Church & Dwight Reports Second Quarter Results; Announces New Long-Term Financial Objectives

Church & Dwight Co., Inc. (NYSE:CHD) today reported netincome for the quarter ended July 1, 2005 of $34.4 million or $0.51per share, an increase of $0.21 per share over last year's net incomeof $19.6 million or $0.30 per share. Last year's results includedpretax charges of $12.1 million or $0.11 per share, consisting of aninventory charge of $4.1 million and an $8.0 million write-off ofdeferred financing costs related to the acquisition on May 28, 2004 ofthe 50% interest in the former Armkel LLC business which the Companydid not already own. Excluding these charges, this year's earnings of$0.51 per share would have been $0.10 or 24% above last year'sadjusted $0.41 per share.

James R. Craigie, President and Chief Executive Officer,commented, "We are pleased with the second quarter results, whichreflect continued organic growth and an improved operating margin, aswell as the full benefit of the Armkel acquisition. With a strongfirst half as the base, we plan to invest behind new product andoperational initiatives in the second half to continue building thebusiness."

Second quarter sales increased to $441.8 million, compared to$340.8 million in the same period a year ago. This advance isprimarily due to the acquisition of Armkel, which recorded sales of$79.0 million in the two-month period through May 28 last year thatwere not included in our consolidated results.

Operating profit of $59.8 million for the quarter was $18.4million higher than the previous year's $41.4 million. Last year'sresults included the acquisition-related inventory charge of $4.1million, and did not reflect Armkel's pre-acquisition operating profitof $9.2 million.

For the first six months, net income was $72.1 million or $1.07per share, an increase of $0.31 per share over last year's net incomeof $49.5 million or $0.76 per share. Excluding last year'sacquisition-related charges of $0.11 per share, this year's earningsof $1.07 per share would have been $0.20 per share or 23% higher thanlast year's adjusted $0.87 per share.

First half sales increased $225.7 million to $862.5 million,primarily due to the acquisition of Armkel which recorded sales of$192.7 million for the five months through May 28 last year that werenot included in our consolidated results. Operating profit increased$47.1 million to $127.0 million. Last year's results included thepreviously-mentioned inventory charge, and did not reflect Armkel'spre-acquisition operating profit of $39.2 million.

At quarter-end, the Company had total outstanding debt of $771million, and cash of $109 million, for a net debt position of $662million. This is a $151 million reduction from the net debt positionof $813 million at the comparable quarter-end last year.

Adjusted earnings before interest, taxes, depreciation andamortization (adjusted EBITDA) as defined in the Company's bank loanagreement, which excludes certain non-cash items, are estimated at$156 million for the first six months.

CHURCH & DWIGHT AND AFFILIATES (Non-GAAP MEASURES)

Management uses the combined results of Church & Dwight and itsunconsolidated affiliates, including Armkel prior to its acquisitionin May 2004, in evaluating the financial performance of the business.

Second quarter combined sales of $456.2 million were $24.4 millionor 5.7% above last year. Excluding foreign exchange gains of 1%,second quarter sales growth was approximately 4.7%.

At the product line level, household products sales were 6% higherdue to strong growth for laundry detergents and pet care products;personal care gained over 2% based on continued growth of condoms anddiagnostic kits, with flat deodorants and slightly lower toothpastesales; international sales increased 7% primarily due to foreignexchange gains; and specialty products increased 8% due to continuedgrowth of animal nutrition and specialty chemicals.

At the brand level, sales of Arm & Hammer(R) and Xtra(R) liquidlaundry detergents, Arm & Hammer Super Scoop(R) cat litter, Trojan(R)condoms and First Response(R) pregnancy kits were all higher than lastyear, while sales of laundry detergent powder were lower.

As expected, combined second quarter gross profit margin forChurch & Dwight and its unconsolidated affiliates declined to 39.0%,compared to the previous year's 39.6%. Adjusting for last year'ssecond quarter inventory charge, this year's gross margin isapproximately 150 basis points lower than the margin for the sameperiod last year, about 40 basis points of which is due to changes insales mix, and the remainder reflects the sharp price increases foroil-based raw and packaging materials and certain commodity chemicalsin the second half of 2004.

As previously reported, the Company has taken price increases forabout 20% of its domestic U.S. product lines, including cat litter,condoms, soap pads and certain specialty chemicals. The Company hasalso implemented pricing and size changes for about 20% of its laundryproducts, and expects to announce similar actions for many of itsremaining laundry products during the second half. In addition, theCompany is evaluating several operational improvement programs forpossible implementation in late 2005.

Second quarter marketing spending increased to $51.2 million, 4%above last year. Selling, general and administrative expenses declinedto $63.2 million, 8% below last year. This year's results included$3.8 million in tradename impairment charges, compared to $6.1 millionfor tradename and other impairment charges in the same period lastyear.

Second quarter combined operating profit increased to $63.6million, a $10.8 million or 20% increase over last year's combined$52.8 million, and a $6.7 million or 12% increase over last year'soperating profit adjusted for the acquisition-related inventorycharge.

Six months combined sales were $889.8 million, which is $37.4million or 4.4% above last year. Excluding foreign exchange gains ofapproximately 1.0%, and taking account of the first quarter calendarwhich was two days shorter than last year's, organic sales growth forthe period is also estimated at 4.4%.

First half combined operating profit increased to $133.3 million,a $10.5 million or 8.6% gain over last year's $122.8 million, and a$6.4 million or 5% gain over last year's combined operating profitadjusted for the acquisition-related inventory charge.

During the quarter, the Company expanded distribution of severalproducts introduced over the last several months. On the householdproducts side of the business, these included Arm & Hammer Multi-Catcat litter, Arm & Hammer Detergent Plus a Touch of Softener, and Arm &Hammer Carpet and Room Allergen Reducer; in personal care, the newproducts included Arm & Hammer Enamel Care with Breath Defense(TM)toothpaste and Mentadent Replenishing White(TM) toothpaste, both ofwhich use the Company's Liquid Calcium(R) technology to restore enamelluster; and Trojan Mint Tingle(TM) condoms.

MAJOR TROJAN NEWS

Late in the second quarter, the Company launched a new advertisingcampaign for Trojan condoms. The campaign, called "Make a Difference,"promotes the use of condoms among sexually active men and women via anincreased emphasis on the health risks of unprotected sex. This is thefirst condom advertising campaign since 1991 to be shown on nationaltelevision starting after 10 p.m.

In a major new product initiative, the Company will shortlyintroduce a premium line of unique sexual health products for women.The new line, called Elexa(TM) by Trojan, will be located in thefeminine care aisle of the store, and includes condoms and otherproducts that are designed to provide women with the freedom to pursuea healthy and fulfilling sex life. The launch will receive significantadvertising, display and other marketing support in the third andfourth quarters. The Company expects shipments to begin in lateAugust.

EPS REAFFIRMED: NEW FINANCIAL GOALS

Mr. Craigie added, "Even though we will pursue an ambitious levelof new product and marketing activity in the second half, and despitepotential one-time costs associated with margin improvement programs,we reaffirm that the Company's earnings objective for the yearcontinues to be at least $1.75 per share."

During the second quarter, the Company reviewed its majorstrategic initiatives as the basis for setting future priorities. Amajor outcome of this review is an increased focus on the developmentand marketing of products designed for healthier living, such as therecent condom, oral care and allergen reducer initiatives.

As part of this review, the Company also established financialobjectives for the three-year period 2006-2008. Key objectives includeaverage annual organic EPS growth of 10-12% a year, excludingacquisitions; average annual organic sales growth of 3-4% a year;gross margin improvement of 100 basis points a year; and significantdebt reduction.

As previously reported, at its August 3 Board meeting, the Companydeclared a quarterly dividend of $0.06 per share. The dividend ispayable September 1, 2005 to stockholders of record at the close ofbusiness on August 15, 2005. This is the Company's 418th regularquarterly dividend.

Church & Dwight will host a conference call to discuss secondquarter 2005 results today at 10:00 a.m. (ET). To participate, dial inat 866-831-6162, access code: 87796368. A replay will be available twohours after the call at 888-286-8010, access code 83060880, as well ason the Company's website. Also, you can participate via webcast byvisiting the Investor Relations section of the Company's website atwww.churchdwight.com.

Church & Dwight Co., Inc. manufactures and markets a wide range ofpersonal care, household and specialty products, under the ARM &HAMMER brand name and other well-known trademarks.

This release contains forward-looking statements relating, amongothers, to short- and long-term financial objectives, sales andearnings growth, gross margin, marketing and product developmentspending, pricing and sizing changes in certain of its products,possible operational improvement initiatives, expanded distribution ofproducts and earnings per share. These statements represent theintentions, plans, expectations and beliefs of Church & Dwight, andare subject to risks, uncertainties and other factors, many of whichare outside the Company's control and could cause actual results todiffer materially from such forward-looking statements. Theuncertainties include assumptions as to market growth and consumerdemand (including the effect of political and economic events onconsumer demand), raw material and energy prices, the financialcondition of major customers, and increased marketing spending. Withregard to the new product introductions referred to in this release,there is particular uncertainty relating to trade, competitive andconsumer reactions. Other factors, which could materially affect theresults, include the outcome of contingencies, including litigation,pending regulatory proceedings, environmental remediation and thedivestiture of assets. For a description of additional cautionarystatements, see Church & Dwight and Armkel's quarterly and annualreports filed with the SEC.
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended Six Months Ended
----------------------------- ------------------ --------------------
(In thousands, except per July 1, July 2, July 1, July 2,
share data) 2005 2004 2005 2004
----------------------------- -------- -------- -------- ----------
Net Sales $441,815 $340,785 $862,489 $636,776
Cost of sales 272,914 221,109 533,351 420,538
----------------------------- -------- -------- -------- --------
Gross profit 168,901 119,676 329,138 216,238
Marketing expenses 51,063 36,118 88,710 60,306
Selling, general and
administrative expenses 58,008 42,130 113,446 76,044
----------------------------- -------- -------- -------- --------
Income from Operations 59,830 41,428 126,982 79,888
Equity in earnings of
affiliates 1,900 2,792 3,170 12,616
Other income (expense), net (9,638) (14,755) (20,205) (18,397)
----------------------------- -------- -------- -------- --------
Income before minority
interest and taxes 52,092 29,465 109,947 74,107
Income taxes 17,720 9,885 37,883 24,615
Minority Interest (8) 7 (17) 13
----------------------------- -------- -------- -------- --------
Net Income $ 34,380 $ 19,573 $ 72,081 $ 49,479
----------------------------- -------- -------- -------- --------
Net Income per share - Basic $0.54 $0.32 $1.14 $0.81
Net Income per share - Diluted $0.51 $0.30 $1.07 $0.76
----------------------------- -------- -------- -------- --------
Dividend per share $0.06 $0.05 $0.12 $0.11
Weighted average shares
outstanding - Basic 63,671 61,596 63,496 61,460
Weighted average shares
outstanding - Diluted 69,222 68,074 69,112 67,899
----------------------------- -------- -------- -------- --------

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)


(Dollars in thousands) July 1, 2005 July 2, 2004
------------------------------------------ ------------ --------------
Assets
------------------------------------------ ------------ --------------
Current Assets
Cash, equivalents and securities $ 109,463 $ 119,561
Accounts receivable 205,000 206,093
Inventories 158,320 157,981
Other current assets 28,360 34,879
------------------------------------------ ------------ --------------
Total Current Assets 501,143 518,514
------------------------------------------ ------------ --------------
Property, Plant and Equipment (Net) 333,612 327,293
Equity Investment in Affiliates 12,850 13,663
Intangibles and other assets 1,044,940 995,307
------------------------------------------ ------------ --------------
Total Assets $ 1,892,545 $ 1,854,777
------------------------------------------ ------------ --------------
Liabilities and Stockholders' Equity
------------------------------------------ ------------ --------------
Short-Term Debt $ 117,293 $ 74,613
Other Current Liabilities 256,803 260,567
------------------------------------------ ------------ --------------
Total Current Liabilities 374,096 335,180
------------------------------------------ ------------ --------------
Long-Term Debt 653,619 858,234
Other Long-Term Liabilities 220,991 166,181
Stockholders' Equity 643,839 495,182
------------------------------------------ ------------ --------------
Total Liabilities and Stockholders' Equity $ 1,892,545 $ 1,854,777
------------------------------------------ ------------ --------------

SUPPLEMENTARY INFORMATION

The following discussion addresses the reconciliations below andin this press release that reconcile non-GAAP and other measures usedin this press release to the most directly comparable GAAP measures:

Adjusted Net Sales

The press release provides information regarding combined salesadjusted to exclude the effect of foreign exchange adjustments and theimpact of the Company's fiscal calendar. Management believes that thepresentation of adjusted combined net sales is useful to investorsbecause it enables them to assess, on a consistent basis, sales ofChurch & Dwight and unconsolidated equity investees products that weremarketed by Church & Dwight or its unconsolidated equity investeesduring the entirety of relevant periods. In addition, the exclusion ofthe effect of foreign exchange adjustments and the effect of theCompany's fiscal calendar is useful to investors because currencyfluctuations and the fiscal calendar difference are out of the controlof, and do not reflect the performance of management.

Combined Gross Profit Margin and Combined Operating Profit

The press release also provides information regarding combinedgross profit margin and combined operating profit. Management believesthe presentation of combined gross margin and combined operatingprofit is useful to investors because the businesses of the Companyand its unconsolidated equity investees are managed on a combinedbasis, and management uses combined performance measures to analyzeperformance and develop financial objectives. Moreover, since theresults of operations of the former Armkel business have been includedin Church & Dwight's consolidated statements of income beginning onMay 29, 2004, the information enhances comparability over the relevantperiods.

Adjusted EBITDA

Management believes that Adjusted EBITDA is an important measureto investors because it indicates the Company's ability to generateliquidity in a fashion that will enable it to satisfy an importantfinancial covenant in the Company's principal credit agreement. Setforth below is a reconciliation of the Company's Adjusted EBITDA tonet cash flow provided by operating activities, the most directlycomparable GAAP measure.

Adjusted EBITDA

Reconciliation of Net Cash Provided By
Operating Activities to Adjusted EBITDA
(Dollars in Millions)

Net Cash Provided by Operating Activities $ 64.0
Interest Expense 21.4
Current Income Tax Provision 31.8
Change in Working Capital &
Other Liabilities 40.3
Investment Income (1.7)
Other 0.3
-----------
Church & Dwight Adjusted EBITDA $ 156.1
===========

Combined Product Line Information

The following tables reconcile the Company's reported product linenet sales, gross profit, marketing expenses, SG&A expenses andoperating profit to the combined amounts for the Company and itsunconsolidated equity investees for the quarters and six months endedJuly 1, 2005, and July 2, 2004. The reconciliation reflects theelimination of intercompany sales and the reclassification of theadministrative costs of production planning and logistics functions.Management believes this information is useful to investors becausethe businesses of the Company and its unconsolidated equity investeesare managed on a combined basis, and management uses combinedperformance measures to analyze performance and develop financialobjectives. Moreover, since the results of operations of the formerArmkel business have been included in Church & Dwight's consolidatedstatements of income beginning on May 29, 2004, the informationenhances comparability over the relevant periods.
Church & Dwight Co., Inc.
Product Line Net Sales, Gross Profit and Operating Profit
Including Unconsolidated Affiliates
2nd Quarter and Six Months 2005 vs. 2004
Dollars in Millions

Three Months Ended July 1, 2005
-----------------------------------------------
Other
CHD Equity CHD &
As Reported Armkel Affiliates Adj's** Affiliates
----------- ------ ---------- ------- ----------

Household Products $ 179.3 $ - $ - $ - $ 179.3
Personal Care Products $ 127.7 $ - $ - $ - $ 127.7
--------- ------ ---------- ------- ----------

Consumer Domestic $ 307.0 $ - $ - $ - $ 307.0
Consumer International $ 78.1 $ - $ - $ - $ 78.1
--------- ------ ---------- ------- ----------
Total Consumer Net
Sales $ 385.1 $ - $ - $ - $ 385.1
Specialty Products
Division $ 56.6 $ - $ 17.5 $ (3.1) $ 71.0
--------- ------ ---------- ------- ----------
Total Net Sales $ 441.7 $ - $ 17.5 $ (3.1) $ 456.1

Gross Profit $ 168.8 $ - $ 5.2 $ 4.0 $ 178.0
% of Net Sales 38.2% 29.8% 39.0%

Marketing $ 51.1 $ - $ 0.1 $ - $ 51.2
% of Net Sales 11.6% 0.7% 11.2%

SG&A $ 57.9 $ - $ 1.3 $ 4.0 $ 63.2
% of Net Sales 13.1% 7.4% 13.9%

Operating Profit $ 59.8 $ - $ 3.8 $ - $ 63.6
% of Net Sales 13.5% 21.6% 13.9%

Three Months Ended July 2, 2004
------------------------------------------------
Other
CHD Equity CHD &
As Reported Armkel Affiliates Adj's** Affiliates
----------- ------ ---------- ------- ----------

Household Products $ 168.4 $ - $ - $ - $ 168.4
Personal Care Products $ 90.5 $ 34.3 $ - $ - $ 124.8
--------- ------ ---------- ------- ----------
Consumer Domestic $ 258.9 $ 34.3 $ - $ - $ 293.2
Consumer International $ 28.8 $ 44.6 $ - $ (0.3) $ 73.1
--------- ------ ---------- ------- ----------
Total Consumer Net
Sales $ 287.7 $ 78.9 $ - $ (0.3) $ 366.3
Specialty Products
Division $ 53.1 $ - $ 14.2 $ (1.8) $ 65.5
--------- ------ ---------- ------- ----------
Total Net Sales $ 340.8 $ 78.9 $ 14.2 $ (2.1) $ 431.8

Gross Profit $ 119.6 $ 44.2 $ 3.4 $ 3.7 $ 170.9
% of Net Sales 35.1% 56.0% 23.9% 39.6%

Marketing $ 36.1 $ 12.8 $ 0.2 $ - $ 49.1
% of Net Sales 10.6% 16.2% 1.4% 11.4%

SG&A $ 42.1 $ 22.2 $ 1.0 $ 3.7 $ 69.0
% of Net Sales 12.4% 28.1% 7.0% 16.0%

Operating Profit $ 41.4 $ 9.2 $ 2.2 $ - $ 52.8
% of Net Sales 12.1% 11.7% 15.5% 12.2%

Six Months Ended July 1, 2005
-----------------------------------------------
Other
CHD Equity CHD &
As Reported Armkel Affiliates Adj's** Affiliates
----------- ------ ---------- ------- ----------
Household Products $ 346.6 $ - $ - $ - $ 346.6
Personal Care Products $ 258.2 $ - $ - $ - $ 258.2
--------- ------ ---------- ------- ----------
Consumer Domestic $ 604.8 $ - $ - $ - $ 604.8
Consumer International $ 147.5 $ - $ - $ - $ 147.5
--------- ------ ---------- ------- ----------
Total Consumer Net
Sales $ 752.3 $ - $ - $ - $ 752.3
Specialty Products
Division $ 110.2 $ - $ 32.4 $ (5.1) $ 137.5
--------- ------ ---------- ------- ----------
Total Net Sales $ 862.5 $ - $ 32.4 $ (5.1) $ 889.8

Gross Profit $ 329.1 $ - $ 8.9 $ 8.8 $ 346.8
% of Net Sales 38.2% 27.5% 39.0%

Marketing $ 88.7 $ - $ 0.2 $ - $ 88.9
% of Net Sales 10.3% 0.6% 10.0%

SG&A $ 113.4 $ - $ 2.4 $ 8.8 $ 124.6
% of Net Sales 13.2% 7.4% 14.0%

Operating Profit $ 127.0 $ - $ 6.3 $ - $ 133.3
% of Net Sales 14.7% 19.5% 15.0%

Six Months Ended July 2, 2004
-----------------------------------------------
Other
CHD Equity CHD &
As Reported Armkel Affiliates Adj's** Affiliates
----------- ------ ---------- ------- ----------
Household Products $ 335.0 $ - $ - $ - $ 335.0
Personal Care Products $ 160.0 $ 92.1 $ - $ - $ 252.1
--------- ------ ---------- ------- ----------
Consumer Domestic $ 495.0 $ 92.1 $ - $ - $ 587.1
Consumer International $ 37.8 $100.6 $ - $ (0.7) $ 137.7
--------- ------ ---------- ------- ----------
Total Consumer Net
Sales $ 532.8 $192.7 $ - $ (0.7) $ 724.8
Specialty Products
Division $ 104.0 $ - $ 27.4 $ (3.8) $ 127.6
--------- ------ ---------- ------- ----------
Total Net Sales $ 636.8 $192.7 $ 27.4 $ (4.5) $ 852.4

Gross Profit $ 216.2 $109.9 $ 6.2 $ 7.2 $ 339.5
% of Net Sales 34.0% 57.0% 22.6% 39.8%

Marketing $ 60.3 $ 25.7 $ 0.2 $ - $ 86.2
% of Net Sales 9.5% 13.3% 0.7% 10.1%

SG&A $ 76.0 $ 45.0 $ 2.3 $ 7.2 $ 130.5
% of Net Sales 12.0% 23.4% 8.4% 15.3%

Operating Profit $ 79.9 $ 39.2 $ 3.7 $ - $ 122.8
% of Net Sales 12.5% 20.3% 13.5% 14.4%

** Adjustments include: elimination of intercompany sales with
unconsolidated affiliates, reclassification of the administrative
costs of production planning and logistics functions that are not
directly attributable to the manufacturing process, from cost of
sales to SG&A.