This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Church & Dwight Co., Inc. (CHD: chart) on February 6, 2007.

Key Investors Issues

- EPS were 36 cents per share compared to 25 cents per share last year.
- Net income was $23.9 million compared to $16.2 million a year ago.
- Net sales were $526.1 million, 22% increase over last year''s $431.3 million.

Fourth Quarter Highlights

Net income was $23.9 million or 36 cents per share, an increase of 11 cents per share from the prior period''s net income of $16.2 million or 25 cents per share.

This year''s fourth quarter results include trademark impairment charges of $11.6 million, primarily related to brands in the toothpaste and antiperspirant categories, and a $1.3 million charge associated with the sale of a small U.S. plant. Last year''s results included $11.8 million of charges related to the shutdown of a small plant in Europe and restructuring activities at several other locations.

Net sales were $526.1 million, a $94.8 million or 22% increase over last year''s $431.3 million.

This year''s sales include two businesses acquired since November 2005, the SpinBrush battery-powered toothbrush business and the Orange Glo International (OGI) laundry additive and household cleaners business. Adjusting primarily for revenue related to these acquisitions, the net effect of foreign currency changes in 2006 and prior year promotion reserve changes, organic sales growth for the quarter was approximately 3%.

Consumer Domestic sales were $383.3 million, an $84.8 million or 28% increase over the prior period sales of $298.5 million, primarily due to the addition of the SpinBrush and OGI businesses.

Sales of Arm & Hammer liquid laundry detergent, Arm & Hammer Super Scoop cat litter, Arm & Hammer toothpaste, Arm & Hammer baking soda, Nair depilatories, and Trojan condoms were all higher than last year. These increases were offset partially by lower other toothpaste and antiperspirant sales. Consumer International sales of $87.8 million increased 16% over last year, primarily due to the OGI and SpinBrush businesses. Approximately 4% of international growth was due to foreign currency changes. The international growth was concentrated in Canada, Australia, and the U.K. Specialty Products sales declined 4% due to soft demand in the animal nutrition market.

Gross margin was 38.8% compared to 32.5% in the prior period.

The margin expansion reflects the benefits of price increases taken in the first half of 2006, the higher margins of the acquired businesses, and cost reduction programs. Last year''s results included higher commodity costs stemming from hurricane damage and, as mentioned above, manufacturing charges of $11.8 million associated with a plant shutdown in Europe and restructuring activity at several other facilities.

Marketing expense was $66.5 million, a $23.8 million increase over the prior period largely due to the acquired businesses.

- Marketing expense as a percentage of net sales increased to 12.6% in the quarter compared to 9.9% in the prior year period which reflects the planned increase in spending to support the business, including the holiday season spending for the SpinBrush business.
- Selling, general, and administrative expense was $93.7 million, a $28 million increase over the prior period. The fourth quarter results include the trademark impairment charge mentioned above and a stock-based compensation charge of approximately $3 million. The remainder of the increase is largely due to the acquired businesses.
- Operating income increased by approximately 39% to $44.2 million compared to $31.9 million in the prior period.

- Other expense was $14.2 million compared to $12 million in the prior period due to interest associated with borrowings to fund the OGI acquisition.
- The effective tax rate was 25.1% compared to last year''s 22.4%. This year''s quarter includes a reduction in tax expense reflecting the full year benefit of the research and development tax credit which was reinstated by Congress in late December. The effective tax rate of 22.4% in the fourth quarter of 2005 was favorably impacted by the reduction of tax liabilities in that period.

In family planning, there will be several new additions to the Trojan product line, including an Intense Ribbed condom and an expanded line of vibrating rings.

- A major enhancement to the First Response pregnancy kit product line is also expected to be launched in 2007.
- In oral and skin care, the Nair depilatory product line will be expanded with the new Nair Pretty line, targeted directly to teens, and a new Nair sensitive formula line consisting of 5 new skin-loving products. The company is innovating in the battery-powered toothbrush category with a new SpinBrush Pro Slim and a two-speed version of SpinBrush.
- In household products, the company is currently introducing a new OxiClean Spray Away portable instant stain remover, for consumers on-the-go. The company is expanding distribution of Arm & Hammer Essentials liquid laundry detergent with plant-based surfactants, and XTRA Lasting ScentSations, a highly fragranced liquid laundry detergent. Both were previously only available in limited distribution. In addition, new product introductions for the pet care and deodorizing categories are planned for the second and third quarters.

Fiscal 2006 Highlights

- Consumer Domestic sales were $1,388.5 million, a $170.3 million or 14% increase over the prior period sales of $1,218.2 million. Consumer International sales of $336.9 million increased 13% over the prior year. The sales increases in the Consumer Domestic and Consumer International businesses are primarily due to the addition of the SpinBrush and OGI businesses. Specialty Products sales for the full year were comparable to the prior year.
- Gross margin was 39.1% compared to 36.7% for the prior year. The margin expansion reflects the benefits of cost reduction programs, price increases taken in the first half of 2006, and the higher margins of the acquired businesses. Last year''s gross margin was impacted by higher commodity costs, manufacturing charges of $14.2 million associated with a plant shutdown in Europe and restructuring activity at several other facilities.

- Marketing expense was $216.7 million, a $33.2 million increase over the prior year largely due to the acquired businesses. Marketing expenses as a percentage of net sales increased to 11.1% for the year compared to 10.6% in the prior year as the company continued to advertise its core brands and newly acquired businesses.
- Selling, general, and administrative expense was $292.4 million, a $51.6 million increase over the prior year. The increase in 2006 reflects the expenses of the acquired businesses, higher trademark impairment charges, higher incentive compensation expense, and stock-based compensation expenses.
- Operating income increased by 18.5% to $252.1 million in 2006 compared to $212.8 million in the prior year.