Jim Craigie - Chairman and CEO Matt Farrell - COO and CFO Bruce Fleming - CMO Louis Tursi - EVP.

Analysts:.

Good afternoon, ladies and gentlemen, and welcome to the Church & Dwight Fourth Quarter and Full Year 2014 Earnings Conference Call. Before we begin, I’ve been asked to remind you that on this call, the company’s management may make forward-looking statements regarding, among other things, the company’s financial objectives and forecasts.

These statements are subject to risks and uncertainties and other factors that are described in detail in the company’s SEC filings. I would now like to introduce your host for today’s call, Mr. Jim Craigie, Chairman and Chief Executive Officer of Church & Dwight. Please go ahead, sir..

Thank you, and good afternoon to all of you. It's always a pleasure to present here in the center of global capitalism, in the New York Stock Exchange board of directors. So we've got a fun day today, hope you enjoy your meal and we have great presentation, Matt and I will give presentation today and then we'll take Q&A.

So my legal bugle in the room, my general counsel say they have to open up the statement about Safe Harbor statement. They say that we have some forward looking comments today, if you believe anything then buy the stock, it's your problem, okay? The agenda, I'm going open up with some remarks.

For those of you, the short attention span I'm going to give you six point that are going to be made today to away with. I'm going to then tell you the ten top total shareholder return drivers that drive our company. Matt will then talk about the fourth quarter results and the total 2014 results.

Matt will also then get up and talk about our 2015 outlook, then again at the end we'll take some question from you and to our best give you some answers. What you're going to hear today, okay so here is your New York minute coming up.

Number 1, we had excellent 2014 results we delivered 8% real EPS growth despite headwinds and we achieved share gains on all four of our mega brands. Two, we exited the year with very strong momentum, we had 5% organic growth in Q4 and we’ve had the highest growth margin of the year.

Three, as we always do we’re playing to win in 2015 with a real aggressive but achievable plan. We have very strong new product pipelines I believe as strong as last year and we also have a great start with retailer acceptance and we have continued focus on growing our four mega brands.

Four, unlike many of our competitors we have minimal exposure to international headwinds less than 10% of our revenue is outside of North America and 8% EPS growth target, we have includes the 2.5% foreign exchange headwind. Many of our competitors are facing double digits headwinds and we’ll talk about that later today.

Number five, we’re returning cash flow to shareholders raising our dividend to 8% that’s high about 40% payout which is our goal and we have a new $500 million to our share authorization to continue to allow us to buy back shares.

And number six, don’t take that share buyback as any sign that we’re backing up an acquisition, we’re still aggressively pursuing acquisitions. We make two small bolt-on acquisitions in late 2014 and we have $2 billion of additional purchasing power ready to exercise at any time.

So there is the six points, those are a nano second [attention span] , you’re done, otherwise those of you want to pay attention to hear some really great news coming forward, stay tuned here we go.

All right, total shareholder return, you know I’ve told you for my 10 plus years during to this company, we are all about total shareholder return that’s we care about most. Our investors love it or non-investors keep missing the boat on this company let me show you why.

My favorite shot of the day this is how Church & Dwight consistently and significantly outperformed S&P 500 whether it’d be one year 2014, the last three years 2012 to 2014, the last five years or the last 10 years you’ll see our results there.

And I think a it’s kind of interesting, its 21% for one year, 22% for three years, 23% for five years, and 18% for 10 years and when compare that to what the S&P 500 did over that timeframe and you’ll see a significant difference across the Board.

This is important within our industry you’ll see how we stack up against our major competitors, we are number one across every one of those timeframe in the total shareholders trend we delivered, so we’re very proud of that we aren’t just a one year wonder, not a three year wonder, not a five year wonder and we are a ten year total time spend here of outstanding results being everybody, every major company in our industry.

Great numbers, great results but that’s all about history, what about tomorrow. That’s why we’re here to talk about the future. And I am going to tell you ten reasons why we believe we can continue to deliver superior total shareholder return results.

Number one, this is a little different, in the past number one used to be we have a recession resistant portfolio. I’ve changed the tune to mean we have a resilient portfolio. Let me tell you what that means. That means we have a product and geographic portfolio that continue to excel despite major headwinds on three basis.

One, we’re still recession resistant. Two, we have minimal explore to weakening foreign economies, and three we have minimal impact from foreign exchange rate. Let me tell put those numbers for you. First of all our portfolio is unique. Nobody else in our industry has a portfolio like this. We have 60% premium brands, 40% value brands.

Last year that was more of 55% to 45%. We’ve brought some couple of business we’ve brought were premium oriented so now we’re little bit more premium, but a 60/40 split. Why is it important? Don’t forget our competitors when they talk that they have value brands.

What they really mean is they have premium price brands with more benefits than other premium priced brands not for us. Our value brands offer a true economic value. You can see from this chart the different categories of these value brands they’re significantly lower priced than the premium brand.

Why is that important? This economy is still a recessionary type economy as consumers are still very value oriented. You see the shift the consumers from the premium mid-tier down at value and extreme value tiers. It’s still out there still strong. Look at the laundry category, our biggest category we are in, a $6 billion category more U.S.

households now buy a value detergents than a premium mid-priced detergents, so people love value, it’s big. The value tier has now passed the mid-priced tier being the number two tier in laundry detergents, that’s huge and it’s growing. People are still looking for great data and they learned hard lessons during the recession.

They still want a great bang for their buck. You can see Church & Dwight has been a winner on this. We’ve gained three share points in the value detergents 2009 and we’re now bigger the two, three and four players combined in the value tier. You can see a little guide in P&G has popped up now in the value of tier. We’ll talk about that more in a minute.

Church & Dwight is the only laundry detergent manufacturer reporting share growth since 2009 you can see our pro forma 3.5 share points. We are now second to Procter & Gamble and bigger than Sun. Secondly, about our resilient portfolio is we have minimal exposure to weakening foreign economies.

We’ve listen to earnings report from our big competitors their screening these numbers, don’t forget 84% of our revenues and almost 90% of profits comes in United States huge advantage right now.

Foreign exchange headwinds are huge, it’s 2.5% for us but if you referred in the past week or two a 10% headwind for Colgate, 12% for Proctor & Gamble I heard little over maybe they reported even bigger number. so these kind of phases [ph] I would challenge one thing today a lot of you have seen the reports are acting as if this is a one year wonder.

I don’t get that. Why do you think the U.S. dollar is apparently going weaken in 2015 or the foreign currency is going strengthen, but I guess with second question a lot of our competitors to deal with this are raising prices in the foreign economies, don’t you think that’s going to have an impact on their consumption.

The consumers in those marketplace don’t have more money and their competitors are raising their prices to offset some of these headwinds, hello if you don’t think it’s going to hurt consumption I think you ought to think about it again. Not a big problem for us.

Secondly, driver of our total share origin strategy, we have a successful megabrand share growth formula. Now that share growth formula is not anything new from competition.

A little bit of new products, we get to that increased marketing spending, increased distribution that leads to share growth, that formula hold a stone but we do it exceptionally well. First of all you can see since we created a new product team back in 2007. We have got a great track record on driving revenue growth for new products.

Today almost 40% of our revenues in 2014 came from new products launched since 2007. You will be a little bit surprised for this chart, we spend behind our products Church & Dwight despite be only a $3 billion, $3.5 billion company, small compared to other guys on this chart, we spend more on advertising than these major CPG companies.

So we spend big behind our product news. You take that to get a new products increased marketing spending and you get increased distribution.

The sales team did an outstanding job taking their product news and spending out to retailers, retailers appreciated, they give us more distribution, winning self is the first war you want to win out there in gaining share and we have done a great job across all of our major brands, sometimes on doubling pace since 2009 as we have laundry detergent and cat litter.

You put that all together and it leads the share growth. You’re keeping this chart going back to 2008, the green bars in the chart show share gains, the red charts for share loses, yellow is neutral. We have gained share and over 75% of the times over the last seven years.

Some of our competitors talk about gaining or holding share, no we don’t count hold share as a win, that’s just neutral we count gaining share, we have an outstanding track record, I don’t think anybody in the industry can rack up to this chart with 75% of the time growing share.

I would give the number to that don’t forget our aggregate categories last year grew 0.2% and yet we gain share and our organic growth was in the 3%, 3.5% range. That means we had to gain share to get there. So we are doing that.

You have to gain share and win and we are doing that, we have a great new products, our increased marketing spending and our great distribution results. So our past success was driven by nine power brands you can see in the chart. These power brands had 80% of revenues in profit.

You can see that very important the market leaders in the categories they exist in.

Retailers love them, we have great fight of the how many of the top selling SKUs start keeping use for the category are your brand, you could see from this chart in some cases all 10, in common detergent we have a top 10 selling comps category you can see all the way down there. We have very important players in our categories.

But in 2014 we said that again what the great strategy on behind the 89 power brands we got evolved it. We want to evolve with the more focus behind our four biggest brands that we call megabrands, the Trojan, OxiClean, the Vitamin brands and Arm & Hammer. Why, because those businesses do 60% of our sales and profits.

Those businesses have been the fastest growing businesses in our portfolio. Same formula, same formula on share growth there were new products, marketing spending, increased distribution lead share growth, but in this case the megabrands have an advantage. There is four reasons why you want to put behind them.

One, you get bigger bank and I would point out them as a bigger bank in marketing investment, two they have greater licensing potential, three you have a bigger bank if you research and development investment and four helps to keep organizational costs down.

What do I mean behind that? Look when you spend a dollar on the advertising behind a megabrand, and you do it smartly is grew strongly ahead of marketing here and gain view when you spend a dollar you will focus on one like and lot and Arm & Hammer and the laundry detergent we through the people here Arm & Hammer and it helps all forms of the brand.

And in fact this brand that we don’t do advertise specifically that are growing because they have the umbrella effect of the this advertising. So spending money behind a megabrand helps.

Now just the opposite I will take a one of our competitors Purex, which will be phased in laundry category, Purex is just a laundry detergent brand, and they spend a dollar on Purex it just helps only detergent doesn’t help anything else is nothing else but Purex alternative of the category. So being a megabrand spending behind is a big win.

We have entered in categories you can see we have taken our megabrands, taken the properties they have whether it’s utilizing, cleaning whatever and taken a five categories to grow those businesses.

Those four megabrands are 60% revenues but we see it 75% of our marketing spending why didn’t I just told you that marketing is the bigger bang for the buck and better spend is there. Licensing which is lot categories properties our brands are utilizing in that apply to but we don’t to get into it.

They are not our businesses, we don’t have strength but other companies have come to us other major companies have come to us and said hey if we put your brand the co-brand on our product it helps sell our product if we like it when we look at it we said it makes sense we do it.

It’s great for us just a 100% gross margin, we don’t make it, we don’t sell it we have the right to look at and approve everything, make sure it’s just done right, they make and they sell we get a licensing fee, they half the course and expand the breadth or brand in the store.

Second thing R&D real hard in doing so, but we are working hard and just one category you can’t seeing something to learn about the utilizing, whitening, brightening whatever to all these categories. When you have a megabrand you can.

You can take that property and might be laundry detergent apply other categories we have, if you get a better bank our R&D investment. Thee, the organizational cost we have just forms a typical categories separate brands just a separate brand in all them.

That’s a lot or organizational cost you will see that in my presentation we have the lowest organizational cost than any company in the industry, why? because we focus behind these megabrands to keep our organizational cost down.

You add that all up a lower R&D investment the bigger bank of the marketing spending, the greater potential, low organizational cost, you get more profits. That’s what it all about folks. I am not a capitalist, I am not ashamed of saying lets all make a more profits.

Okay, let’s talk about our example, Arm & Hammer our biggest mega brand, over a $1 billion in sales. Here is a brand that’s in over 12 different categories today -- 12 different categories. It’s in more aisles in the grocery store than any other brand in America. You walked down those aisles, you see the orange, Arm & Hammer was all over the place.

It’s both a premium and value brand. In the laundry category its value. In the cat litter category, baking soda, toothpaste as a premium brand so we expand all price segments with this brand.

This might surprise you, Arm & Hammer is much smaller than some of the brands in that chart up there, but yes we're one of the top-25 advertised brands of America. I bet you wouldn’t think of that. So we've spend good buck behind Arm & Hammer.

Our margin grew as the brand chopped in all forms of marketing whether it's TV, radio, online, in-store whatever. But the end result is who's the brand that goes back to 1846 over a 160 years old and in the last six years we've had a single-digit growth rate.

And how many brands that are brand new have a high single-digit growth rate and here because the way we're going to market the way we I just told about how we export this business we're growing the 10% categories CAGR over the last six years.

So and we don’t we stop no this tables little bit of innovation last year here's some of the great innovations we launched the Arm & Hammer Clean Scentsations laundry detergent, the truly radiant toothpaste, the Clump & Seal cat litter major winners.

That was the best laundry detergent launched since Arm & Hammer OxiClean helped drive the 20th consecutive quarter of Arm & Hammer share growth, the cat litter was a monster, absolute monster. We drove over $0.20 increase in our sales strengthened our position number two player in the category don’t forget we were not in cat litter.

We didn’t enter in the category that's old 1988 and now what 16 years later we're number two player with over 20 share grown over 20% with great innovations.

And the Truly Radian, a real tough category, oral care, we’re the number four player in the category against the big guys out there this was the best introduction we've had in a long time and we had twice the growth rate of the category because of this than our competitors did.

So despite competitive attacks it was a tough year we were attacked on all fronts by major competitors we still grew shares on Arm & Hammer.

OxiClean our next big mega brand when we really turned into a mega brand in 2014 it is one category laundry additive is number one brand bigger than next three brands combined second most advertised brand in Fabricare again Arm & Hammer in total above all categories bigger advertising but in Fabricare OxiClean actually spends more than Arm & Hammer, second-most only to the big guy in Cincinnati.

Loved by consumers.

This brand, I would tell you, from consumer surveys we take is more loved by consumer than any brand we have quite honestly I hear more I don’t know people when I tell them we own OxiClean oh my god the stories that come out of their mouth about OxiClean the great success they had in saving a jacket that was all done with stains and that people just love OxiClean they tell their friends about it.

This brings a great success since we bought it in 2006 great high single-digit growth rate. Again second most advertised brand is the Fabricare category so last year we said we have this tremendous property, this tremendous property stands for great stain removal, it’s in $1 billion dollar category but it can be bigger than that.

We took a bold move, you know what let's take this in the three adjoining categories. Let's take it right into laundry detergent. People have been adding as a laundry detergent what mega laundry detergent with OxiClean that’s a great stain remover. Let's take it into the bleach category and go right up against Clorox and that.

And let's take it in auto dish where again, stain removal in dishes is huge. So we went into three big categories making OxiClean a mega brand, great new laundry detergent over 80% of the business we got was incremental with 1.0 shares somebody said 21.0 don’t think that this is a $6 billion category that we got a one share of.

Secondly, we went into the bleach category, Lou Tursi and his team, we got distribution in the bleach category we never been before achieved a 2.2 share and over 65% of business that was incremental to our existing business.

Three auto dish super tough category two big competitors beat their brains out all the time, we got great distribution and achieved the 2.0 share we exited the year as number three player having past Colgate-Palmolive brand number three in the category.

So very happy we increased advertising by 66% behind this business it's a great holistic marketing campaign on all points behind all the new products as consumption as a total went up 26% in 2014 OxiClean we are very happy.

Now I will tell you we're treating 2015 as a second trial year behind these forums we're not going to back it off going okay we're back into let's just say we're still full speed ahead on Oxo’s mega brand we're going to spend just as aggressively in 2015 on this brand than we spent in 2014.

Trojan our next mega brand I think is a business we bought in 2001 here's a very strong leading share of the common category in 2005 we make this into a mega brand, we launched in the vibrators 2013 went in lubricants so today we have a mega brand covering all those segments this brand has delivered nice penny share growth overtime out with a brand new condom, brand new vibrators, brand new lubricants and a record annual sales and record annual shares you might have seen New York Post today ran an article, the movie Fifty Shades of Grey breaks on February 14th if you go to a movie theater and watch that I know you all will you'll see some ads running before the movie think you'll have Trojan in them so stay tuned we're taking advantage of something that’s right up our ally and dealing with this brand.

Our fourth mega brand the vitamin business that we bought just a few years ago we bought this in October 2012 we saw the beauty in this a lot of our competitors looked at this and said while it's 3% of the total vitamin business they said who want the 3% player we looked at it and said yes 3% but it's the fastest growing segment of vitamins in the gummy vitamins huge opportunity already 56% of kids have got vitamins when we bought were gummy but only 3% of adult vitamins were gummy and then in adult category is a $7 billion category 21 times size the kids category so we said there's the opportunity keep the kids business keep it growing if you can but go after the adult category and the brand was at that time and still is number one gummy brand for kids and adult.

We got a growth rate on that one again we did note in 2008 but since 2008 tremendous double-digit growth rate in this business we want that with new innovations we took multi vitamins and added some benefits to it for both the adult Vitafusion and the kid version L’il Critters.

We increased advertising support 35% last year and had great results we built the number one share position for kids and adults and Vitafusion again the key focus we had on the adult side had double-digit sales growth all 12 months of 2014 and still tremendous ops by there.

So as the year goes down we launched double suite of new products early year spend heavily behind it and then the markets for chicken in Q2 in that you can see we built momentum across the year, so really good, exiting the year with good organic growth.

So our 2015 plan reflects continued focus behind those four megabrands, major new product launches in every one of them on the table suit today, Matt will give you the details in a few minutes. 75% of our ad spend we spent behind those four brands on our portfolio.

As I said before we’re going to continue and the dish wash particularly in OxiClean to expand the rest of the megabrands in 2015, and again Matt is going to come here for few minutes to give you the detail behind the great new products.

Number three, of the 10 reasons why I believe we continue to deliver great total share return, we firstly defend our brand.

Great example is OxiClean, we launched this business since 2006, we launched the new products, increased the advertisement in 2009 was up to 40% of the category, it's a great new product we launched in that timeframe, we increased the marketing spending by 400% net timeframe.

And then the big guys in Cincinnati said, you know what they had a little stain pen in this category but they said why don't we have a bigger piece of this billion category. So they launched a new their big name into laundry additives with powder forms and liquid forms. We just step back and say we're dead, no.

you step back and say we're not going to give up to this category, with whole bunch of big new products, with co-branded on other parts on our portfolio to expand the breadth of the brand, its presence towards consumers, increase the advertising of the brand, again the number two most advertized brand in the category as in the day look what happened.

Not only did we lose share, we gained share. And the big guy in Cincinnati and other competitors were pretty big names too you can see there, lost share. So we despite being the smallest guy in that chart in terms of size of business feed them all back. Now the story wasn't over, the big guys said, let's do it again.

So they came out in 2014 as you all well know, was a laundry brand taking their big brand name down on to the value segment. So we sit back and say we're dead, the game is over, hell no. We came out with a great new form of Arm & Hammer called Clean Sensations, I told you out before, and we went upscale. They went downscale we went upscale.

We brought up the OxiClean laundry detergent. We increased our advertising and trade spending by 5%, this is the category we already spent a lot of money and we increased it even above that. Look what happened here. Yes the big guys in Cincinnati gained some shares but we gained share too, and the other two guys lost.

So as I said, we ferociously defend our business and we're not going to give up share, in fact we're going to gain share. International growth has been a nice little part of our portfolio too. International in 2001 was nothing in this company and then we brought Carter-Wallace and we bought some of the businesses.

Today it's about 60% international includes Canada and Mexico, so when I say North America sometimes misleading. But international today is about 60% of our portfolio. Basically in the six countries it was 95% of the business out there.

We had great results over time, some of these countries that really struggled with their economies, we had great results over time in these economies. The fact in 2014 overall we did 3.3% organic growth; we exited the year with 7.4% organic growth. So we have a great business Steve Cugine, Head of International couldn't be today he had flu.

But he and his team are doing an outstanding job in very tough situations out there. What helps us do that? We've some local brands, call international power brands, some of these countries are number one in their category. We're also trying to expand our U.S. brands, our corporate power brands in these countries.

We're also are building scale through acquisitions, we brought some cool businesses like Batiste which is a dry shampoo on the table here number one dry shampoo in the UK growing double-digits.

And we're taking other international countries and we're leveraging our one company strength, whether be R&D, operations sales, whatever across all of the functions in these countries, so great shop.

Gross margin number five, great story here we had 800 basis points of growth margin expansion from 2004 to 2014 that far exceeds any of our competitors on the chart there, most of them in fact haven't even grown they've gone backwards on gross margins.

How do we do that? We have a good [degree] we rip off the book the cost optimization that covers everything from these formulation reducing packaging, Mark Conish our Head of Operations here today and his team is doing a great job there with Paul Siracusa the Head of R&D.

Supply chain is structurally built and invested a simple amount of money in some new plans to be more efficient both in the Pennsylvania and California. Acquisition synergies we do like to buy higher margin businesses in house then knock out cost on top of that by bringing into our plans.

And then last thing we like to launch, we launched new products higher margin new products. So that's all behind the grade when we set our new products, also gross margin. This is unique, I know of only one other company in our industry ever made that has gross margin as part of this company's bonus targets.

Before that additional stuff, 25% of my employee's bonuses come from hidden or gross margin target. That's huge and that's tough. That's tough when you are dealing with commodities that are whiplashed back and forth.

So it's a big driver, 100% of the people in my company look at gross margin every day, that does not happen with other companies, not part of your bonus target many times the marketing guys they don't give a damn about gross margin, its operations. My company is everybody's problem, everybody works on it.

Again we've had programs driving it behind with the long way I am sorry. Now 2013 we had a great year with 80 basis point, 2014 as we told you at the start of the year we invested heavily to launch a record number of new products and we have some price wars going on, backwards in 2014.

But the good news is we exit the year with a 45 gross margin exactly where we were in 2013. So we’re headed back to the right direction, we're calling gross margin improvement in 2015.

Track record of acquisitions has been outstanding, I think you know we're known for this, we’re very specific in what we look for, we look for number one or two share brand, we look for higher growth, higher margin brands as we brought, we look for asset life, that means we don't like to buy businesses that have a large number of plans for big headed quarter things like that.

We like business as we take them out and leverage our capital base from our plant from our headquarters and deliver sustainable competitive advantage. The track record has been great, much of our -- good part of our growth has been driven through acquisitions.

You can see there the brands we had we brought eight of them since 2001 so big reason behind our good growth. We take those brands we don’t sit down on them we grow them. As I showed you with OXICLEAN before we take and we invest behind and we launched new products and we’ve grown share at every one of the businesses that we have purchased.

We have had total bolt-on late year one Lil’ Drug Store had some feminine care businesses and we get into our women’s health businesses great acquisition about 50 million in sales.

And VI-COR believe it they were not we bought business in the specialty product area that’s hit in right with our specialty products portfolio about $25 million in sales they are small accretive, their growth margins are accretive to our company growth margin, their sales growths accretive so we’ll get some nice accretion from these businesses in 2015 not much but nice little bolt-on.

We love something much bigger I would tell you we’ve ever spent more time in a year that we did in 2014 shaping acquisitions, the right one just didn’t happen but yet but we’re still working hard on it and we have a lot of money. We have $2.5 billion with dry power to grow up make acquisition which is plenty big.

Best in class free cash flow on conversion this is we’re made and Eric Drucker do a great job, we have outstanding numbers so we’ve increased cash flow almost 200% since 2004. We are the best in class. We do a ratio of 119% of net income in free cash flow.

Look at the rest of the guys in that chart some get close but nobody beats us, outstanding numbers. And we’ve increased our dividend steadily almost 500% since 2009 and in our goals we have about 40% payout and we’re ready to get 8% this year. Overhead management this maybe something I kind of find interesting, I always had an attitude in house.

We started as a small company we’re still the same, a lot of our competitors are big companies all here about restructuring charges, restructuring charges, restructuring charges kind of excuse me pissing away their shareholders’ money.

You can see from this chart that’s I am very proud of we’ve more than doubled the revenue base in this company and yet we have hardly increased that all less than 10% number of employees going up led to our 300% increase in earnings per share, asset up in chart.

I mean most companies who were doubled their size and revenue what can be close to doubling their size and employees it is bringing the people they hire of the companies they buy at amount. We don’t -- we largely buy the company get rid of most of the people and leverage our people and households on the businesses.

As a result we have the highest revenue per employee of any major consumer packages company. We shouldn’t win that war. These guys are huge. Look at their revenue base versus us. They should blow us away with $22 billion brand, this will easily beat us on revenue per employee but they don’t because we keep such a tight employee base.

And as led us to low S&G at percent of revenue of any major CPG company, this is again everybody wants to get to be like Church & Dwight we’re going to keep down, so they’re going ahead of keep chasing us, so lots of good stuff. And this is where we do walk to walk on type overhead controls. I wish I had a company car I want to go back in that.

I wish I had a company car. I wish I had a company plane. I wish I had a golf club membership. We don’t do that. We never have done that. We don’t believe it’s our right and one of the companies that takes shareholders money and spend it on Wall Street from that so what we’re very tight on managing our overhead.

Last but not least a very of the expert management team we have the people who our strategic business units, there is eight of them, are lifers, I tell them during that job for the rest of your life and they’ve averaged they’ve 24 years of experienced in the industry and those things like that people who know the business goal. I don’t move them.

I don’t say the person running women’s health and go them put them in the laundry business and swap around. I think that’s stupid. Why just somebody who runs women’s health or the sexual health business, Trojan going to be come us as expert on laundry detergent you’re wrong move people we don’t move the top people around.

As a result they know their businesses so that’s why the share results are still great that’s why 75% and we grow our share we know our business’ goal and also maybe losing minimize headcount.

I grew up in another company where I was moved every two to three years later I had to have people big staff teach me to the business and teach me all about the business and two and there deliveries I’d move and they taught the next person about next business, sort of like Congress. We don’t do that.

We have experts running our business they don’t need a huge staff and tell them what’s going on teach them about the business, so we were able to minimize headcount. We also therefore execute great. A lot of people know what works and what doesn’t work in driving share.

They don’t come in new business new to the game and all of sudden something that’s tried 10 years ago and failed but they didn’t know. Our guys know that. They don’t make mistake. They execute superbly across all functions and then the acquisitions wise they don’t think it’s bored running business just along, so last point is it’s the secret.

I’ve given new businesses we have acquired so I just gave the two new businesses we bought the Lil’ Drug Store brand to the woman who run our women’s sexual health business. She is now running that business now for 16 years. But now she gets these new acquisitions so I gave her that. I gave her Batista few years ago.

They loved it more business as work down and should we run those businesses for the rest of her career and sure she likes, but it’s great to be an expert of those businesses. That’s a really crucial point. I hear some of competitors now changing their tune and star to keep their people longer on businesses while yes, make sense.

I mean why take person just they get really a business they are moving to something that’s wholly different, it makes no sense to me, we don’t do that. Last but least kind of a summary of everybody up here, we are total shareholder return junkie.

The number they speak for themselves across every line of the P&L how much we’ve grown across everyone industry leading numbers and there is my favorite chart.

I think we’ll just stop here today and just admire this for a minute and seriously folks this why we’re right, are you here today where we one or they had award of year, best new Super Bowl ad? Are you here today to learn it. We are the best new product of the year. No, you are here today because of that chart.

You here today to picture Church & Dwight stock recommended to your people to buy your companies and tell we’re worth more than $65 share and move us on out there it’s a thing. So there is the result industry leading numbers across the Board. There is my great team.

That was shot a year ago will be ringing the bell at 4 o’clock today up there and I am really proud of it. So last but not least we take two, our bonuses somewhat unique, our bonuses are tight rate to drive total shareholder return.

Our return on bonus is tied to those fourth factors 25% of its tight hit the net revenue growth number, 25% hit the growth margin expansion number, 25% the EPS number 25% free cash flow everybody in the company me and down I’ve on another Board another companies where the chairman has one set of targets the CEO has one set of targets and it changes.

You can’t have that, we have a lined up, everything that company has the same targets, the same numbers, that makes us all work together in same way. Our equity, number two is the 100% stock option, very unique in this industry. Other companies have restricted stock, which is free money. You get it no matter what.

In our company if that stock price doesn’t go up the day you get the stock option, it’s worthless. So we are very incentive on driving the stock price. It’s what our equity is based on. And we required to heavily invest in the company in the stock price. So we live and die Church & Dwight.

90% of my net worth is tied up in Church & Dwight stock, believe me I look at it every day, as I can look at right now. We will do okay. So, last but not least here, here is Matt. .

Okay, hello everybody. I am going to talk about some numbers now. I will start with the fourth quarter. Just going to roll down the headlines. So you can see that we had a fabulous quarter from an organic standpoint, 5.2% highest for the year and I am going to show you the progression of the quarter is in the second and largely driven by volume, 4.7%.

And then our gross contracted 20 basis points, we actually had expected expansion in the fourth quarter. Couple of things happened to us, we have a little bit more FX contraction or FX closing contraction in gross margin in the fourth quarter, and also had a mix issue because our friend in a specialty products business had another stellar quarter.

There were lower gross margin than the other division. Then our operating margin up 130 basis points. We also expected that to be higher but you probably all noticed that our marketing spend in the quarter was 13.8% and in our third quarter call we expected 12.2. So we elected to dial that up in the fourth quarter behind our brands.

And as you can see, we head our expectations by $0.78. So it’s a little bit more color on the divisions. We see domestic 3.1%, international 74 and the specialty products business 20% I was a bit over surprised. So we came out a little over 5% for the quarter. Now you should look at that in context with what we are calling for next year.

So you read in a release 2% to 3% and say while seriously had an awfully strong third quarter and fourth quarter, so that’s up with the 2% to 3%. So, the way to think about that is specialty product business had a stellar year. So everything went right, clean lights all the way. So that’s not going to happen again in 2015.

So we had an all-time record prices for milk in 2014, the $24, guess where it is today $17 today. So the dairy industry will still be profitable in 2015 but not as profitable as it was in 2014. So specialty products should expect in the come way down to earth and be more over 1% to 3% grower in 2015.

Going up to page international 7.4%, so before we get giddy about that, let’s remember what it was in the third quarter. So third quarter international was up 1.7%. So, that can be a very lumpy business, so that’s now represented above the run rate for international.

And keep in mind that our two biggest subsidiaries are Europe and Canada and can expect that those areas are going to be growing significantly next year. Consumer domestic and a full basis was 2%, in 2014. So next year we are expecting 2% to 3% for domestic.

So when you weight those altogether you come out with 2% to 3% for the business and that’s how the math works. Specialty products 1 to 3 and the other two businesses you can expect 2 percentage to 3 percentage.

Okay, here is the trend throughout the year, so you can see we are generally volume driven business, so we are average between 4% and 5% on a full year basis. So there is a trend that Jim talked about.

So we finished the year super strong but again we call next year 2% to 3% for quarter 3% and the first quarter next year will be highest quarter for trade, couponed and slotting. And there is a gross margin progression as well. So highest for the year in Q4 expected to be a little bit higher but we are happy with the result of 45%.

And here is marketing. The 30.8% but that as the surprise I am sure to a lot of people how much money we spent and the difference on a full year basis if you spend 13.8 and we expected to spend 12.2 in the fourth quarter, that a 150 basis points more than we told everybody in November.

So that’s 40 basis points hit to operating margin on full year basis, so it’s kind of simple math. So now let’s go to full year 2014. So full year 2014 you see 3.5% organic sales, 4.4% volume, so it’s a volume driven year.

Gross expected to be down 50 basis points, marketing up hand to 12.6% and SG&A by 2014 we expected to tighten our belts in order to fund the wards and trade worse in 2014. That 90 basis points down on a full year basis, for gross margin contrast with what we said a year-ago. We expect a gross margin to be flat in 2014 it was not.

So that 90 basis points down reflects the price was in 2014. Marketing you can see 12.6% that’s the good news and we actually 12.5 in 2013. I am going to show you the trend in a minute. And Jim said we upgraded overhead management, SG&A was down 90 basis points to 12.1. You might ask what are some of the contributors to that.

Obviously, we have significant headcount control.

We've also said in the past that we've invested in systems in order to make our people more efficient and one of the other unique things that we did in 2014 is we moved to a private exchange for medical and dental cost and unlike lots of other companies our average constant claim per employee actually declined 8% in 2014 and that is way out passing on cost per employee.

So it was a win-win for the company and for the employees. Just rolling down the page you see free cash flow of $470 million that's a record for us and free cash flow conversion 113% and we've averaged about 118% free cash flow conversions for the past five years.

Now we'll talk about shares so you can see in full year 2014, 6 of 9 power brands grew share, 3 did not you can see the red one is up there first response, XTRA and Spinbrush, we think that's a great record and these cash conversion cycle so as you know this is a real good measure of the discipline within the company.

And so we keep a lid on the cash conversion cycle you see the math up there the upper right what the calculation is [DSO plus DIO minus DPO] so again a very result and then here as we talked about earlier it's a $470 million of free cash flow.

So one thing we should be aware of it because that's after CapEx and our dividends on an annual basis are about 170 million.

So we started with 470 you say okay, I’m going to subtract the dividend with 170 million so you get 300 million you're going to add to that $50 million that we normally get from option exercises and you're going to see the $350 million available to us after CapEx after dividends on an annual basis so we are a cash generation machine.

And we've a very strong balance sheet so generating that kind of dough $350 million of free cash flow after CapEx and dividends that grows overtime and then on top of that we have an unlevered balance sheet that's why Jim is always telling you we have tremendous firepower and a great ability to acquire businesses but again we're very fussy about what we're going to acquire.

And we're declaring 8% dividend increase so that's commeasure with our EPS call for next year 8% EPS growth and 8% dividend increase. Pretty proud of that up 114 consecutive years of dividends and again our target payout ratio is 40% probably a little bit ahead of that, probably around 41% right now.

So now we're going to talk about 2015 and before I get into the numbers as Jim said let’s talk a little bit about what our new products are if you want to study these charts carefully. So 2014 the year we just ended was our biggest year ever for new product launches and we had a great line up for 2015.

So building on the success of Clump & Seal, Truly Radiant and also OxiClean so we're going to start with Clump & Seal. I guess that was our most successful product launch in the litter category ever so that category actually grew 8% in 2014, our share grew 290 basis points through 22.9% share right now and the Clump & Seal brand alone is 7.3% share.

So we're moving into two areas now in 2015 with Clump & Seal; one is lightweight. We are the third entrant in there. You already have Clorox and Nestle and we're actually moving it to natural so we're definitely building on the strength of that Clump & Seal brand in 2015.

So now let's go to Truly Radiant where Jim talked about that as well so that was a very successful new launch for us in 2014 so now we're taking it into two new areas where we're not today on the left you see manual toothbrush in the middle you see rinse and on the far right we have a new variant of Truly Radiant toothbrush.

So let's start on the left hand side of the page so manual toothbrush is a $700 million category and it's growing 6% annually.

So our point of differentiation here is we have a rotating head on the manual brush, after lots of consumer test and the consumer scores are extremely high so we think we have a point of differentiation in entering that category. Rinse is next. Here is old category 1.4 billion also growing at 6%. We’re not in this category today.

We're going in with a rinse that is alcohol free and I was going to say drug free and peroxide free.

So you probably know that both of those are causes of sensitivity in tooth and gums so again we think we have a great point of differentiation entering that category and finally, Truly Radiant so Truly Radiant successfully launched in 2014 coming out with a different flavor in 2015 just to build upon our success in '14 so next we have White Revive.

You talked about we entered the bleach category in 2013. So very successful and we have a 2.6% share right now in bleach.

So this is the logical expansion for us so we're coming out with a liquid form of the additives you see that in the middle of slide and we're also coming out within White Revive laundry detergent so that'll be showed in the detergent category again building on 2014 success.

And now I'll talk about gummies so we had a very successful gummy acquisition that we acquired in 2012 so now we're pushing out into another brand so you recognize first response as one of our powerful power brands and this is our women's heath brand through leveraging that equity in 2015 by coming of the prenatal vitamin.

We already have a Vitafusion Prenatal vitamin is going to be added to the business. And then we come to Odor blasters. This is another point of differentiation for us. So, a focus on odor removal here. And we an exclusive formulation which neutralizes odors.

And that we're going to bring that into two forms of products, you see on the left the Arm & Hammer with OxiClean detergent well that's also going to be with odor blasters, and OxiClean our base OxiClean we're going to have a variant, it's also going to have odor blasters. So bringing some innovation in 2015.

So fresheners and boosters, you wonder what is that? Well that is a $290 million category that we're not in today. And since then we had a very successful launch of creams and facials, in 2014 the fragrances identified as Clean Scentsations for Arm & Hammer detergent.

So what we're doing is we're taking those fragrances and we're entering this category in 2015. So we have high hopes for that. So now let we get to some numbers. I'll take you through the 2% or 3% organic sales already due to the components of that. The gross margin is the next story, so 25 basis points up in 2015.

So that breaks down as follows; we actually have a 75 basis point help in 2015 coming from three areas. One is commodities, next is Good-to-Great program which Jim mentioned earlier and the third is a normalized pricing environment. So that's where we would be up in 2015 but we have some things going the other way.

So 50 basis points headwind from currency and also a new plant that's coming online in the first quarter. So just remind everybody that we spent $60 million on building a new vitamin plant in York, Pennsylvania that's going to come online at the end of the first quarter.

And what we have to do with in 2015 are startup cost and we have to grow our way into all the additional fixed costs that we added to that business. So that capacity and the growth is on the comps but for now we have to deal with the drag from that. So we got 75 up from the three factors that I mentioned.

And going the other, that's how you get to your 25 basis points of gross margin. Marketing at 12.5% I’m going to show you a chart on that in a second, so you see a lot of consistency there. We've often said that we spent 12% to 13% on marketing on an annual basis, so that's right in the middle. And as we expect to get some more leverage in 2015.

So the way you get to 50 basis points of operating margin is 25 from gross margins, 10 from marketing which is 12.6 in 2004, and another 15 basis points from SG&A, so that's us 50.

And then you cut the EPS, so EPS ex-pension charges 7% to 9%, just want to remind everybody that we're re-risking the company, we've been getting out of our defined benefit plans. So back in 2010 we got out of our U.S. pension, we terminated the plan, we've taken $0.11 charge back then, this is our Canadian plant.

So we have a $0.05 charge, we're going to take probably in the second quarter you're going to see it and we're kind of looking through at. As you know we're kind of curious when it comes to reporting numbers, so first actually call something out separately, but we're consistent with how we go with the U.S. pension termination.

Currency-neutral EPS, so you know we have 7% to 9% EPS growth but we also pointed out that we have 2.5% drag on the bottom line from currency. So on a currency neutral basis if you pick the midpoint of this 7 to 9, you have a 2.5% from currency you have 10.5%.

And then share count, what you should use for full share calculation is 134 million, what that assumes is that we would spend about approximately half of the $500 million authorization that we announced today. So that is math, so let's get some context.

So here's just a look back at our evergreen target of 3% or 4% for top line, this is how we've done over time and we can see recalling through the 3 in 2015, the marketing spend, you're not doing this for many CPG companies these days and as consistency is supporting the brand equity.

So we've been around 2.5% now for the last couple of years and we expect to be there again in 2015. And here the EPS growth, you could see we had a consistent double-digit growth for many, many years up until 2014, obviously 2014 we ran for the price rates and were 7% to 9% for 2015.

And here's the FX story, this was included as it seems to be a lot of discussion with respect to multipliers and ratios and comparing what's the top line versus the bottom line. So you can see 2014 we kind of laid it out for you there 50 basis points to the top line and 1.8% to the bottom line.

We see very different story for '15 that EPS stayed at 2.5%, you would expect to be a lot higher, one of the things that is gone on our favor is we actually hedged the currencies early for 2015 otherwise that number would be far higher than 2.5%.

And capital we raised, we generate so much cash flow we don't have a big investment spend respect to CapEx and you can see 2015 is very much like 2014 about $70 million, and for prioritize uses of free cash flow, so remember one destination in our company where free cash flow is going to be acquisitions.

So we’re very deliberated about the order that you see up there I won’t read it to you but you see with respect to number four, we announced today we’re on 80% of dividend increase and a $500 million share buyback half of which we expect to use in 2015 and now we’re going to do some Q&A..

Thank you guys, I don’t know if we can ask from the broader leadership team or questions just for you guys..

I am sorry. I leading my leadership team up here Bruce Fleming, Head of Marketing; Jacky Brova, the Head of Human Resource; Mark Conish, Head of Operations; Pat de Maynadier, my General Counsel; and Louis Tursi, my Head of Sales; and [Ric Trukcer] who is our number two guy in Finance.

So we will try to see if we can feel this now we’ll talk into one our specialists here who’d been some key drivers behind the company..

Perfect. I'd actually like to hear from the specialists first, if that's possible. A question for you, Lou. You've lived through lots of environments out there. Right now a lot of us are looking at oil prices down, we're expecting resin prices to roll over. Now you told us you're banking on more of a normalized price environment as we go through 2015.

So, Lou, in your experience, what do you see when input costs start to roll over? What are you expecting in terms of competitive intensity, trade spend, demands from retailers, et cetera? And, Matt, if we do see more pricing pressure out there in the market what offsets do you have throughout that P&L to absorb that?.

So it was your segment question?.

Your pricing goes bad how do absorb it?.

Okay with respect to your first question, I think one of the things I am sure everybody is tracking what’s happening with respect to how much you sold on deal in Q3 versus Q4 that was quite an improvement and if you look at so the four weeks end of January 17th I am sure everybody is going to look at that, that period looks a lot like Q4 rather than Q3 so that’s sort of early thinking with respect to..

The Q4 laundry detergent category was down only 1.9% the best time of the year and yet the trends are looking a little better, but I wouldn’t say that the world is over.

And Lou do you want add in?.

Yes, there is nothing much more to add then what you just said, so it has subsided in the back half of last year specially the fourth quarter. And we’re going in not knowing exactly where it’s going end up for 2015 where our company does an unbelievable job and react to whatever they do..

[Jason], to your second question, if things get hot again out there from trade spending as we did this year we have two levers to step on we would step on SG&A probably first and try to squeeze even harder and if we had to last resource we’ll step on the marketing volume.

I think Mat that comments just towards the end of his time, a lot of our competitors are cutting marketing spending in 2015.

They cut 2014 they’re talking about cuts in 2015, we’re not, but if pricing was a problem you can be wrong on price out there but hopefully pricing now is kind of stabilizing out in the marketplace and we’ll spend our advertising dollar and again if the trouble happens, we always have the S&G lever to pull, don’t talk my employee but we’ll put hard..

So Lou did you want to add anything to that discussion..

No..

Can you talk a little bit about the increase in the marketing between end of October, beginning of November when you gave us the guidance for the fourth quarter and what you actually spent, and where you saw -- it sounds like that was more advertising than promotion, but where did you see the benefit from that? Because it seems like in the fourth quarter the big upside surprise on the revenue line was on specialty, which you don't advertise.

And it seems like the first quarter is only going to be 3% top-line growth. So, I'm wondering how confident you are or how happy you are with the payback from that incremental spending..

Yes, just to clear to be clear the fourth quarter the five versus the three calls actually it was broad based that not just specialty was actually all three divisions did better than we had expected.

I mean that’s all you should think about, so it wasn’t a doughnut for you know what you’re saying if you take up the marketing spend, did you get anything back for that.

So remember the international business is a component at the consumer business and the domestic business also was up as well and Jim was correct where we put most of spend to kind of mega brands..

We at the end of quarter at about tweaking about 12.2 which is lower than our annual average and as we saw the quarter progress and things are pretty looking good, it’s a big quarter for brands like TROJAN, TROJAN really bit at end of the fourth quarter and things like that, it’s a big quarter for laundry detergent so we have the opportunity to go back and spend that.

We felt very good Bruce Fleming get his gang lifted the talk with the agencies. There was good quality advertising out there. So whatever we can and still deliver we promise, we went out there and spend the money and the organic results speak for themselves with a good quarter and we think it gave us momentum coming into 2015.

We’ve done that in the prior years too so the payback ratio is always -- we can’t even calculate that for another couple of months to look back and done things like that, but we always feel we have good return on the money and again the organic at the first time, organic was good, the sales results were good, 20% EPS was good so whenever we get a chance to support our brands, we did have the honest and we had assigned and some competitors were pulling back.

So it’s kind of competitive advantage for us to step up the gas and category we’ve faced competitors out there.

So we took those abilities to do it again only because we knew we felt we can make sure we can deliver the goal we felt for fourth quarter EPS once we felt that was pretty solid, we then lose put some money in the marketplace when we had a good chance for quality advertising out there, it was advertising, it wasn’t trade. It was advertising dollars..

Thank you..

Over here Ms. [Schmitz].

A couple questions, Jim. I think for the first time in probably five years you said you think the US economy is going to accelerate in the back half of the year. But you only guided to 2% to 3% growth in the consumer business.

So, how do you square those two?.

We’ll also get -- I do think [$2 gas] is going to be a good thing in the economy. It’s got to help out. But, again, if you look at our aggregate categories across the year, the 13 or so category look in the aggregate categories grew on the year 0.2%. Again we still delivered 3.5% growth. Fourth quarter little bit better was 0.6% growth.

So even with that we still count 2% to 3% of category growth. I will wondering where is this money is going. Hey we all saw Apple’s results, iPhone sales roof.

My personal belief the majority of the savings from lower GAAP prices, lower energy cost is going to go into more discretionary category, such as iPhone, such as digital game, such as restaurant sales and things like that. I don’t think people are going to rush out and buy more laundry detergent in two phase and Cat Litter and things like that.

Again we haven’t seen, okay, 0.6 was one of the best quarters we had in the fourth quarter but it’s not the old days for 2% to 3% category growth in that. So I am not going to step out right now and tell I see stronger category growth in 2015 which we haven’t seen yet. .

And then, Matt, can you just go through the gross margin guidance? Because this quarter you said you have this massive negative mix from specialty, and next year specialty is going to go to, like you said, maybe flat to 2% or whatever.

So, aren't you going to benefit from that mix reversing back out? And then on the commodity side, do you have hedges that are hurting you this year or are they even or are they beneficial?.

The first thing with respect to specialty, year-over-year. So if we said it’s going to grow 1% to 3% so it’s going to have big negative mix, but it’s negative it’s not going to a big positive year-over-year.

So it’s just a small so this year when you have business up 9% of yourself and it grows 20% it’s a big swinger that business growing up’14 to ‘15 to growing 1% and the others growing 2 to 3 it’s going to be a big over.

Sorry Matt, and what was the second question?.

The commodity stuff, just where your hedges are there because you talked about--. .

So we have lots of, we have seven inputs that are most volatile that we have talked about in the past. So we have just going to run to employee again. There is surfactants resin, paper is probably be your big three. After that you probably have palm fatty acid distillate and then diesel oil and then followed by Latex.

So we’ve probably got 6 or 7 right there. And I hate them all. As far as the hedging, diesel we have more hedged now than we were this time last year.

Some of you who read 10-K so you are going to pick that up you are going to see we are 60% hedged and this up for ’15 last year around 30% so we are sad about that, we put less hedges on diesel the good news is on currency is as is said we got ahead of that. So we are not having as bigger heard as you would expect on the currency line.

Some of the other ones that I discussed were not hedged at all, I won’t go into which ones, but on a fully loaded basis we are less hedged today than we were last year going to 2015 with the excision of diesel. .

Got you. And then, Jim, do you still think that VMS and OTC is a platform for you guys? Because I know it's been a few years now since Avid. And I know there's been a couple of little bolt-ons. But it's still a massively fragmented industry and it seems like there's so much stuff out there.

So why is it taking so long to get a more sizeable deal done?.

Bill, I think it is a massive platform by gumifying of the OTC world especially for kids. It’s a typical because you have to unlike vitamin where you have vitamin levels in that you put in vitamin you could eat the whole jar and it won't kill you.

When you are dealing with actives whether it's cough and cold or aspirin allergy medicines you have to have the exact amount active in the gummy and maintain the exact amount of active in that gummy for 18 months to 24 months, that’s the truth and that’s what we are trying to correct right. We believe we can but it takes time to get there.

So we can’t just unlike launching other vitamin which is relatively easy getting into the OTC categories is much more difficult and it’s just taking time, but we do see as a big opportunity. .

I'm buying. Thanks. First, just to follow up on the input cost question, I'm going to assume the reason why the benefit is mostly in the second half of the year is because of the diesel hedge.

So, it's that everything else starts to catch up in the second half?.

So it’s not just Steve, so I think all people would look at oil and so oil is down 50% therefore everything else must be down 50%, it’s not the case. So resin for example is down 10%. So it takes time for it to work their way through the supply chain and through the inventory.

So I think heard lot of CPG companies saying expect the benefit more in the second half than the first half. So that’s kind of diesel story, that’s all the inputs..

And at this point how significant? When we think about gross margin through the year, is it down in the first half and then up significantly in the second? Is it that sort of progression?.

Well we said we are going to be flat to year-over-year in the first quarter. So the 43.4% last year first quarter. So, no help in the first quarter so obviously the next three quarters are going to have to be bigger than a 25% expansion. So yeah. .

Okay. And if you could talk a little bit about the children's Gummies. You mentioned in the release that that business is a little bit softer in the fourth quarter.

So, just curious if there's any real color on why and if your competitors are finally waking up and realizing that this is a great product for them?.

I mean it’s very competitive, the children’s gummy section is very mature. So I think that the vitamins for kids took thirds of it is already in gummies, so is there is not lot of room there. So it’s super competitive. We are still the number one there.

We big a gap as we had before so in measured channels, L’IL CRITTERS is 28% share and Flintstones also the 28% share which is there, but that excludes COSCO and that's were huge in COSCO, so with COSCO we're sort of number one in kids.

But yes people have woken up two earliest competitors and we'd see a lot of the people are successful in gummies right in children's gummies coming with characters. They license characters. So that sells with kids where we don’t pay a license consequently we have a higher margin because we just have the L’il Critters.

But we haven’t gone that path with the characters..

But again we're more focused on adult for those 21 times of size of a kid category and $7 billion category with only 8% penetration of gummies right now. I just had my annual physical at John Hopkins a few months ago and I was talking to my doctor and he was asking about the business.

I told him we send we sell vitamins so I sent him a box of gummy vitamins.

And he just wrote to me back the other day his mother-in-law was in town that she tasted the vitamins she loved them so much she took on the bottle of gummy vitamins which is exactly what I've always said I dare anybody to try a gummy vitamin in the adult and if you don’t switch from your hard pills you're crazy, you're done.

Pass the microphone back there. .

Thanks. A year ago this time we were talking a lot about really intense slotting fees in the first half with all of the new launches. Matt, in your gross margin bridge I didn't hear about any pull back in that year over year, so I'm wondering what's gone on in that line.

And then just given the commentary around hedging, given where you are in FX and the timing delays in the commodities, holding everything else equal, does that imply you're going to probably have a 1 point incremental FX drag in 2016 that we should be thinking if we're thinking beyond 2015?.

Yes I will take that one first for FX so you're right. So if the fact that dollar stays strong for the next three years to four years then right from '15 going to '16 we would have a hit a bigger hit with this type of currency, but that is a broader issue for any multinational company.

So one of the things that tends to me that a lot of investors are not focusing on is when you look at EPS people say well, here is the EPS I'm going to add back local currency some are going to feel good saying well absent local currency here is my number, but as you pointed out if the dollar stay strong in three year to four year period the cash earnings of multinationals is permanently like depressed and we don’t have that issue because as Jim said 90% of our profits are kind of the U.S.

so yes we'll have some of bit of a hurry in '16 versus '15 but the good news is that our cash earnings will not be permanently depressed by strong dollar.

Your first question with respect to slowing, so yes you're right we had a lot of slowing in the first half of this year and I didn’t call that out separately but I did say was that gross margin would be up 75 basis points in 2015 for three reasons and it was commodities good to create in a normalized environment for pricing so it's all kind of motion in there and within that you have trade, coupons and slotting.

So there are a lot of variables coupons is a multiple of slotting. We did call that out last year because we were going after so much new distribution for OxiClean but the math is far more complicated than that so we're 75 basis points up from those three factors and then we had FX and the new plant 50 basis points going other way..

Okay, two questions. One we heard a lot about the four mega brands obviously getting the bulk of the resources, and the shares were well.

But can you talk about the five power brands that I think two of the shares were up, three were down? Can you just talk about how you manage those sales versus profitability just on an ongoing basis and taking innovation into the context of it? The second question is really on international.

I know you have some international power brands out there, too, but can you talk a little bit more about the nine core brands and any plans in terms of incremental distribution that's not out there already?.

Correct me if I am wrong.

But in the fourth quarter of the five other power brands three of them had share up two had share down the one with share down pricing situations one was extra actually which is our lowest priced laundry detergent has been hit hard by all the discounting going out there and we're fighting back and extra shares actually coming back and pretty much plus or minus now and then first response has been hit hard again by one of our competitors there's been a lot of deep discounting on pregnancy kits, so we're fighting back the share losses were minimal they weren't big at all innovation wise we're just as strong on those brands launching all new forms of products across those brands so I feel very strong but it's again we are putting more of a focus on the mega brands because the dollars family be a lot more brands.

But we haven’t cut back that much on other still planning appropriately honestly we haven’t faced as much competition on an advertising basis in those categories as in the past some of our competitors have pulled back an advertising going into price. So we're trying to find the right balance..

Bruce could you comment on our vigilance with respect to share voice and share market?.

Yes I would just echo what Jim said and also what by focusing in the four mega brands we flowed our marketing and media support against those brands to drive them but also against the power brands that had innovation in a particular year okay so you'll see us calling audibles from year to year and even within a year typically we pick our stocks where we think we think we have the best innovation where we have the most competition and then we'll spend there.

And add to Matt’s point over the years that I've been marketing I've really tried to extend it about share of voice to share market of about 200% index if not higher depending upon the category and if you are in wide space even more.

So, we really look at our media budget as one that we are not stealing Peter to pay a Paul on a day-to-day basis, what we are doing is we are trying to figure out where we are going to optimize return for the shareholders. .

I would just add to into two examples like Jim said if they were both specific examples of highly aggressive competitive pricing activity, in both those cases..

On vitamins, if gummies are such a great category, why is it still only a single-digit percentage of the category in the adult area? Is there more that needs to be done in terms of promotion, marketing, et cetera? Why isn't there bigger --?.

The best answer to that is answer the vitamin category is not heavily advertised category.

When we saw what happened a lot of competitors doing buy one get one free, they put lot of money in the promotion, they weren’t put the money in advertising so people just honestly were not aware to this day I meet people many adults I go to and say hey should we try a gummies vitamin actually my kids taken, I say no we haven’t for doctor like they have no idea.

So I think this year we increased our advertising spending by 25% or some like that this year, there is still sort of a very low base the business we bought. So it’s something we came trying to raise the budget, and we are starting the promotional competition and that. Centrum is in there. One a Day is in there. The money has started to come through.

And we do a lot of in-store trials, as I swear to god and he will be another Costco and things like that they got a pop gumming your mouth and that’s when like my doctor example, his mother-in-law, his 70 year mother-in-law taste the gummy she is like unconverted but she is never knew the exist before until I literally gave him a free bottle. .

I would add that demographic wins in our favor too, because a lot of parents who have been giving their children gummies over the last 20 years which relatively new form of vitamin is now they are rich in age and they are thinking what can we do for ourselves, as a further parents.

So we see great upside as Jim mentioned before on the 8% of the adult vitamin category is in the gummy form. So there is much more run way there. .

Something 3 to 8 in just two years. I mean that have seen like but that’s pretty big shift overtime. We want to get the double-digits in 2015 and keep growing.

So we are going to launching new forms stuff along, but the bigger thing is advertising and trials, driving trials because people just, it’s not a category like laundry detergent we spend a money it was never a big advertised category blame the competitors that it included company we bought they just a advertise at least the people does really won’t aware of it.

And the kids did because the kids wouldn’t eat anything but a gummy and no problem taking they will take the hard pills they are used to it, the parents switched the kids to the gummies the kid would not eat the hard pills so that’s why gummies popular with kids but this is right.

Our advertising target today is people who are parents of kids to ate gummies, because gummies because they are the like hey my kids and we find many times that parents were stealing the kid’s gummies out of the in the morning and popping a few, so that’s the case. We just got keep spending on the advertising keep driving the trial. .

Got it. And then on organic sales I'm still trying to understand the gap between Q1's plus 3% versus the full year of 2% to 3%, because you made the commentary on the press release about how you expect US to get better. You've got a lot of incremental activity dedicated towards OxiClean which is hitting the top line in Q1.

So, US is getting better, presumably you're taking some pricing in some of your international markets where you can, and slotting fees and all these incremental trade spending things should go down as the year progresses.

So, what's the delta there?.

The Q1 were same 3% but on full year percent 2 to 3. So there are two things one is Q1 authority has come so last year we were 1.4% organic. And they look at that is specialty products although all are going to 3%, they are going to coming like lion and act line lan.

So they are going to do fairly well in the first quarter but they are coming back down to earth in a hurry. So they won’t look like Q4 specialty products but abilities in the first quarter. .

There was an article I think today about some retailers being charged with selling product that actually didn't have in it what it was supposed to. Which we were wondering if that would affect your vitamin business at all.

Or if it's good for you because you can defend that, in fact, if people analyze what's in your vitamins they do what they say they do. Or if this is another negative piece of news for the category. I don't know if you saw the article. .

I don’t think something we're very on top of, we're very careful that we put exactly in the vitamins what we say I am not going to comment on the competition, but we are aware but our quality control as we have stepped up spending on quality controls since we took over the business.

The just to be clear that article by about urban products we don’t have in our product business and we to get something are products that we have couple of urban ingredient. So we are unaffected by that announcement. .

And then my second question just on product mix and the contribution of that to price mix and margin. If you see growth on your four power brands, mega brands, does that generally help margin? If you could just walk us through some of the big movers there..

That will generally held margin , almost all of the power brands growth margin is slightly above the company average, some within, Arm & Hammer is the complex one, Arm & Hammer has some forms that are below company average, some above.

It depends on that which ones are hotter colder at times but generally it’s a positive and TROJAN very high gross margin vitamin is little bit up company average another way to think about..

Another way to think about household generally has lower gross margins, personal care higher, so you got look at our house personal care growing. The second piece of it house international growing, so that’s largely personal care business going to help you think about where you going to get gross margin expansion from..

Mr. Travel came in late from Atlanta already there are some other more important companies we’re going do..

Did I miss the TSR chart?.

Yes, you do, you can come back..

I'll catch up on that. A couple questions on detergent. On OxiClean, I know you did go through it, but give me a state of state from you or Lou after the first year.

Was 1% share what you were thinking? Where can it go? Is it priced right in terms of within the grand mix? And do you expect increased distribution even coming into this year or is the goal to hold it? And then on the bigger category -- and I'm sorry if you did talk about compaction -- are we still on plan for next year for the next round? And are there any costs associated in the back half of the year to make that transfer?.

Yes, I would tell you and I’ll let Lou jump in. I would tell you OXICLEAN laundry detergent came into ballpark where we expected, don’t forget we launched right into the peak of math and price war, so that made us pull back on the rest a little bit. The brand built nicely through the year.

We’re going to again put continue trial level devices behind at this year to continue to grow share behind the business, so on down track it was set back by the price war which we didn’t expect that is the extended happened in 2013. So I know another year strong trial in OXICLEAN and then consumer feedback is outstanding.

The consumer comments we get and the surveys we take are just outstanding, so the products after delivery -- we’re this year making minor tweak to in some cases sizes and fresh points I am going to get into that kind of detail but we’ll make some minor tweak there we think to make the brand more competitive out there.

Lou do you want add anything?.

Yes, the only thing I would add Bill is going in 2014 we knew from the beginning that this is going to be a multiyear launch it was going to be a one hit wonder. And we needed to spend behind it over a multiple years.

Jim and Matt said earlier that’s exactly what we’re going to do and we’re fully guns blazing in 2015 again to help support that whole launch. We’re also introducing some new items and you asked how is the distribution going, it’s too early to tell we should wait here.

But we’ve been fortunate of over the many years Jim has a chart in one of his early ones how we’ve grown distribution. So the retailers have been very supportive of all and innovation over the years. And so we’re very hopeful that although it’s still early at that to support all launches in 2015.

On the compaction there has been nothing announced on compaction when the next round would be we’ll tell you our company would participate look forward to it, but I am not exactly sure it’s 2016..

Wal-Mart says in 2017 probably..

It’s out..

Thanks. Jim, when you look at the gross margin chart right over time, you cited, I think, 2004 until current in its really impressive gross margin expansion. But it struck me that most of that came through 2009. It's been extraordinary circumstances but since then the gross margin has been roughly flat.

So, I was hoping you could walk through and explain what kind of an opportunity do you see in gross margin over time? And where does it come from? Is it more M&A dependent or can you really squeeze more out of the Company for a while?.

You’re probably right since we’ve run a lot of price force and competitions since 2009 and that our goal is still long term to be 25% to 50% basis points of gross margin growth as we get start and we haven’t had a massive acquisition since 2009 of high level gross margin on that, but we still believe overtime we can gross margin on average 25% to 50% basis points, so that’s kind of our goal getting into there..

Right and remember we said earlier Chris is that personal care is where the higher margin is, so that’s where you want to concentrate your growth in the future. And acquisitions one of standards that it has to be accretive to the corporate gross margin and that has certainly helped us overtime and needs to continue where we’re going to 50%..

The only think I would add to it as Matt and Jim have said before that we’re enhancing our systems and so we’re looking forward through the systems enhancement how to improve our efficiencies within all levels of our spending trade coupon et cetera. So we’re looking forward other ways through enhancements of our systems moving forward..

Thanks.

Is there a brand in your portfolio today you see becoming the next mega brand? Or do you have to go out and buy one first? And, second, what's been the issue on the M&A side? Has it been all valuation or are there just not targets that are in your alley, effectively?.

I can’t answer the first it’s powerful based on some stuffs looking at one of our current other power brand looking mega brands possible, but I am not considering more than that.

M&A environment is very interesting we’ve been very active I think I’ve said to you I’ve spent more time and my team spent more time in 2014 pursuing acquisitions they never before. One of the reasons I made this switch and promoted Matt to COO was besides the fact he’s been voted the number one CFO for like five straight years.

He was get little bored. I want to spend more time looking at the acquisitions looking at the long term strategy in that and he was already running the day-to-day business anyway, so I gave him that promotion but allowed to me to spend more time with my team looking acquisitions. It’s an interesting markets.

It’s interesting because acquisitions should be very hot, debt so cheap, everybody wants organic growth, wants the good sales growth in that. I would tell you generally sellers are little greedy.

I will give you a roundabout case we had one this year within the ballpark of $0.5 billion acquisition price you're very interested in it, very high gross margin.

We were told at the competitive bidding process, we got very deeply involved, we chased it in the end, we assessed a proper bid that was a little less than what the seller wanted, but that actually due diligence in using proper multiples in the marketplace for sales. And then we got a phone call saying you're out and somebody else can win the bid.

So guess what's happened nobody's won the bid.

It was bologna, there was nobody else in there and our bid was the best they didn’t get they want they pulled back which is what's going to happening in the M&A market to some extent so and I'm happy because I would have felt awful if we had raised our bid to giving what they want and then found out like some of our competitors have found out that they were the only one they got snickered by the investment bankers and they're paying a higher multiple that really wasn’t justified and really took a way lot of the accretion from the deal you can get so we're very diligent about that we spent a lot of time due diligence we pay a very fair price but in the end we're not going to just pay any price to win a bid and bringing the house say hey I'm in an acquisition not going to do that I'm very prudent about our shareholders money.

And the fact that I would say it factors and we've spent a lot of time and just other than the nicer small deals we've landed we're very happy about.

We haven’t been able to land a big deal yet, but I'm not going to feel the pressure to do that until we find the right deal for the company because when we find them, you see the history the history is fantastic. We buy good businesses.

Most of the things are on table there were acquisitions over the course for the last 10 years, 15 years we grow them, we build them, drive the company's earnings up, it’s a great story but we have our process, we have our rules, we have our due diligence it's unbelievable.

We uncover stuff on deals sometimes its deal killers that some other guys don’t uncover sometime and we just we do our hard work, so we're working hard.

We're working very hard on it, but can't tell you when I'm telling you we're just we're working as hard as I were to find the next great acquisition for the company and we have the money so I'm not going to just spend it on something that say the dumb acquisitions. More questions..

Thanks. Jim, just to follow on to Joe's question there on M&A, we talked last year at CAGNY.

Is there still a personal care bias with respect to M&A? And then I think ideally you were saying at the time that the right asset could potentially have a footprint in both the US and international where you could recognize higher cost synergies but maybe expand the footprint internationally.

But maybe reconcile that today with some of the commentary around the stronger dollar, et cetera. .

Yes I mean as Matt said several times our personal care acquisition almost always comes with higher gross margin, OxiClean a household business came with personal care type margins but yes I mean generally we'd love to buy a business with the best possible gross margin yet that's generally personal care business but honestly I'm quite agnostic about also by a great household business to your second point's kind of interesting because of what's happened in currencies right now, everybody in their brother is looking for a U.S.

based acquisitions. So U.S.

based acquisitions have become very hot because the dollar situation the foreign currencies so maybe a little more competition there I somewhat look at that as maybe there's good opportunity get a great buy on a foreign company and things like that so we haven’t cut back it all on our look around the whole globe for good acquisitions paying a fair price for them, so I mean we're just out there trying our best to find the right deal out there.

But I mean you haven’t seen that many acquisitions happen honestly in the industry it's been kind of quiet I think honestly part of it is because the stock market has still been so strong I think a lot of Boards are sitting there going hey yes organic growth is not good hey yes we got problems but hey the stock's up 20% what's the problem and let's not go make the big deal on that so I think to fight being super cheap it's a perfect time to take debt leverages out there there's a lot of companies are sitting back and just saying I'm not going to make the move because there are no perfect deals out there the perfect little company with the one brand that you just want to add your portfolio it's usually a company that's got a great business and then a lot of we call hair a lot of things you don’t want to buy that are added they’re selling you the whole bundle and a lot of our competitors we believe have stepped back and said we don’t feel the need to go out and buy that bundle and bring it in the house here because things are good stock price is up a bit, so it's I think most investment bankers despite telling you it’s a very good year overall for deals we'd tell you they've got to be much bigger year for deals in that so everybody still looking at maybe the currency has caught more focus on the U.S.

based companies selling but I don’t know we're just active we're very active I'm very tired looking for deals, so we're working hard on them. All right I'd like to do one thing special here today before we sign off.

There's a personal room today one of your colleagues who's retiring after many years in the business often times rated a 5-star analyst Alice Longley in the back of room there. She just announced her retirement recently gift for Alice today is something for first time ever we've done this Alice come on up here for a second.

As we do with all of you, we consider you all good friends, Alice sometimes we call the dentist because she would drill us on earnings calls on every line of the P&L until she had an answer then she would ask us again, so Alice what I have for you today is something I want you to open it up to show the crew here, Bill you’ll get a big kick out of this.

Who wrapped this? Somebody with a knife open it up -- and then you'll get arrested going outside but what we have here is a chart that we have only ever gave through, we only ever given before to retiring members of Church & Dwight either staff or Board of Directors and what the charts shows us outside of the covering our company September 29, 1998 she put a buy on us.

And what this chart shows is what’s happened to Church & Dwight’s stock price since that time versus the S&P 500. And you invested a $1000 when Alex told you that’s a $1000 back on September 29, 1999 and held it for today that $1000 to be worth $11041. If you invest that $1000 to S&P 500 it would be worth only $1615.

So there you can see you get that over there. There you can see the total shareholder of Church & Dwight stock price if listen to certain analysts. And there you can see if you invest money into S&P 500.

So this probably goes in the walls of all the retiring members of our company and our Board of Directors and we wanted you to have it too my dear, thank you. .

She said she would try to down grade us on success few times but we still succeeded. So anyway we love you and good luck in retirement.

For the rest of you today we showed you our plans, we feel very proud the results we turned in 2014, 2015 we think our outlook is right on the button going forward a very tough year of all the foreign stuff going out but we are going to deliver outstanding results compared to our competitors or often negative EPS numbers call for next when you take your currencies in to effect, deliver you 8% real reported EPS next year, which I think half of the pack of the industry.

So with that I thank you for coming on a very difficult weather day and please get home safe and sound, thank you..

Ladies and gentlemen thank you participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a great day..