CHURCH & DWIGHT CHURCH & DWIGHT CO., INC.CO., INC.

Brad Schwier ACG2021-002Brad Schwier ACG2021-002

EXECUTIVE SUMMARYEXECUTIVE SUMMARY

Church and Dwight Co., Inc. met or Church and Dwight Co., Inc. met or exceeded their financial goals in exceeded their financial goals in every quarter. In addition, the every quarter. In addition, the

company recorded a 38% increase company recorded a 38% increase over the previous year. Combined over the previous year. Combined

sales for the company and it’s sales for the company and it’s affiliates had a 13% increase over affiliates had a 13% increase over

the previous year. the previous year.

http://www.churchdwight.comhttp://www.churchdwight.com

INTRODUCTIONINTRODUCTION James R. Craigie - President and ChiefJames R. Craigie - President and Chief Executive Officer since July 2004.Executive Officer since July 2004. Church & Dwight Co., Inc., was founded in 1846, Church & Dwight Co., Inc., was founded in 1846,

and is headquartered in Princeton, New Jersey.and is headquartered in Princeton, New Jersey. Fiscal Year ending December 31, 2004 .Fiscal Year ending December 31, 2004 . Church & Dwight Consumer Products encompass Church & Dwight Consumer Products encompass

four categories: Deodorizing and Household four categories: Deodorizing and Household Cleaning, Laundry, Personal Care and International. Cleaning, Laundry, Personal Care and International. Some of their well known principle products include Some of their well known principle products include Trojan Condoms, Arm & Hammer, Brillo, and First Trojan Condoms, Arm & Hammer, Brillo, and First Response. Response.

During 2004, approximately 83% of the Company’s During 2004, approximately 83% of the Company’s sales were generated in U.S. markets. The Company sales were generated in U.S. markets. The Company manufactures and markets mainly in the United manufactures and markets mainly in the United States (including Puerto Rico) and Canada. The States (including Puerto Rico) and Canada. The Consumer International segment sells a variety of Consumer International segment sells a variety of personal care products in international markets, personal care products in international markets, including France, the United Kingdom, Canada, including France, the United Kingdom, Canada, Mexico, Australia and Spain. Mexico, Australia and Spain.

AUDIT REPORTAUDIT REPORT Independent Auditors- Deloitte & Independent Auditors- Deloitte &

Touche LLP, 2 Hilton Court, Touche LLP, 2 Hilton Court, Parsippany, NJ 07054.Parsippany, NJ 07054.

Auditors expressed that the financial Auditors expressed that the financial statements and analysis are in statements and analysis are in conformity with accounting principles conformity with accounting principles generally accepted in the United generally accepted in the United States of America. States of America.

Auditors also expressed that Auditors also expressed that management’s assessment that the management’s assessment that the Company maintained effective Company maintained effective internal control over financial internal control over financial reporting is fairly stated.reporting is fairly stated.

STOCK MARKET STOCK MARKET INFORMATIONINFORMATION

Price of stock on 12/31/04 33.34 per Price of stock on 12/31/04 33.34 per share.share.

Twelve month trading range of stock Twelve month trading range of stock from 01/01/04-12/31/04 is between from 01/01/04-12/31/04 is between 26.14 and 33.34.26.14 and 33.34.

Dividends per share of 23 cents for Dividends per share of 23 cents for 2004.2004.

In it’s current situation I think it In it’s current situation I think it would be best to hold stock long-would be best to hold stock long-term with a stock value at it’s term with a stock value at it’s highest at the end of the accounting highest at the end of the accounting period.period.

INDUSTRY SITUATION AND INDUSTRY SITUATION AND COMPANY PLANSCOMPANY PLANS

Over the past three years Church and Dwight has Over the past three years Church and Dwight has made three major acquisitions doubling the size of made three major acquisitions doubling the size of their business and transforming their product their business and transforming their product portfolio. portfolio.

These acquisitions also expanded the company’s These acquisitions also expanded the company’s international business.international business.

The integration delivered better than expected cost The integration delivered better than expected cost savings for the company and better cost structure, savings for the company and better cost structure, but resulted in a slowdown of internal growth factor.but resulted in a slowdown of internal growth factor.

The company compensated by spending more money The company compensated by spending more money on marketing and product development. They will on marketing and product development. They will introduce a series of new products, one in every introduce a series of new products, one in every product category which will likely contribute to product category which will likely contribute to another year of solid sales for the company. (This another year of solid sales for the company. (This information is offered on the company’s annual information is offered on the company’s annual report in the company’s letter to stockholders).report in the company’s letter to stockholders).

The company’s website offers information for each The company’s website offers information for each year showing an increased growth of stock value year showing an increased growth of stock value throughout 2004 chart is on next slide. throughout 2004 chart is on next slide. ((http://www.churchdwight.com)http://www.churchdwight.com)

COMPANY STOCK CHARTCOMPANY STOCK CHARTDaily for 2004,2005,2006.Daily for 2004,2005,2006.

INCOME STATEMENTINCOME STATEMENTCHURCH & DWIGHT CO., INC. AND SUBSIDIARIES CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

  CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF INCOME

      Year ended December 31, Year ended December 31, (Dollars in thousands, except per share data)(Dollars in thousands, except per share data)         20042004      2003 20022003 2002

Net SalesNet Sales      $1,462,062 $1,462,062     $1,056,874 $1,056,874     $1,047,149 $1,047,149 Cost of salesCost of sales      928,674   928,674     738,883   738,883     735,928   735,928         

  Gross ProfitGross Profit       533,388  533,388     317,991   317,991      311,221  311,221 Marketing expensesMarketing expenses      161,183  161,183     88,807   88,807     86,195 86,195 Selling, general and administrative expensesSelling, general and administrative expenses      200,452   200,452     117,333   117,333     120,512   120,512       

Income from OperationsIncome from Operations      171,753  171,753      111,851  111,851      104,514  104,514 Equity in earnings of affiliatesEquity in earnings of affiliates      15,115  15,115      28,632  28,632      21,520  21,520 Investment earningsInvestment earnings       3,225  3,225      1,322  1,322      1,793  1,793 Other income (expense) - netOther income (expense) - net      1,628  1,628     (313) (313)    (2,618) (2,618)Loss on early extinguishment of debtLoss on early extinguishment of debt      (22,871)  (22,871)     (4,127) (4,127)     —    —   Interest expenseInterest expense      (41,407) (41,407)    (20,400) (20,400)    (23,974) (23,974)          

Income before minority interest and taxesIncome before minority interest and taxes      127,443   127,443      116,965  116,965     101,235   101,235 Minority interestMinority interest      4  4      30  30     143  143           

Income before taxesIncome before taxes       127,439  127,439      116,935  116,935       101,092  101,092 Income taxesIncome taxes       38,631  38,631      35,974  35,974     34,402   34,402           

Net IncomeNet Income      $88,808 $88,808     $80,961 $80,961     $66,690 $66,690           

Weighted average shares outstanding (in thousands)— BasicWeighted average shares outstanding (in thousands)— Basic     61,868  61,868     60,341   60,341     59,445   59,445 Weighted average shares outstanding (in thousands)— DilutedWeighted average shares outstanding (in thousands)— Diluted     68,066  68,066    64,508  64,508      62,714  62,714           

Net Income Per Share—BasicNet Income Per Share—Basic      $1.44 $1.44    $1.34 $1.34    $1.12 $1.12 Net Income Per Share—DilutedNet Income Per Share—Diluted      $1.36 $1.36    $1.28 $1.28    $1.07 $1.07 

INCOME STATEMENTINCOME STATEMENT

Appears to be a multistep I/S.Appears to be a multistep I/S. Gross Margin, Operating Gross Margin, Operating

Income, and Net Income all Income, and Net Income all increased from 2003 to 2004.increased from 2003 to 2004.

These results include accounting These results include accounting charges related to the Armkel charges related to the Armkel and Unilever brand oral care and Unilever brand oral care acquisitions, as well as charges acquisitions, as well as charges related to early redemption of related to early redemption of debt.debt.

BALANCE SHEETBALANCE SHEET

AssetsAssets == LiabilitiesLiabilities ++ Stockholder’sStockholder’s

EquityEquity

20042004   1,877,998 1,877,998 1,317,9681,317,968 560,030560,030

20032003 1,119,617 1,119,617 681,123681,123438,494438,494

The company merged creating an increase in all The company merged creating an increase in all of these balance sheet accounts. Liabilities of these balance sheet accounts. Liabilities increased the most which seems most effected increased the most which seems most effected by a large increase in long-term debts due to the by a large increase in long-term debts due to the mid-year acquisition of the remaining 50% mid-year acquisition of the remaining 50% interest in Armkel LLC not already owned. interest in Armkel LLC not already owned.

STATEMENT OF CASH STATEMENT OF CASH FLOWSFLOWS

Cash flows from operations are more Cash flows from operations are more than net income for the last two than net income for the last two years.years.

The company is growing through The company is growing through investing in the purchase of new investing in the purchase of new businesses, property, plant, and businesses, property, plant, and equipment.equipment.

The company’s primary source of The company’s primary source of finances using long-term loans.finances using long-term loans.

Overall, cash has increased over the Overall, cash has increased over the past two years.past two years.

ACCOUNTING POLICIESACCOUNTING POLICIES Financial statements are prepared according to the Financial statements are prepared according to the

Generally Accepted Accounting Principles.Generally Accepted Accounting Principles. Property, plant and equipment and other long-lived assets Property, plant and equipment and other long-lived assets

are reviewed periodically for possible impairment in are reviewed periodically for possible impairment in accordance with SFAS No. 144. accordance with SFAS No. 144.

Refers to Refers to Moody’s AA Corporate Bond IndexMoody’s AA Corporate Bond Index for the for the Valuation of pension and postretirement benefit costs. Valuation of pension and postretirement benefit costs.

Topics under Topics under Notes to Consolidated Income Notes to Consolidated Income StatementsStatements include: 1. Accounting include: 1. Accounting Policies, 2. Fair Value Policies, 2. Fair Value of Financial Instruments and Risk Management, 3. of Financial Instruments and Risk Management, 3. Inventories, 4. Property, Plant and Equipment, 5. Unilever Inventories, 4. Property, Plant and Equipment, 5. Unilever Oral Care Business Acquisition, 6. Armkel, LLC, 7. Oral Care Business Acquisition, 6. Armkel, LLC, 7. Unaudited Pro Forma Results, 8. Goodwill and Other Unaudited Pro Forma Results, 8. Goodwill and Other Intangibles, 9. Accounts Payable and Accrued Expenses, Intangibles, 9. Accounts Payable and Accrued Expenses, 10. Short-Term Borrowings and Long-Term Debt, 11. 10. Short-Term Borrowings and Long-Term Debt, 11. Income Taxes, 12. Benefit Plans, 13. Stock Option Plans, Income Taxes, 12. Benefit Plans, 13. Stock Option Plans, 14. Comprehensive Income, 15. Common Stock Voting 14. Comprehensive Income, 15. Common Stock Voting Rights and Rights Agreement, 16. Commitments, Rights and Rights Agreement, 16. Commitments, Contingencies and Guarantees, 17. Segments, 18. Assets Contingencies and Guarantees, 17. Segments, 18. Assets Held For Sale, 19. Unaudited Quarterly Financial Held For Sale, 19. Unaudited Quarterly Financial Information. Information.

  

FINANCIAL ANALYSIS/ FINANCIAL ANALYSIS/ LIQUIDITY RATIOSLIQUIDITY RATIOS

  2004 2003

Working Capital 136,257 57,168

Current Ratio 1.25 times 1.38 times

Receivable Turnover 8.8 times 9.83 times

Average Days Sales Uncollected 41.48 days 37.13 days

Inventory Turnover 6.24 times 8.78 times

Average Days Inventory on Hand 58.49 days 41.57 days

FIANANCIAL ANALYSIS/ FIANANCIAL ANALYSIS/ PROFITABILITY RATIOSPROFITABILITY RATIOS

  2004 2003

Profit Margin 16.46%

Asset Turnover .78 .94

Return on Assets 4.7% 7.2%

Return on Equity 15.86% 18.46%

13.05%

FINANCIAL ANALYSIS/ FINANCIAL ANALYSIS/ SOLVENCY RATIOSSOLVENCY RATIOS

20042004 20032003

Debt to EquityDebt to Equity 2.35 times 1.55 times 2.35 times 1.55 times

Currently the company is financed primarily by creditors.Currently the company is financed primarily by creditors.

FINANCIAL ANALYSIS/ MARKET FINANCIAL ANALYSIS/ MARKET STRENGTH RATIOSSTRENGTH RATIOS

2004 2004 20032003

Price / Earnings RatioPrice / Earnings Ratio 24.5 times 20.3 times24.5 times 20.3 times This measurement reflects investor confidence in the company, investor’s confidence has This measurement reflects investor confidence in the company, investor’s confidence has

increased since last year.increased since last year.

Dividend YieldDividend Yield: .7% (page 56 of 10-k Annual Report): .7% (page 56 of 10-k Annual Report) Company is focusing on growth so they’re paying less dividends.Company is focusing on growth so they’re paying less dividends.