What changed in Church & Dwight's 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Church & Dwight's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+337 added−346 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)
Top changes in Church & Dwight's 2023 10-K
337 paragraphs added · 346 removed · 271 edited across 2 sections
- Item 6. [Reserved]+329 / −340 · 265 edited
- Item 5. Market for Registrant's Common Equity+8 / −6 · 6 edited
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
6 edited+2 added−0 removed1 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
6 edited+2 added−0 removed1 unchanged
2022 filing
2023 filing
Biggest changeCompany / Index 2017 2018 2019 2020 2021 2022 ■ Church & Dwight Co., Inc. 100.00 133.23 144.37 181.15 215.35 171.37 ■ S&P 500 Index 100.00 95.61 125.71 148.82 191.51 156.79 ■ S&P 500 Household Products Index 100.00 100.01 131.50 152.24 175.44 165.05 32 Share Repurchase Authorization On October 28, 2021, the Board authorized a new share repurchase program under which the Company may purchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”).
Biggest changeCompany / Index 2018 2019 2020 2021 2022 2023 ■ Church & Dwight Co., Inc. 100.00 108.36 135.96 161.63 128.63 152.70 ■ S&P 500 Index 100.00 131.48 155.66 200.30 163.99 207.05 ■ S&P 500 Household Products Index 100.00 131.49 152.22 175.42 165.04 165.25 32 Share Repurchase Authorization On October 28, 2021, the Board authorized a new share repurchase program, under which the Company may repurchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”).
The following graph compares the yearly change in the cumulative total stockholder return on our Common Stock for the past five fiscal years with the cumulative total return of the S&P 500 Index and the S&P 500 Household Products Index described more fully below. The returns are indexed to a value of $100 at December 31, 2017.
The following graph compares the yearly change in the cumulative total stockholder return on our Common Stock for the past five fiscal years with the cumulative total return of the S&P 500 Index and the S&P 500 Household Products Index described more fully below. The returns are indexed to a value of $100 at December 31, 2018.
The 2021 Share Repurchase Program does not modify the Company’s evergreen share repurchase program, authorized by the Board on January 29, 2014, under which the Company may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under its incentive plans.
The 2021 Share Repurchase Program did not modify the Company’s evergreen share repurchase program, authorized by the Board on January 29, 2014, under which the Company may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under its incentive plans.
ITEM 5. MAR KET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of common stock are traded on the New York Stock Exchange with the stock ticker symbol “CHD”. Approximate number of record holders of our Common Stock as of December 31, 2022: 1,700.
ITEM 5. MAR KET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of common stock are traded on the New York Stock Exchange with the stock ticker symbol “CHD”. Approximate number of record holders of our Common Stock as of December 31, 2023: 1,600.
As a result of our stock repurchases, there remains $729.7 million of share repurchase availability under the 2021 Share Repurchase Program as of December 31, 2022 . 33
As a result of the Company’s stock repurchases, there remains $658.9 of share repurchase availability under the 2021 Share Repurchase Program as of December 31, 2023.
The 2021 Share Repurchase Program does not have an expiration and replaced the Company’s 2017 Share Repurchase Program.
The 2021 Share Repurchase Program does not have an expiration and replaced the 2017 Share Repurchase Program. All remaining dollars authorized for repurchase under the 2017 Share Repurchase Plan have been cancelled.
Added
In November 2023, the Company executed an agreement to purchase 3.3 million shares for $300.1, inclusive of fees, of which $229.3 was purchased under the evergreen share repurchase program and $70.8 was purchased under the 2021 Share Repurchase Program.
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Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under All Programs 10/1/2023 to 10/31/2023 346 $ 90.11 346 $ 729,727,297 11/1/2023 to 11/30/2023 3,144,242 91.62 3,144,242 $ 658,905,959 12/1/2023 to 12/31/2023 126,245 94.92 126,245 $ 658,905,959 Total 3,270,833 $ 91.75 3,270,833 (1) Includes shares of Common Stock withheld by us to satisfy tax withholding obligations in connection with the vesting of restricted stock. 33
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
265 edited+64 added−75 removed172 unchanged
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
265 edited+64 added−75 removed172 unchanged
2022 filing
2023 filing
Biggest changeThe gains are primarily due to favorable pricing/product mix in all three segments and acquisitions in Consumer Domestic and Consumer International, partially offset by unfavorable volumes in all three segments and unfavorable changes in foreign exchange rates in Consumer International. • Gross margin decreased 170 basis points to 41.9% in 2022 from 43.6% in 2021, primarily due to higher manufacturing costs including labor, raw materials and components, and higher transportation and commodity costs, as well as unfavorable volumes, partially offset by favorable price/product mix, the impact of productivity programs, and business acquisition benefits. • Operating margin decreased 970 basis points to 11.1% in 2022 from 20.8% in 2021, reflecting a lower gross margin percentage and higher selling general and administrative costs (including the non-cash Flawless intangible asset impairment charge of $411.0 or 760 bps and 2021's favorable $98.0 or 190 bps Flawless business acquisition liability adjustments), partially offset by lower marketing expenses. • We reported diluted net earnings per share in 2022 of $1.68 (including the non-cash Flawless intangible asset impairment charge of $1.26 per share), a decrease of approximately 49.4% from 2021 diluted net earnings per share of $3.32 which included the favorable impact of the Flawless business acquisition liability adjustments of $0.30 per share. • Cash provided by operations was $885.2 in 2022, a $108.6 decrease from the prior year due to higher working capital and lower cash earnings (net income adjusted for non-cash items). • We returned $255.0 in 2022 to our stockholders through cash dividends paid. 36 CHURCH & DWIGHT CO., INC AND SUBSIDIARIES (Dollars in millions, except share and per share data) Strategic Goals, Challenges and Initiatives Our ability to generate sales depends on consumer demand for our products and retail customers’ decisions to carry our products, which are, in part, affected by general economic conditions in our markets.
Biggest changeExcluding the impairment charge, operating margin decreased 70 basis points as an increase in gross margins was offset by higher marketing expenses and selling general and administrative costs. • We reported diluted net earnings per share in 2023 of $3.05, an increase of approximately 81.5% from 2022 diluted net earnings per share of $1.68 which included the non-cash Flawless intangible asset impairment charge of $1.26 per share. • Cash provided by operations was $1,030.6 in 2023, a $145.4 increase from the prior year due to an improvement in working capital and an increase in cash earnings (net income adjusted for non-cash items) including the impact of recent acquisitions. • We returned $566.6 in 2023 to our stockholders through cash dividends paid and share repurchases.
As a result, any delays or reduction of sales of these products, in the event that our product category diversification efforts discussed below are not successful, could have a material adverse effect on our business, financial condition and operating results and cash flows.
As a result, any delays or reduction of sales of these products, in the event that our product category diversification efforts discussed below are not successful, could have a material adverse effect on our business, financial condition, operating results and cash flows.
Selling, general and administrative expenses (“SG&A”) expenses include, among others, costs related to functions such as sales, corporate management, research and development, marketing administration, information technology and legal.
Selling, general and administrative (“SG&A”) expenses include, among others, costs related to functions such as sales, corporate management, research and development, marketing administration, information technology and legal.
With respect to goodwill, impairment occurs when the carrying value of the reporting unit exceeds the discounted present value of cash flows for that reporting unit.
With respect to goodwill, impairment occurs when the carrying value of the reporting unit exceeds the discounted present value of cash flows for that reporting unit.
Deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the differences are expected to be recovered or settled. Management provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely than not” to be realized.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the differences are expected to be recovered or settled. Management provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely than not” to be realized.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In millions, except share and per share data) 6. Acquisitions On October 13, 2022, the Company acquired all of the issued and outstanding shares of capital stock of Hero Cosmetics, Inc. ("Hero"), the developer of the Hero ® brand which includes the MIGHTY PATCH® acne treatment products (the “Hero Acquisition”).
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In millions, except share and per share data) 6. Acquisitions On October 13, 2022, the Company acquired all of the issued and outstanding shares of capital stock of Hero Cosmetics, Inc. ("Hero"), the developer of the HERO® brand which includes MIGHTY PATCH® acne treatment products (the “Hero Acquisition”).
After determining the estimated fair value of the assets, which included a reduction in cash flows due to the loss of distribution mentioned above along with an expected continued decline in discretionary consumption and higher interest rates, a non-cash impairment charge of $ 411.0 was recorded in the fourth quarter of 2022.
After determining the estimated fair value of the assets, which included a reduction in cash flows due to the loss of distribution mentioned above along with an expected continued decline in discretionary consumption and higher interest rates, a non-cash impairment charge of $ 411.0 was recorded in the fourth quarter of 2022.
The preliminary fair values of the net assets at acquisition are set forth as follows: Accounts receivable $ 19.5 Inventory 25.4 Other current assets 1.2 Property, plant and equipment 0.4 Trade name 400 .0 Other intangible assets 71.9 Goodwill 156.1 Accounts payable and accrued expenses ( 1.1 ) Deferred and Other Long-term Liabilities ( 1.4 ) Deferred income taxes ( 117.2 ) Business acquisition liabilities - long-term ( 8.0 ) Cash purchase price (net of cash acquired) $ 546.8 The trade name and other intangible assets were valued using a discounted cash flow model.
The fair values of the net assets at acquisition are set forth as follows: Accounts receivable $ 19.5 Inventory 25.4 Other current assets 1.2 Property, plant and equipment 0.4 Trade name 400 .0 Other intangible assets 71.9 Goodwill 156.1 Accounts payable and accrued expenses ( 1.1 ) Deferred and Other Long-term Liabilities ( 1.4 ) Deferred income taxes ( 117.2 ) Business acquisition liabilities - long-term ( 8.0 ) Cash purchase price (net of cash acquired) $ 546.8 The trade name and other intangible assets were valued using a discounted cash flow model.
We record liabilities for potential assessments in various tax jurisdictions under U.S. GAAP guidelines. The liabilities relate to tax return positions that, although supportable by us, may be challenged by the tax authorities and do not meet the minimum recognition threshold required under applicable accounting guidance for the related tax benefit to be recognized in the income statement.
We record liabilities for potential assessments in various tax jurisdictions under U.S. GAAP guidelines. The liabilities relate to tax return positions that, although supportable by us, may be challenged by the tax authorities and do not meet the minimum recognition threshold required under applicable accounting guidance for the related tax benefit to be recognized on the income statement.
The interest rate is the Secured Overnight Financing Rate (“SOFR”) plus a spread and an applicable margin based on the Company’s credit rating, which can range from 60 basis points to 125 bps. The proceeds of the Term Loan were used to partially fund the TheraBreath Acquisition, with the remaining proceeds used for the repayment of commercial paper.
The interest rate is the Secured Overnight Financing Rate (“SOFR”) plus a spread and an applicable margin based on the Company’s credit rating, which can range from 60 basis points to 125 bps. The proceeds of the Loan were used to partially fund the TheraBreath Acquisition, with the remaining proceeds used for the repayment of commercial paper.
Additional information regarding the Company’s risk management activities, including derivative instruments and hedging activities, are separately disclosed. See Notes 2 and 3. Goodwill and Other Intangible Assets The Company has intangible assets of substantial value on its consolidated balance sheet. These intangible assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill.
Additional information regarding the Company’s risk management activities, including derivative instruments and hedging activities, are separately disclosed. See Notes 2 and 3. Goodwill and Other Intangible Assets The Company has intangible assets of substantial value on its consolidated balance sheet. Intangible assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill.
The 2027 Notes will mature on August 1, 2027 unless earlier retired or redeemed. 2.3% Senior Notes due December 15, 2031 The Company financed the TheraBreath Acquisition with a portion of the proceeds from an underwritten public offering of $ 400.0 aggregate principal amount Senior Notes due 2031 (the “2031 Notes”). The 2031 Notes bear interest at 2.3 %.
The 2027 Notes will mature on August 1, 2027 unless earlier retired or redeemed. 2.3% Senior Notes due December 15, 2031 The Company financed the TheraBreath Acquisition with a portion of the proceeds from an underwritten public offering of $ 400.0 aggregate principal amount Senior Notes due 2031 (the “2031 Notes”). The 2031 Notes bear interest at 2.30 %.
Based on the total face value of Consumer Domestic coupons redeemed over the past several years, if the actual rate of redemptions were to deviate by 0.1% from the rate for which reserves are accrued in the financial statements, a difference of approximately $2.7 in the reserve required for coupons would result.
Based on the total face value of Consumer Domestic coupons redeemed over the past several years, if the actual rate of redemptions were to deviate by 0.1% from the rate for which reserves are accrued in the financial statements, a difference of approximately $0.7 in the reserve required for coupons would result.
Harold Katz, LLC and HK-IP International, Inc., the owners of the THERABREATH® brand of oral care products business (the “TheraBreath Acquisition”). The Company paid $ 556.0 , net of cash acquired, at closing and deferred an additional cash payment of $ 14.0 related to certain indemnity obligations provided by the seller.
Harold Katz, LLC and HK-IP International, Inc., the owners of the THERABREATH® brand of oral care products (the “TheraBreath Acquisition”). The Company paid $ 556.0 , net of cash acquired, at closing and deferred an additional cash payment of $ 14.0 related to certain indemnity obligations provided by the seller.
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.
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 dilution from potential Common Stock issuable pursuant to the exercise of outstanding stock options.
In this regard, settlement of any issue with, or an adverse determination in litigation against, a taxing authority could require the use of cash and result in an increase in the Company’s annual tax rate. Conversely, favorable resolution of an issue with a taxing authority would be recognized as a reduction to the Company’s annual tax rate.
In this regard, settlement of any issue with, or an adverse determination in litigation against, a taxing authority could require the use of cash and result in an increase in the Company’s annual effective tax rate. Conversely, favorable resolution of an issue with a taxing authority would be recognized as a reduction to the Company’s annual effective tax rate.
Some customers have responded to economic conditions by increasing their private label offerings (primarily in the dietary supplements, diagnostic kits and oral analgesics categories), launching their own brands, and consolidating the product selections they offer to the top few leading brands in each category.
Some retail customers have responded to economic conditions by increasing their private label offerings (primarily in the dietary supplements, diagnostic kits and oral analgesics categories), launching their own brands, and consolidating the product selections they offer to the top few leading brands in each category.
The additional amount, to the extent not used in satisfaction of such indemnity obligations, is payable in installments between two and four years from the closing. THERABREATH’s annual net sales for the year ended December 31, 2021 were approximately $ 100 .
The additional amount, to the extent not used in satisfaction of such indemnity obligations, is payable in installments between two and four years from the closing. THERABREATH’s annual net sales for the year ended December 31, 2021 were approximately $ 100.0 .
The Company has applied the portfolio approach to all open contracts as they have similar characteristics and can reasonably expect that the effects on the financial statements of applying this new guidance to the portfolio of contracts would not differ materially from applying this guidance to the individual contracts within the portfolio.
The Company has applied the portfolio approach to all open contracts as they have similar characteristics and can reasonably expect that the effects on the financial statements of applying this guidance to the portfolio of contracts would not differ materially from applying this guidance to the individual contracts within the portfolio.
The Company’s Passport Food Safety business has experienced sales and profit declines due to decreased demand driven by the COVID-19 pandemic and pressures from new competitive activities resulting from the loss of exclusivity on a key product line.
The Company’s Passport Food Safety business has experienced sales and profit declines primarily due to decreased demand driven by the COVID-19 pandemic and pressures from new competitive activities resulting from the loss of exclusivity on a key product line.
Ewing, New Jersey Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Church & Dwight Co., Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements").
Ewing, New Jersey Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Church & Dwight Co., Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements").
The Level 3 inputs include the discount rate of 8.5 % applied to management’s estimates of future cash flows based on projections of revenue, gross margin, marketing expense and tax rates considering the loss of product distribution and the reduction in customer demand that FINISHING TOUCH FLAWLESS has been experiencing through December 31, 2022.
The Level 3 inputs include the discount rate of 8.5 % applied to management’s estimates of future cash flows based on projections of revenue, gross margin, marketing expense and tax rates considering the loss of product distribution and the reduction in customer demand that FINISHING TOUCH FLAWLESS had been experiencing through December 31, 2022.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This information appears under the heading “Market Risk” in the “Management’s Discussion and Analysis” section. Refer to page 49 of this Annual Report. 49 I TEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Church & Dwight Co., Inc.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This information appears under the heading “Market Risk” in the “Management’s Discussion and Analysis” section. Refer to page 48 of this Annual Report. 48 I TEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Church & Dwight Co., Inc.
Such proceedings are generally subject to considerable uncertainty and their outcomes, and any related damages, may not be reasonably predictable or estimable. Any such proceedings could result in a material adverse outcome negatively impacting the Company’s business, financial condition, results of operations or cash flows. 81 CHURCH & DWIGHT CO., INC.
Such proceedings are generally subject to considerable uncertainty and their outcomes, and any related damages, may not be reasonably predictable or estimable. Any such proceedings could result in a material adverse outcome negatively impacting the Company’s business, financial condition, results of operations or cash flows. 80 CHURCH & DWIGHT CO., INC.
Indicators such as unexpected adverse economic factors, unanticipated technological change, distribution losses, or competitive activities and acts by governments and courts may indicate that an asset has become impaired. Intangible assets with finite lives are amortized over their estimated 61 CHURCH & DWIGHT CO., INC.
Indicators such as unexpected adverse economic factors, unanticipated technological change, distribution losses, or competitive activities and acts by governments and courts may indicate that an asset has become impaired. Intangible assets with finite lives are amortized over their estimated 60 CHURCH & DWIGHT CO., INC.
Over the past two decades, we have diversified from an almost exclusively U.S. business to a global company with approximately 17% of sales derived from countries outside of the United States in 2022. We have subsidiary operations in seven countries (Canada, Mexico, U.K., France, Germany, China and Australia).
Over the past two decades, we have diversified from an almost exclusively U.S. business to a global company with approximately 17% of sales derived from countries outside of the United States in 2023. We have subsidiary operations in seven countries (Canada, Mexico, U.K., France, Germany, China and Australia).
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Pro forma results are not presented because the impact of the acquisition is not material to the Company’s consolidated financial results. The goodwill and other intangible assets associated with the Zicam Acquisition are not deductible for U.S. tax purposes. 7. Goodwill and Other Intangibles, Net The Company has intangible assets of substantial value on its consolidated balance sheet.
Pro forma results are not presented because the impact of the acquisition is not material to the Company’s consolidated financial results. The goodwill and other intangible assets associated with the TheraBreath Acquisition are deductible for U.S. tax purposes. 7. Goodwill and Other Intangibles, Net The Company has intangible assets of substantial value on its consolidated balance sheet.
Ewing, New Jersey Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Church & Dwight Co., Inc. and subsidiaries (the "Company") as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Ewing, New Jersey Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Church & Dwight Co., Inc. and subsidiaries (the "Company") as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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 The Corporate segment income consists of equity in earnings of affiliates. As of December 31, 2022, the Company held 50 % ownership interests in each of Armand and ArmaKleen, respectively.
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 The Corporate segment income consists of equity in earnings of affiliates. As of December 31, 2023, the Company held 50 % ownership interests in each of Armand and ArmaKleen, respectively.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with the accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with the accounting principles generally accepted in the United States of America.
Other : The carrying amounts of accounts receivable, and accounts payable and accrued expenses, approximated estimated fair values as of December 31, 2022 and 2021. 3. Derivative Instruments and Risk Management Changes in interest rates, foreign exchange rates, the price of the Common Stock and commodity prices expose the Company to market risk.
Other : The carrying amounts of Accounts Receivable, and Accounts Payable and Accrued Expenses, approximated estimated fair values as of December 31, 2023 and 2022. 3. Derivative Instruments and Risk Management Changes in interest rates, foreign exchange rates, the price of the Common Stock and commodity prices expose the Company to market risk.
The determination of fair value contains numerous variables that are subject to change as business conditions change and therefore could impact fair value in the future. 70 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In millions, except share and per share data) 8.
The determination of fair value contains numerous variables that are subject to change as business conditions change and therefore could impact fair value in the future. 69 CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In millions, except share and per share data) 8.
We adjust this liability as a result of changes in tax legislation, interpretations of laws by courts, rulings by tax authorities, changes in estimates and the expiration of the statute of limitations. Many of the judgments involved in adjusting the liability involve assumptions and estimates that are highly uncertain and subject to change.
We adjust this liability as a result of changes in tax legislation, interpretations of laws by courts, guidance and rulings issued by tax authorities, changes in estimates and the expiration of the statute of limitations. Many of the judgments involved in adjusting the liability involve assumptions and estimates that are highly uncertain and subject to change.
As a result of this assessment and based on the criteria in the COSO framework, management has concluded that as of December 31, 2022, the Company’s internal control over financial reporting was effective. The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has audited the Company’s internal control over financial reporting.
As a result of this assessment and based on the criteria in the COSO framework, management has concluded that as of December 31, 2023, the Company’s internal control over financial reporting was effective. The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has audited the Company’s internal control over financial reporting.
AND SUBSIDIARIES CONSO LIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2022, 2021 and 2020 (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.
AND SUBSIDIARIES CONSO LIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2023, 2022 and 2021 (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.
Personal Care Products include condoms, pregnancy kits, oral care products, skin care products, hair care products and gummy dietary supplements. Geographic Information Approximately 83 %, 82 % and 83 % of the net sales reported in the accompanying consolidated financial statements in 2022, 2021 and 2020, respectively, were to customers in the U.S.
Personal Care Products include condoms, pregnancy kits, oral care products, skin care products, hair care products and gummy dietary supplements. Geographic Information Approximately 83 %, 83 % and 82 % of the net sales reported in the accompanying consolidated financial statements in 2023, 2022 and 2021, respectively, were to customers in the U.S.
(2) In determining income before income taxes, interest expense, investment earnings and certain aspects of other income and expense were allocated among segments based upon each segment’s relative income from operations. (3) Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen in 2022, 2021 and 2020.
(2) In determining income before income taxes, interest expense, investment earnings and certain aspects of other income and expense were allocated among segments based upon each segment’s relative income from operations. (3) Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen in 2023, 2022 and 2021.
We also export products to over 130 other countries through our Global Markets Group using a broad network of third-party distributors. In 2022, we benefited from our expanded global footprint and expect to continue to focus on selectively expanding our global business.
We also export products to over 130 other countries through our Global Markets Group using a broad network of third-party distributors. In 2023, we benefited from our expanded global footprint and expect to continue to focus on selectively expanding our global business.
On October 28, 2021, the Board authorized a new share repurchase program, under which the Company may repurchase up to $ 1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”). The 2021 Share Repurchase Program does not have an expiration and replaced the 2017 Share Repurchase Program.
On October 28, 2021, the Board authorized a new share repurchase program, under which we may repurchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”). The 2021 Share Repurchase Program does not have an expiration and replaced the 2017 Share Repurchase Program.
Under the hedge agreements, the Company agreed to pay a fixed price per gallon of diesel fuel determined at the time the agreements were executed and to receive a floating rate payment that is determined on a monthly basis based on the avera ge price of the Department of Energy’s Diesel Fuel Index during the applicable month and is designed to offset any increase or decrease in fuel costs that the Company pays to it common carriers.
Under the hedge agreements, the Company agreed to pay a fixed price per gallon of diesel fuel determined at the time the agreements were executed and to receive a floating rate payment that is determined on a monthly basis based on the average price of the Department of Energy’s Diesel Fuel Index during the applicable month and is designed to offset any increase or decrease in fuel costs that the Company pays to it common carriers.
Such untimely transactions require immediate recognition in earnings of gains and losses previously recorded in other comprehensive income. During 2022 and 2021, the Company used derivative instruments to mitigate risk, some of which were designated as hedging instruments.
Such untimely transactions require immediate recognition in earnings of gains and losses previously recorded in other comprehensive income. During 2023 and 2022, the Company used derivative instruments to mitigate risk, some of which were designated as hedging instruments.
Approximately 97 %, 96 % and 96 % of long-lived assets were located in the U.S. at December 31, 2022, 2021 and 2020, respectively. Other than the U.S., no one country accounts for more than 5 % of consolidated net sales and 5 % of total assets.
Approximately 96 %, 97 % and 96 % of long-lived assets were located in the U.S. at December 31, 2023, 2022 and 2021, respectively. Other than the U.S., no one country accounts for more than 5 % of consolidated net sales and 5 % of total assets.
These assumptions are based on current market conditions, recent trends and management’s expectation of the success of initiatives to lower costs (including tariffs) and to develop lower-cost water flosser alternatives as well as improvement in the supply chain.
These assumptions are based on current market conditions, recent trends and management’s expectation of the success of initiatives to lower costs and to develop lower-cost water flosser alternatives as well as improvement in the supply chain.
We anticipate that our cash from operations, together with our current borrowing capacity, will be sufficient to fund our share repurchase programs to the extent implemented by management, pay debt and interest as it comes due and pay dividends at the latest approved rate, and meet our capital expenditure program costs, which are expected to be approximately $250.0 in 2023 primarily for manufacturing capacity investments in laundry, litter and vitamins to support expected future sales growth.
We anticipate that our cash from operations, together with our current borrowing capacity, will be sufficient to fund our share repurchase programs to the extent implemented by management, pay debt and interest as it comes due, pay dividends at the latest approved rate, and meet our capital expenditure program costs, which are expected to be approximately $180.0 in 2024 primarily for manufacturing capacity investments in laundry, litter and vitamins to support expected future sales growth.
Management evaluated the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, management used the framework established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Management evaluated the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the framework established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
These agreements were used to hedge the interest rate risk associated with the first ten years of semi-annual interest payments associated with the Senior Notes due in 2052 and 2032, respectively, and will each be amortized over a ten-year period. There were no interest rate lock agreements outstanding as of December 31, 2022.
These agreements were used to hedge the interest rate risk associated with the first ten years of semi-annual interest payments associated with the Senior Notes due in 2052 and 2032, respectively, and will each be amortized over a ten-year period to interest expense. There were no interest rate lock agreements outstanding as of December 31, 2023 or 2022.
In the fourth quarter of 2022, we determined that a review of our ability to recover the carrying values of the global FINISHING TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain products at a major retailer. The FINISHING TOUCH FLAWLESS assets consist of the definite-lived tradename, customer relationships and technology assets recorded at acquisition.
In the fourth quarter of 2022, we determined that a review of our ability to recover the carrying values of the global FINISHING TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain products at a major retailer. The FINISHING TOUCH FLAWLESS assets consist of the definite-lived trade name, customer relationships and technology assets recorded at acquisition.
Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on the Company’s financial condition, results of operations and cash flows. f.
Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on the Company’s financial condition, results of operations and cash flows. Legal proceedings f.
The Credit Agreement replaced our prior $1,000.0 unsecured revolving credit facility maturing on March 29, 2024 that was entered into on March 29, 2018. We have the ability to increase our borrowing up to an additional $750.0, subject to lender commitments and certain conditions as described in the Credit Agreement.
The Credit Agreement replaced our prior $1,000.0 unsecured revolving credit facility that would have matured on March 29, 2024 that was entered into on March 29, 2018. We have the ability to increase our borrowing up to an additional $750.0, subject to lender commitments and certain conditions as described in the Credit Agreement.
The Revolving Credit Facility also contains customary events of default, including failure to make certain payments under the Term Loan Facility when due, breach of covenants, materially incorrect representations and warranties, default on other material indebtedness, events of bankruptcy, material adverse judgments, certain events relating to pension plans, the failure of any of the loan documents to remain in full force and effect and the occurrence of any change in control with respect to the Company. 74 CHURCH & DWIGHT CO., INC.
The Term Loan Facility also contains customary events of default, including failure to make certain payments under the Term Loan Facility when due, breach of covenants, materially incorrect representations and warranties, default on other material indebtedness, events of bankruptcy, material adverse judgments, certain events relating to pension plans, the failure of any of the loan documents to remain in full force and effect and the occurrence of any change in control with respect to the Company. 72 CHURCH & DWIGHT CO., INC.
We also issued $61.5 of restricted stock which will be recognized as compensation expense as the vesting requirements for individuals who received the restricted stock and will continue to be employed by us are satisfied. The vesting requirements are satisfied at various dates over a three-year period from the date of the acquisition.
The Company also issued $ 61.5 of restricted stock which will be recognized as compensation expense as the vesting requirements for individuals who received the restricted stock, and will continue to be employed by the Company, are satisfied. The vesting requirements are satisfied at various dates over a three-year period from the date of the acquisition.
The segment discussion also addresses certain product line information. Our operating segments are consistent with our reportable segments. Consolidated results 2022 compared to 2021 Twelve Months Ended Change vs.
The segment discussion also addresses certain product line information. Our operating segments are consistent with our reportable segments. Consolidated results 2023 compared to 2022 Twelve Months Ended Change vs.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 15, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
That review determined that the estimated future cash flows would not be sufficient to recover the carrying value of the assets resulting in an impairment of the associated tradename and other intangible assets of $ 11.3 in the fourth quarter of 2021. The charge was recorded in SG&A.
That review determined that the estimated future cash flows would not be sufficient to recover the carrying value of the assets resulting in an impairment of the associated trade name and other intangible assets of $ 11.3 in the fourth quarter of 2021. The charge was recorded in SG&A.
ITEM 6. RE SERVED 34 CHURCH & DWIGHT CO., INC AND SUBSIDIARIES (Dollars in millions, except share and per share data) I TEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements.
ITEM 6. RESERVED 34 CHURCH & DWIGHT CO., INC AND SUBSIDIARIES (Dollars in millions, except share and per share data) I TEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements.
The 2021 Share Repurchase Program does not modify our evergreen share repurchase program, authorized by the Board on January 29, 2014, under which we may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under our incentive plans.
The 2021 Share Repurchase Program did not modify our evergreen share repurchase program, authorized by the Board on January 29, 2014, under which we may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under its incentive plans.
The amounts charged to earnings, including the effect of the hedges, totaled expense of $ 1.2 , $ 2.2 and $ 2.1 in 2022, 2021 and 2020, respectively. Non-employee members of the Company’s Board are eligible to defer up to 100 % of their directors’ compensation into a similar plan; however, the only option for investment is Common Stock.
The amounts charged to earnings, including the effect of the hedges, totaled expense of $ 3.7 , $ 1.2 and $ 2.2 in 2023, 2022 and 2021, respectively. Non-employee members of the Company’s Board are eligible to defer up to 100 % of their directors’ compensation into a similar plan; however, the only option for investment is Common Stock.
Hero’s annual net sales for the year ended December 31, 2022 were approximately $179.0. The Hero Acquisition was financed with cash on hand and commercial paper borrowings and is managed in the Consumer Domestic segment.
Hero’s annual net sales for the year ended December 31, 2022 were approximately $ 179.0 . The Hero Acquisition was financed with cash on hand and commercial paper borrowings and is managed in the Consumer Domestic and Consumer International segments.
The Company also believes that it is more likely than not that the benefit from certain additional deferred tax assets of a foreign subsidiary will not be realized. In recognition of this risk, the Company maintains a valuation allowance of $ 0.5 and $ 0.9 at December 31, 2022 and 2021, respectively, on these deferred tax assets.
The Company also believes that it is more likely than not that the benefit from certain additional deferred tax assets of a foreign subsidiary will not be realized. In recognition of this risk, the Company maintains a valuation allowance of $ 0.8 and $ 0.5 at December 31, 2023 and 2022, respectively, on these deferred tax assets.
The impact of U.S. tariffs on certain products was a component of increased cost of sale during the year ended December 31, 2022.
The impact of U.S. tariffs on certain products was a component of increased cost of sale during the year ended December 31, 2023.
With regard to other promotional reserves and sales returns, we use experience-based estimates, customer and sales organization inputs and historical trend analysis in arriving at the reserves required. If our estimates for promotional activities and sales returns reserves were to change by 10% the impact to promotional spending and sales return accruals would be approximately $15.9.
With regard to other promotional reserves and sales returns, we use experience-based estimates, customer and sales organization inputs and historical trend analysis in arriving at the reserves required. If our estimates for promotional activities and sales returns reserves were to change by 10% the impact to promotional spending and sales return accruals would be approximately $16.0.
These carriers currently charge the Company a basic rate per mile for diesel fuel price increases. The Company has entered into hedge agreements with counterparties to mitigate the volatility of diesel fuel prices, and not to speculate in the future price of diesel fuel.
The carriers charge the Company a basic rate per mile for diesel fuel. The Company has entered into hedge agreements with counterparties to mitigate the volatility of diesel fuel prices, and not to speculate in the future price of diesel fuel.
As a result, the WATERPIK business has experienced declining sales and profits resulting in a reduction in expected future cash flows which have eroded a substantial portion of the excess between the fair and carrying value of the tradename.
As a result, the WATERPIK business has experienced declining sales and profits resulting in a reduction in expected future cash flows which have eroded a substantial portion of the excess between the fair and carrying value of the trade name.
The Company’s equity in earnings of Armand and ArmaKleen, totaling $ 12.3 , $ 9.4 , and $ 6.7 for the three years ending December 31, 2022, 2021 and 2020, respectively, are included in the Corporate segment. Certain subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment.
The Company’s equity in earnings of Armand and ArmaKleen, totaling $ 8.7 , $ 12.3 , and $ 9.4 for the three years ending December 31, 2023, 2022 and 2021, respectively, are included in the Corporate segment. Certain subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 16, 2023, expressed an unqualified opinion on those consolidated financial statements.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 15, 2024, expressed an unqualified opinion on those consolidated financial statements.
Accordingly, the Company filed amended returns with the IRS claiming refunds for 2018 and 2019, totaling $ 6.5 , and utilized $ 2.0 of foreign tax credits in 2020. During 2022, the Company determined that it was able to utilize the remaining foreign tax credit carryforwards in 2022 and future years.
Accordingly, the Company filed amended returns with the Internal Revenue Service claiming refunds for 2018 and 2019, totaling $ 6.5 , and utilized $ 2.0 of foreign tax credits in 2020. During 2022, the Company determined that it was able to utilize the remaining foreign tax credit carryforwards in 2022 and future years.
Members of the Board are fully vested in their account balance. As of December 31, 2022, there were approximately 129,000 shares of Common Stock from shares held as Treasury Stock in a rabbi trust to protect the interest of the directors’ deferred compensation plan participants in the event of a change of control. 13.
Members of the Board are fully vested in their account balance. As of December 31, 2023, there were approximately 109,000 shares of Common Stock from shares held as Treasury Stock in a rabbi trust to protect the interest of the directors’ deferred compensation plan participants in the event of a change of control. 13.
The impairment charge is included in SG&A with $ 349.3 recorded in the Consumer Domestic segment and $ 61.7 recorded in the Consumer International segment. The impairment charge was applied as a full impairment of the customer relationship and technology assets and a partial impairment of the tradename.
The impairment charge is included in SG&A with $ 349.3 recorded in the Consumer Domestic segment and $ 61.7 recorded in the Consumer International segment. The impairment charge was applied as a full impairment of the customer relationship and technology assets and a partial impairment of the trade name.
Gains and losses on foreign currency transactions are recorded in the Consolidated Statements of Income. 60 CHURCH & DWIGHT CO., INC.
Gains and losses on foreign currency transactions are recorded in the Consolidated Statements of Income. 59 CHURCH & DWIGHT CO., INC.
These sales are eliminated from the Consumer International segment results set forth in the table below. 82 CHURCH & DWIGHT CO., INC.
These sales are eliminated from the Consumer International segment results set forth in the table below. 81 CHURCH & DWIGHT CO., INC.
The Company’s global WATERPIK business has recently experienced a significant decline in customer demand for many of its products, primarily due to lower consumer spending for discretionary products from inflation and a growing number of water flosser consumers switching to more value-branded products.
The Company’s global WATERPIK business has continued to experience a significant decline in customer demand for many of its products, primarily due to lower consumer spending for discretionary products from inflation and a growing number of water flosser consumers switching to more value-branded products.
Related Party Transactions The following summarizes the balances and transactions between the Company and each of Armand and ArmaKleen, in which the Company holds a 50 % ownership interest: Armand ArmaKleen Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Purchases by Company $ 13.7 $ 12.9 $ 14.2 $ 0.0 $ 0.0 $ 0.0 Sales by Company $ 0.0 $ 0.0 $ 0.0 $ 0.9 $ 1.2 $ 1.1 Outstanding Accounts Receivable $ 0.9 $ 1.0 $ 0.7 $ 1.1 $ 0.9 $ 0.5 Outstanding Accounts Payable $ 1.0 $ 1.2 $ 1.4 $ 0.0 $ 0.0 $ 0.0 Administration & Management Oversight Services (1) $ 2.2 $ 2.2 $ 2.1 $ 2.0 $ 2.1 $ 2.2 (1) Billed by Company and recorded as a reduction of SG&A expenses. 17.
Related Party Transactions The following summarizes the balances and transactions between the Company and each of Armand and ArmaKleen, in which the Company holds a 50 % ownership interest: Armand ArmaKleen Year Ended December 31, Year Ended December 31, 2023 2022 2021 2023 2022 2021 Purchases by Company $ 14.9 $ 13.7 $ 12.9 $ 0.0 $ 0.0 $ 0.0 Sales by Company $ 0.0 $ 0.0 $ 0.0 $ 1.4 $ 0.9 $ 1.2 Outstanding Accounts Receivable $ 1.6 $ 0.9 $ 1.0 $ 1.4 $ 1.1 $ 0.9 Outstanding Accounts Payable $ 0.8 $ 1.0 $ 1.2 $ 0.0 $ 0.0 $ 0.0 Administration & Management Oversight Services (1) $ 2.3 $ 2.2 $ 2.2 $ 2.1 $ 2.0 $ 2.1 (1) Billed by Company and recorded as a reduction of SG&A expenses. 17.
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: 2022 2021 2020 Weighted average common shares outstanding - basic 242.9 244.9 246.8 Dilutive effect of stock options 3.4 4.7 5.4 Weighted average common shares outstanding - diluted 246.3 249.6 252.2 Antidilutive stock options outstanding 3.0 1.6 1.5 Employee and Director Stock Based Compensation The fair value of share-based compensation is determined at the grant date and the related expense is recognized over the required employee service period in which the share-based compensation vests.
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: 2023 2022 2021 Weighted average common shares outstanding - basic 244.9 242.9 244.9 Dilutive effect of stock options 2.7 3.4 4.7 Weighted average common shares outstanding - diluted 247.6 246.3 249.6 Antidilutive stock options outstanding 2.6 3.0 1.6 Employee and Director Stock Based Compensation The fair value of stock-based compensation is determined at the grant date and the related expense is generally recognized over the required employee service period in which the share-based compensation vests.
A group of three customers accounted for approximately 37% of consolidated net sales in 2021 and 36% in 2020, of which a single customer (Walmart Inc. and its affiliates) accounted for approximately 24%, 24% and 23% in 2022, 2021 and 2020, respectively.
A group of three customers accounted for approximately 37% of consolidated net sales in 2021, of which a single customer (Walmart Inc. and its affiliates) accounted for approximately 23%, 24% and 24% in 2023, 2022 and 2021, respectively.
(2) Leased assets obtained in exchange for new lease liabilities in 2022 primarily consisted of a contract amendment to one of the Company's international locations, which resulted in an increase to the Company’s right of use assets and corresponding lease liabilities of approximately $ 8.2 recorded in the third quarter of 2022, and an amendment to its contract at one of its leased manufacturing facilities, which resulted in an increase to the Company’s right of use assets and corresponding lease liabilities of approximately $ 15.2 recorded in the second quarter of 2022.
Leased assets obtained in exchange for new lease liabilities in 2022 primarily consisted of a contract amendment to one of the Company's international locations, which resulted in an increase to the Company’s right of use assets and corresponding lease liabilities of approximately $ 8.2 recorded in the third quarter of 2022, and an amendment to its contract at one of its leased manufacturing facilities, which resulted in an increase to the Company’s right of use assets and corresponding lease liabilities of approximately $ 15.2 recorded in the second quarter of 2022. 70 CHURCH & DWIGHT CO., INC.
Our equity in earnings of Armand and ArmaKleen, totaling $12.3, $9.4 and $6.7 for the three years ended December 31, 2022, 2021 and 2020, respectively, are included in the Corporate segment. 43 CHURCH & DWIGHT CO., INC AND SUBSIDIARIES (Dollars in millions, except share and per share data) Some of the subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment.
Our equity in earnings of Armand and ArmaKleen, totaling $8.7, $12.3 and $9.4 for the three years ended December 31, 2023, 2022 and 2021, respectively, are included in the Corporate segment. 42 CHURCH & DWIGHT CO., INC AND SUBSIDIARIES (Dollars in millions, except share and per share data) Some of the subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In millions, except share and per share data) The difference between tax expense and the tax that would result from the application of the federal statutory rate is as follows: 2022 2021 2020 Statutory rate 21 % 21 % 21 % Tax that would result from use of the federal statutory rate $ 109.9 $ 216.6 $ 204.5 State and local income tax, net of federal effect 5.2 30.5 28.7 Varying tax rates of foreign affiliates 2.9 2.6 2.8 Valuation Allowances ( 4.1 ) ( 8.5 ) 2.9 Stock Options Exercised ( 5.2 ) ( 29.0 ) ( 29.4 ) Reserve for Uncertain Tax Position ( 0.9 ) 0.0 ( 10.6 ) Other 1.6 ( 8.0 ) ( 11.0 ) Recorded tax expense $ 109.4 $ 204.2 $ 187.9 Effective tax rate 20.9 % 19.8 % 19.3 % At December 31, 2022, certain foreign subsidiaries of the Company had net operating loss carryforwards of approximately $ 27.2 .
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In millions, except share and per share data) The difference between tax expense and the tax that would result from the application of the federal statutory rate is as follows: 2023 2022 2021 Statutory rate 21 % 21 % 21 % Tax that would result from use of the federal statutory rate $ 203.1 $ 109.9 $ 216.6 State and local income tax, net of federal effect 30.1 5.2 30.5 Varying tax rates of foreign affiliates 6.8 2.9 2.6 Valuation Allowances 0.0 ( 4.1 ) ( 8.5 ) Stock Options Exercised ( 21.8 ) ( 5.2 ) ( 29.0 ) Reserve for Uncertain Tax Position ( 0.3 ) ( 0.9 ) 0.0 Other ( 6.1 ) 1.6 ( 8.0 ) Recorded tax expense $ 211.8 $ 109.4 $ 204.2 Effective tax rate 21.9 % 20.9 % 19.8 % At December 31, 2023, certain foreign subsidiaries of the Company had net operating loss carryforwards of approximately $ 9.0 .
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