chd-10q_20150930.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 quarter ended September 30, 2015

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 of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

500 Charles Ewing Boulevard, Ewing, N.J. 08628

(Address of principal executive offices)

Registrant’s telephone number, including area code: (609) 806-1200

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange

on which registered

Common Stock, $1 par value

 

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

 

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the 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

 

¨

 

 

 

 

Non-accelerated filer

 

¨

  

Smaller reporting company

 

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

As of October 29, 2015, there were 131,122,903 shares of Common Stock outstanding.

 

 

 

 

 


TABLE OF CONTENTS

PART I

 

Item

 

 

 

Page

1.

 

Financial Statements

 

3

 

 

 

 

 

2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

28

 

 

 

 

 

4.

 

Controls and Procedures

 

29

PART II

 

1.

 

Legal Proceedings

 

30

 

 

 

 

 

1A.

 

Risk Factors

 

30

 

 

 

 

 

2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

 

 

 

 

 

6.

 

Exhibits

 

32

 

 

 

2


PART I – FINANCIAL INFORMATION

ITEM 1:

FINANCIAL STATEMENTS

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net Sales

$

861.8

 

 

$

841.8

 

 

$

2,521.2

 

 

$

2,432.1

 

Cost of sales

 

476.0

 

 

 

474.3

 

 

 

1,406.8

 

 

 

1,368.8

 

Gross Profit

 

385.8

 

 

 

367.5

 

 

 

1,114.4

 

 

 

1,063.3

 

Marketing expenses

 

92.8

 

 

 

96.6

 

 

 

297.4

 

 

 

297.8

 

Selling, general and administrative expenses

 

102.4

 

 

 

93.7

 

 

 

312.0

 

 

 

288.1

 

Income from Operations

 

190.6

 

 

 

177.2

 

 

 

505.0

 

 

 

477.4

 

Equity in earnings (losses) of affiliates

 

3.1

 

 

 

3.4

 

 

 

(8.4

)

 

 

7.9

 

Investment earnings

 

0.2

 

 

 

0.6

 

 

 

1.2

 

 

 

1.7

 

Other income (expense), net

 

(0.8

)

 

 

(1.1

)

 

 

(4.4

)

 

 

(1.6

)

Interest expense

 

(7.4

)

 

 

(6.9

)

 

 

(22.9

)

 

 

(20.5

)

Income before Income Taxes

 

185.7

 

 

 

173.2

 

 

 

470.5

 

 

 

464.9

 

Income taxes

 

65.3

 

 

 

57.3

 

 

 

169.2

 

 

 

157.6

 

Net Income

$

120.4

 

 

$

115.9

 

 

$

301.3

 

 

$

307.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - Basic

 

131.1

 

 

 

133.7

 

 

 

131.3

 

 

 

135.5

 

Weighted average shares outstanding - Diluted

 

133.6

 

 

 

136.0

 

 

 

133.8

 

 

 

137.9

 

Net income per share - Basic

$

0.92

 

 

$

0.87

 

 

$

2.29

 

 

$

2.27

 

Net income per share - Diluted

$

0.90

 

 

$

0.85

 

 

$

2.25

 

 

$

2.23

 

Cash dividends per share

$

0.335

 

 

$

0.31

 

 

$

1.01

 

 

$

0.93

 

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net Income

$

120.4

 

 

$

115.9

 

 

$

301.3

 

 

$

307.3

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustments

 

(13.1

)

 

 

(19.3

)

 

 

(17.8

)

 

 

(14.8

)

Defined benefit plan adjustments

 

0.0

 

 

 

0.0

 

 

 

3.9

 

 

 

0.7

 

Income (loss) from derivative agreements

 

2.3

 

 

 

0.9

 

 

 

3.7

 

 

 

0.0

 

Other comprehensive income

 

(10.8

)

 

 

(18.4

)

 

 

(10.2

)

 

 

(14.1

)

Comprehensive income

$

109.6

 

 

$

97.5

 

 

$

291.1

 

 

$

293.2

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

 

 

3


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share and per share data)

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

210.6

 

 

$

423.0

 

Accounts receivable, less allowances of $0.9 and $1.9

 

330.7

 

 

 

322.9

 

Inventories

 

274.3

 

 

 

245.9

 

Deferred income taxes

 

14.3

 

 

 

14.4

 

Other current assets

 

21.8

 

 

 

26.3

 

Total Current Assets

 

851.7

 

 

 

1,032.5

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

610.0

 

 

 

616.2

 

Equity Investment in Affiliates

 

7.9

 

 

 

24.8

 

Trade Names and Other Intangibles, Net

 

1,279.5

 

 

 

1,272.4

 

Goodwill

 

1,354.3

 

 

 

1,325.0

 

Other Assets

 

114.4

 

 

 

110.4

 

Total Assets

$

4,217.8

 

 

$

4,381.3

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Short-term borrowings

$

25.0

 

 

$

146.7

 

Current portion of long-term debt

 

250.0

 

 

 

249.9

 

Accounts payable and accrued expenses

 

486.3

 

 

 

507.7

 

Income taxes payable

 

21.7

 

 

 

1.0

 

Total Current Liabilities

 

783.0

 

 

 

905.3

 

 

 

 

 

 

 

 

 

Long-term Debt

 

706.0

 

 

 

698.6

 

Deferred Income Taxes

 

495.1

 

 

 

484.1

 

Deferred and Other Long-term Liabilities

 

157.0

 

 

 

163.1

 

Pension, Postretirement and Postemployment Benefits

 

27.1

 

 

 

28.3

 

Total Liabilities

 

2,168.2

 

 

 

2,279.4

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

Preferred Stock, $1.00 par value, Authorized 2,500,000 shares; none issued

 

0.0

 

 

 

0.0

 

Common Stock, $1.00 par value, Authorized 300,000,000 shares; 146,427,550 shares issued

 

146.4

 

 

 

146.4

 

Additional paid-in capital

 

374.1

 

 

 

364.8

 

Retained earnings

 

2,584.8

 

 

 

2,414.9

 

Accumulated other comprehensive loss

 

(44.9

)

 

 

(34.7

)

Common stock in treasury, at cost: 15,434,991 shares in 2015 and 13,075,944 shares in 2014

 

(1,010.8

)

 

 

(789.5

)

Total Stockholders' Equity

 

2,049.6

 

 

 

2,101.9

 

Total Liabilities and Stockholders’ Equity

$

4,217.8

 

 

$

4,381.3

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

 

 

4


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(In millions)

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

Cash Flow From Operating Activities

 

 

 

 

 

 

 

Net Income

$

301.3

 

 

$

307.3

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation expense

 

44.1

 

 

 

43.3

 

Amortization expense

 

32.2

 

 

 

24.4

 

Deferred income taxes

 

20.4

 

 

 

10.5

 

Equity in net earnings of affiliates

 

(9.0

)

 

 

(7.9

)

Distributions from unconsolidated affiliates

 

9.8

 

 

 

8.4

 

Non-cash pension settlement charge

 

8.4

 

 

 

0.0

 

Non-cash compensation expense

 

14.2

 

 

 

15.0

 

Asset impairment charge and other asset write-offs

 

17.9

 

 

 

5.6

 

Other

 

5.1

 

 

 

1.1

 

Change in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(20.1

)

 

 

5.0

 

Inventories

 

(36.5

)

 

 

(10.0

)

Other current assets

 

2.7

 

 

 

2.1

 

Accounts payable and accrued expenses

 

(3.1

)

 

 

(2.6

)

Income taxes payable

 

41.7

 

 

 

26.4

 

Excess tax benefit on stock options exercised

 

(13.6

)

 

 

(14.6

)

Other operating assets and liabilities, net

 

(6.7

)

 

 

(5.3

)

Net Cash Provided By Operating Activities

 

408.8

 

 

 

408.7

 

Cash Flow From Investing Activities

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

(44.7

)

 

 

(36.2

)

Acquisitions

 

(74.9

)

 

 

(216.1

)

Other

 

(3.0

)

 

 

(1.3

)

Net Cash Used In Investing Activities

 

(122.6

)

 

 

(253.6

)

Cash Flow From Financing Activities

 

 

 

 

 

 

 

Short-term debt borrowings (repayments)

 

(121.7

)

 

 

250.4

 

Proceeds from stock options exercised

 

23.3

 

 

 

24.5

 

Excess tax benefit on stock options exercised

 

13.6

 

 

 

14.6

 

Payment of cash dividends

 

(131.4

)

 

 

(126.0

)

Purchase of treasury stock

 

(263.1

)

 

 

(435.0

)

Other

 

(1.0

)

 

 

(0.1

)

Net Cash Used In Financing Activities

 

(480.3

)

 

 

(271.6

)

Effect of exchange rate changes on cash and cash equivalents

 

(18.3

)

 

 

(10.2

)

Net Change In Cash and Cash Equivalents

 

(212.4

)

 

 

(126.7

)

Cash and Cash Equivalents at Beginning of Period

 

423.0

 

 

 

496.9

 

Cash and Cash Equivalents at End of Period

$

210.6

 

 

$

370.2

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

 

 

5


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW-CONTINUED

(Unaudited)

(In millions)

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

Cash paid during the year for:

 

 

 

 

 

 

 

Interest (net of amounts capitalized)

$

15.8

 

 

$

14.2

 

Income taxes

$

110.7

 

 

$

122.2

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

 

Property, plant and equipment expenditures included in Accounts Payable

$

5.5

 

 

$

11.9

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

 

 

6


CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(In millions)

 

 

Number of Shares

 

 

Amounts

 

 

Common

Stock

 

 

Treasury

Stock

 

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

 

 

Total

Church &

Dwight Co., Inc.

Stockholders'

Equity

 

 

Noncontrolling

Interest

 

 

Total

Stockholders'

Equity

 

December 31, 2013

 

146.4

 

 

 

(7.5

)

 

$

146.4

 

 

$

352.9

 

 

$

2,168.5

 

 

$

0.2

 

 

$

(368.1

)

 

$

2,299.9

 

 

$

0.1

 

 

$

2,300.0

 

Net income

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

307.3

 

 

 

0.0

 

 

 

0.0

 

 

 

307.3

 

 

 

0.0

 

 

 

307.3

 

Other comprehensive

   income (loss)

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(14.1

)

 

 

0.0

 

 

 

(14.1

)

 

 

0.0

 

 

 

(14.1

)

Cash dividends

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(126.0

)

 

 

0.0

 

 

 

0.0

 

 

 

(126.0

)

 

 

0.0

 

 

 

(126.0

)

Stock purchases

 

0.0

 

 

 

(6.4

)

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(435.0

)

 

 

(435.0

)

 

 

0.0

 

 

 

(435.0

)

Stock based compensation

   expense and stock option plan

   transactions, including related

   income tax benefits of $14.9

 

0.0

 

 

 

1.0

 

 

 

0.0

 

 

 

9.9

 

 

 

0.0

 

 

 

0.0

 

 

 

43.6

 

 

 

53.5

 

 

 

0.0

 

 

 

53.5

 

Other stock issuances

 

0.0

 

 

 

0.1

 

 

 

0.0

 

 

 

0.6

 

 

 

0.0

 

 

 

0.0

 

 

 

1.1

 

 

 

1.7

 

 

 

0.0

 

 

 

1.7

 

September 30, 2014

 

146.4

 

 

 

(12.8

)

 

$

146.4

 

 

$

363.4

 

 

$

2,349.8

 

 

$

(13.9

)

 

$

(758.4

)

 

$

2,087.3

 

 

$

0.1

 

 

$

2,087.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

146.4

 

 

 

(13.1

)

 

$

146.4

 

 

$

364.8

 

 

$

2,414.9

 

 

$

(34.7

)

 

$

(789.5

)

 

$

2,101.9

 

 

$

0.0

 

 

$

2,101.9

 

Net income

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

301.3

 

 

 

0.0

 

 

 

0.0

 

 

 

301.3

 

 

 

0.0

 

 

 

301.3

 

Other comprehensive

   income  (loss)

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(10.2

)

 

 

0.0

 

 

 

(10.2

)

 

 

0.0

 

 

 

(10.2

)

Cash dividends

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(131.4

)

 

 

0.0

 

 

 

0.0

 

 

 

(131.4

)

 

 

0.0

 

 

 

(131.4

)

Stock purchases

 

0.0

 

 

 

(3.2

)

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(263.1

)

 

 

(263.1

)

 

 

0.0

 

 

 

(263.1

)

Transfer of stock for settlement

   of share repurchase agreement

 

0.0

 

 

 

0.1

 

 

 

0.0

 

 

 

(4.1

)

 

 

0.0

 

 

 

0.0

 

 

 

4.1

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

Stock based compensation

   expense and stock option plan

   transactions, including related

   income tax benefits of $13.6

 

0.0

 

 

 

0.8

 

 

 

0.0

 

 

 

13.4

 

 

 

0.0

 

 

 

0.0

 

 

 

37.7

 

 

 

51.1

 

 

 

0.0

 

 

 

51.1

 

September 30, 2015

 

146.4

 

 

 

(15.4

)

 

$

146.4

 

 

$

374.1

 

 

$

2,584.8

 

 

$

(44.9

)

 

$

(1,010.8

)

 

$

2,049.6

 

 

$

0.0

 

 

$

2,049.6

 

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

 

 

7


 

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In millions, except per share data)

 

1.

Basis of Presentation

The condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2015 and September 30, 2014, and the condensed consolidated statements of cash flow and stockholders’ equity for the nine months ended September 30, 2015 and September 30, 2014 have been prepared by Church & Dwight Co., Inc. (the “Company”).  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2015 and results of operations and cash flows 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 (“GAAP”) 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, 2014 (the “Form 10-K”).  The results of operations for the period ended September 30, 2015 are not necessarily indicative of the operating results for the full year.

The Company incurred research and development expenses in the third quarter of 2015 and 2014 of $16.0 and $14.8, respectively.  The Company incurred research and development expenses in the first nine months of 2015 and 2014 of $48.1 and $42.3, respectively.  These expenses are included in selling, general and administrative expenses.

 

2.

New Accounting Pronouncements  

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance that clarifies the principles for recognizing revenue.  The guidance provides that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to receive for those goods or services.  The guidance is effective for annual and interim periods beginning after December 15, 2017, and allows companies to apply the requirements retrospectively, either to all prior periods presented or through a cumulative adjustment in the year of adoption.  Early adoption is allowed for annual and interim periods beginning after December 15, 2016.  The Company is currently evaluating the impact, if any, that the adoption of the guidance will have on its consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance that changes the presentation of certain debt issuance costs in the financial statements.  The guidance requires debt issuance costs to be presented as a direct deduction from the associated debt liability rather than as an asset.  Amortization of the costs will continue to be reported as interest expense.  The guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and will be applied retrospectively for each prior period presented in the financial statements.  This guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance that clarifies the accounting treatment for cloud computing arrangements.  The guidance provides that if an arrangement includes a software license, then the software license element should be accounted for consistent with the acquisition of other software licenses.  If the arrangement does not include a software license, the arrangement should be accounted for as a service contract.  This guidance is effective for interim and annual periods beginning after December 15, 2015, and may be applied retrospectively or prospectively.  This guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.  

In July 2015, the FASB issued guidance on simplifying the measurement of inventory. Inventory within the scope of this update is required to be measured at the lower of its cost or net realizable value, with net realizable value being the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted, and will be applied prospectively. The Company is currently evaluating the impact, if any, that the adoption of the guidance will have on its consolidated financial position, results of operations or cash flows.

In September 2015, the FASB issued guidance simplifying the accounting for measurement-period adjustments in connection with an acquisition.  The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that

8


 

the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The new guidance is effective prospectively for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company is currently evaluating the impact, if any, that the adoption of the guidance will have on its consolidated financial position, results of operations or cash flows.

There have been no accounting pronouncements issued but not yet adopted by the Company, which are currently expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.  

 

3.

Inventories

Inventories consist of the following:

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Raw materials and supplies

$

81.7

 

 

$

70.8

 

Work in process

 

37.0

 

 

 

25.0

 

Finished goods

 

155.6

 

 

 

150.1

 

Total

$

274.3

 

 

$

245.9

 

 

 

 

4.

Property, Plant and Equipment, Net (“PP&E”)

PP&E consists of the following:

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

Land

$

25.3

 

 

$

25.5

 

Buildings and improvements

 

301.5

 

 

 

281.7

 

Machinery and equipment

 

644.0

 

 

 

599.3

 

Software

 

86.7

 

 

 

86.4

 

Office equipment and other assets

 

60.6

 

 

 

57.2

 

Construction in progress

 

32.8

 

 

 

71.5

 

Gross Property, Plant and Equipment

 

1,150.9

 

 

 

1,121.6

 

Less accumulated depreciation and amortization

 

540.9

 

 

 

505.4

 

Net Property, Plant and Equipment

$

610.0

 

 

$

616.2

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Depreciation and amortization on PP&E

$

14.5

 

 

$

13.9

 

 

$

44.1

 

 

$

43.3

 

Interest charges capitalized (in construction in progress)

$

0.1

 

 

$

0.2

 

 

$

0.5

 

 

$

0.5

 

 

The decrease in construction in progress is due to the completion of the Company’s new vitamin manufacturing facility in York, Pennsylvania.  

 

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5.

Earnings Per Share (“EPS”)  

Basic EPS is calculated based on income available to holders of the Company’s common stock (“Common Stock”) 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 outstanding stock options.

The following table sets forth a reconciliation of the weighted average number of shares of Common Stock outstanding to the weighted average number of shares outstanding on a diluted basis:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Weighted average common shares outstanding -  basic

 

131.1

 

 

 

133.7

 

 

 

131.3

 

 

 

135.5

 

Dilutive effect of stock options

 

2.5

 

 

 

2.3

 

 

 

2.5

 

 

 

2.4

 

Weighted average common shares outstanding - diluted

 

133.6

 

 

 

136.0

 

 

 

133.8

 

 

 

137.9

 

Antidilutive stock options outstanding

 

0.5

 

 

 

1.2

 

 

 

1.1

 

 

 

1.2

 

 

 

6.

Stock Based Compensation Plans

The following table provides a summary of option activity during the nine months ended September 30, 2015:

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Average

 

 

 

 

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Aggregate

 

 

 

 

 

 

Exercise

 

 

Contractual

 

 

Intrinsic

 

 

Options

 

 

Price

 

 

Term

 

 

Value

 

Outstanding at December 31, 2014

 

8.5

 

 

$

45.50

 

 

 

 

 

 

 

 

 

Granted

 

1.1

 

 

 

83.81

 

 

 

 

 

 

 

 

 

Exercised

 

(0.8

)

 

 

30.21

 

 

 

 

 

 

 

 

 

Cancelled

 

(0.1

)

 

 

62.55

 

 

 

 

 

 

 

 

 

Outstanding at September 30, 2015

 

8.7

 

 

$

51.38

 

 

 

6.0

 

 

$

282.9

 

Exercisable at September 30, 2015

 

4.9

 

 

$

36.86

 

 

 

4.3

 

 

$

231.5

 

 

The following table provides information regarding the intrinsic value of stock options exercised and stock compensation expense related to stock option awards.  

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Intrinsic Value of Stock Options Exercised

$

9.4

 

 

$

7.3

 

 

$

41.7

 

 

$

44.5

 

Stock Compensation Expense Related to Stock Option Awards

$

1.7

 

 

$

1.7

 

 

$

13.1

 

 

$

13.5

 

Issued Stock Options

 

0.0

 

 

 

0.0

 

 

 

1.1

 

 

 

1.1

 

Weighted Average Fair Value of Stock Options issued (per share)

$

13.27

 

 

$

12.76

 

 

$