chd10q1q2009.htm

0001140361-09-011093.txt : 20090505 0001140361-09-011093.hdr.sgml : 20090505 20090505172906 ACCESSION NUMBER: 0001140361-09-011093 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20090327 FILED AS OF DATE: 20090505 DATE AS OF CHANGE: 20090505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHURCH & DWIGHT CO INC /DE/ CENTRAL INDEX KEY: 0000313927 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] IRS NUMBER: 134996950 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10585 FILM NUMBER: 09798711 BUSINESS ADDRESS: STREET 1: 469 N HARRISON ST CITY: PRINCETON STATE: NJ ZIP: 08543-5297 BUSINESS PHONE: 6096835900 MAIL ADDRESS: STREET 1: 469 N HARRISON STREET CITY: PRINCETON STATE: NJ ZIP: 08543-5297 10-Q 1 chd10q1q2009.htm FORM 10-Q chd10q1q2009.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 March 27, 2009

Commission file number 1-10585

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 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 May 1, 2009, there were 70,221,318 shares of Common Stock outstanding.

TABLE OF CONTENTS

PART I

Item		Page
1.	Financial Statements	3
2.	Management’s Discussion and Analysis	21
3.	Quantitative and Qualitative Disclosure About Market Risk	26
4.	Controls and Procedures	27

PART II

1.	Legal Proceedings	28
1A.	Risk Factors	28
4.	Submission of Matters to a Vote of Security Holders	28
6.	Exhibits	29

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PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended
	March 27,			March 28,
(Dollars in thousands, except per share data)	2009			2008
Net Sales	$	580,867		$	552,867
Cost of sales		331,509			328,761
Gross Profit		249,358			224,106
Marketing expenses		66,373			53,485
Selling, general and administrative expenses		78,325			77,859
Income from Operations		104,660			92,762
Equity in earnings of affiliates		2,705			2,380
Investment earnings		392			2,569
Other income (expense), net		484			2,198
Interest expense		(8,749	)		(12,505	)
Income before Income Taxes		99,492			87,404
Income taxes		36,916			31,211
Net Income		62,576			56,193
Noncontrolling interest		7			2
Net Income attributable to Church & Dwight Co., Inc.	$	62,569		$	56,191
Weighted average shares outstanding - Basic		70,234			66,343
Weighted average shares outstanding - Diluted		71,312			70,817
Net income per share - Basic	$	0.89		$	0.85
Net income per share - Diluted	$	0.88		$	0.81
Cash dividends per share	$	0.09		$	0.08

See Notes to Condensed Consolidated Financial Statements.

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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 27,			December 31,
(Dollars in thousands, except per share data)	2009			2008
Assets
Current Assets
Cash and cash equivalents	$	280,241		$	197,999
Accounts receivable, less allowances of $5,567 and $5,427		216,469			211,194
Inventories		199,882			198,893
Deferred income taxes		17,114			15,107
Prepaid expenses		11,648			10,234
Other current assets		31,476			31,694
Total Current Assets		756,830			665,121
Property, Plant and Equipment, Net		398,965			384,519
Equity Investment in Affiliates		9,821			10,061
Tradenames and Other Intangibles		803,907			810,173
Goodwill		845,412			845,230
Other Assets		85,681			86,334
Total Assets	$	2,900,616		$	2,801,438
Liabilities and Stockholders' Equity
Current Liabilities
Short-term borrowings	$	35,268		$	3,248
Accounts payable and accrued expenses		307,804			310,622
Current portion of long-term debt		95,631			71,491
Income taxes payable		20,906			1,760
Total Current Liabilities		459,609			387,121
Long-term Debt		740,282			781,402
Deferred Income Taxes		183,802			171,981
Deferred and Other Long Term Liabilities		93,613			93,430
Pension, Postretirement and Postemployment Benefits		32,833			35,799
Total Liabilities		1,510,139			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		257,064			252,129
Retained earnings		1,120,188			1,063,928
Accumulated other comprehensive loss		(24,017	)		(20,454	)
Common stock in treasury, at cost:
3,025,682 shares in 2009 and 3,140,931 shares in 2008		(36,168	)		(37,304	)
Total Church & Dwight Co., Inc. Stockholders' Equity		1,390,281			1,331,513
Noncontrolling interest		196			192
Total Stockholders' Equity		1,390,477			1,331,705
Total Liabilities and Stockholders’ Equity	$	2,900,616		$	2,801,438

See Notes to Condensed Consolidated Financial Statements.

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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

	Three Months Ended
	March 27,			March 28,
(Dollars in thousands)	2009			2008
Cash Flow From Operating Activities
Net Income	$	62,569		$	56,191
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,670			15,212
Equity in earnings of affiliates		(2,705	)		(2,380	)
Distributions from unconsolidated affiliates		2,945			2,564
Deferred income taxes		10,106			2,103
Asset impairment charges and other asset write-offs		-			5,626
Gain on sale of assets		-			(3,005	)
Non cash compensation expense		2,707			2,424
Unrealized foreign exchange gain and other		(379	)		(2,558	)
Change in assets and liabilities:
Accounts receivable		(7,980	)		3,436
Inventories		(2,348	)		(3,549	)
Prepaid expenses		(1,466	)		(2,409	)
Accounts payable and accrued expenses		(11,780	)		(30,473	)
Income taxes payable		20,413			20,936
Excess tax benefit on stock options exercised		(936	)		(1,872	)
Other liabilities		(835	)		477
Net Cash Provided By Operating Activities		91,981			62,723
Cash Flow From Investing Activities
Proceeds from sale of assets		-			9,620
Additions to property, plant and equipment		(21,281	)		(6,283	)
Proceeds from note receivable		1,324			1,263
Contingent acquisition payments		(241	)		(305	)
Change in other long-term assets		(417	)		(111	)
Net Cash (Used In) Provided by Investing Activities		(20,615	)		4,184
Cash Flow From Financing Activities
Long-term debt repayment		(16,979	)		(8,453	)
Short-term debt borrowings, net		31,434			(100,000	)
Bank overdrafts		561			293
Proceeds from stock options exercised		2,071			2,761
Excess tax benefit on stock options exercised		936			1,872
Payment of cash dividends		(6,309	)		(5,307	)
Net Cash Provided by (Used In) Financing Activities		11,714			(108,834	)
Effect of exchange rate changes on cash and cash equivalents		(838	)		180
Net Change In Cash and Cash Equivalents		82,242			(41,747	)
Cash and Cash Equivalents at Beginning of Period		197,999			249,809
Cash and Cash Equivalents at End of Period	$	280,241		$	208,062

See Notes to Condensed Consolidated Financial Statements

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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW-CONTINUED

(Unaudited)

	Three Months Ended
	March 27,		March 28,
(Dollars in thousands)	2009		2008
Cash paid during the year for:
Interest (net of amounts capitalized)	$	2,790	$	9,270
Income taxes	$	5,349	$	7,584
Supplemental disclosure of non-cash investing activities:
Property, plant and equipment expenditures included in Accounts Payable	$	12,324	$	932

See Notes to Condensed Consolidated Financial Statements.

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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 27, 2009

(Unaudited)

	Number of Shares					Amounts
						Church & Dwight Co., Inc. Stockholders' Equity
																Accumulated
											Additional					Other
	Common		Treasury			Common		Treasury			Paid-In		Retained			Comprehensive			Noncontrolling
(in thousands)	Stock		Stock			Stock		Stock			Capital		Earnings			Income (Loss)			Interest
December 31, 2008		73,214		(3,141	)	$	73,214	$	(37,304	)	$	252,129	$	1,063,928		$	(20,454	)	$	192
Net income		-		-			-		-			-		62,569			-			7
Translation adjustments		-		-			-		-			-		-			(4,502	)		(3	)
Derivative agreements,
net of taxes of $485		-		-			-		-			-		-			948			-
Defined Benefit Plans,
net of taxes of $9		-		-			-		-			-		-			(9	)		-
Comprehensive income
Cash dividends		-		-			-		-			-		(6,309	)		-			-
Stock purchases		-		-			-		-			-		-			-			-
Stock based compensation
expense and stock option
plan transactions including
related income tax benefits of $1,293		-		105			-		1,031			4,757		-			-			-
Other stock issuances		-		10			-		105			178		-			-			-
March 27, 2009		73,214		(3,026	)	$	73,214	$	(36,168	)	$	257,064	$	1,120,188		$	(24,017	)	$	196

See Notes to Condensed Consolidated Financial Statements.

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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.	Basis of Presentation

The condensed consolidated balance sheets as of March 27, 2009 and December 31, 2008, the condensed consolidated statements of income for the three months ended March 27, 2009 and March 28, 2008, the condensed consolidated statements of cash flow for the three months ended March 27, 2009 and March 28, 2008 and the condensed consolidated statement of stockholders’ equity for the three months ended March 27, 2009 have been prepared by the Company. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at March 27, 2009 and results of operations and cash flow for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2008. The results of operations for the three month period ended March 27, 2009 are not necessarily indicative of the operating results for the full year.

The Company’s fiscal year begins on January 1st and ends on December 31st. Quarterly periods are based on a 4 weeks - 4 weeks - 5 weeks methodology. As a result, the first quarter can include a partial or expanded week in the first four week period of the quarter. Similarly, the last five week period in the fourth quarter could include a partial or expanded week. Certain subsidiaries operating outside of North America are included for periods beginning and ending one month prior to the period presented, which enables timely processing of consolidating results. There were no material intervening events that occurred with respect to these subsidiaries in the one month period prior to the period presented.

The Company incurred research and development expenses in the first quarter of 2009 and 2008 of $10.9 million and $12.0 million, respectively. These expenses are included in selling, general and administrative expenses.

2.	Inventories consist of the following:

	March 27,		December 31,
(In thousands)	2009		2008
Raw materials and supplies	$	55,529	$	52,850
Work in process		10,070		9,147
Finished goods		134,283		136,896
Total	$	199,882	$	198,893

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3.	Property, Plant and Equipment consist of the following:

	March 27,		December 31,
(In thousands)	2009		2008
Land	$	25,579	$	25,659
Buildings and improvements		143,531		143,590
Machinery and equipment		420,628		421,012
Office equipment and other assets		38,496		41,169
Software		36,692		36,729
Mineral rights		1,158		1,146
Construction in progress		89,976		60,949
		756,060		730,254
Less accumulated depreciation and amortization		357,095		345,735
Net Property, Plant and Equipment	$	398,965	$	384,519

Depreciation and amortization of property, plant and equipment amounted to $14.5 million and $9.5 million for the three months ended March 27, 2009 and March 28, 2008, respectively. Interest charges capitalized in connection with construction projects were $0.5 million and $0.1 million for the three months ended March 27, 2009 and March 28, 2008, respectively.

During the second quarter of 2008, the Company announced it will be closing its North Brunswick, New Jersey facility in 2009 and has been recording accelerated depreciation charges on those facilities. The accelerated depreciation charge, which was $4.5 million in the first quarter of 2009 (see Note 16), is included in total depreciation expense.

4.	Earnings Per Share (“EPS”)

Basic EPS is calculated based on income available to common shareholders and the weighted-average number of shares outstanding during the reported period. Diluted EPS includes additional dilution from potential common stock issuable pursuant to the exercise of stock options outstanding. The following table sets forth a reconciliation of the weighted average number of common shares outstanding to the weighted average number of shares outstanding on a diluted basis.

	Three Months Ended
	March 27,		March 28,
(In thousands)	2009		2008
Weighted average common shares outstanding - basic		70,234		66,343
Dilutive effect of stock options		1,078		1,240
Dilutive effect of convertible debt		-		3,234
Weighted average common shares outstanding - diluted		71,312		70,817
Antidilutive stock options outstanding		712		490

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5.	Stock-Based Compensation

A summary of option activity during the three months ended March 27, 2009 is as follows:

						Weighted-
				Weighted-		Average		Aggregate
				Average		Remaining		Intrinsic
	Options			Exercise		Contractual		Value
		(000)		Price		Term		$	(000)
Outstanding at January 1, 2009		4,258		$	35.42
Exercised		(105	)		19.22
Cancelled		(19	)		47.98
Outstanding at March 27, 2009		4,134			35.75		6.1	$	67,653
Exercisable at March 27, 2009		2,097		$	25.88		4.3	$	53,583

	Three Months Ended
	March 27,		March 28,
(In millions)	2009		2008
Intrinsic Value of Stock Options Exercised	$	3.3	$	6.0
Stock Compensation Expense Related to Stock Option Awards	$	2.4	$	2.3

Stock compensation expense related to restricted stock awards was $0.2 million in the first quarter of 2009. This expense amounted to $0.1 million for the same period of 2008.

6.	Fair Value of Certain Instruments

Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” establishes a hierarchy that prioritizes the inputs (generally, assumptions that market participants would use in pricing an asset or liability) used to measure fair value based on the quality and reliability of the information provided by the inputs, as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

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The following table summarizes the carrying amounts and fair values of certain assets and liabilities:

	March 27, 2009
(In thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Foreign exchange contracts	$	523	$	-	$	523	$	-
Liabilities
Interest rate collars	$	6,953	$	-	$	6,953	$	-
Diesel fuel contract		3,495		-		3,495		-
	$	10,448	$	-	$	10,448	$	-

The fair value of the foreign exchange contracts are based on observable forward rates in commodity quoted intervals for the full term of the contract.

The fair value of the diesel fuel contracts is based on home heating oil future prices for the duration of the contract.

The fair value for the interest rate collars was derived using the forward three month LIBOR curve for the duration of the respective collars and a credit valuation adjustment.

7.	Derivative Instruments

Changes in interest rates, foreign exchange rates, the Company's common stock, and commodity prices expose the Company to market risk. The Company manages these risks by the use of derivative instruments, such as cash flow hedges, diesel hedge contracts, equity derivatives and foreign exchange forward contracts. As a matter of policy, the Company does not use derivatives for trading or speculative purposes.

On January 1, 2009, the Company adopted FAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133.” FAS No. 161 requires enhanced disclosure of derivatives and hedging activities on an interim and annual basis. The guidance seeks to improve the transparency of financial reporting through enhanced disclosures on: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

The designation of a derivative instrument as a hedge and its ability to meet the FAS No. 133 hedge accounting criteria determines how the change in fair value of the derivative instrument will be reflected in the Condensed Consolidated Financial Statements. A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the hedged underlying’s cash flows or fair value and the documentation standards of FAS No. 133 are fulfilled at the time the Company enters into the derivative contract. A hedge is designated as a cash flow hedge, fair value hedge, or a net investment in foreign operations hedge based on the exposure being hedged. The asset or liability value of the derivative will change in tandem with its fair value. Changes in fair value, for the effective portion of qualifying hedges, are recorded in other comprehensive income (“OCI”). The derivative’s gain or loss is released from OCI to match the timing of the hedged underlying’s cash flows effect on earnings.

The Company reviews the effectiveness of its hedging instruments on a quarterly basis and recognizes in earnings current period hedge ineffectiveness and discontinues hedge accounting for any derivative instrument that is no longer considered to be highly effective. Changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting are recognized in current period earnings. Upon termination of cash flow hedges, the Company reclassifies gains and losses from other comprehensive income based on the timing of the underlying cash flows, unless the termination results from the failure of the intended transaction to occur in the expected timeframe. Such untimely transactions require us to immediately recognize in earnings gains and losses previously recorded in other comprehensive income.

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During the first quarter of 2009, the Company used the following derivative instruments to mitigate risk:

Cash Flow Hedges

The Company has two cash flow hedge agreements, each covering $100.0 million of zero cost collars, one effective as of September 29, 2006, and the other effective as of December 29, 2006, to reduce the impact of interest rate fluctuations on its term loan debt. The hedge agreements have terms of five and three years, respectively, each with a cap of 6.50% and a floor of 3.57%. The Company recorded a charge to interest expense of $1.0 million in the first quarter of 2009 with respect to the hedge agreements and estimates it will recognize approximately $2.8 million in interest expense in the remainder of 2009. Changes in the fair value of cash flow hedge agreements are recorded in Accumulated Other Comprehensive Income on the balance sheet.

Foreign Currency

The Company is subject to exposure from fluctuations in foreign currency exchange rates, primarily U.S. Dollar/Euro, U.S. Dollar/British Pound, U.S. Dollar/Canadian Dollar, U.S. Dollar/Mexican Peso, U.S. Dollar/Australian Dollar, U.S. Dollar/Brazilian Real and U.S. Dollar/Chinese Yuan.

The Company, from time to time, enters into forward exchange contracts to hedge anticipated but not yet committed sales or purchases denominated in the U.S. Dollar, Canadian dollar, British pound and Euro. During the fourth quarter of 2008 and the first quarter of 2009, the Company’s Canadian subsidiary entered into forward exchange contracts to protect the Company from the risk that dollar net cash outflows would be adversely affected by changes in exchange rates. The contracts expire by the end of 2009. The face value of the unexpired contracts as of March 27, 2009 totaled $13.5 million. The contracts qualified as foreign currency cash flow hedges in accordance with SFAS No. 133, and, therefore, changes in the fair value through the end of the first quarter 2009 were marked to market and recorded as Other Comprehensive Income. The gain recorded, net of deferred taxes, was approximately $0.4 million.

Derivatives not Designated as Hedging Instruments Under FAS No. 133

Diesel Fuel Hedges

The Company uses independent freight carriers to deliver its products. These carriers charge the Company a basic rate per mile that is subject to a mileage surcharge for diesel fuel price increases. In July 2008 and April 2009, in response to increasing fuel prices and a concomitant increase in mileage surcharges, the Company entered into agreements with two providers to hedge approximately 36% if its notional diesel fuel requirements for 2009 and approximately 15% of its 2010 requirements. It is the Company’s policy to use the hedges to mitigate the volatility of diesel fuel prices and related fuel surcharges, and not to speculate in the future price of diesel fuel. The hedge agreements are designed to add stability to the Company’s product costs, enabling the Company to make pricing decisions and lessen the economic impact of abrupt changes in diesel fuel prices over the term of the contract.

Because the diesel hedge agreements do not qualify for hedge accounting under SFAS No. 133, the Company is required to mark the agreements to market throughout the life of the agreements. The change in the market value of the hedge agreements resulted in a $0.1 million loss for the first quarter of 2009, which is reflected in cost of sales. If future diesel prices were to change by $0.10 per gallon, the impact on the Company’s financial statements for the remainder of 2009 due to the hedge agreements would be approximately $0.2 million.

Equity Derivatives

The Company has entered into equity derivative contracts of its own stock in order to minimize the impact on earnings resulting from fluctuations in the liability to plan participants for contributions designated to notional investments in Company stock under the Company’s deferred compensation plan as a result of changes in quoted fair values.

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The following tables summarize the fair value of our derivative instruments, the effect of derivative instruments on our Condensed Consolidated Statements of Income and on comprehensive income, and the amounts reclassified from other comprehensive income:

		Fair Value at			Fair Value at
(In millions)	Balance Sheet Location	March 27, 2009			December 31, 2008
Derivatives designated as hedging instruments under FAS No. 133
Asset Derivatives
Foreign exchange contracts	Accounts receivable	$	0.5		$	0.4
Liability Derivatives
Interest rate collars	Accounts payable and accrued expenses	$	1.8		$	-
Interest rate collars	Other long-term liabilities		5.1			7.9
Total liabilities under FAS No. 133		$	6.9		$	7.9
Derivatives not designated as hedging instruments under FAS No. 133
Asset Derivatives
Equity derivatives	Accounts receivable	$	0.3		$	-
Liability Derivatives
Equity derivatives	Accounts payable and accrued expenses	$	0.7		$	0.1
Diesel fuel contract	Accounts payable and accrued expenses		4.4			4.5
Total liabilities outside FAS No. 133		$	5.1		$	4.6

		Amount of Gain (Loss) Recognized in Income			Amount of Gain (Loss) Recognized in Income
	Location of Gain (Loss)	Three Months Ended			Three Months Ended
(In millions)	Recognized in Income	March 27, 2009			March 28, 2008
Derivatives not designated as hedging instruments under FAS No. 133
Equity derivatives	Selling, general and administrative expenses	$	(0.5	)	$	(0.2	)
Diesel fuel contracts	Cost of sales		(0.1	)		1.9
Total loss recognized in income		$	(0.1	)	$	1.7

		Amount of Gain Recognized in OCI			Amount of Gain Recognized in OCI
		from Derivatives			from Derivatives
		Three Months Ended			Three Months Ended
(In millions)		March 27, 2009			March 28, 2008
Derivatives in FAS No. 133 cash flow hedging relationship
Foreign exchange contracts (net of taxes)	Other comprehensive income	$	0.4		$	-
Interest rate collars (net of taxes)	Other comprehensive income		0.6			2.2
Total gain recognized in OCI		$	1.0		$	2.2

The amount of gain (loss) reclassified from other comprehensive income for derivitave income was immaterial for the three months ended March 27, 2009 and March 28, 2008.

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8.	Acquisitions

On July 7, 2008, the Company purchased substantially all of the assets and certain liabilities of Del Pharmaceuticals, Inc. (the “Orajel Acquisition”) for cash consideration of $383.4 million including fees. Products acquired from Del Pharmaceuticals, Inc. include the Orajel brand of oral analgesics and various other over-the-counter brands. The Company paid for the acquisition with proceeds of $250.0 million in additional bank debt and with available cash. The Company is in the process of finalizing the purchase price allocation.

9.	Goodwill and Other Intangible Assets

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

	March 27, 2009							December 31, 2008
	Gross							Gross
	Carrying		Accumulated					Carrying		Accumulated
(In thousands)	Amount		Amortization			Net		Amount		Amortization			Net
Amortizable intangible assets:
Tradenames	$	115,811	$	(40,555	)	$	75,256	$	115,976	$	(38,648	)	$	77,328
Customer Relationships		241,640		(27,335	)		214,305		241,640		(24,045	)		217,595
Patents/Formulas		27,370		(15,778	)		11,592		27,220		(14,977	)		12,243
Non Compete Agreement		1,143		(835	)		308		1,143		(807	)		336
Total	$	385,964	$	(84,503	)	$	301,461	$	385,979	$	(78,477	)	$	307,502

Indefinite lived intangible assets - Carrying value
Tradenames	$	502,446						$	502,671

Intangible amortization expense amounted to $6.1 million for the first quarter of 2009 and $4.8 million for the same period of 2008. The increase principally reflects the customer relationship amortization related to the Orajel Acquisition. The Company estimates that intangible amortization expense will be approximately $23.0 million in each of the next five years.

The changes in the carrying amount of goodwill for the three months ended March 27, 2009 are as follows:

(In thousands)	Consumer Domestic		Consumer International		Specialty Products		Total
Balance December 31, 2008	$	788,516	$	36,486	$	20,228	$	845,230
Goodwill associated with the Orajel acquisition		13		-		-		13
Additional contingent consideration		169		-		-		169
Balance March 27, 2009	$	788,698	$	36,486	$	20,228	$	845,412

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10.	Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt consist of the following:

	March 27,		December 31,
(In thousands)	2009		2008
Short-term borrowings
Securitization of accounts receivable due in February 2010	$	30,000	$	1,000
Various debt due to international banks		5,268		2,248
Total short-term borrowings	$	35,268	$	3,248
Long-term debt
Term Loan facility	$	585,913	$	602,893
Senior subordinated notes (6%) due December 22, 2012		250,000		250,000
Total long-term debt		835,913		852,893
Less: current maturities		95,631		71,491
Net long-term debt	$	740,282	$	781,402

The long-term debt principal payments required to be made are as follows:

(In thousands)
Due by March 2010	$	95,631
Due by March 2011		171,312
Due by March 2012		187,862
Due by December 2012		381,108
	$	835,913

During the first quarter of 2009, the Company’s net borrowings under its accounts receivable securitization facility were $29.0 million. In the first three months of 2009, the Company repaid approximately $17.0 million of its Term Loan.

11.	Comprehensive Income

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

										Accumulated
	Foreign			Defined						Other
	Currency			Benefit			Derivative			Comprehensive
(In thousands)	Adjustments			Plans			Agreements			Income (Loss)
Balance December 31, 2008	$	(7,173	)	$	(8,567	)	$	(4,714	)	$	(20,454	)
Comprehensive income changes during the three months ended (net of tax of $ 494)		(4,502	)		(9	)		948			(3,563	)
Balance March 27, 2009	$	(11,675	)	$	(8,576	)	$	(3,766	)	$	(24,017	)

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The following table provides information related to the Company’s other comprehensive income for the three months ended March 27, 2009 and March 28, 2008, respectively.

	Three Months Ended
	March 27,			March 28,
(In thousands)	2009			2008
Net Income	$	62,569		$	56,191
Other Comprehensive Income, Net of Tax:
Foreign Exchange Translation Adjustments		(4,502	)		(2,880	)
Derivative Agreements		948			(2,325	)
Defined Benefit Plan Adjustments		(9	)		-
Comprehensive Income		59,006			50,986
Comprehensive Income attributable to the noncontrolling interest		4			2
Comprehensive Income attributable to Church & Dwight Co., Inc.	$	59,010		$	50,988

12.	Pension and Postretirement Plans

The following table provides information regarding the net periodic benefit cost for the Company’s pension and postretirement plans for the three months ended March 27, 2009 and March 28, 2008:

	Pension Costs
	Three Months Ended
	March 27,			March 28,
(In thousands)	2009			2008
Components of Net Periodic Benefit Cost:
Service cost	$	388		$	723
Interest cost		1,648			1,937
Expected return on plan assets		(1,483	)		(2,179	)
Amortization of prior service cost		-			4
Recognized actuarial (gain) or loss		339			(9	)
Net periodic benefit cost	$	892		$	476

	Postretirement Costs
	Three Months Ended
	March 27,		March 28,
(In thousands)	2009		2008
Components of Net Periodic Benefit Cost:
Service cost	$	82	$	187
Interest cost		315		367
Amortization of prior service cost		15		11
Recognized actuarial (gain) or loss		2		-
Net periodic benefit cost	$	414	$	565

The Company made cash contributions of approximately $4.1 million to its pension plans during the first three months of 2009. The Company estimates it will be required to make additional cash contributions to its pension plans during the remainder of the year of approximately $1.7 million.

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13.	Commitments, contingencies and guarantees

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.

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.

As of March 27, 2009, the Company had commitments to acquire approximately $112.1 million of raw material, packaging supplies and services from its vendors at market prices. The packaging supplies are in either a converted or non-converted status. These commitments enable the Company to respond quickly to changes in customer orders or requirements.

The Company has $3.3 million of outstanding letters of credit drawn on several banks which guarantee payment for such things as insurance claims in the event of the Company’s insolvency. In addition, the Company guarantees the payment of rent on a leased facility in Spain. The lease expires in November 2012 and the accumulated monthly payments from March 27, 2009 through the remainder of the lease term will amount to approximately $2.7 million. Approximately two thirds of the rental space is subleased to a third party.

In connection with the Company’s acquisition of Unilever’s oral care brands in the United States and Canada in October 2003, the Company is required to make additional performance-based payments of a minimum of $5.0 million and a maximum of $12.0 million over the eight year period following the acquisition. The Company made cash payments of $0.2 million, and accrued a payment of $0.2 million in the first three months of 2009. The payment and accrual were accounted for as additional purchase price. The Company has paid approximately $9.2 million, exclusive of the $0.2 million accrual, in additional performance-based payments since the acquisition.

The Company filed suit against Abbott Laboratories, Inc. (“Abbott”) in April 2005 claiming infringement of certain patents resulting from Abbott’s manufacture and sale of its Fact Plus pregnancy diagnostic test kits. Following a trial in February 2008, the jury found that the Company’s patents were valid and willfully infringed by Abbott during the period from April 1999 through September 2003 and awarded damages to the Company in the amount of $14.6 million. On June 23, 2008, the District Court issued an opinion finding that Abbott’s conduct had been willful and doubled the damages awarded to the Company to $29.2 million. There remain two post-trial motions filed by the Company with the District Court with respect to prejudgment interest and attorney’s fees. Abbott has filed an appeal of the verdict that has been deactivated pending a ruling on the post-trial motions. In June 2007, Abbott filed a separate suit against the Company claiming infringement of certain patents that are licensed to Abbott, also in relation to pregnancy diagnostic test kits. The Company is vigorously defending that action.

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.

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14.	Related Party Transactions

The following summarizes the balances and transactions between the Company and each of two 50% owned entities, Armand Products Company (“Armand”) and The ArmaKleen Company (“ArmaKleen”):

	Armand				ArmaKleen
	Three Months Ended				Three Months Ended
	March 27,		March 28,		March 27,		March 28,
(In millions)	2009		2008		2009		2008
Purchases	$	2.2	$	2.8		-		-
Sales		-		-	$	1.0	$	1.3
Outstanding Accounts Receivable	$	0.3	$	0.8	$	0.9	$	1.0
Outstanding Accounts Payable	$	0.3	$	1.1		-		-
Administration & Management Oversight Services (1)	$	0.4	$	0.4	$	0.7	$	0.7

(1) Recorded as a reduction of selling, general and administrative expenses.

15.	Sale of Subsidiaries and Assets Held for Sale

On February 29, 2008, the Company sold its wholly-owned British subsidiary, Brotherton Speciality Products Ltd. (“Brotherton”), for $11.2 million, net of fees. The sale resulted in a pretax gain of $3.0 million, which was recorded as a reduction of selling, general and administrative (“SG&A”) expenses in the Specialty Products Division Segment.

The Company has made available for sale certain non core personal care product lines. The results of these product lines are included in both the Consumer Domestic and Consumer International Segments. The Company anticipates proceeds of approximately $30 million, which is included in other current assets on the Company’s Consolidated Balance Sheet. The Company does not expect to record a gain or loss on the sale.

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16.	Plant Shutdown

On June 5, 2008, the Company announced plans to construct a new integrated laundry detergent manufacturing plant and distribution center in York County, Pennsylvania. Construction began in September 2008, and the facility is scheduled to be operational by the end of 2009. The Company expects to invest approximately $151.0 million in capital expenditures to build the York County facility, of which $51.0 million was spent in 2008 and $14.7 million was spent in the first quarter of 2009.

In conjunction with the opening of the new facility, the Company will close its existing laundry detergent manufacturing plant and distribution facility in North Brunswick, New Jersey. The Company plans to provide severance and transition benefits to approximately 270 affected employees at the North Brunswick complex, as well as consideration for employment opportunities at other Company operations.

The Company expects to incur the following cash and non–cash costs relating to the closing of the North Brunswick complex, which has been, or will be, included in cost of sales for the Consumer Domestic segment:

Cash Costs

Severance - - $4.2 million

Exit and disposal costs - $6.6 million

Non Cash Costs

Accelerated Depreciation - $24.6 million

The severance costs are being recognized ratably over the employees’ respective service requirement. In 2008, the Company accrued $1.9 million for severance costs. In the first quarter of 2009, the Company accrued an additional $0.5 million for severance costs. The exit and disposal costs include asset disposition and lease related costs. The Company anticipates it will incur approximately $3.0 million in exit and disposal costs in 2009 and the balance of the exit and disposal costs in 2010.

Accelerated depreciation charges are being recognized ratably over the remaining life of the North Brunswick complex. The Company recorded a charge of $8.1 million related to accelerated depreciation in 2008 and $4.5 million in the first quarter of 2009.

17.	Segment Information

The Company operates three reportable segments: Consumer Domestic, Consumer International and Specialty Products Division (“SPD”). These segments are determined based on differences in the nature of products and organizational and ownership structures. The Company also has a Corporate segment.

Segment revenues are derived from the sale of the following products:

	Segment	Products
	Consumer Domestic	Household and personal care products
	Consumer International	Primarily personal care products
	SPD	Specialty chemical products

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The Company had 50% ownership interests in Armand and ArmaKleen as of March 27, 2009. The Company’s 50% ownership interest in Esseco U.K. LLP (“Esseco”) was divested in the first quarter of 2008 as part of the sale of Brotherton. The equity in earnings of Armand and ArmaKleen for the three months ended March 27, 2009 and March 28, 2008, and Esseco for the two months ended February 29, 2008 (prior to the sale of Brotherton), is included in the Corporate segment.

Some of the subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment. These sales are eliminated from the Consumer International segment results set forth below.

Segment sales and income before income taxes for the three months ended March 27, 2009 and March 28, 2008 were as follows:

(In thousands)	Consumer Domestic		Consumer International		SPD		Corporate		Total
Net Sales(1)
First Quarter 2009	$	438,090	$	82,760	$	60,017	$	-	$	580,867
First Quarter 2008		382,744		99,694		70,429		-		552,867
Income Before Income Taxes(2)
First Quarter 2009	$	79,934	$	10,717	$	6,136	$	2,705	$	99,492
First Quarter 2008		67,831		7,252		9,941		2,380		87,404

(1)	Intersegment sales from Consumer International to Consumer Domestic, which were $0.5 million and $2.1 million for the first quarter ended March 27, 2009 and March 28, 2008, respectively, are not reflected in the table.

(2)	In determining Income Before Income Taxes, interest expense, investment earnings, and other income (expense) were allocated among the segments based upon each segment’s relative operating profit. The Corporate segment income consists of equity in earnings of affiliates.

The following table sets forth product line revenues from external customers for the three months ended March 27, 2009 and March 28, 2008.

	Three Months Ended
	March 27,		March 28,
(In thousands)	2009		2008
Household Products	$	284,050	$	242,827
Personal Care Products		154,040		139,917
Total Consumer Domestic		438,090		382,744
Total Consumer International		82,760		99,694
Total SPD		60,017		70,429
Total Consolidated Net Sales	$	580,867	$	552,867

Household Products include deodorizing and cleaning products and laundry products. Personal Care Products include condoms, pregnancy kits, oral care and skin care products.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

Results of Operations

Consolidated Results

Net Sales

Net Sales for the quarter ended March 27, 2009 were $580.9 million, an increase of $28.0 million or 5.1% above last year’s first quarter. Of the increase, 4.5% is due to sales of products acquired in connection with the Company’s July 2008 acquisition of substantially all of the assets of Del Laboratories, Inc. (the “Orajel Acquisition”), partially offset by the loss of sales due to the divestiture in the first quarter of 2008 of Brotherton Speciality Products Ltd. (“Brotherton”), a former United Kingdom subsidiary that was included in the Company’s Specialty Products Division, and the third quarter 2008 divestiture of the Company’s consumer products subsidiary in Spain. Foreign exchange rates reduced the current quarter sales by 4.1%. The balance of the increase in Net Sales is primarily due to higher prices, sales mix and higher unit volumes.

Operating Costs

The Company’s gross profit was $249.4 million for the quarter ended March 27, 2009, a $25.3 million increase as compared to the same period in 2008. Gross margin increased 240 basis points to 42.9% in the first quarter as compared to 40.5% in the same quarter last year. The increase in gross margin includes higher margins associated with the sales of products acquired in the Orajel Acquisition, lower commodity costs, the impact of higher prices, liquid laundry detergent concentration and the benefits of cost reduction programs. The gross profit increase was partially offset by a $5.2 million charge related to the planned closing of an existing manufacturing facility (see Note 16 to the condensed consolidated financial statements included in this report) and the impact of foreign exchange rates.

Marketing expenses were $66.4 million in the first quarter, an increase of $12.9 million as compared to the same period in 2008. The increased marketing spending included expenditures for products acquired in the Orajel Acquisition. Expenses for the Company's existing products increased in support of ARM & HAMMER liquid laundry detergent, OXICLEAN powder and liquid laundry additives and ARM & HAMMER dental care products. Marketing expense as a percentage of net sales increased 170 basis points to 11.4% in the first quarter as compared to 9.7% in last year’s first quarter.

Selling, general and administrative expenses (“SG&A”) were $78.3 million in the first quarter of 2009, an increase of $0.5 million as compared to the same period in 2008. The year over year increase reflected higher operating expenses in 2009, principally to support higher sales, increased information systems costs and amortization and operating costs related to the Orajel Acquisition, offset by foreign exchange rate changes. In addition, SG&A for the first quarter of 2008 included asset impairment charges of $5.6 million and a higher level of legal costs, primarily due to litigation against Abbott Laboratories (see paragraph f in Note 13 to the condensed consolidated financial statements included in this report) as well as a $3.0 million gain on the divestiture of Brotherton.

Other Income and Expense

Other income was approximately $0.5 million in the first quarter of 2009 as compared to $2.2 million in the same period of 2008. The change is primarily due to lower foreign exchange gains.

Interest expense in the three month period ended March 27, 2009 decreased $3.8 million compared to the same period in 2008. The decline was due to lower interest rates compared to the prior year partially offset by higher average debt outstanding as a result of the Orajel acquisition.

Investment income in the three month period ended March 27, 2009 decreased $2.2 million due to lower interest rates, although there was a higher average cash balance for investment as compared to the same period in 2008.

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Taxation

The effective tax rate in the first quarter of 2009 was 37.1% compared to 35.7% in the prior year’s first quarter. The increase in the effective tax rate results from a higher proportion of projected U.S. taxable income and higher state taxes.

Segment Results

	Segment	Products
	Consumer Domestic	Household and personal care products
	Consumer International	Primarily personal care products
	SPD	Specialty chemical products

The Company had 50% ownership interests in Armand Products Company (“Armand”) and The ArmaKleen Company (“ArmaKleen”) as of March 27, 2009. The Company’s 50% ownership interest in Esseco U.K. LLP (“Esseco”) was divested in the first quarter of 2008 as part of the sale of Brotherton. The equity in earnings of Armand and ArmaKleen for the three months ended March 27, 2009 and March 28, 2008, and Esseco for the two months ended February 29, 2008 (prior to the sale of Brotherton), is included in the Corporate segment.

Segment sales and income before income taxes for the three month period ended March 27, 2009 and March 28, 2008 were as follows:

	Consumer		Consumer
(In thousands)	Domestic		International		SPD		Corporate		Total
Net Sales(1)
First Quarter 2009	$	438,090	$	82,760	$	60,017	$	-	$	580,867
First Quarter 2008		382,744		99,694		70,429		-		552,867
Income Before Income Taxes(2)
First Quarter 2009	$	79,934	$	10,717	$	6,136	$	2,705	$	99,492
First Quarter 2008		67,831		7,252		9,941		2,380		87,404

(1)	Intersegment sales from Consumer International to Consumer Domestic, which were $0.5 million and $2.1 million for the first quarter ended March 27, 2009 and March 28, 2008, respectively, are not included in the table.

(2)	In determining Income Before Income Taxes, interest expense, investment earnings, and other income (expense) were allocated among the segments based upon each segment’s relative operating profit. The Corporate segment income consists of equity in earnings of affiliates.

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Product line revenues for external customers for the three months ended March 27, 2009, and March 28, 2008, were as follows:

	Three Months Ended
	March 27,		March 28,
(In thousands)	2009		2008
Household Products	$	284,050	$	242,827
Personal Care Products		154,040		139,917
Total Consumer Domestic		438,090		382,744
Total Consumer International		82,760		99,694
Total SPD		60,017		70,429
Total Consolidated Net Sales	$	580,867	$	552,867

Consumer Domestic

Consumer Domestic net sales in the first quarter of 2009 were $438.1 million, an increase of $55.3 million or 14.5% as compared to the first quarter of 2008. Of the increase, approximately 6% relates to sales of products acquired in the Orajel Acquisition, with the remainder principally attributable to higher unit volumes, with the balance due to higher prices and mix. At a product line level, sales of XTRA liquid laundry detergent, ARM & HAMMER liquid laundry detergent, OXICLEAN laundry additive, ARM & HAMMER powder laundry detergent and ARM & HAMMER SUPER SCOOP cat litter were all higher than in the first quarter of 2008. Consumer Domestic net sales benefited from the May 2008 price increase on ARM & HAMMER powder laundry detergent and the October 2008 price increase on liquid laundry detergents, toothpaste and battery operated toothbrushes. The increased net sales were offset partially by lower sales of household cleaners and certain personal care products.

Consumer Domestic Income Before Income Taxes for the first quarter of 2009 was $79.9 million, a $12.1 million increase as compared to the first quarter of 2008. The impact of higher net sales, the shift to concentrated liquid laundry detergent, the Orajel Acquisition, lower commodity costs and lower allocated interest expense was offset partially by accelerated depreciation and other expenses associated with the Company’s planned 2009 shutdown of its North Brunswick, New Jersey facility (see Note 16 to the condensed consolidated financial statements included in this report), and increased marketing and SG&A costs.

Consumer International

Consumer International net sales were $82.8 million in the first quarter of 2009, a decrease of $16.9 million or approximately 17.0% as compared to the first quarter of 2008. This decrease includes the impact of unfavorable foreign exchange rates of approximately 20% and the divestiture of the subsidiary in Spain at the end of the third quarter of 2008, partially offset by lower trade promotion costs and sales increases which occurred primarily in Canada and Australia.

Consumer International Income Before Income Taxes was $10.7 million in the first quarter of 2009, an increase of $3.5 million as compared to the first quarter of 2008. The increase includes higher prices in 2009. In addition, results for the first quarter of 2008 reflected asset impairment charges of $5.6 million and severance costs in one of the Company’s European subsidiaries.

Specialty Products Division (SPD)

Specialty Products net sales were $60.0 million in the first quarter of 2009, a decrease of $10.4 million or 14.8% as compared to the first quarter of 2008. This decrease in net sales includes the approximately 5% impact of unfavorable foreign exchange rates and the approximately 6% impact of the sale of Brotherton during the first quarter of 2008. A significant decline in U.S. milk prices weakened the dairy market resulting in lower sales volumes in the animal nutrition business, partially offset by higher prices of certain specialty chemical products.

Specialty Products Income Before Income Taxes was $6.1 million in the first quarter of 2009, a decrease of $3.8 million as compared to the first quarter of 2008. The 2008 results included a $3.0 million gain associated with the sale of Brotherton. In addition, the balance of the decrease reflects lower sales, higher raw material costs for certain animal nutrition and specialty chemical products and higher SG&A expense.

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Liquidity and Capital Resources

As of March 27, 2009, the Company had $280.2 million in cash, $85.0 million available through its $115.0 million accounts receivable securitization facility, approximately $96.0 million available under its $100.0 million revolving credit facility and a $250.0 million accordion feature that enables the Company to increase the principal amount of its term loan. To ensure the safety of its cash resources, the Company invests its cash primarily in government agency money market funds.

The Company renewed its accounts receivable securitization facility in February 2009. This facility has been renewed annually and the Company anticipates that this facility will be renewed in February 2010.

The Company believes that its ability to access the sources of cash described above has not been adversely affected by recent economic events. Therefore, the Company currently does not anticipate that the credit environment will have a material adverse effect on its ability to address its current and forecasted liquidity requirements. The Company anticipates that its cash from operations, along with its current borrowing capacity, will be sufficient to meet its capital expenditure program costs (including the cash requirements related to construction of its new laundry detergent and warehouse facility in York County, Pennsylvania, discussed in this section under “Net Cash Used in Investing Activities”), pay its common stock dividend at current rates and meet its mandatory debt repayment schedule and minimum pension funding requirements over the next twelve months. Nevertheless, the current economic environment presents risks that could have adverse consequences that the Company does not currently anticipate will occur. For further information, see “Economic conditions could adversely affect our business” under “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

In addition, the Company does not anticipate that current economic conditions will adversely affect its ability to comply with the financial covenants in its principal credit facilities because the Company currently is, and anticipates that it will continue to be, above the minimum interest coverage ratio requirement and below the maximum leverage ratio requirement. These ratios are discussed in more detail in this section under the sub-heading, “Adjusted EBITDA.”

Net Debt

The Company had outstanding total debt of $871.2 million and cash of $280.2 million (of which approximately $41.7 million resides in foreign subsidiaries) at March 27, 2009. Total debt less cash (“net debt”) was $591.0 million at March 27, 2009. This compares to total debt of $856.1 million and cash of $198.0 million, resulting in net debt of $658.1 million at December 31, 2008.

The Company entered into two cash flow hedge agreements each covering $100.0 million of zero cost collars, one effective as of September 29, 2006, and the other effective as of December 29, 2006, to reduce the impact of interest rate fluctuations on its term loan debt. The hedge agreements have terms of five and three years, respectively, each with a cap of 6.50% and a floor of 3.57%. The Company recorded a charge to interest expense of $1.0 million in the first quarter of 2009 with respect to the hedge agreements. Changes in the fair value of the hedge agreements are recorded in Accumulated Other Comprehensive Income on the balance sheet.

Cash Flow Analysis

	Three Months Ended
	March 27,			March 28,
(In thousands)	2009			2008
Net cash provided by operating activities	$	91,981		$	62,723
Net cash (used in) provided by investing activities	$	(20,615	)	$	4,184
Net cash provided by (used in) financing activities	$	11,714		$	(108,834	)

Net Cash Provided by Operating Activities – The Company’s net cash provided by operating activities in the first three months of 2009 increased $29.3 million to $92.0 million as compared to the same period in 2008. The increase was primarily due to higher net income, higher non-cash expenses for depreciation and a smaller increase in working capital (exclusive of cash), partially offset by the gain recorded on the sale of Brotherton (see Note15) as well as the asset impairment write-offs recorded in the first quarter of 2008.

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For the three months ending March 27, 2009, the components of working capital that significantly affected operating cash flow are as follows:

Accounts receivable increased $8.0 million due to business growth.

Inventories increased $2.4 million primarily to support higher anticipated sales.

Accounts payable and other accrued expenses decreased $11.8 million primarily due to the timing of incentive and profit sharing payments which were offset partially by increased marketing expense accruals.

Taxes payable increased $20.4 million due to higher tax expense associated with increased earnings and the timing of payments.

Net Cash Used in Investing Activities – Net cash used in investing activities during the first three months of 2009 was $20.6 million, reflecting $21.3 million of property, plant and equipment expenditures (including $14.7 million for the York County plant, discussed in the following paragraph), partially offset by a $1.3 million payment received on an outstanding note.

On June 5, 2008, the Company announced plans to construct a new laundry detergent manufacturing plant and distribution center in York County, Pennsylvania and to close its existing laundry detergent manufacturing and distribution facility in North Brunswick, New Jersey. The Company anticipates that capital expenditures in connection with construction of the new facility, which is expected to be operational by the end of 2009, will be approximately $151 million, and cash expenditures relating to the closing of the North Brunswick facilities will be approximately $11 million. To build the plant and distribution center, the Company spent approximately $51 million in 2008, and approximately $15 million in the first quarter of 2009, and anticipates spending an additional $85 million in the remainder of 2009. The Company estimates it also will spend approximately $3 million in 2009 and $8 million in 2010 in connection with closing the North Brunswick facility. The costs will be funded using the Company’s existing credit facilities and available cash. See Note 16 to the condensed consolidated financial statements included in this report for additional information.

Net Cash Provided by Financing Activities – Net cash provided by financing activities during the first three months of 2009 was $11.7 million. This reflects a net increase in debt of $15 million. An increase in short term borrowings of $29.0 million associated with the Company’s accounts receivable securitization facility and increases in international debt of $3.0 million, were partially offset by mandatory payments on the Term Loan of $17.0 million. Payments of cash dividends of $6.3 million were offset partially by proceeds of and tax benefits from stock option exercises of $3.0 million.

Adjusted EBITDA

Adjusted EBITDA is a component of the financial covenants contained in the Company's primary credit facility. Management believes that the presentation of Adjusted EBITDA is useful to investors as a financial indicator of the Company's ability to service its indebtedness. Adjusted EBITDA may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to cash flows from operating activities, which is determined in accordance with accounting principles generally accepted in the United States. Financial covenants include a total debt to Adjusted EBITDA leverage ratio and an interest coverage ratio, which if not met, could result in an event of default and trigger the early termination of the credit facility, if not remedied within a specified period of time. The leverage ratio (total debt to Adjusted EBITDA) was 1.9, which is below the maximum of 3.5 permitted under the credit facility, and the interest coverage ratio (Adjusted EBITDA to total interest expense) for the first quarter of 2009 was 10.8, which is above the minimum of 3.0 permitted under the credit facility. The Company’s obligations under the credit facility are secured by the assets of the Company.

Recent Accounting Pronouncements

In December 2008, the FASB issued FASB Staff Position No. SFAS 132(revised 2003)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (FSP FAS 132(R)-1), which requires employers to disclose information about fair value measurements of plan assets that are similar to the disclosures about fair value measurements required by SFAS No 157, “Fair Value Measurements” (“SFAS 157”). FSP FAS 132(R)-1 will become effective for the Company’s annual financial statements for 2009. The Company currently is evaluating the impact of this standard on our Consolidated Financial Statements.

In April 2009, the FASB issued FASB Staff Position No SFAS 107-1 and APB No. 28-1, “Disclosures about the Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”), which requires quarterly disclosure of information about the fair value of financial instruments within the scope of FASB Statement No.107, “Disclosures about Fair Value of Financial Instruments.” FSP FAS 107-1 and APB 28-1 have an effective date requiring adoption for the Company’s second quarter Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

The Company had outstanding total debt at March 27, 2009 of $871.2 million, of which $250.0 million or 29% carries a fixed rate of interest. The remaining debt balance is primarily comprised of $586.0 million in term loans under the Company’s principal credit facilities, $30.0 million outstanding under a receivables purchase agreement and $5.2 million in international debt. The weighted average interest rate on these borrowings at March 27, 2009, excluding deferred financing costs and commitment fees, was approximately 3.4%.

The Company entered into two cash flow hedge agreements, each covering $100.0 million of zero cost collars, one effective as of September 29, 2006, and the other effective as of December 29, 2006, to reduce the impact of interest rate fluctuations on its term loan debt. The hedge agreements have terms of five and three years, respectively, each with a cap of 6.50% and a floor of 3.57%. The Company recorded a charge to interest expense of $1.0 million in the first quarter of 2009 and estimates it will recognize approximately $2.8 million in interest expense in the remainder of 2009 with respect to the hedge agreements. Changes in the hedging options’ fair value are recorded in Accumulated Other Comprehensive Income on the balance sheet.

If the variable rate on the Company’s floating rate debt outstanding on March 27, 2009 were to change by 100 basis points from the March 27, 2009 level, annual interest expense associated with the floating rate debt would change by approximately $4.2 million.

Foreign Currency

The Company, from time to time, enters into forward exchange contracts to hedge anticipated but not yet committed sales or purchases denominated in the U.S. Dollar, Canadian dollar, British pound and Euro. During the fourth quarter of 2008 and the first quarter of 2009, the Company’s Canadian subsidiary entered into forward exchange contracts to protect the Company from the risk that dollar net cash outflows would be adversely affected by changes in exchange rates. The contracts expire by the end of 2009. The face value of the unexpired contracts as of March 27, 2009 totaled $13.5 million. The contracts qualified for hedge accounting in accordance with SFAS No. 133, and, therefore, changes in the fair value through the end of the first quarter 2009 were marked to market and recorded as Other Comprehensive Income. The gain recorded, net of deferred taxes was approximately $0.4 million.

Diesel Fuel Hedge

Because the diesel hedge agreements do not qualify for hedge accounting under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” the Company is required to mark the agreements to market throughout the life of the agreements. The change in the market value of the hedge agreements resulted in a $0.1 million loss for the first quarter of 2009 which is reflected in cost of sales. If future diesel prices were to change by $0.10 per gallon, the impact on the 2009 financial statements due to the hedge agreements would be approximately $0.2 million.

Equity Derivatives

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ITEM 4. CONTROLS AND PROCEDURES

a.	Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure control and procedures at the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding the disclosure.

b.	Change in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Cautionary Note on Forward-Looking Statements

This Report contains forward-looking statements, including, among others, statements relating to short- and long-term financial objectives, sales and earnings growth, earnings per share, margin improvement, price increases, marketing spending, the Orajel Acquisition, assets held for sale, the shift to concentrated liquid laundry detergent, the Company’s hedge programs, interest rate collars, effective tax rate, capital expenditures, the timing of the completion of the York County, Pennsylvania laundry detergent and warehouse facility, capital expenditures relating to the new facility, facility restructuring charges, the closing of the Company's facilities in North Brunswick, New Jersey, the sufficiency of cash flow to meet capital expenditures needs, the ability of the Company to comply with financial covenants, the effect of the credit environment on liquidity and the Company’s ability to renew the accounts receivable facility. These statements represent the intentions, plans, expectations and beliefs of the Company, and are subject to risks, uncertainties and other factors, many of which are outside the Company’s control and could cause actual results to differ materially from such forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include a decline in market growth and consumer demand (including the effect of political, economic and marketplace conditions and events on consumer demand); unanticipated increases in raw material and energy prices; adverse developments affecting the financial condition of major customers; competition; the impact of retailer actions in response to changes in consumer demand and the economy, including increasing shelf space of private label products; consumer reaction to new product introductions and features; disruptions in the banking system and financial markets and the outcome of contingencies, including litigation, pending regulatory proceedings and environmental remediation.

The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our filings with the U.S. Securities and Exchange Commission.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company, in the ordinary course of its business, is the subject of, or party to, various pending or threatened legal actions. The Company believes that any ultimate liability arising from these actions will not have a material adverse effect on its financial position or results of operation.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company’s Annual Meeting of Stockholders (the “Annual Meeting”) was held on April 30, 2009. The following nominees were elected to serve on the Company’s Board of Directors for a term of three years:

Nominees	For	Withheld
T. Rosie Albright	59,305,319	256,933
Ravichandra K. Saligram	59,309,249	253,003
Robert K. Shearer	59,106,758	455,494

The Company’s other directors whose term of office continued after the meeting are: James R. Craigie, Robert A. Davies, III, Rosina B. Dixon, M.D., Bradley C. Irwin, J. Richard Leaman, Jr., Robert D. LeBlanc and Arthur B. Winkleblack. Robert A. McCabe and John O. Whitney retired from the Company’s Board of Directors, effective as of the Annual Meeting.

In addition to the election of three directors, stockholders voted on a proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm to audit the Company’s 2009 consolidated financial statements. The voting results on the proposal were as follows:

For		Against		Abstain
58,638,124		897,259		26,869

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ITEM 6. EXHIBITS

•	(3.1)	Certificate of Amendment of Restated Certificate of Incorporation dated June 4, 2008, as filed with the Secretary of the State of Delaware on June 4, 2008.

•	(3.2)	Restated Certificate of Incorporation of the Corporation, as amended through June 4, 2008.

	(3.3)	By-laws of the Company as amended, incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed on February 3, 2009.

•	(11)	Computation of earnings per share.

•	(31.1)	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act.

•	(31.2)	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act.

•	(32.1)	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350.

•	(32.2)	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350.


	•	Indicates documents filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CHURCH & DWIGHT CO., INC.
		(REGISTRANT)

DATE:	May 5, 2009	/s/ Matthew T. Farrell
		MATTHEW T. FARRELL
		CHIEF FINANCIAL OFFICER

DATE:	May 5, 2009	/s/ Steven J. Katz
		STEVEN J. KATZ
		VICE PRESIDENT AND
		CONTROLLER
		(PRINCIPAL ACCOUNTING OFFICER)

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EXHIBIT INDEX

•	(3.1)	Certificate of Amendment of Restated Certificate of Incorporation dated June 4, 2008, as filed with the Secretary of the State of Delaware on June 4, 2008.

•	(3.2)	Restated Certificate of Incorporation of the Corporation, as amended through June 4, 2008.

	(3.3)	By-laws of the Company as amended, incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed on February 3, 2009.

•	(11)	Computation of earnings per share.

•	(31.1)	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act.

•	(31.2)	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act.

•	(32.1)	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350.

•	(32.2)	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350.


	•	Indicates documents filed herewith.

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EX-3.1 2 exhibit31.htm CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION- JUNE 4, 2008 exhibit31.htm

EXHIBIT 3.1

CERTIFICATE OF AMENDMENT

RESTATED CERTIFICATE OF INCORPORATION

CHURCH & DWIGHT CO., INC.

Pursuant to Section 242 of the

General Corporation Law of the State of Delaware

CHURCH & DWIGHT CO., INC. (the “Corporation”) a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:

FIRST: That at a meeting of the Board of Directors of the Corporation, resolutions were duly adopted setting forth a proposed amendment of the Restated Certificate of Incorporation of the Corporation, declaring said amendment to be advisable and calling for the consideration thereof by the stockholders at the Corporation’s Annual Meeting of Stockholders. The resolution setting forth the proposed amendment is as follows:

RESOLVED, that subject to the approval of the stockholders of the Company, subparagraph (a) of Paragraph 4 of the Company’s Restated Certificate of Incorporation be amended to read as follows:

“FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is 302,500,000 shares of two classes. 300,000,000 shares shall be Common Stock at $1.00 par value per share, and 2,500,000 shares shall be Preferred Stock, at $1.00 par value per share.”

SECOND: That thereafter, pursuant to resolution of the Corporation’s Board of Directors, the Annual Meeting of Stockholders of the Corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed in its corporate name and on its behalf by its duly authorized officer this 4th day of June, 2008.


	CHURCH & DWIGHT CO., INC.

	By:		/s/ James R. Craigie
			James R. Craigie
			Chief Executive Officer

EX-3.2 3 exhibit32.htm RESTATED CERTIFICATE OF INCORPORATION- JUNE 4, 2008 exhibit32.htm

EXHIBIT 3.2

RESTATED CERTIFICATE OF INCORPORATION

CHURCH & DWIGHT CO., INC.

(Pursuant to Item 601(3)(b)(i) of Regulation S-K, the following constitutes a complete copy of the

Restated Certificate of Incorporation of the Registrant, as amended to date and as currently in effect).

FIRST: The name of the corporation is:

CHURCH & DWIGHT CO., INC.

SECOND: The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

THIRD: The nature of the business or purposes to be conducted or promoted is as follows:

(a) To manufacture, buy, sell, import, export, deal in and use chemicals, grocery products, food products, drugs, cleaners, detergents, water softeners, disinfectants, and consumer or industrial products of every nature and description; and

(b) To conduct any lawful business; to exercise any lawful purpose or power; and to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware.

The foregoing clause of this Article THIRD shall be construed as purposes, objects and powers. The enumeration of specified purposes, objects and powers shall not be construed to exclude, limit or restrict in any manner, any power, right or privilege given to the Corporation by law, or to limit or restrict the meaning of the general terms or the general powers of the Corporation, nor shall the expression of one thing be deemed to exclude another, although it be of like nature, not expressed, it being the intent of this Article THIRD that this Corporation shall have and may exercise all the powers now or which hereafter may be conferred by the laws of the State of Delaware upon corporations formed under the General Corporation Law.

Nothing herein contained shall be construed as giving the Corporation any rights, powers or privileges not permitted to it by law, but the occurrence within any of the foregoing clauses of any purpose, power or object prohibited by the laws of the State of Delaware or any other state, or of any territory, dependency or foreign country, in which the Corporation may carry on business, shall not invalidate any other purpose, power or object not so prohibited, by reason of its contiguity or apparent association therewith.

FOURTH: (a) The total number of shares of capital stock which the Corporation shall have authority to issue is 302,500,000 shares of two classes. 300,000,000 shares shall be Common Stock at $1.00 par value per share, and 2,500,000 shares shall be Preferred Stock, at $1.00 par value per share.

(b) A holder of Common Stock shall, be entitled to one (1) vote on each matter submitted to a vote at a meeting of stockholders for each share of Common Stock held of record by such holder as of the record date for such meeting.

Shares of Preferred Stock may be issued from time to time in one or more series, the shares of each series to have such voting powers, fully or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed herein and in a resolution or resolutions providing for the issue of such series adopted by a two-thirds vote of the entire Board of Directors of the Corporation.

The Board of Directors of the Corporation is hereby expressly authorized, by a two-thirds vote of the entire Board, subject to the limitations provided by law, to establish and designate series of the Preferred Stock, to fix the number of shares constituting each series, and to fix the designations and the relative powers, rights and preferences, and the qualifications, limitations, or restrictions thereof, of the shares of each series and the variations in the relative powers, rights, preferences and limitations as between series, and to increase and to decrease the number of shares constituting each series.

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The authority of the Board of Directors of the Corporation with respect to each series shall include, but shall not be limited to, the authority to determine the following:

(1) The designation of such series;

(2) The number of shares initially constituting such series;

(3) The increase, and the decrease to a number not less than the number of the outstanding shares of such series, of the number of shares constituting such series theretofore fixed;

(4) The rate or rates and the times and conditions under which dividends on the shares of such series shall be paid, and (x) if such dividends are payable in preference to, or in relation to, the dividends payable on any other class or classes of stock, the terms and conditions of such payment, and (y) if such dividends shall be cumulative, the date or dates from and after which they shall accumulate;

(5) Whether or not the shares or such series shall be redeemable, and, if such shares shall be redeemable, the designations, preferences, and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, and the terms and conditions of such redemption, including, but not limited to, the date or dates upon or after which such shares shall be redeemable and the amount period share which shall be payable upon such redemption, which amount may vary under different conditions and at different redemption dates;

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(6) The amount payable on the shares in the event of the dissolution of, or upon any distribution of the assets of, the Corporation;

(7) Whether or not the shares of such series may be convertible into, or exchangeable for, shares of any other class or series and the price or prices and the rates of exchange and the terms of any adjustments to be made in connection with such conversion or exchange;

(8) Whether or not the shares of such series shall have voting rights, in addition to the voting rights provided by law, and, if such shares shall have such voting rights, the terms and conditions thereof, including, but not limited to, the right of the holders of such shares to vote as a separate class either alone or with the holders of shares of one or more other series of Preferred Stock and the right to have more (or less) than one vote per share;

(9) Whether or not a purchase fund shall be provided for the shares of such series, and if such a purchase fund shall be provided, the terms and conditions thereof;

(10) Whether or not a sinking fund shall be provided for the redemption of the shares of such series, and if such a sinking fund shall be provided, the terms and conditions thereof; and

(11) Any other powers, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions thereof, which shall not be inconsistent with the provisions of this Article FOURTH or the limitations provided by law.

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(d) No stockholder shall have any preemptive right to subscribe to any shares of stock of the Corporation of any class or series thereof, now or hereafter authorized, or any security convertible into such stock.

(e) Every reference in this Certificate of Incorporation or in the By-Laws to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock.

(f) Pursuant to authority conferred by this Article Fourth upon the Board of Directors of the Corporation, the Board of Directors created a series of Preferred Stock designated as Junior Participating Cumulative Preferred Stock, which consists of 225,000 shares with a par value of $1.00 per share, by filing a Certificate of Designation of the Corporation with the Secretary of State of the State of Delaware on April 28, 1989, and the voting powers, designations, preferences and relative, participating and other special rights, and the qualifications, limitations and restrictions thereof, of the Junior Participating Cumulative Preferred Stock of the Corporation are as set forth in Exhibit A hereto and are incorporated herein by reference.

FIFTH: (a) The number of directors of the Corporation shall not be less than three nor more than fifteen, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. Such exact number shall be 10 until otherwise determined by resolution adopted by affirmative vote of a majority of the entire Board of Directors. As used in this Certificate of Incorporation, the term “entire Board” means the total number of directors which the Corporation would have if there were no vacancies.

(b) The Board of Directors shall be divided into three classes, as nearly equal in number (as determined by the Board of Directors) as the then total number of directors constituting the entire Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1980, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. At each annual meeting of stockholders after 1980, the successors to the class of directors whose terms shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting.

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(c) Any director may be removed from office, but only for cause at a meeting of stockholders, by the affirmative vote of the holders of at least a majority of the outstanding shares of capital stock of the Corporation entitled to vote for the election of directors. If any director shall be removed by the stockholders pursuant to this paragraph, the stockholders of the Corporation may, at the meeting at which such removal is effected, fill the resulting vacancy by the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote for the election of directors. If the vacancy is not filled by the stockholders, the vacancy shall be filled by the affirmative vote of two-thirds of the directors then in office, although less than a quorum. Any newly created directorships resulting from any increase in the number of directors may be filled by the affirmative vote of two-thirds of the directors then in office, although less than a quorum. Any directors chosen pursuant to the provisions of this paragraph shall hold office until the next election of the class for which such directors shall have been chosen and until their successors shall be elected and qualified.

(d) The number of directors is changed pursuant to paragraph (a) of this Article FIFTH, any newly created directorships or any decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number (as determined by the Board of Directors) as may be. No decrease in the number of directors shall shorten the term of any incumbent director.

(e) Notwithstanding any of the foregoing provisions of this Article FIFTH, each director shall hold office until his successor shall have been duly elected and qualified, unless he shall resign, become disqualified or disabled, or be removed in accordance with this Article.

SIXTH: In furtherance, and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:

(a) To make, alter or repeal the By-Laws of the Corporation;

(b) To set apart out of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish such reserve.

SEVENTH: (a) A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law (3) under Section 174 of the Delaware General Corporation Law, or (4) for any transaction from which the director derived an improper personal benefit.

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(b)(1) Right of Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in this paragraph (b), the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this paragraph (b) shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition as authorized by the Board of Directors; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director, officer, employee or agent of the Company in his or her capacity as such in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director, officer, employee or agent of the Company, to repay all amounts so advanced if it shall ultimately be determined that such director, officer, employee or agent of the Company is not entitled to be indemnified under this Section or otherwise.

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(2) Right of Claimant to Bring Suit. If a claim under subparagraph (b)(1) is not paid in full by the Corporation within 30 days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(3) Non-Exclusivity of Rights. The right to indemnification and the Payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this paragraph (b) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-Law, agreement, vote of stockholders or disinterested directors or otherwise.

(4) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

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EIGHTH: (a) The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

(b) Notwithstanding any other provisions of this Certificate of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Certificate of Incorporation or the By-Laws of the Corporation), the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors shall be required to amend, alter, change or repeal Article FIFTH, EIGHTH and NINTH of this Certificate of Incorporation.

(c) No action by the stockholders of the Corporation may be taken otherwise than at the annual or special meeting of stockholders.

NINTH: (a) Except as otherwise provided in paragraph (b) of this Article NINTH, the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in elections of directors shall be required at a meeting of stockholders (held in accordance with the provisions of this Certificate of Incorporation and the By-Laws of the Corporation) to adopt, authorize, or approve any of the following actions:

(1) A merger or consolidation by the Corporation with any corporation, other than a merger or consolidation with a wholly-owned, direct or indirect subsidiary of the Corporation in a transaction which this Corporation is the surviving corporation and in which all stockholders of this Corporation retain the same proportional voting and equity interests in the Corporation which they had prior to the consummation of the transaction; and

(2) Any sale, lease, exchange or other disposition, other than in the ordinary course of business (in a single transaction or in a related series of transactions) to any other corporation, person or other entity of any substantial assets of the Corporation, or the voting of any shares of any direct or indirect subsidiary, by proxy, written consent or otherwise, to permit such sale, lease, or other disposition by any direct or indirect subsidiary of the Corporation. For purposes of this Article NINTH, “substantial assets” shall mean assets in excess of twenty-five percent (25%) of the value of the gross assets of the Corporation on a consolidated basis, at the time of the transaction to which this definition relates, as determined by the Board of Directors.

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(b) If any action referred to above in paragraph (a) has first been approved by resolution adopted by not less than two-thirds of the directors then in office, such action may be adopted, authorized, or approved by a majority of the votes cast by holders of shares of the Corporation entitled to vote thereon.

TENTH: (a) Special meetings of stockholders may be called by a majority of the directors then in office or by the Chief Executive Officer at any time for any purpose or purposes.

(b) To be properly brought before an annual meeting of stockholders, nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders at an annual meeting of stockholders must be either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the President, the Chairman of the Board of Directors or by vote of a majority of the full Board or Directors, or (iii) otherwise brought before the annual meeting by any stockholder of the Corporation who is a stockholder of record on the date of the giving of the notice, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Article TENTH.

(c) For nominations or other business to be properly brought before an annual meeting by a stockholder under this Article TENTH, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper subject for stockholder action under the Delaware General Corporation Law. To be timely, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not less than 120 days (unless such day is not a business day, in which case the immediately preceding business day) prior to the first anniversary of the date of the Corporation’s proxy statement released to stockholders in connection with the previous year’s annual meeting; provided, however, that if the date of the annual meeting is advanced by more than 40 days or delayed by more than 40 days from such anniversary date, then notice by the stockholder to be timely must be delivered not later than the close of business on the later of the 120th day prior to the annual meeting or the 10th day following the day on which the date of the meeting is publicly announced. In no event shall the public announcement of a postponement or adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice must set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection

- 10 - -

as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owners, if any, on whose behalf the nomination or proposal is made (A) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (B) the number of shares of the Corporation which are owned (beneficially or of record) by such stockholder and such beneficial owner, (C) a description of all arrangements or understandings between such stockholder and such beneficial owner and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder and of such beneficial owner in such business, and (D) a representation that such stockholder or its agent or designee intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in this Article TENTH to the contrary, if the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement specifying the size of the increased Board of Directors made by the Corporation at least 120 days prior to the first anniversary of the preceding year’s annual meeting, then a stockholder’s notice required by this Article TENTH will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

(d) Only such business may be conducted at a special meeting of stockholders as has been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving the notice required by this

- 11 - -

Article TENTH, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Article TENTH. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice required by this Article TENTH is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 120th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

(e) Only those persons who are nominated in accordance with the procedures set forth in this Article TENTH will be eligible for election as directors at any meeting of stockholders. Only business brought before the meeting in accordance with the procedures set forth in this Article TENTH may be conducted at a meeting of stockholders. The Chairman of the meeting has the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Article TENTH and, if any proposed nomination or business is not in compliance with this Article TENTH, to declare that such defective proposal shall be disregarded.

(f) For purposes of this Article TENTH, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

(g) Notwithstanding the foregoing provisions of this Article TENTH, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Article TENTH. Nothing in this Article TENTH shall be deemed to remove any obligation of stockholders to comply with the requirements of Rule 14a-8 under the Exchange Act with respect to proposals requested to be included in the Corporation’s proxy statement pursuant to said Rule 14a-8.

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EXHIBIT A

Section 1. Designation and Amount.

The shares of such series shall be designated as Junior Participating Cumulative Preferred Stock, par value $1.00 per share (the “Junior Preferred Stock”) and the number of shares constituting such series shall be 225,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Junior Preferred Stock to a number less than the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Junior Preferred Stock.

Section 2. Dividends and Distributions.

(A)

Subject to the rights of the holders of any shares of any series of preferred stock (or any similar stock) ranking prior and superior to the Junior Preferred Stock with respect to dividends, the holders of shares of Junior Preferred Stock, in preference to the holders of Common Stock, and of any other junior stock which may be outstanding, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of January, April, July and October in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Junior Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) 25.00 per share ($100.00 per annum), or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Junior Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Junior Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

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(B)

The Corporation shall declare a dividend or distribution on the Junior Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment date and the next subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share ($100.00 per annum) on the Junior Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C)

Dividends shall begin to accrue and be cumulative on outstanding shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Junior Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Junior Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall accumulate but shall not bear interest. Dividends paid on the shares of Junior Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Junior Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

Section 3. Voting Rights.

The holders of shares of Junior Preferred Stock shall have the following voting rights.

(A)

Subject to the provisions for adjustment as hereinafter set forth, each share of Junior Preferred Stock shall entitle the holder thereof to 100 votes (and each one one-hundredth of a share of Junior Preferred Stock shall entitle the holder thereof to one vote) on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by classification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or less number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Junior Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

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(B)

Except as otherwise provided herein, in the Certificate of Incorporation, in any other certificate of designation creating a series of preferred stock or any similar stock, or by law, the holders of shares of Junior Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(C)

If at any time the Corporation shall not have declared and paid all accrued and unpaid dividends on the Junior Preferred Stock as provided in Section 2 hereof for four consecutive Quarterly Dividend Payment Dates, then, in addition to any voting rights provided for in paragraphs (A) and (B), the holders of the Junior Preferred Stock shall have the exclusive right, voting separately as class, to elect two directors on the Board of Directors of the Corporation (such directors, the “Preferred Directors”). The right of the holders of the Junior Preferred Stock to elect the Preferred Directors shall continue until all such accrued and unpaid dividends shall have been paid. At such time, the terms of any of the Preferred Directors shall terminate. At any time when the holders of the Junior Preferred Stock shall have thus become entitled to elect Preferred Directors, a special meeting of shareholders shall be called for the purpose of electing such Preferred Directors, to be held within 30 days after the right of the holders of the Junior Preferred Stock to elect such Preferred Directors shall arise, upon notice given in the manner provided by law or the by-laws of the Corporation for giving notice of a special meeting of shareholders (provided, however, that such a special meeting shall not be called if the annual meeting of shareholders is to convene within said 30 days). At any such special meeting or at any annual meeting at which the holders of the Junior Preferred Stock shall be entitled to elect Preferred Directors, the holders of a majority of the then outstanding Junior Preferred Stock present in person or by proxy shall be sufficient to constitute a quorum for the election of such directors. The persons elected by the holders of the Junior Preferred Stock at any meeting in accordance with the terms of the preceding sentence shall become directors on the date of such election. During any period of time in which there are any shares of Junior Preferred Stock outstanding, the number of Directors (excluding Preferred Directors, if any) on the Board of Directors of the Corporation shall not exceed thirteen.

Section 4. Certain Restrictions.

(A)

Whenever quarterly dividends or other dividends or distributions payable on the Junior Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Junior Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i)

declare or pay dividends or, make any other distributions on any shares or stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Junior Preferred Stock;

(ii)

declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Junior Preferred Stock except dividends paid ratably on the Junior Preferred Stock, and all

- 15 - -

such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are than entitled;

(iii)

redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Junior Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding-up) to the Junior Preferred Stock; or

(iv)

purchase or otherwise acquire for consideration any shares of Junior Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Junior Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B)

The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares.

Any shares of Junior Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever, shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock, without designation as to series, and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, in any other certificate of designation creating a series of preferred stock or any similar stock or as otherwise required by law.

Section 6. Liquidation, Dissolution or Winding-Up.

Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, no distribution shall be made (A) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Junior Preferred Stock unless prior thereto, the holders of shares of Junior Preferred Stock shall have received the higher of (i) $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (ii) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock; nor shall any distribution be made (B) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Junior Preferred Stock, except distributions made ratably on the Junior Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are

- 16 - -

entitled upon such liquidation, dissolution or winding-up. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Junior Preferred Stock are entitled immediately prior to such event under the provision in clause (A) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7. Consolidation, Merger, etc.

In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, or otherwise changed, then in any such case each share of Junior Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Junior Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption.

The shares of Junior Preferred Stock shall not be redeemable.

Section 9. Rank.

Unless otherwise provided in the Certificate of Incorporation of the Corporation or a certificate of designation relating to a subsequent series of preferred stock of the Corporation, the Junior Preferred Stock shall rank junior to all other series of the Corporation’s preferred stock as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding-up, and senior to the Common Stock of the Corporation.

- 17 - -

Section 10. Amendment.

The Certificate of Incorporation of the Corporation, as amended, shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Junior Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Junior Preferred Stock, voting together as a single series.

Section 11. Fractional Shares.

Junior Preferred Stock may be issued in fractions of a share (in one one-hundredths (1/100) of a share and integral multiples thereof) which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Junior Preferred Stock.

- 18 - -

EX-11 4 exhibit11.htm EARNINGS PER SHARE exhibit11.htm

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

EXHIBIT 11 - Computation of Earnings Per Share

(In thousands except per share amounts)

	Three Months Ended
	March 27, 2009		March 28, 2008
BASIC:
Net Income attributable to Church & Dwight Co., Inc.	$	62,569	$	56,191
Weighted average shares outstanding		70,234		66,343
Basic earnings per share	$	0.89	$	0.85
DILUTED:
Net Income attributable to Church & Dwight Co., Inc.	$	62,569	$	56,191
After-tax interest cost of convertible debt		-		918
Net Income plus assumed debt conversion	$	62,569	$	57,109
Weighted average shares outstanding		70,234		66,343
Dilutive effect of convertible debt		-		3,234
Incremental shares under stock option plans		1,078		1,240
Adjusted weighted average shares outstanding		71,312		70,817
Diluted earnings per share	$	0.88	$	0.81

EX-31.1 5 exhibit311.htm 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER exhibit311.htm

EXHIBIT 31.1

CERTIFICATIONS

I, James R. Craigie, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Church & Dwight Co., Inc.;

Based on my knowledge, this report does not contain any untrue statement of any material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on our evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	May 5, 2009	/s/ James R. Craigie
		James R. Craigie
		Chief Executive Officer

EX-31.2 6 exhibit312.htm 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER exhibit312.htm

EXHIBIT 31.2

CERTIFICATIONS

I, Matthew T. Farrell, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Church & Dwight Co., Inc.;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on our evaluation; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	May 5, 2009	/s/ Matthew T. Farrell
		Matthew T. Farrell
		Chief Financial Officer

EX-32.1 7 exhibit321.htm 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER exhibit321.htm

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT AND
18 U.S.C. SECTION 1350

I, James R. Craigie, Chief Executive Officer of Church & Dwight Co., Inc. (the “Company”), hereby certify that, based on my knowledge:

The Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		By:		/s/ James R. Craigie
				James R. Craigie
				Chief Executive Officer

		Dated:		May 5, 2009

EX-32.2 8 exhibit322.htm 906 CERTIFICATION OF CHIEF FINANCIAL OFFICER exhibit322.htm

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT AND
18 U.S.C. SECTION 1350

I, Matthew T. Farrell, Chief Financial Officer of Church & Dwight Co., Inc. (the “Company”), hereby certify that, based on my knowledge:

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		By:		/s/ Matthew T. Farrell
				Matthew T. Farrell
				Chief Financial Officer

		Dated:		May 5, 2009

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