,689  
 
See Notes to Condensed Consolidated Financial Statements.

 
- 5 -
 

 
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW- CONTINUED
(Unaudited)

   
Nine Months Ended
 
   
September 25,
   
September 26,
 
   
2009
   
2008
 
Cash paid during the year for:
           
      Interest (net of amounts capitalized)
  $ 18,346     $ 29,462  
      Income taxes
  $ 72,220     $ 65,617  
Supplemental disclosure of non-cash investing activities:
               
      Property, plant and equipment expenditures included in Accounts Payable
  $ 15,593     $ 1,517  
                 
Acquisitions in which liabilities were assumed are as follows:
               
      Fair value of assets
   $ -     $ 391,550  
      Purchase price
    -       (383,241 )
      Liabilities assumed
   $ -     $ 8,309  
 
See Notes to Condensed Consolidated Financial Statements.
 
 
- 6 -
 


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 26, 2008 and September 25, 2009
(Unaudited)

   
Number of Shares
   
Amounts
 
(In thousands)
 
Common
Stock
   
Treasury
Stock
   
Common
Stock
   
Treasury
Stock
   
Additional
Paid-In
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Total
Church &
Dwight Co., Inc.
Stockholders'
Equity
   
Noncontrolling
Interest
   
Total
Stockholders'
Equity
 
December 31, 2007
    69,991       (3,748 )   $ 69,991     $ (42,624 )   $ 121,902     $ 891,868     $ 39,128     $ 1,080,265     $ 194     $ 1,080,459  
Net income
    -       -       -       -       -       150,945       -       150,945       7       150,952  
Translation adjustments
    -       -       -       -       -       -       (12,580 )     (12,580 )     (2 )     (12,582 )
Interest rate agreements
                                                                               
     (net of taxes)
    -       -       -       -       -       -       57       57       -       57  
Cash dividends
    -       -       -       -       -       (16,811 )     -       (16,811 )     -       (16,811 )
Stock based compensation expense
                                                                               
     and stock option plan
                                                                               
     transactions (including related
                                                                               
     tax benefit)
    -       503       -       4,647       21,239       -       -       25,886       -       25,886  
Convertible bond redemption
    3,223       -       3,223       -       96,662       -       -       99,885       -       99,885  
Directors' deferred compensation
                                                                               
     plan
    -       -       -       -       6,605       -       -       6,605       -       6,605  
Other stock issuances
    -       12       -       109       710       -       -       819       -       819  
September 26, 2008
    73,214       (3,233 )   $ 73,214     $ (37,868 )   $ 247,118     $ 1,026,002     $ 26,605     $ 1,335,071     $ 199     $ 1,335,270  
December 31, 2008
    73,214       (3,141 )   $ 73,214     $ (37,304 )   $ 252,129     $ 1,063,928     $ (20,454 )   $ 1,331,513     $ 192     $ 1,331,705  
Net income
    -       -       -       -       -       190,753       -       190,753       4       190,757  
Translation adjustments
    -       -       -       -       -       -       25,426       25,426       7       25,433  
Derivative agreements,
                                                                               
     net of tax benefits of $259
    -       -       -       -       -       -       239       239       -       239  
Defined benefit plans,
                                                                               
net of taxes of $37
    -       -       -       -       -       -       (94 )     (94 )     -       (94 )
Cash dividends
    -       -       -       -       -       (22,476 )     -       (22,476 )     -       (22,476 )
Stock purchases
    -       (7 )     -       (389 )     -       -       -       (389 )     -       (389 )
Stock based compensation expense
                                                                               
     and stock option plan
                                                                               
     transactions, including related
                                                                               
     income tax benefits of $2,382
    -       242       -       2,386       16,061       -       -       18,447       -       18,447  
Other stock issuances
    -       13       -       138       583       -       -       721       -       721  
September 25, 2009
    73,214       (2,893 )   $ 73,214     $ (35,169 )   $ 268,773     $ 1,232,205     $ 5,117     $ 1,544,140     $ 203     $ 1,544,343  

See Notes to Condensed Consolidated Financial Statements.

 
- 7 -
 


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.  
 Basis of Presentation
 
The condensed consolidated balance sheets as of September 25, 2009 and December 31, 2008, the condensed consolidated statements of income for the three months and nine months ended September 25, 2009 and September 26, 2008, the condensed consolidated statements of cash flow and the condensed consolidated statements of stockholders’ equity for the nine months ended September 25, 2009 and September 26, 2008 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 September 25, 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 periods ended September 25, 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 third quarter of 2009 and 2008 of $12.6 million and $12.7 million, respectively. The Company incurred research and development expenses in the first nine months of 2009 and 2008 of $37.2 million and $37.4 million, respectively. These expenses are included in selling, general and administrative expenses.

2.  
Recently Adopted Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting Standards Codification (“ASC”) Topic 105, Generally Accepted Accounting Principles (formerly Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). Topic 105 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). ASC Topic 105 is effective for interim and annual periods ending after September 15, 2009. The Company adopted ASC Topic 105 in the third quarter of 2009 and, accordingly, updated GAAP references are to the Codification. The Codification is not intended to change or alter existing GAAP and adoption of the Codification had no impact on our consolidated financial position or results of operations.
 
In May 2009, the FASB issued ASC Subtopic 855-10, Subsequent Events: Overall (formerly SFAS No. 165, Subsequent Events), which provides general standards of accounting for and disclosure of subsequent events. ASC Subtopic 855-10 clarifies that public companies must evaluate, as of each reporting period (i.e. interim and annual), events or transactions that occur after the balance sheet date through the date that the financial statements are issued. It also requires public companies to disclose the date through which subsequent events have been evaluated and whether that is the date on which the financial statements were issued. ASC Subtopic 855-10 is effective prospectively for interim or annual financial periods ending after June 15, 2009. The Company adopted ASC Subtopic 855-10 in the second quarter of 2009 (see Note 20).
 
In April 2009, the FASB amended FASB ASC Subtopic 825-10, Financial Instruments: Overall (formerly FASB Staff Position No. SFAS 107-1 and APB No. 28-1, Disclosures about the Fair Value of Financial Instruments). ASC Subtopic 825-10, as so amended, requires quarterly disclosure of information about the fair value of financial instruments within the scope of ASC Subtopic 825-10. The Company adopted ASC Subtopic 825-10 effective as of the second quarter of 2009. See Note 7 for disclosures relating to the fair value of financial instruments.
 
 
- 8 -
 

3.  
Inventories consist of the following:
 
(In thousands)
 
September 25,
2009
   
December 31,
2008
 
Raw materials and supplies
  $ 58,781     $ 52,850  
Work in process
    10,487       9,147  
Finished goods
    158,039       136,896  
Total
  $ 227,307     $ 198,893  

4.  
Property, Plant and Equipment (“PP&E”) consist of the following:

(In thousands)
 
September 25,
2009
   
December 31,
2008
 
Land
  $ 25,934     $ 25,659  
Buildings and improvements
    149,107       143,590  
Machinery and equipment
    440,203       421,012  
Office equipment and other assets
    39,525       41,169  
Software
    41,636       36,729  
Mineral rights
    1,475       1,146  
Construction in progress
    141,254       60,949  
      839,134       730,254  
Less accumulated depreciation and amortization
    397,452       345,735  
Net Property, Plant and Equipment
  $ 441,682     $ 384,519  
 
   
Three Months Ended
   
Nine Months Ended
 
(In thousands)
 
September 25,
2009
   
September 26,
2008
   
September 25,
2009
   
September 26,
2008
 
Depreciation and amortization on PP&E
  $ 14,161     $ 13,030     $ 43,473     $ 33,432  
Interest charges capitalized (in constuction in progress)
  $ 862     $ 205     $ 1,962     $ 461  
 
During the second quarter of 2008, the Company announced it will be closing its North Brunswick, New Jersey facility in 2009 and, accordingly, has been recording accelerated depreciation charges on those facilities in the Consumer Domestic Segment. The accelerated depreciation charges of $4.5 million and $3.5 million in the third quarter of 2009 and 2008 respectively, and $13.5 million and $4.6 million for the nine months ended September 25, 2009 and September 26, 2008 respectively (see Note 17), are included in cost of sales.

During the third quarter of 2009, the Company recorded a plant asset impairment charge of approximately $4.0 million, representing the carrying value of the related assets associated with one of its international subsidiaries. The Company measured the impairment charge using the discounted cash flow method. This subsidiary manufactures some products that compete with imports priced in U.S. dollars. As the dollar has weakened, it has been necessary to lower prices in the local currency to stay competitive, leading to negative cash flows, which is the key input under the discounted cash flow method.  The charge is included in cost of sales in the Specialty Products Division segment income statement. The Company's fair value measurement input is considered a Level 3, nonrecurring measurement under ASC Subtopic 820-10, Fair Value Measurements and Disclosures: Overall (formerly SFAS No. 157, Fair Value Measurements).

 
- 9 -
 

 
5.  
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
   
Nine Months Ended
 
(In thousands)
 
September 25,
2009
   
September 26,
2008
   
September 25,
2009
   
September 26,
2008
 
Weighted average common shares outstanding - basic
    70,419       68,400       70,332       67,106  
Dilutive effect of stock options
    1,205       1,274       1,111       1,259  
Dilutive effect of convertible debt(1)
    -       1,597       -       2,680  
Weighted average common shares outstanding - diluted
    71,624       71,271       71,443       71,045  
Antidilutive stock options outstanding
    842       532       1,090       897  
 
(1)All but a nominal portion of the Company's outstanding convertible debentures were converted into common stock in the third quarter of 2008.

6.  
Stock-Based Compensation

A summary of option activity during the nine months ended September 25, 2009 is as follows:
 
   
Options
(000)
   
Weighted-
Average
Exercise
Price
   
Weighted-
Average
Remaining
Contractual
Term
   
Aggregate
Intrinsic
Value
($000)
 
Outstanding at January 1, 2009
    4,258     $ 35.42              
Granted
    704       54.04              
Exercised
    (242 )     20.66              
Cancelled
    (36 )     48.94              
Outstanding at September 25, 2009
    4,684     $ 38.85       6.3     $ 79,144  
Exercisable at September 25, 2009
    2,733     $ 28.78       4.6     $ 73,664  

   
Three Months Ended
   
Nine Months Ended
 
   
September 25,
2009
   
September 26,
2008
   
September 25,
2009
   
September 26,
2008
 
Intrinsic Value of Stock Options Exercised (in millions)
  $ 1.9     $ 7.0     $ 7.9     $ 18.2  
Stock Compensation Expense Related to Stock Option Awards (in millions)
  $ 1.6     $ 2.5     $ 10.3     $ 8.9  
Issued Stock Options (in thousands)
    9       2       704       667  
Weighted Average Fair Value of Stock Options issued (per share)
  $ 15.44     $ 18.75     $ 14.83     $ 16.59  
Fair Value of Stock Options Issued (in millions)
  $ 0.1     $ -     $ 10.4     $ 11.1  
Assumptions Used:
                               
Risk-free interest rate
    3.3 %     3.8 %     3.2 %     3.7 %
Expected life in Years
    6.3       6.8       6.4       6.6  
Expected volatility
    21.7 %     22.9 %     21.9 %     22.5 %
Dividend Yield
    0.6 %     0.6 %     0.7 %     0.6 %

The average fair value is based upon the Black Scholes option pricing model. The Company determined the options’ life based on historical exercise behavior and determined the options’ expected volatility and dividend yield based on the historical changes in stock price and dividend payments. The risk free interest rate is based on the yield of an applicable term Treasury instrument. Stock compensation expense related to restricted stock awards was $0.1 million and $0.4 million for the three and nine months ended September 25, 2009, respectively. This expense amounted to $0.1 million and $0.4 million respectively, for the same periods of 2008.
 
 
- 10 -
 
 
7.  
Fair Value of Certain Instruments

ASC Subtopic 820-10, Fair Value Measurements and Disclosures: Overall (formerly 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:
 
   
September 25, 2009
   
December 31, 2008
 
(In thousands)
 
Significant Other Observable Inputs (Level 2)
   
Significant Other Observable Inputs (Level 2)
 
Assets
           
Equity Derivatives
  $ 727     $ -  
Foreign exchange contracts
    -       353  
Diesel fuel contract
    204       -  
    $ 931     $ 353  
Liabilities
               
Equity Derivatives
  $ 67     $ 95  
Foreign exchange contracts
    756       -  
Interest rate collars and swaps
    6,491       7,862  
Diesel fuel contract
    1,444       4,541  
    $ 8,758     $ 12,498  
 
The fair value of the equity derivatives is based on the quoted market prices of the Company stock at the end of each reporting period.
 
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 and swaps was derived using the forward three month LIBOR curve for the duration of the respective collars and swaps and a credit valuation adjustment relating to the credit risk of the counterparty.

The following table presents the carrying amounts and estimated fair values of the Company's financial instruments at September 25, 2009 and December 31, 2008. ASC Subtopic 825-10, Financial Instruments: Overall defines the fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

   
September 25, 2009
   
December 31, 2008
 
(In thousands)
 
Carrying
Amount
   
Fair
Value
   
Carrying
Amount
   
Fair
Value
 
Financial Assets:
                       
    Current portion of note receivable
  $ 1,388     $ 1,388     $ 1,324     $ 1,324  
    Long-term note receivable
    954       946       2,342       2,450  
Financial Liabilities:
                               
    Short-term borrowings
    33,593       33,593       3,248       3,248  
    Current portion of long-term debt
    143,911       138,227       71,491       66,708  
    6% Senior subordinated note debt
    250,000       255,625       250,000       240,250  
    Long-term bank debt
    408,043       382,777       531,402       495,849  
 
 
- 11 -
 
 
The following methods and assumptions were used to estimate the fair value of each class of financial instruments reflected in the Condensed Consolidated Balance Sheets:

Note Receivable

The fair value of the note receivable reflects what management believes is the appropriate interest factor at September 25, 2009 and December 31, 2008, respectively, based on similar risks in the market.

Short-term Borrowings

The carrying amounts of accounts receivable securitization (see Note 11) and unsecured lines of credit equal fair value because of short maturities and variable interest rates.

Long-term Bank Debt, Current Portion of Long-term Debt

The Company determines fair value based upon the prevailing value of equivalent financing.

Senior Subordinated Note Debt

The Company determines fair value of its senior subordinated notes based upon their quoted market value.

8.  
Derivative Instruments

Changes in interest rates, foreign exchange rates, the price of 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. The Company does not use derivatives for trading or speculative purposes.

On January 1, 2009, the Company adopted amendments to ASC Subtopic 815-10, Derivatives and Hedging: Overall (formerly SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities).  ASC Subtopic 815-10, as so amended, 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; 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 hedge accounting criteria articulated in ASC Subtopic 815-20, Derivatives and Hedging: Hedging – General (formerly SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities) 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 cash flows or fair value of the hedged interest rate, commodity price, foreign exchange rate or other variable, and the documentation standards of ASC Subtopic 815-20 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 type of 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. If the Company determines that a derivative instrument is no longer highly effective, it recognizes in current period earnings the hedge ineffectiveness and discontinues hedge accounting with respect to the derivative instrument. 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 immediate recognition in earnings of gains and losses previously recorded in other comprehensive income.

 
- 12 -
 
 
During the nine months of 2009, the Company used derivative instruments to mitigate risk, some of which were designated as hedging instruments under ASC Subtopic 815-20, as indicated below.

Derivatives Designated as Hedging Instruments Under ASC Subtopic 815-20

Cash Flow Hedges

The Company entered into two cash flow hedge zero cost collar agreements, each covering a notional amount of $100.0 million, 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 a portion of its term loan indebtedness. 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 $1.5 million in the third quarter of 2009 and $3.7 million for the nine months ended September 25, 2009 with respect to these hedge agreements. The Company estimates it will recognize approximately $1.8 million in interest expense under the hedge agreements in the fourth quarter of 2009. Changes in the fair value of cash flow hedge agreements are recorded in Accumulated Other Comprehensive Income on the balance sheet.

In addition, the Company entered into interest rate swap hedge agreements covering a notional amount of $150.0 million, effective as of June 26, 2009, to reduce the impact of interest rate fluctuations on a portion of its term loan indebtedness. These cash flow hedge agreements have terms of two years and a fixed rate of 1.38%. 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 nine months of 2009, the Company’s Canadian subsidiary entered into forward exchange contracts to protect the Company from the risk that, due to changes in currency exchange rates, it would be adversely affected by net cash outflows. The last of the contracts expire by the end of August 2010. The face value of the unexpired contracts as of September 25, 2009 totaled U.S. $19.5 million. The contracts qualified as foreign currency cash flow hedges, and, therefore, changes in the fair value through the end of the third quarter of 2009 were marked to market and recorded as Other Comprehensive Income (Loss). The changes in fair values are summarized in the tables below for each reported period.

Derivatives not Designated as Hedging Instruments Under ASC Subtopic 815-20

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 financial counterparties to hedge approximately 34% of its notional diesel fuel requirements for 2009 and approximately 13% of its 2010 requirements. The Company uses the hedge agreements 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 ASC Subtopic 815-20, Derivatives and Hedging: Hedging - General (formerly SFAS 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 and record changes in fair value in the consolidated statement of income. The loss recorded, net of deferred taxes, as a result of changes in the fair value of the diesel fuel hedge agreements, was immaterial for the nine months ended September 25, 2009. If future diesel prices were to change by $0.10 per gallon, the impact on the 2009 financial statements due to the change in fair value of the hedge agreements would be approximately $0.3 million.

 
- 13 -
 


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, as a result of changes in quoted fair values, with respect to contributions designated by the participants for notional investments in Company stock under the Company’s deferred compensation plan.  The contracts are settled in cash.

The following tables summarize the fair value of our derivative instruments and the effect of derivative instruments on our Condensed Consolidated Statements of Income and on comprehensive income:
 
(In millions)
Balance Sheet Location
 
Fair Value at
September 25, 2009
   
Fair Value at
December 31, 2008
 
Derivatives designated as hedging
             
    instruments under ASC Subtopic 815-20
           
Liability Derivatives
             
 Interest rate collars and swaps
Accounts payable and accrued expenses
  $ 0.9     $ -  
 Interest rate collars and swaps
Deferred and other long-term liabilities
    5.6       7.9  
 Foreign exchange contracts
Accounts payable and accrued expenses
    0.8       0.4  
Total liabilities
  $ 7.3     $ 8.3  
Derivatives not designated as hedging
                 
    instruments under ASC Subtopic 815-20
               
Asset Derivatives
                 
Diesel fuel contract
Other current assets
  $ 0.2     $ -  
Equity derivatives
Accounts receivable
    0.7       -  
         Total assets     $ 0.9     $ -  
Liability Derivatives
                 
Equity derivatives
Accounts payable and accrued expenses
  $ -     $ 0.1  
Diesel fuel contract
Accounts payable and accrued expenses
    1.4       4.5  
Total liabilities
  $ 1.4     $ 4.6  
 
 
 
 
 
(In millions)
 
 
Location of Gain (Loss)
Recognized in Income
 
Amount of Gain (Loss)
Recognized in Income
Three Months Ended
September 25, 2009
   
Amount of Gain (Loss)
Recognized in Income
Three Months Ended
September 26, 2008
 
Derivatives not designated as hedging
             
    instruments under ASC Subtopic 815-20
             
 Equity derivatives
Selling, general and administrative expenses
  $ 0.1     $ 0.9  
 Diesel fuel contracts
Cost of sales
    (0.7 )     (3.2 )
   Total loss recognized in income
    $ (0.6 )   $ (2.3 )
 
 
- 14 -
 
 
 
 
 
 
(In millions)
   
Amount of Gain (Loss) 
Recognized in OCI
from Derivatives
Three Months Ended
September 25, 2009
   
Amount of Gain (Loss) 
Recognized in OCI
from Derivatives
Three Months Ended
September 26, 2008
 
Derivatives in ASC Subtopic 815-20 cash
             
    flow hedging relationship
             
 Foreign exchange contracts (net of taxes)
    Other comprehensive income (loss)
  $ (0.4 )   $ -  
 Interest rate swap (net of taxes)
Other comprehensive income (loss)
    (0.5 )     -  
 Interest rate collars (net of taxes)
Other comprehensive income (loss)
    0.3       0.1  
   Total gain (loss) recognized in OCI
    $ (0.6 )   $ 0.1  
 
(In millions)
Location of Gain (Loss)
Recognized in Income
 
Amount of Gain (Loss)
Recognized in Income
Nine Months Ended
September 25, 2009
   
Amount of Gain (Loss)
Recognized in Income
Nine Months Ended
September 26, 2008
 
Derivatives not designated as hedging
             
    instruments under ASC Subtopic 815-20
             
Equity derivatives
Selling, general and administrative expenses
  $ 0.3     $ 1.2  
Diesel fuel contracts
Cost of sales
    -       1.7  
Total gain recognized in income
    $ 0.3     $ 2.9  
 
 
 
 
 
(In millions)
   
Amount of Gain (Loss)
Recognized in OCI
from Derivatives
Nine Months Ended
September 25, 2009
   
Amount of Gain (Loss)
Recognized in OCI
from Derivatives
Nine Months Ended
September 26, 2008
 
Derivatives in ASC Subtopic 815-20 cash
           
    flow hedging relationship
             
 Foreign exchange contracts (net of taxes)
     Other comprehensive income (loss)
  $ (0.6 )   $ -  
Interest rate swap (net of taxes)
 Other comprehensive income (loss)
    (0.4 )     -  
 Interest rate collars (net of taxes)
     Other comprehensive income (loss)
    1.3       0.1  
 Total gain recognized in OCI
    $ 0.3     $ 0.1  
 
The amount of gain (loss) reclassified from other comprehensive income for derivative income was immaterial for the nine months ended September 25, 2009 and September 26, 2008.
 
 
- 15 -
 
 
9.  
Acquisitions

On July 7, 2008, the Company purchased substantially all of the assets and certain liabilities of Del Pharmaceuticals, Inc. from Coty, 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 finalized its purchase price allocation relating to the Orajel Acquisition in the second quarter of 2009.

10.  
Goodwill and Other Intangible Assets

The following table provides information related to the carrying value of all intangible assets excluding goodwill:

   
September 25, 2009
   
December 31, 2008
 
 
 
(In thousands)
 
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Net
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Net
 
Amortizable intangible assets:
                                   
    Tradenames
  $ 117,623     $ (44,665 )   $ 72,958     $ 115,976     $ (38,648 )   $ 77,328  
    Customer Relationships
    241,640       (33,915 )     207,725       241,640       (24,045 )     217,595  
    Patents/Formulas
    27,370       (17,379 )     9,991       27,220       (14,977 )     12,243  
    Non Compete Agreement
    1,143       (891 )     252       1,143       (807 )     336  
    Total
  $ 387,776     $ (96,850 )   $ 290,926     $ 385,979     $ (78,477 )   $ 307,502  
Indefinite lived intangible assets - Carrying value
                                               
    Tradenames
  $ 507,615                     $ 502,671                  
 
Intangible amortization expense amounted to $6.1 million for the third quarter of 2009, and $6.1 million for the same period of 2008. Intangible amortization expense amounted to $18.2 million for the first nine months of 2009 and $15.7 million for the same period of 2008. The increase for the first nine months of 2009 principally reflects customer relationships 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 nine months ended September 25, 2009 are as follows:

(In thousands)
 
Consumer
Domestic
   
Consumer
International
   
Specialty
Products
   
Total
 
Balance December 31, 2008
  $ 788,516     $ 36,486     $ 20,228     $ 845,230  
Adjustments to the Orajel Acquisition purchase price allocation(1)
    (3,815 )     -       -       (3,815 )
Additional contingent consideration
    498       -       -       498  
Other
    (818 )     -       -       (818 )
Balance September 25, 2009
  $ 784,381     $ 36,486     $ 20,228     $ 841,095  
(1)The adjustments to the Orajel Acquisition purchase price allocation relate to the finalization of certain liabilities.

The Company performed its annual goodwill impairment test as of April 1, 2009, and no adjustments were required.
 
 
- 16 -
 
 
11.  
Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt consist of the following:
(In thousands)
 
September 25,
2009
   
December 31,
2008
 
Short-term borrowings
           
Securitization of accounts receivable due in February 2010
  $ 30,000     $ 1,000  
Various debt due to international banks
    3,593       2,248  
Total short-term borrowings
  $ 33,593     $ 3,248  
Long-term debt
               
Term Loan facility
  $ 551,954     $ 602,893  
6% Senior subordinated notes due December 22, 2012
    250,000       250,000  
Total long-term debt
    801,954       852,893  
Less: current maturities
    143,911       71,491  
Net long-term debt
  $ 658,043     $ 781,402  
 
The long-term debt principal payments required to be made are as follows:
 
(In thousands)
       
Due by September 2010
    $ 143,911  
Due by September 2011
      145,827  
Due by September 2012
      262,216  
Due by December 2012
      250,000  
      $ 801,954  
 
During the first nine months of 2009, the Company increased the borrowings under its accounts receivable securitization facility by a net amount of $29.0 million. In the first nine months of 2009, the Company repaid approximately $50.9 million of its Term Loan.
 
12.  
Comprehensive Income

The following table provides information relating to the Company’s accumulated other comprehensive loss:

 
(In thousands)
 
Foreign
Currency
Adjustments
 
Defined
Benefit
Plans
   
Derivative
Agreements
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Balance December 31, 2008
  $ (7,173 )   $ (8,567 )   $ (4,714 )   $ (20,454 )
Comprehensive income changes during
                               
        the nine months ended (net of taxes of $222)
    25,426       (94 )     239       25,571  
Balance September 25, 2009
  $ 18,253     $ (8,661 )   $ (4,475 )   $ 5,117  
 
 
- 17 -
 
 
The following table provides information related to the Company’s comprehensive income for the three and nine months ended September 25, 2009 and September 26, 2008:
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 25,
   
September 26,
   
September 25,
   
September 26,
 
(In thousands)
 
2009
   
2008
   
2009
   
2008
 
Net Income
  $ 70,028     $ 48,989     $ 190,753     $ 150,945  
Other Comprehensive Income, Net of Tax:
                               
        Foreign Exchange Translation Adjustments
    6,096       (17,711 )     25,426       (12,580 )
        Derivative Agreements
    (674 )     170       239       57  
        Defined Benefit Plan Adjustments
    (85 )     -       (94 )     -  
Comprehensive Income attributable to Church & Dwight Co., Inc.
    75,365       31,448       216,324       138,422  
Comprehensive Income attributable to the noncontrolling interest
    1       (4 )     11       5  
Comprehensive Income
  $ 75,366     $ 31,444     $ 216,335     $ 138,427  
 
13. 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 and nine months ended September 25, 2009 and September 26, 2008:

   
Pension Costs
   
Pension Costs
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 25,
   
September 26,
   
September 25,
   
September 26,
 
(In thousands)
 
2009
   
2008
   
2009
   
2008
 
Components of Net Periodic Benefit Cost:
                       
    Service cost
  $ 334     $ 570     $ 1,107     $ 2,003  
    Interest cost
    1,558       1,694       4,820       5,539  
    Expected return on plan assets
    (1,502 )     (1,922 )     (4,463 )     (6,249 )
    Amortization of prior service cost
    -       4       -       11  
    Recognized actuarial (gain) or loss
    395       (7 )     1,073       (25 )
    Net periodic benefit cost
  $ 785     $ 339     $ 2,537     $ 1,279  
 
   
Postretirement Costs
   
Postretirement Costs
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 25,
   
September 26,
   
September 25,
   
September 26,
 
(In thousands)
 
2009
   
2008
   
2009
   
2008
 
Components of Net Periodic Benefit Cost:
                       
Service cost
  $ 57     $ 184     $ 220     $ 554  
Interest cost
    293       365       924       1,094  
Amortization of prior service cost
    14       11       44       34  
Recognized actuarial (gain) or loss
    1       -       4       -  
Net periodic benefit cost
  $ 365     $ 560     $ 1,192     $ 1,682  
 
The Company made cash contributions of approximately $5.7 million to its pension plans during the first nine months of 2009. The Company does not anticipate that it will be required to make any significant cash contributions to its pension plans in the fourth quarter of 2009.
 
 
- 18 -
 
 
14.  
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 September 25, 2009, the Company had commitments to acquire approximately $112.4 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 September 25, 2009 through the remainder of the lease term will amount to approximately $2.5 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 $0.6 million, and accrued a payment of $0.2 million in the first nine months of 2009. The payment and accrual were accounted for as additional purchase price. The Company has paid approximately $9.6 million, exclusive of the $0.2 million accrual, in additional performance-based payments since the acquisition.

f.  
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.
 
15.  
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
 
   
Nine Months Ended
   
Nine Months Ended
 
   
September 25,
   
September 26,
   
September 25,
   
September 26,
 
(In millions)
 
2009
   
2008
   
2009
   
2008
 
Purchases by Company
  $ 8.1     $ 9.8     -     -  
Sales by Company
  $ -     -     $ 3.6     $ 3.9  
Outstanding Accounts Receivable
  -     -     $ 0.5     $ 0.7  
Outstanding Accounts Payable
  $ 0.5     $ 0.1     -     -  
 Administration & Management Oversight Services (1)
  $ 1.2     $ 1.2     $ 2.0     $ 2.0  
                                 
(1) Billed by Company and recorded as a reduction of selling, general and administrative expenses.
         

 
- 19 -
 


16.  
Sale of Subsidiaries and Assets Held for Sale

In the fourth quarter of 2008, the Company made available for sale certain non core personal care product lines acquired in the Orajel Acquisition. The results of these product lines were included in both the Consumer Domestic and Consumer International Segments. In June 2009, the Company sold these product lines for approximately $30 million, net of fees, which approximated the book value of related assets.

On August 29, 2008, the Company sold its Consumer International subsidiary in Spain for $6.0 million. The transaction resulted in a pretax charge of $3.5 million, which has been recorded in selling, general and administrative expenses for the Consumer International Segment. As a result of the sale, a $4.0 million tax benefit also was recorded as a reduction to tax expense.

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.

17.  
Plant Shutdown

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 began production of certain products in September 2009 and is expected to be fully operational by the end of 2009, will be approximately $142 million, cash expenditures relating to the closing of the North Brunswick facilities will be approximately $11 million (see below for further details), and cash transition expenses in the new facility will be approximately $6 million. To build the plant and distribution center, the Company spent approximately $51 million in 2008, and approximately $68 million in the first nine months of 2009, and anticipates spending an additional $23 million during the remainder of 2009. The transition costs for the York facility will be incurred principally in 2009. The costs will be funded using the Company’s existing credit facilities and available cash.

The Company plans to provide severance and transition benefits to approximately 260 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 have been, or will be, included in cost of sales for the Consumer Domestic segment:

Cash Costs
Severance - $3.8 million
Exit and disposal costs - $7.2 million

Non Cash Costs
Accelerated Depreciation - $24.6 million

The severance costs are being recognized ratably over the employees’ respective service requirements. In 2008, the Company accrued $1.9 million for severance costs. In the first nine months of 2009, the Company accrued an additional $1.6 million for severance costs, increasing the total accrual to $3.5 million as of September 25, 2009. To date, no severance payments have been made. The majority of the $3.8 million in severance payments will be made in 2010. The exit and disposal costs include asset disposition and lease related costs. The Company anticipates it will incur approximately $4 million in exit and disposal costs in 2009 and the balance of the exit and disposal costs in 2010.  To date, $0.3 million has been paid for exit and disposal costs.

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 $13.5 million in the first nine months of 2009.
 
18.  
Litigation Settlement

In April 2005, the Company filed suit against Abbott Laborato