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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended April 2, 2004



Commission file Number 333-73160



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ARMKEL, LLC

(Exact name of registrant as specified in its certificate of formation)



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|                                                    |  |                                  
|--------------------------------------------------- |  | ---------------------------------
|Organized in Delaware                               |  |                                  
|469 North Harrison Street                           |  |                                  
|Princeton, New Jersey 08543-5297                    |  | 13-4181336                       
|(Address of principal executive offices) (Zip Code) |  | I.R.S Employer Identification No.



(609) 683-5900

Registrants telephone Number, including area code



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



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



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act)    Yes ̈No  x



As of May 11, 2004, all of the 10,000 outstanding membership interests in
Armkel, LLC were held by affiliates.



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TABLE OF CONTENTS



|     |  |                                                           |  |     
|---- |  | --------------------------------------------------------- |  | ----
|     |  |                                                           |  | PAGE
|     |  | PART I                                                    |  |     
|ITEM |  |                                                           |  |     
|     |  |                                                          
|1.   |  | Financial Statements                                      |  | 3   
|     |  |                                                          
|2.   |  | Managements Discussion and Analysis                      |  | 17  
|     |  |                                                          
|3.   |  | Quantitative and Qualitative Disclosure About Market Risk |  | 21  
|     |  |                                                          
|4.   |  | Controls and Procedures                                   |  | 21  
|     |  | PART II                                                   |  |     
|     |  |                                                          
|6.   |  | Exhibits and Reports on Form 8-K                          |  | 22  



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PART I - FINANCIAL INFORMATION



ITEM 1: FINANCIAL STATEMENTS



ARMKEL, LLC AND SUBSIDIARIES



CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND

CHANGES IN MEMBERS EQUITY

(Unaudited)



|                                               |  |                    |         |   |               |   |         |  
|---------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                               |  | Three Months Ended |        
|(Dollars in thousands)                         |  | April 2,2004       |         |   | March 28,2003 |  
|Net Sales                                      |  | $                  | 113,773 |   |               | $ | 99,654  |  
|Cost of goods sold                             |  |                    | 48,088  |   |               |   | 41,169  |  
|                                               |  |                    |         |   |               |   |         |  
|Gross Profit                                   |  |                    | 65,685  |   |               |   | 58,485  |  
|Marketing expenses                             |  |                    | 12,830  |   |               |   | 12,009  |  
|Selling, general and administrative expenses   |  |                    | 23,044  |   |               |   | 21,376  |  
|                                               |  |                    |         |   |               |   |         |  
|Income from Operations                         |  |                    | 29,811  |   |               |   | 25,100  |  
|Interest expense                               |  |                    | (7,765  | ) |               |   | (8,890  | )
|Interest income                                |  |                    | 291     |   |               |   | 281     |  
|Other expense                                  |  |                    | (669    | ) |               |   | (284    | )
|                                               |  |                    |         |   |               |   |         |  
|Income before taxes                            |  |                    | 21,668  |   |               |   | 16,207  |  
|Income taxes                                   |  |                    | 3,505   |   |               |   | 3,104   |  
|                                               |  |                    |         |   |               |   |         |  
|Income from continuing operations              |  |                    | 18,163  |   |               |   | 13,103  |  
|Income from discontinued operations            |  |                    |        |   |               |   | 254     |  
|Gain on disposition of discontinued operations |  |                    |        |   |               |   | 1,862   |  
|                                               |  |                    |         |   |               |   |         |  
|Net Income                                     |  |                    | 18,163  |   |               |   | 15,219  |  
|Other comprehensive income                     |  |                    | 4,833   |   |               |   | 648     |  
|                                               |  |                    |         |   |               |   |         |  
|Total comprehensive income                     |  |                    | 22,996  |   |               |   | 15,867  |  
|Members Equity at Beginning of Period         |  |                    | 279,437 |   |               |   | 229,680 |  
|                                               |  |                    |         |   |               |   |         |  
|Members Equity at End of Period               |  | $                  | 302,433 |   |               | $ | 245,547 |  
|                                               |  |                    |         |   |               |   |         |  



See Notes to Condensed
Consolidated Financial Statements.



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ARMKEL, LLC AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                          |  |               |         |   |               |   |         |  
|--------------------------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | -
|(Dollars in thousands)                                    |  | April 2, 2004 |         |   | Dec. 31, 2003 |  
|                                                          |  | (Unaudited)   |         |   |               |  
|Assets                                                    |  |               |         |   |               |   |         |  
|Current Assets                                            |  |               |         |   |               |   |         |  
|Cash and cash equivalents                                 |  | $             | 64,757  |   |               | $ | 69,188  |  
|Accounts receivable, less allowances of $1,558 and $1,509 |  |               | 90,892  |   |               |   | 74,783  |  
|Inventories                                               |  |               | 55,619  |   |               |   | 53,782  |  
|Prepaid expenses                                          |  |               | 6,361   |   |               |   | 6,436   |  
|Net assets held for sale                                  |  |               | 11,500  |   |               |   | 11,500  |  
|                                                          |  |               |         |   |               |   |         |  
|Total Current Assets                                      |  |               | 229,129 |   |               |   | 215,689 |  
|Property, Plant and Equipment (Net)                       |  |               | 76,153  |   |               |   | 75,815  |  
|Tradenames and Patents                                    |  |               | 255,650 |   |               |   | 256,775 |  
|Goodwill                                                  |  |               | 205,156 |   |               |   | 205,156 |  
|Deferred Financing Costs                                  |  |               | 13,073  |   |               |   | 13,877  |  
|Other Assets                                              |  |               | 8,513   |   |               |   | 8,009   |  
|                                                          |  |               |         |   |               |   |         |  
|Total Assets                                              |  | $             | 787,674 |   |               | $ | 775,321 |  
|                                                          |  |               |         |   |               |   |         |  
|Liabilities and Members Equity                           |  |               |         |   |               |   |         |  
|Current Liabilities                                       |  |               |         |   |               |   |         |  
|Accounts payable and accrued expenses                     |  | $             | 86,916  |   |               | $ | 86,347  |  
|Current portion of long-term debt                         |  |               | 3,029   |   |               |   | 2,705   |  
|Taxes payable                                             |  |               | 4,749   |   |               |   | 7,214   |  
|                                                          |  |               |         |   |               |   |         |  
|Total Current Liabilities                                 |  |               | 94,694  |   |               |   | 96,266  |  
|Long-term Debt                                            |  |               | 356,886 |   |               |   | 364,838 |  
|Deferred Income Taxes                                     |  |               | 8,165   |   |               |   | 9,669   |  
|Deferred and Other Long-term Liabilities                  |  |               | 25,496  |   |               |   | 25,111  |  
|Commitments and Contingencies                             |  |               |        |   |               |   |        |  
|                                                          |  |               |         |   |               |   |         |  
|Total Liabilities                                         |  |               | 485,241 |   |               |   | 495,884 |  
|Members Equity                                           |  |               |         |   |               |   |         |  
|Net contributed capital                                   |  |               | 220,500 |   |               |   | 220,500 |  
|Retained earnings                                         |  |               | 83,968  |   |               |   | 65,805  |  
|Accumulated other comprehensive loss                      |  |               | (2,035  | ) |               |   | (6,868  | )
|                                                          |  |               |         |   |               |   |         |  
|Total Members Equity                                     |  |               | 302,433 |   |               |   | 279,437 |  
|                                                          |  |               |         |   |               |   |         |  
|Total Liabilities and Members Equity                     |  | $             | 787,674 |   |               | $ | 775,321 |  
|                                                          |  |               |         |   |               |   |         |  



See Notes to Condensed
Consolidated Financial Statements.



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ARMKEL, LLC AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)



|                                                                                  |  |                    |         |   |                |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------ | ------- | - | -------------- | - | ------- | -
|                                                                                  |  | Three Months Ended |        
|(Dollars in thousands)                                                            |  | April 2, 2004      |         |   | March 28, 2003 |  
|                                                                                  |  |                    |         |   |                |   |         |  
|Cash Flow From Operating Activities:                                              |  |                    |         |   |                |   |         |  
|Net Income                                                                        |  | $                  | 18,163  |   |                | $ | 15,219  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                    |         |   |                |   |         |  
|Depreciation and amortization                                                     |  |                    | 4,127   |   |                |   | 3,933   |  
|Unrealized gain on foreign exchange transactions                                  |  |                    | 429     |   |                |   | 81      |  
|Net (income) loss from discontinued operations                                    |  |                    |        |   |                |   | (254    | )
|Net gain on sale of discontinued operations                                       |  |                    |        |   |                |   | (1,862  | )
|Change in assets and liabilities:                                                 |  |                    |         |   |                |   |         |  
|Increase in accounts receivable                                                   |  |                    | (13,406 | ) |                |   | (12,337 | )
|Increase in inventories                                                           |  |                    | (613    | ) |                |   | (1,995  | )
|Decrease in prepaid expenses and other current assets                             |  |                    | 146     |   |                |   | 326     |  
|Decrease in accounts payable and other accrued expenses                           |  |                    | (3,865  | ) |                |   | (2,549  | )
|Decrease in other liabilities                                                     |  |                    | (2,221  | ) |                |   | (1,927  | )
|                                                                                  |  |                    |         |   |                |   |         |  
|Net Cash Provided by (Used in) Operating Activities                               |  |                    | 2,760   |   |                |   | (1,365  | )
|                                                                                  |  |                    |         |   |                |   |         |  
|Cash Flow From Investing Activities:                                              |  |                    |         |   |                |   |         |  
|Additions to property, plant and equipment                                        |  |                    | (1,938  | ) |                |   | (2,054  | )
|Proceeds from divestiture                                                         |  |                    |        |   |                |   | 22,573  |  
|                                                                                  |  |                    |         |   |                |   |         |  
|Net Cash Provided by (Used in) Investing Activities                               |  |                    | (1,938  | ) |                |   | 20,519  |  
|                                                                                  |  |                    |         |   |                |   |         |  
|Cash Flow From Financing Activities:                                              |  |                    |         |   |                |   |         |  
|Repayment of syndicated bank credit facility                                      |  |                    | (7,500  | ) |                |   | (26,253 | )
|                                                                                  |  |                    |         |   |                |   |         |  
|Net Cash Used in Financing Activities                                             |  |                    | (7,500  | ) |                |   | (26,253 | )
|                                                                                  |  |                    |         |   |                |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                    | 2,247   |   |                |   | 925     |  
|                                                                                  |  |                    |         |   |                |   |         |  
|Net Change in Cash and Cash Equivalents                                           |  |                    | (4,431  | ) |                |   | (6,174  | )
|Cash and Cash Equivalents at Beginning of Period                                  |  |                    | 69,188  |   |                |   | 54,780  |  
|                                                                                  |  |                    |         |   |                |   |         |  
|Cash and Cash Equivalents at End of Period                                        |  | $                  | 64,757  |   |                | $ | 48,606  |  
|                                                                                  |  |                    |         |   |                |   |         |  



See Notes to Condensed
Consolidated Financial Statements.





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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Financial Statement Presentation



The condensed consolidated balance sheet as of April 2, 2004, the condensed consolidated
statements of income and changes in members equity for the three months ended April 2, 2004 and March 28, 2003, and the consolidated statements of cash flow for the three months ended April 2, 2004 and March 28, 2003 have been prepared by
Armkel, LLC and subsidiaries (the Company) and are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and
cash flow at April 2, 2004 and for all periods presented have been made.



Fifty-percent (50%) of the membership interests in the Company is owned by each of Church & Dwight Co., Inc. (C&D) and certain affiliates of Kelso & Company, L.P. (Kelso).



Certain information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto
included in the Companys December 31, 2003 required Form 10-K filing. The financial statement effect of the Italian operations that were divested in February 2003 is recognized as discontinued operations. The results of operations for the
period ended April 2, 2004 are not necessarily indicative of the operating results for the full year.



2. Inventories consist of the following (in thousands):



|                           |  |               |        |               |   |       
|-------------------------- |  | ------------- | ------ | ------------- | - | ------
|                           |  | April 2, 2004 |        | Dec. 31, 2003
|Raw materials and supplies |  | $             | 12,319 |               | $ | 11,913
|Work in process            |  |               | 7,537  |               |   | 6,427 
|Finished goods             |  |               | 35,763 |               |   | 35,442
|                           |  |               |        |               |   |       
|                           |  | $             | 55,619 |               | $ | 53,782
|                           |  |               |        |               |   |       



3. Property, Plant and Equipment
consist of the following (in thousands):



|                                               |  |               |        |               |   |       
|---------------------------------------------- |  | ------------- | ------ | ------------- | - | ------
|                                               |  | April 2, 2004 |        | Dec. 31, 2003
|Land                                           |  | $             | 7,198  |               | $ | 7,206 
|Buildings and improvements                     |  |               | 25,419 |               |   | 25,351
|Machinery and equipment                        |  |               | 51,851 |               |   | 52,384
|Office equipment and other assets              |  |               | 6,430  |               |   | 5,999 
|Construction in progress                       |  |               | 3,516  |               |   | 816   
|                                               |  |               |        |               |   |       
|                                               |  |               | 94,414 |               |   | 91,756
|Less accumulated depreciation and amortization |  |               | 18,261 |               |   | 15,941
|                                               |  |               |        |               |   |       
|Net Property, Plant and Equipment              |  | $             | 76,153 |               | $ | 75,815
|                                               |  |               |        |               |   |       



4. Goodwill and Intangible Assets



The following tables discloses the carrying value of all intangible
assets (in thousands):



|                                                |  |                      |         |                    |   |        |  |                      |        |                     |   |         |  |   |        |  |   |       
|----------------------------------------------- |  | -------------------- | ------- | ------------------ | - | ------ |  | -------------------- | ------ | ------------------- | - | ------- |  | - | ------ |  | - | ------
|                                                |  | April 2, 2004        |         | December 31, 2003 
|                                                |  | Gross CarryingAmount |         | Accum.Amortization |   | Net    |  | Gross CarryingAmount |        | Accum. Amortization |   | Net    
|Amortized intangible assets:                    |  |                      |         |                    |   |        |  |                      |        |                     |   |         |  |   |        |  |   |       
|Patents                                         |  | $                    | 27,500  |                    | $ | 11,250 |  | $                    | 16,250 |                     | $ | 27,500  |  | $ | 10,125 |  | $ | 17,375
|                                                |  |                      |         |                    |   |        |  |                      |        |                     |   |         |  |   |        |  |   |       
|Unamortized intangible assets - Carrying value: |  |                      |         |                    |   |        |  |                      |        |                     |   |         |  |   |        |  |   |       
|Tradenames                                      |  | $                    | 239,400 |                    |   |        |  |                      |        |                     | $ | 239,400 |  |   |        |  |   |       
|                                                |  |                      |         |                    |   |        |  |                      |        |                     |   |         |  |   |        |  |   |       





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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Intangible amortization expense amounted to $1.1 million for the three months ended April 2, 2004 and March 28, 2003.
The estimated intangible amortization is approximately $4.5 million per year over the remaining amortization period. The weighted average amortization period for patents is 6.4 years.



There were no changes in the carrying amount of goodwill for the three months ended April 2, 2004. The balances are as follows (in
thousands):



|                      |  |          |         |               |   |        |  |   |        
|--------------------- |  | -------- | ------- | ------------- | - | ------ |  | - | -------
|                      |  | Domestic |         | International |   | Total 
|Balance April 2, 2004 |  | $        | 172,318 |               | $ | 32,838 |  | $ | 205,156



5. Related Party Transactions



Arrangements with Church & Dwight



The Company owed C&D $6.6 million and $6.4 million for primarily administrative and
management oversight services for the three months ended April 2, 2004 and March 28, 2003, respectively. The Company sold $0.5 million and $0.7 million of deodorant/antiperspirant inventory to C&D at its cost during the three months ended April
2, 2004 and March 28, 2003, respectively. The Company purchased $0.4 million and $0.8 million of Arm & Hammer products to be sold in international markets during the three months ended April 2, 2004 and March 28, 2003, respectively. The Company
had a net payable to C&D at April 2, 2004 and March 28, 2003, respectively, of approximately $3.6 million and $3.5 million that primarily related to administration fees and invoices paid by C&D on behalf of Armkel, offset by amounts owed for
inventory.



Arrangements with Kelso



Kelso provides the Company with financial advisory services for which the Company pays an
annual fee of $1.0 million. The Company indemnifies Kelso against certain liabilities and reimburses expenses in connection with its engagement. For the three months ended April 2, 2004, the Company paid Kelso $0.3 million. The Company prepaid
Kelsos 2003 annual fee at the end of December 2002.



6. Commitments,
Contingencies and Guarantees



|a. | On January 17, 2002, a petition for appraisal, Cede & Co., Inc. and GAMCO Investors, Inc. v. Medpointe Healthcare Inc., Civil Action No. 19354, was filed in the Court of
Chancery of the State of Delaware demanding a determination of the fair value of shares of Medpointe. The action was brought by purported former shareholders of Carter-Wallace in connection with the merger on September 28, 2001 of MCC Acquisition
Sub Corporation with and into Carter-Wallace. The merged entity subsequently changed its name to Medpointe. The petitioners seek an appraisal of the fair value of their shares in accordance with Section 262 of the Delaware General Corporation Law.
The matter was heard on March 10 and 11, 2003, at which time the petitioners purportedly held approximately 2.3 million shares of Medpointe. An additional post-trial hearing was held on January 20, 2004 to address the valuation of the Company. No
decision has yet been rendered by the court.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Medpointe and certain former Carter-Wallace shareholders are party to an indemnification agreement pursuant to which such shareholders will be required to indemnify Medpointe from a portion of the damages, if any, suffered by Medpointe in
relation to the exercise of appraisal rights by other former Carter-Wallace shareholders in the merger. Pursuant to the agreement, the shareholders have agreed to indemnify Medpointe for 40% of any Appraisal Damages (defined as the recovery greater
than the per share merger price times the number of shares in the appraisal class) suffered by Medpointe in relation to the merger; provided that if the total amount of Appraisal Damages exceeds $33.3 million, then the indemnifying stockholders will
indemnify Medpointe for 100% of any damages suffered in excess of that amount. The Company, in turn, is party to an agreement with Medpointe pursuant to which it has agreed to indemnify Medpointe and certain related parties against 60% of any
Appraisal Damages for which Medpointe remains liable. The maximum liability to the Company pursuant to the indemnification agreement and prior to any indemnification from C&D, as described in the following sentence is $12 million. C&D is
party to an agreement with the Company pursuant to which it has agreed to indemnify the Company for 17.4% of any Appraisal Damages, or up to a maximum of $2.1, million for which the Company becomes liable.



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)





The Company, Medpointe
and the indemnifying shareholders believe that the consideration offered in the merger was fair to the former Carter-Wallace shareholders and have vigorously defended the petitioners claim. However, the Company cannot predict the outcome of
the proceedings.



On March 27, 2003, GAMCO Investors, Inc.
filed another complaint in the New York Supreme Court seeking damages from MedPointe Healthcare Inc., the former directors of Carter-Wallace, and one of the former shareholders of Carter-Wallace. The complaint alleges breaches of fiduciary duty in
connection with certain employment agreements with former Carter-Wallace executives, the sale of Carter Wallaces consumer products business to the Company (some of the products acquired by the Company were subsequently sold by the Company to
C&D) and the merger of MCC Acquisition Sub Corporation with and into Carter-Wallace. The complaint seeks monetary damages and equitable relief, including among other things, invalidation of the transactions. The defendants have moved to dismiss
the complaint. The Company has not been named as a defendant in this action and believes it has no liability.



|b. | The Companys distribution of condoms under the Trojan and other trademarks is regulated by the U.S. Food and Drug Administration (FDA). Certain of Armkels condoms and
similar condoms sold by Armkels major competitors, contain the spermicide nonoxynol-9 (N-9). The World Health Organization and other interested groups have issued reports suggesting that N-9 should not be used rectally or for multiple daily
acts of vaginal intercourse, given the ingredients potential to cause irritation to human membranes. The Company expects the FDA to issue non-binding draft guidance concerning the labeling of condoms with N-9, although the timing of such draft
guidance is uncertain. The Company believes that condoms with N-9 provide an acceptable added means of contraceptive protection and is cooperating with the FDA concerning the appropriate labeling revisions, if any. However, the Company cannot
predict the outcome of the FDA review. While awaiting further FDA guidance, the Company has implemented interim labeling revisions that caution against rectal use and more-than-once-a-day vaginal use of N-9-containing condoms, and has launched a
public information campaign to communicate these messages to the affected communities. If the FDA or state governments promulgate rules which prohibit or restrict the use of N-9 in condoms (such as new labeling requirements), the financial condition
and operating results of the Company could suffer.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In March 2003, two members of the California Assembly introduced a non-binding resolution calling on FDA to ban condoms containing N-9. The proposed resolution was not brought to a vote since California could not legally ban an FDA approved
medical device from marketing. Instead, the proposed resolution was announced at a public press release and retailers were asked voluntarily not to stock any condom containing N-9. The Company had previously supplied the Assemblymen and the Assembly
Speaker with information explaining why a ban would be inappropriate and outlining the interim labeling revisions and public information efforts the Company has implemented. While the resolution cannot be voted upon and passed and cannot be legally
binding, making it public (as was done here) could impair public perception of the product with resultant impairment of operating results of the Company.



|c. | The Company has commitments to acquire approximately $2.5 million of raw material and packaging supplies from its vendors. The packaging supplies are either in a converted or
non-converted status. This enables the Company to respond quickly to changes in customer orders/requirements.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|d. | The Company has a guarantee with the New Jersey Department of Environmental Protection for a performance based obligation for estimated environmental remediation costs at its
Cranbury, New Jersey facility.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|e. | The Company, in the ordinary course of its business, is the subject of, or party to, various pending or threatened legal actions. The Company believes that any ultimate liability
arising from these actions will not have a material adverse effect on its financial position or results of operation.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



7. Reorganization Reserve



As of September 28, 2001, the date of the acquisition of the Carter-Wallace Consumer Business (the Predecessor), the Company
started to implement a plan to reorganize the operation of the acquired consumer business. The main components of the plan included rationalizing facilities for which the Company had incurred lease termination costs, environmental remediation costs
and work force rationalization costs. The plan was finalized in 2002 and the Company substantially completed the plan in 2003 except for certain long-term contractual obligations related to benefits for certain former executives of Carter-Wallace,
Inc. and certain environmental remediation activities.



The Company established
an accrual for severance to reflect the purchase of various services from C&D in lieu of obtaining such services through continued employment of certain personnel by the Company. The accrued severance is for identified employees from various
areas including executives, administrative support and corporate functions (finance, human resources, legal, MIS, R&D, logistics, marketing, sales and purchasing).



The following table summarizes the activity in the Companys reorganization accruals (in thousands):



|                                |  |                           |       |          |   |      |                           |  |   |      
|------------------------------- |  | ------------------------- | ----- | -------- | - | ---- | ------------------------- |  | - | -----
|                                |  | Reserves at Dec. 31, 2003 |       | Payments |   |      | Reserves at April 2, 2004
|Severance and other charges     |  | $                         | 1,861 |          | $ | (108 | )                         |  | $ | 1,753
|Environmental remediation costs |  |                           | 1,515 |          |   | (53  | )                         |  |   | 1,462
|                                |  |                           |       |          |   |      |                           |  |   |      
|                                |  | $                         | 3,376 |          | $ | (161 | )                         |  | $ | 3,215
|                                |  |                           |       |          |   |      |                           |  |   |      



8. Assets Held for Sale



In July 2002, the Company met the criteria to classify its Cranbury, New
Jersey facility as assets held for sale. At December 31, 2001, the net book value of the Cranbury property and facilities was $43 million based on regional market prices for such property when used for a similar purpose, as determined by an
independent appraisal at the time of acquisition. During the third quarter of 2002, however, independent real estate consultants advised the Company that the property would likely have to be sold to land developers who would use it for purposes
other than manufacturing, for which the fair value is significantly less. Accordingly, the Company adjusted the purchase price allocation recorded for the property to the fair value for developmental property ($20 million). Upon further review, the
Company decided to retain the research and development building of the facility for continued use. The fair value of the research building is $5.4 million which was reclassified to property, plant and equipment at December 31, 2002.



In the second quarter of 2003, during negotiations with a potential buyer for the remaining
land (other than that related to the research facilities), the buyer raised new issues regarding environmental remediation costs to be incurred by the Company prior to the sale, and the portion of the parcel that could actually be developed. The
Company recorded an impairment charge of $3.1 million in its statement of income for the second quarter of 2003, after the conclusion of the allocation period, because it became apparent from status of the negotiations in the second quarter of 2003
that the carrying value of the land (approximately $14.6 million at that time) would not be fully realized. In the fourth quarter of 2003, the Company entered into a contract to sell the remaining land available for development (and demolish the
remaining buildings at the buyers expense), subject to obtaining environmental and other regulatory approvals. In the course of obtaining such approvals the Company discovered additional groundwater contamination and although the cost to
remediate will be immaterial the Company does not expect to be able to complete the remediation and obtain approvals in the time frames as agreed to in the contract. As a result, the Company is currently in negotiation with the buyer to determine a
resolution. It is possible that the buyer may terminate the contract and the Company will need to put the property back on the market. Notwithstanding this possibility, the value expected to be received for all land at the Cranbury, NJ location
(other than that related to the research facilities), net of costs to sell, is approximately $11.5 million.



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



9. Discontinued Operations



At the end of December 2002, the Company signed a definitive agreement to sell its Italian operations. On February 20, 2003, the sale was
completed with proceeds of $22.6 million. In the first quarter of 2003, the Company recorded an after-tax gain on the sale of these operations of approximately $1.9 million. As part of this transaction, the Company recorded a $0.5 million guarantee
reserve which was the estimated fair value of the contractual indemnification obligation of the Company to the buyer of the Italian operations. In June 2003, the Company signed an agreement which effectively reduced the selling price by requiring
the payment of 0.1 million Euros by the Company to the buyer in the third quarter of 2003 in return for a release from any indemnification obligations that might arise with respect to certain tax matters under the definitive sales agreement. Upon
payment of the 0.1 million Euros the guarantee reserve was reduced accordingly. Exposure under such indemnification obligation is capped at 1.5 million Euros, which is approximately $1.8 million at April 2, 2004.



For the three months ended March 28, 2003, net sales from the Italian operations was $10.0
million and income from discontinued operations was $0.3 million (net of taxes of $0.3 million). The proceeds were used to pay down the term loan debt and costs associated with the divestiture.



10. Recent Accounting Pronouncements



In January 2003, the FASB issued Financial Interpretation No. 46 (FIN No. 46)
Consolidation of Variable Interest Entities, as amended in December 2003 by FIN No. 46R. FIN No. 46 sets forth criteria to be used in determining whether an investment in a variable interest entity (VIE) should be consolidated and is
based on the general premise that companies that control another entity through interests other than voting interests should consolidate the controlled entity. FIN No. 46 would require the immediate consolidation of specified VIEs created after
January 31, 2003. For specified VIEs created before February 1, 2003, FIN No. 46 would require consolidation in interim or annual financial statements issued for periods beginning after December 15, 2003. The Company adopted FIN No. 46R and
determined that it would not have a material impact to its consolidated financial statements.



In December 2003, the FASB issued a revised version of SFAS No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106. This
Statement retained the disclosure requirements as originally included in SFAS No. 132 and contained additional disclosure requirements. The Company has included the required disclosures in Note 11 to its financial statements.



In January 2004, the FASB issued FASB Staff Position (FSP) No. 106-1 Accounting and
Disclosure Requirements to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree
health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The FSP permits a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to
defer accounting for the effects of the Act. The Company does not believe that the effects of the Act apply to its postretirement health care plans and it will not have a material impact on its consolidated financial statements.



11. Pension Disclosure



The following table presents the net periodic benefit cost for the Companys pension and postretirement plans for the quarter ending
April 2, 2004 and March 28, 2003 (in thousands).



|                                          |  |               |        |   |                      |   |      |      |  |      |    |  |   |   
|----------------------------------------- |  | ------------- | ------ | - | -------------------- | - | ---- | ---- |  | ---- | -- |  | - | --
|                                          |  | Pension Costs |        |   | Postretirement Costs
|                                          |  | 2004          |        |   | 2003                 |   |      | 2004 |  | 2003
|Components of Net Periodic Benefit Cost:  |  |               |        |   |                      |   |      |      |  |      |    |  |   |   
|Service cost                              |  | $             | 563    |   |                      | $ | 416  |      |  | $    | 31 |  | $ | 11
|Interest cost                             |  |               | 1,299  |   |                      |   | 658  |      |  |      | 30 |  |   | 25
|Expected return on plan assets            |  |               | (1,208 | ) |                      |   | (603 | )    |  |      |   |  |   |  
|Recognized actuarial (gain) or loss/other |  |               | 15     |   |                      |   | 45   |      |  |      | 3  |  |   |  
|                                          |  |               |        |   |                      |   |      |      |  |      |    |  |   |   
|Net periodic benefit cost                 |  | $             | 669    |   |                      | $ | 516  |      |  | $    | 64 |  | $ | 36
|                                          |  |               |        |   |                      |   |      |      |  |      |    |  |   |   



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



12. Subsequent Events



On May 6, 2004, C&D announced that it has reached a non-binding understanding with its partner, Kelso & Company, to purchase
Kelsos 50% interest in the Company, for a purchase price of approximately $254 million. It is expected that the purchase will be completed on or about May 30, 2004, subject to customary closing conditions including completion of financing.
C&D expects to raise a total of $640 million in medium-term borrowing facilities, which will be used to finance the acquisition and replace both C&Ds and the Companys existing borrowing facilities.



13. Segments and Supplemental Information



Segment Information



The Company has two operating segments: Domestic Consumer Products Division and International Consumer Products Division.



Measurement of Segment Results and Assets



The accounting policies of the segments are generally the same as those described in Note 1.



Supplemental Financial Information of Domestic and International
Operations



The senior subordinated notes registered by the Company
are fully and unconditionally guaranteed by the domestic subsidiaries of the Company on a joint and several basis. The following information is being presented to comply with SEC Regulation SX, Item 3-10 and to provide required segment disclosures.



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Supplemental information for condensed consolidated balance sheets at April 2, 2004, condensed consolidated income
statements and consolidated cash flows for the period from December 31, 2003 to April 2, 2004 is summarized as follows (amounts in thousands):



Statements of Income



|                       |  |                                          |        |   |               |   |        |              |  |   |                    |   |  |   |         |  
|---------------------- |  | ---------------------------------------- | ------ | - | ------------- | - | ------ | ------------ |  | - | ------------------ | - |  | - | ------- | -
|                       |  | For The Three Months Ended April 2, 2004 |       
|                       |  | Domestic                                 |        |   | International |   |        | Eliminations |  |   | Total Consolidated |  
|Net sales              |  | $                                        | 59,495 |   |               | $ | 55,786 |              |  | $ | (1,508             | ) |  | $ | 113,773 |  
|Cost of goods sold     |  |                                          | 22,053 |   |               |   | 27,543 |              |  |   | (1,508             | ) |  |   | 48,088  |  
|                       |  |                                          |        |   |               |   |        |              |  |   |                    |   |  |   |         |  
|Gross profit           |  |                                          | 37,442 |   |               |   | 28,243 |              |  |   |                   |   |  |   | 65,685  |  
|Operating expenses     |  |                                          | 19,621 |   |               |   | 16,253 |              |  |   |                   |   |  |   | 35,874  |  
|                       |  |                                          |        |   |               |   |        |              |  |   |                    |   |  |   |         |  
|Income from operations |  |                                          | 17,821 |   |               |   | 11,990 |              |  |   |                   |   |  |   | 29,811  |  
|Interest expense       |  |                                          | (7,629 | ) |               |   | (136   | )            |  |   |                   |   |  |   | (7,765  | )
|Interest income        |  |                                          | 59     |   |               |   | 232    |              |  |   |                   |   |  |   | 291     |  
|Intercompany accounts  |  |                                          | 1,303  |   |               |   | (1,303 | )            |  |   |                   |   |  |   |        |  
|Other expense          |  |                                          | (341   | ) |               |   | (328   | )            |  |   |                   |   |  |   | (669    | )
|                       |  |                                          |        |   |               |   |        |              |  |   |                    |   |  |   |         |  
|Income before taxes    |  |                                          | 11,213 |   |               |   | 10,455 |              |  |   |                   |   |  |   | 21,668  |  
|Income taxes           |  |                                          |       |   |               |   | 3,505  |              |  |   |                   |   |  |   | 3,505   |  
|                       |  |                                          |        |   |               |   |        |              |  |   |                    |   |  |   |         |  
|Net Income             |  | $                                        | 11,213 |   |               | $ | 6,950  |              |  | $ |                   |   |  | $ | 18,163  |  
|                       |  |                                          |        |   |               |   |        |              |  |   |                    |   |  |   |         |  



|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  
|---------------------------------------------- |  | ----------------------------------------- | ------ | - | ------------- | - | ------ | ------------ |  | - | ------------------ | - |  | - | ------ | -
|                                               |  | For The Three Months Ended March 28, 2003 |       
|                                               |  | Domestic                                  |        |   | International |   |        | Eliminations |  |   | Total Consolidated |  
|Net sales                                      |  | $                                         | 53,706 |   |               | $ | 47,525 |              |  | $ | (1,577             | ) |  | $ | 99,654 |  
|Cost of goods sold                             |  |                                           | 20,238 |   |               |   | 22,508 |              |  |   | (1,577             | ) |  |   | 41,169 |  
|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  
|Gross profit                                   |  |                                           | 33,468 |   |               |   | 25,017 |              |  |   |                   |   |  |   | 58,485 |  
|Operating expenses                             |  |                                           | 18,380 |   |               |   | 15,005 |              |  |   |                   |   |  |   | 33,385 |  
|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  
|Income from operations                         |  |                                           | 15,088 |   |               |   | 10,012 |              |  |   |                   |   |  |   | 25,100 |  
|Interest expense                               |  |                                           | (8,593 | ) |               |   | (297   | )            |  |   |                   |   |  |   | (8,890 | )
|Interest income                                |  |                                           | 98     |   |               |   | 183    |              |  |   |                   |   |  |   | 281    |  
|Intercompany accounts                          |  |                                           | 1,384  |   |               |   | (1,384 | )            |  |   |                   |   |  |   |       |  
|Other expense                                  |  |                                           | (29    | ) |               |   | (255   | )            |  |   |                   |   |  |   | (284   | )
|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  
|Income before taxes                            |  |                                           | 7,948  |   |               |   | 8,259  |              |  |   |                   |   |  |   | 16,207 |  
|Income taxes                                   |  |                                           |       |   |               |   | 3,104  |              |  |   |                   |   |  |   | 3,104  |  
|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  
|Income from continuing operations              |  |                                           | 7,948  |   |               |   | 5,155  |              |  |   |                   |   |  |   | 13,103 |  
|Income from discontinued operations            |  |                                           |       |   |               |   | 254    |              |  |   |                   |   |  |   | 254    |  
|Gain on disposition of discontinued operations |  |                                           |       |   |               |   | 1,862  |              |  |   |                   |   |  |   | 1,862  |  
|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  
|Net Income                                     |  | $                                         | 7,948  |   |               | $ | 7,271  |              |  | $ |                   |   |  | $ | 15,219 |  
|                                               |  |                                           |        |   |               |   |        |              |  |   |                    |   |  |   |        |  



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Consolidated Balance Sheet

|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|--------------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | ------------ |  | - | ------------------ | - |  | - | ------- | -
|                                              |  | April 2, 2004 |        
|                                              |  | Domestic      |         |   | International |   |         | Eliminations |  |   | Total Consolidated |  
|Cash and cash equivalents                     |  | $             | 18,726  |   |               | $ | 46,031  |              |  | $ |                   |   |  | $ | 64,757  |  
|Accounts receivable, less allowances          |  |               | 26,662  |   |               |   | 64,230  |              |  |   |                   |   |  |   | 90,892  |  
|Inventories                                   |  |               | 23,756  |   |               |   | 31,863  |              |  |   |                   |   |  |   | 55,619  |  
|Prepaid expenses                              |  |               | 677     |   |               |   | 5,684   |              |  |   |                   |   |  |   | 6,361   |  
|Net assets held for sale                      |  |               | 11,500  |   |               |   |        |              |  |   |                   |   |  |   | 11,500  |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Current Assets                          |  |               | 81,321  |   |               |   | 147,808 |              |  |   |                   |   |  |   | 229,129 |  
|Property, plant and equipment (net)           |  |               | 48,090  |   |               |   | 28,063  |              |  |   |                   |   |  |   | 76,153  |  
|Notes receivable                              |  |               | 65,088  |   |               |   |        |              |  |   | (65,088            | ) |  |   |        |  
|Investment in subsidiaries                    |  |               | 63,557  |   |               |   |        |              |  |   | (63,557            | ) |  |   |        |  
|Tradenames and patents                        |  |               | 217,450 |   |               |   | 38,200  |              |  |   |                   |   |  |   | 255,650 |  
|Goodwill                                      |  |               | 172,318 |   |               |   | 32,838  |              |  |   |                   |   |  |   | 205,156 |  
|Deferred financing costs                      |  |               | 13,073  |   |               |   |        |              |  |   |                   |   |  |   | 13,073  |  
|Other assets                                  |  |               | 4,721   |   |               |   | 3,792   |              |  |   |                   |   |  |   | 8,513   |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Assets                                  |  | $             | 665,618 |   |               | $ | 250,701 |              |  | $ | (128,645           | ) |  | $ | 787,674 |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Accounts payable and accrued expenses         |  | $             | 30,053  |   |               | $ | 56,863  |              |  | $ |                   |   |  | $ | 86,916  |  
|Intercompany accounts                         |  |               | 10,107  |   |               |   | (10,107 | )            |  |   |                   |   |  |   |        |  
|Current portion of long-term debt             |  |               | 2,229   |   |               |   | 800     |              |  |   |                   |   |  |   | 3,029   |  
|Taxes payable                                 |  |               |        |   |               |   | 4,749   |              |  |   |                   |   |  |   | 4,749   |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Current Liabilities                     |  |               | 42,389  |   |               |   | 52,305  |              |  |   |                   |   |  |   | 94,694  |  
|Long-term debt                                |  |               | 343,396 |   |               |   | 13,490  |              |  |   |                   |   |  |   | 356,886 |  
|Deferred income taxes                         |  |               |        |   |               |   | 8,165   |              |  |   |                   |   |  |   | 8,165   |  
|Notes payable                                 |  |               |        |   |               |   | 77,296  |              |  |   | (77,296            | ) |  |   |        |  
|Deferred and other long-term liabilities      |  |               | 14,489  |   |               |   | 11,007  |              |  |   |                   |   |  |   | 25,496  |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Liabilities                             |  |               | 400,274 |   |               |   | 162,263 |              |  |   | (77,296            | ) |  |   | 485,241 |  
|                                              |  |               |         |  
|Net contributed capital                       |  |               | 220,500 |   |               |   | 52,061  |              |  |   | (52,061            | ) |  |   | 220,500 |  
|Retained earnings                             |  |               | 52,285  |   |               |   | 31,683  |              |  |   |                   |   |  |   | 83,968  |  
|Accumulated other comprehensive (loss) income |  |               | (7,441  | ) |               |   | 4,694   |              |  |   | 712                |   |  |   | (2,035  | )
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Members Equity                         |  |               | 265,344 |   |               |   | 88,438  |              |  |   | (51,349            | ) |  |   | 302,433 |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Liabilities and Members Equity         |  | $             | 665,618 |   |               | $ | 250,701 |              |  | $ | (128,645           | ) |  | $ | 787,674 |  
|                                              |  |               |         |   |               |   |         |              |  |   |                    |   |  |   |         |  



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Consolidated Balance Sheet



|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|--------------------------------------------- |  | ----------------- | ------- | - | ------------- | - | ------- | ------------ |  | - | ------------------ | - |  | - | ------- | -
|                                              |  | December 31, 2003 |        
|                                              |  | Domestic          |         |   | International |   |         | Eliminations |  |   | Total Consolidated |  
|Cash and cash equivalents                     |  | $                 | 28,105  |   |               | $ | 41,083  |              |  | $ |                   |   |  | $ | 69,188  |  
|Accounts receivable, less allowances          |  |                   | 19,038  |   |               |   | 55,745  |              |  |   |                   |   |  |   | 74,783  |  
|Inventories                                   |  |                   | 21,115  |   |               |   | 32,667  |              |  |   |                   |   |  |   | 53,782  |  
|Prepaid expenses                              |  |                   | 937     |   |               |   | 5,499   |              |  |   |                   |   |  |   | 6,436   |  
|Net assets held for sale                      |  |                   | 11,500  |   |               |   |        |              |  |   |                   |   |  |   | 11,500  |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Current Assets                          |  |                   | 80,695  |   |               |   | 134,994 |              |  |   |                   |   |  |   | 215,689 |  
|Property, plant and equipment (net)           |  |                   | 48,725  |   |               |   | 27,090  |              |  |   |                   |   |  |   | 75,815  |  
|Notes receivable                              |  |                   | 67,311  |   |               |   |        |              |  |   | (67,311            | ) |  |   |        |  
|Investment in subsidiaries                    |  |                   | 63,557  |   |               |   |        |              |  |   | (63,557            | ) |  |   |        |  
|Tradenames and patents                        |  |                   | 218,575 |   |               |   | 38,200  |              |  |   |                   |   |  |   | 256,775 |  
|Goodwill                                      |  |                   | 172,318 |   |               |   | 32,838  |              |  |   |                   |   |  |   | 205,156 |  
|Deferred financing costs                      |  |                   | 13,877  |   |               |   |        |              |  |   |                   |   |  |   | 13,877  |  
|Other assets                                  |  |                   | 4,339   |   |               |   | 3,670   |              |  |   |                   |   |  |   | 8,009   |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Assets                                  |  | $                 | 669,397 |   |               | $ | 236,792 |              |  | $ | (130,868           | ) |  | $ | 775,321 |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Accounts payable and accrued expenses         |  | $                 | 37,986  |   |               | $ | 48,361  |              |  | $ |                   |   |  | $ | 86,347  |  
|Intercompany accounts                         |  |                   | 10,845  |   |               |   | (10,845 | )            |  |   |                   |   |  |   |        |  
|Current portion of long-term debt             |  |                   | 1,894   |   |               |   | 811     |              |  |   |                   |   |  |   | 2,705   |  
|Taxes payable                                 |  |                   |        |   |               |   | 7,214   |              |  |   |                   |   |  |   | 7,214   |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Current Liabilities                     |  |                   | 50,725  |   |               |   | 45,541  |              |  |   |                   |   |  |   | 96,266  |  
|Long-term debt                                |  |                   | 350,569 |   |               |   | 14,269  |              |  |   |                   |   |  |   | 364,838 |  
|Deferred income taxes                         |  |                   |        |   |               |   | 9,669   |              |  |   |                   |   |  |   | 9,669   |  
|Notes payable                                 |  |                   |        |   |               |   | 77,621  |              |  |   | (77,621            | ) |  |   |        |  
|Deferred and other long-term liabilities      |  |                   | 13,927  |   |               |   | 11,184  |              |  |   |                   |   |  |   | 25,111  |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Liabilities                             |  |                   | 415,221 |   |               |   | 158,284 |              |  |   | (77,621            | ) |  |   | 495,884 |  
|                                              |  |                   |         |  
|Net contributed capital                       |  |                   | 220,500 |   |               |   | 52,061  |              |  |   | (52,061            | ) |  |   | 220,500 |  
|Retained earnings                             |  |                   | 41,072  |   |               |   | 24,733  |              |  |   |                   |   |  |   | 65,805  |  
|Accumulated other comprehensive (loss) income |  |                   | (7,396  | ) |               |   | 1,714   |              |  |   | (1,186             | ) |  |   | (6,868  | )
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Members Equity                         |  |                   | 254,176 |   |               |   | 78,508  |              |  |   | (53,247            | ) |  |   | 279,437 |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  
|Total Liabilities and Members Equity         |  | $                 | 669,397 |   |               | $ | 236,792 |              |  | $ | (130,868           | ) |  | $ | 775,321 |  
|                                              |  |                   |         |   |               |   |         |              |  |   |                    |   |  |   |         |  



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Statements of Cash Flow



|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | - | ------------- | - | ------ | ------------------ |  | - | ------- | -
|                                                                                  |  | For The Three Months Ended April 2, 2004 |       
|                                                                                  |  | Domestic                                 |        |   | International |   |        | Total Consolidated | 
|Cash Flow From Operating Activities:                                              |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Net Income                                                                        |  | $                                        | 11,213 |   |               | $ | 6,950  |                    |  | $ | 18,163  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Depreciation and amortization                                                     |  |                                          | 2,959  |   |               |   | 1,168  |                    |  |   | 4,127   |  
|Unrealized loss on foreign exchange transactions                                  |  |                                          | 91     |   |               |   | 338    |                    |  |   | 429     |  
|Net income from discontinued operations                                           |  |                                          |       |   |               |   |       |                    |  |   |        |  
|Net gain on sale of discontinued operations                                       |  |                                          |       |   |               |   |       |                    |  |   |        |  
|Change in assets and liabilities:                                                 |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Increase in accounts receivable                                                   |  |                                          | (7,492 | ) |               |   | (5,914 | )                  |  |   | (13,406 | )
|Decrease (Increase) in inventories                                                |  |                                          | (2,641 | ) |               |   | 2,028  |                    |  |   | (613    | )
|Decrease (Increase) in prepaid expenses and other current assets                  |  |                                          | 260    |   |               |   | (114   | )                  |  |   | 146     |  
|(Decrease) Increase in accounts payable and other accrued expenses                |  |                                          | (7,609 | ) |               |   | 3,744  |                    |  |   | (3,865  | )
|Decrease in other                                                                 |  |                                          | (388   | ) |               |   | (1,833 | )                  |  |   | (2,221  | )
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Net Cash (Used in) Provided by Operating Activities                               |  |                                          | (3,607 | ) |               |   | 6,367  |                    |  |   | 2,760   |  
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Cash Flow From Investing Activities:                                              |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Additions to property, plant & equipment                                          |  |                                          | (306   | ) |               |   | (1,632 | )                  |  |   | (1,938  | )
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Net Cash Used in Investing Activities                                             |  |                                          | (306   | ) |               |   | (1,632 | )                  |  |   | (1,938  | )
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Cash Flow from Financing Activities:                                              |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Repayment of syndicated bank credit facility                                      |  |                                          | (6,881 | ) |               |   | (619   | )                  |  |   | (7,500  | )
|Intercompany debt transactions                                                    |  |                                          | 1,415  |   |               |   | (1,415 | )                  |  |   |        |  
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Net Cash Used in Financing Activities                                             |  |                                          | (5,466 | ) |               |   | (2,034 | )                  |  |   | (7,500  | )
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                                          |       |   |               |   | 2,247  |                    |  |   | 2,247   |  
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|NET CHANGE IN CASH & CASH EQUIVALENTS                                             |  |                                          | (9,379 | ) |               |   | 4,948  |                    |  |   | (4,431  | )
|CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    |  |                                          | 28,105 |   |               |   | 41,083 |                    |  |   | 69,188  |  
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  
|CASH & CASH EQUIVALENTS AT END OF PERIOD                                          |  | $                                        | 18,726 |   |               | $ | 46,031 |                    |  | $ | 64,757  |  
|                                                                                  |  |                                          |        |   |               |   |        |                    |  |   |         |  



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ARMKEL, LLC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Statements of Cash Flow



|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|--------------------------------------------------------------------------------- |  | ----------------------------------------- | ------- | - | ------------- | - | ------- | ------------------ |  | - | ------- | -
|                                                                                  |  | For The Three Months Ended March 28, 2003 |        
|                                                                                  |  | Domestic                                  |         |   | International |   |         | Total Consolidated | 
|Cash Flow From Operating Activities:                                              |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Net Income                                                                        |  | $                                         | 7,948   |   |               | $ | 7,271   |                    |  | $ | 15,219  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Depreciation and amortization                                                     |  |                                           | 2,956   |   |               |   | 977     |                    |  |   | 3,933   |  
|Unrealized (gain) loss on foreign exchange transactions                           |  |                                           | (42     | ) |               |   | 123     |                    |  |   | 81      |  
|Net income from discontinued operations                                           |  |                                           |        |   |               |   | (254    | )                  |  |   | (254    | )
|Net gain on sale of discontinued operations                                       |  |                                           |        |   |               |   | (1,862  | )                  |  |   | (1,862  | )
|Change in assets and liabilities:                                                 |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Increase in accounts receivable                                                   |  |                                           | (7,833  | ) |               |   | (4,504  | )                  |  |   | (12,337 | )
|Decrease (Increase) in inventories                                                |  |                                           | (2,657  | ) |               |   | 662     |                    |  |   | (1,995  | )
|Decrease in prepaid expenses and other current assets                             |  |                                           | 161     |   |               |   | 165     |                    |  |   | 326     |  
|(Decrease) Increase in accounts payable and other accrued expenses                |  |                                           | (7,186  | ) |               |   | 4,637   |                    |  |   | (2,549  | )
|(Decrease) Increase in other                                                      |  |                                           | 2,208   |   |               |   | (4,135  | )                  |  |   | (1,927  | )
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Net Cash (Used in) Provided by Operating Activities                               |  |                                           | (4,445  | ) |               |   | 3,080   |                    |  |   | (1,365  | )
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Cash Flow From Investing Activities:                                              |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Additions to property, plant & equipment                                          |  |                                           | (1,503  | ) |               |   | (551    | )                  |  |   | (2,054  | )
|Proceeds from divestiture                                                         |  |                                           |        |   |               |   | 22,573  |                    |  |   | 22,573  |  
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Net Cash (Used in) Provided by Investing Activities                               |  |                                           | (1,503  | ) |               |   | 22,022  |                    |  |   | 20,519  |  
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Cash Flow from Financing Activities:                                              |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Repayment of syndicated bank credit facility                                      |  |                                           | (9,881  | ) |               |   | (16,372 | )                  |  |   | (26,253 | )
|Intercompany capital contribution                                                 |  |                                           | 9,797   |   |               |   | (9,797  | )                  |  |   |        |  
|Intercompany debt transactions                                                    |  |                                           | (6,115  | ) |               |   | 6,115   |                    |  |   |        |  
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Net Cash Used in Financing Activities                                             |  |                                           | (6,199  | ) |               |   | (20,054 | )                  |  |   | (26,253 | )
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                                           |        |   |               |   | 925     |                    |  |   | 925     |  
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|NET CHANGE IN CASH & CASH EQUIVALENTS                                             |  |                                           | (12,147 | ) |               |   | 5,973   |                    |  |   | (6,174  | )
|CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    |  |                                           | 35,093  |   |               |   | 19,687  |                    |  |   | 54,780  |  
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  
|CASH & CASH EQUIVALENTS AT END OF PERIOD                                          |  | $                                         | 22,946  |   |               | $ | 25,660  |                    |  | $ | 48,606  |  
|                                                                                  |  |                                           |         |   |               |   |         |                    |  |   |         |  



The following table sets forth the
Companys principal product lines and related data for the three month period ended April 2, 2004 and March 28, 2003.



|                                          |  |                    |         |               |   |       
|----------------------------------------- |  | ------------------ | ------- | ------------- | - | ------
|                                          |  | Three Months Ended
|                                          |  | April 2,2004       |         | March 28,2003
|Net Sales                                 |  |                    |         |               |   |       
|Products                                  |  |                    |         |               |   |       
|Family Planning(1)                        |  | $                  | 52,708  |               | $ | 44,712
|Depilatories and waxes; face and skincare |  |                    | 23,827  |               |   | 23,408
|Oral care                                 |  |                    | 10,626  |               |   | 8,553 
|OTC Products                              |  |                    | 13,810  |               |   | 12,532
|Other consumer products                   |  |                    | 12,802  |               |   | 10,449
|                                          |  |                    |         |               |   |       
|Total net sales                           |  | $                  | 113,773 |               | $ | 99,654
|                                          |  |                    |         |               |   |       

---

|(1) | Family Planning includes condom product sales and pregnancy and ovulation kits.
|--- | -------------------------------------------------------------------------------





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|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- |  | --------------------------------------------------------------------------------------



Overview



Armkel, LLC (the Company) is an equally owned joint venture formed by Church & Dwight Co., Inc. (C&D) and affiliates of
Kelso & Company, L.P. (Kelso). On September 28, 2001, the Company acquired certain of the domestic consumer product assets of Carter-Wallace (the Acquisition), primarily Trojan condoms, Nair depilatories,
and First Response and Answer pregnancy and ovulation test kits, and the international subsidiaries of Carter-Wallace. Initial financing was obtained on August 28, 2001, however operations did not commence until the Acquisition was
consummated on September 28, 2001. The remainder of Carter-Wallace, comprised of its healthcare and pharmaceuticals businesses, was merged with MedPointe, Inc. (MedPointe) after the completion of the Acquisition. Simultaneously with the
consummation of the Acquisition, the Company sold the remainder of the consumer products businesses, Arrid antiperspirant in the U.S. and Canada and the Lambert-Kay line of pet care products, to C&D (the Disposed Businesses).



On May 6, 2004, C&D announced that it has reached a
non-binding understanding with its partner, Kelso & Company, to purchase Kelsos 50% interest in the Company, for a purchase price of approximately $254 million. It is expected that the purchase will be completed on or about May 30, 2004,
subject to customary closing conditions including completion of financing. C&D expects to raise a total of $640 million in medium-term borrowing facilities, which will be used to finance the acquisition and replace both C&Ds and the
Companys existing borrowing facilities.



The Company is a
leading marketer and manufacturer of well recognized branded personal care products. It recognizes revenues and profits from selling its products to consumers through supermarkets, drug stores and mass merchandisers.



Operationally, the Companys key performance indicator is Adjusted
EBITDA, as defined in the syndicated bank credit and bond agreements. The Liquidity and Capital Resources section below discusses Adjusted EBITDA and its relation to the Companys borrowing agreements. These agreements are material to the
Company and information about the covenants is required for our investors understanding of the Companys liquidity and financial condition. Additionally, the Company notes that its SEC filings are to meet its requirements under its bond
agreement for the benefit of it bondholders. The Company has met its covenant ratios each quarter and expects to continue to do so. Operating cash flows are expected to be sufficient to meet the anticipated cash requirements for the coming year,
including continued prepayments to the Companys syndicated bank credit facility.



Results of Continuing Operations



Three
Months ended April 2, 2004 compared with the Three Months ended March 28, 2003



|                                               |  |                    |       |               |     |   |               |   |               |  |     |  
|---------------------------------------------- |  | ------------------ | ----- | ------------- | --- | - | ------------- | - | ------------- |  | --- | -
|                                               |  | Three Months Ended |      
|(amounts in millions)                          |  | April 2,2004       |       | % ofNet Sales |     |   | March 28,2003 |   | % ofNet Sales | 
|                                               |  |                    |       |               |     |   |               |   |               |  |     |  
|Net sales                                      |  | $                  | 113.8 |               | 100 | % |               | $ | 99.7          |  | 100 | %
|Cost of goods sold                             |  |                    | 48.1  |               | 42  | % |               |   | 41.2          |  | 41  | %
|                                               |  |                    |       |               |     |   |               |   |               |  |     |  
|Gross Profit                                   |  |                    | 65.7  |               | 58  | % |               |   | 58.5          |  | 59  | %
|Marketing expenses                             |  |                    | 12.8  |               | 11  | % |               |   | 12.0          |  | 12  | %
|Selling, general & administrative expenses     |  |                    | 23.0  |               | 20  | % |               |   | 21.4          |  | 21  | %
|Interest expense & other income                |  |                    | 8.2   |               | 8   | % |               |   | 8.9           |  | 10  | %
|                                               |  |                    |       |               |     |   |               |   |               |  |     |  
|Income before taxes from continuing operations |  | $                  | 21.7  |               | 19  | % |               | $ | 16.2          |  | 16  | %
|                                               |  |                    |       |               |     |   |               |   |               |  |     |  





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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)



Net Sales



Net sales for the three months ended April 2, 2004 increased $14.1 million, or 14.1%, to $113.8 million from $99.7 million in the same period last year.
This increase includes $6.7 million of favorable foreign exchange. This increase is discussed by business segment below.



Domestic net sales for the quarter increased $5.9 million, or 11.3%, to $58.0 million in 2004 from $52.1 million in 2003. This increase in Domestic net
sales (net of intercompany eliminations) is primarily due to new product offerings in Trojan and Nair, additional sales generated by marketing programs for First Response and the effects of six extra days in the quarter as a result of the
Companys fiscal calendar.



International net sales for
the quarter increased $8.2 million, or 17.2%, to $55.8 million in 2004 from $47.6 million in 2003. On a constant dollar basis, sales increased $1.5 million or 3.2% primarily due to higher sales in England and Canada.



Cost of Goods Sold



Cost of goods sold for the three months ended April 2, 2004 increased $6.9 million or 16.7% to $48.1 million from $41.2
million in the same period last year. Gross profit as a percentage of net sales declined slightly to 58% in 2004 from 59% in 2003. The 1.0 percentage point decline over 2003 results is primarily related to unfavorable product mix and higher
distribution costs in the International division partially offset by a 0.4 point improvement in the domestic division.



Cost of goods sold for domestic products for the quarter increased $1.9 million or 10.2% to $20.6 million in 2004 from $18.7 million in 2003. Gross profit
as a percentage of net sales improved slightly to 64.6% in 2004 from 64.2% in 2003. The slight improvement is due to favorable product mix.



Cost of goods sold for international products for the quarter increased $5.0 million or 22.2% to $27.5 million in 2004 from $22.5 million in 2003. Gross
profit as a percentage of net sales declined to 50.6% in 2004 from 52.6% in 2003. The decrease is primarily related to unfavorable product mix and higher distribution costs.



Marketing Expenses and Selling, General and Administrative Expenses



Marketing expenses in the three months ended April 2, 2004 increased by $0.8 million, or 6.7%, to $12.8 million from $12.0
million in the same period last year. Marketing expenses as a percentage of net sales declined to 11% in 2004 from 12% in 2003. The increase in spending is primarily related to the domestic pregnancy kit business.



Selling, general and administrative (SG&A) expenses in the
three months ended April 2, 2004 increased $1.6 million, or 7.5%, to $23.0 million in 2004 from $21.4 million in 2003. The increase in SG&A expense is due to higher spending for research and development and higher costs at our International
subsidiaries due to foreign exchange. However, SG&A expenses as a percentage of net sales declined to 20% in 2004 from 21% in 2003 due to the strong sales volume.



Interest Expense and Other Income



Interest expense for the three months ended April 2, 2004 was $7.8 million compared to $8.9 million for the same period last year. This reduction in
interest expense is related to the lower debt position from prior year and lower interest rates on the Companys credit facility loans.



Interest income of $0.3 million for the three months ended April 2, 2004 remains unchanged from last year.



Other expense was $0.7 million for the three months ended April 2, 2004
compared to $0.3 million last year and primarily relates to foreign exchange remeasurement on intercompany loans between the Companys subsidiaries.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)



Liquidity and Capital Resources



The Company had total outstanding debt of $359.9 million, and cash and cash equivalents of $64.8 million, for a net debt
position of $295.1 million at April 2, 2004. This compares to the net debt position of $298.3 million at December 31, 2003. The decrease in net debt is attributable to the use of proceeds from cash flow from operations.



Interest payments on the notes and on borrowings under the senior credit
facilities affect the Companys liquidity requirements. Borrowings under the syndicated bank credit facility bear interest at variable rates plus any applicable margin. The interest rates on the syndicated bank credit facility are dependent on
the attainment of certain covenants depending on the ratio of total debt to EBITDA as defined in the Companys credit agreement (Adjusted EBITDA). Adjusted EBITDA is a required component of the financial covenants contained in the
Companys primary credit facility, a material agreement to the Company, and management believes that the presentation of Adjusted EBITDA is useful to investors as a financial indicator of the Companys ability to service its indebtedness.
Adjusted EBITDA may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to cash flows from operating activities, which is determined in accordance with accounting principles generally
accepted in the United States. Financial covenants include a total debt to Adjusted EBITDA leverage ratio and an interest coverage ratio, which if not met, could result in an event of default and trigger the early termination of the credit facility,
if not remedied within a certain period of time. Adjusted EBITDA was approximately $32.9 million for the three months ended April 2, 2004. The leverage ratio, as defined in the credit agreement, was 2.72 versus the agreements maximum 4.75, and
the interest coverage ratio was 3.82 versus the agreements minimum of 2.25. The reconciliation of Net Cash Provided by Operating Activities (the most directly comparable GAAP financial measure) to the Companys key liquidity measure,
Adjusted EBITDA, per the term loan agreement, is as follows (in millions) for the three months ended April 2, 2004:



|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|Net Cash Provided by Operating Activities |  | $ | 2,760  |  
|Interest Expense(1)                       |  |   | 6,919  |  
|Interest Income                           |  |   | (291   | )
|Income Tax Provision                      |  |   | 3,505  |  
|Decrease in Working Capital               |  |   | 17,708 |  
|Other                                     |  |   | 2,337  |  
|                                          |  |   |        |  
|Adjusted EBITDA                           |  | $ | 32,938 |  
|                                          |  |   |        |  
|Net Cash Used in Investing Activities     |  | $ | 1,938  |  
|                                          |  |   |        |  
|Net Cash Used in Financing Activities     |  | $ | 7,500  |  
|                                          |  |   |        |  

---

|(1) | Interest expense excludes the amortization of deferred financing costs.
|--- | -----------------------------------------------------------------------



Cash flow from operating activities was $2.8
million for the three months ended April 2, 2004 as a result of higher operating earnings partially offset by $0.1 million in severance payments, $1.2 million in transition expenses related to the cost to carry and sell the Cranbury facility, which
includes medical and pension payments for transitional employees in excess of reserves. Also, there is an increase in working capital due to higher accounts receivable of $13.4 million from sales volume, which includes a $7.5 million increase in the
Domestic division and a $5.9 million increase in the International division, and a decrease in accounts payable of $3.9 million.



Cash flow used in investing activities was $1.9 million for the three months ended April 2, 2004 for capital expenditures.



Cash flow used in financing activities was $7.5 million for a voluntary
repayment of debt from proceeds generated from cash flow from operating activities.



The Company incurred severance and other change in control related liabilities to certain employees. Since the Acquisition the Company paid $45.2 million in severance payments, including $0.1 million paid in the three
months ended April 2, 2004. The Company estimates that the total severance payments will be approximately $47.0 million. The Company anticipates that approximately $0.5 million of the remaining $1.8 million reserve will be paid in 2004



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)



for the remaining transition employees, with the majority of the balance being carried into future years for medical
and life insurance payments for two former Carter-Wallace executives. The Company also paid $0.1 million for environmental remediation costs at its Cranbury, New Jersey facility for the three months ended April 2,2004.



The following table summarizes the activity in the Companys
reorganization accruals (in millions):



|                                |  |                               |     |          |   |      |             |  |                           |   |  |   |    
|------------------------------- |  | ----------------------------- | --- | -------- | - | ---- | ----------- |  | ------------------------- | - |  | - | ---
|                                |  | Reserves at December 31, 2003 |     | Payments |   |      | Adjustments |  | Reserves at April 2, 2004
|Severance and other charges     |  | $                             | 1.9 |          | $ | (0.1 | )           |  | $                         |  |  | $ | 1.8
|Environmental remediation costs |  |                               | 1.5 |          |   | (0.1 | )           |  |                           |  |  |   | 1.4
|                                |  |                               |     |          |   |      |             |  |                           |   |  |   |    
|                                |  | $                             | 3.4 |          | $ | (0.2 | )           |  | $                         |  |  | $ | 3.2
|                                |  |                               |     |          |   |      |             |  |                           |   |  |   |    



The Company expects
that the total capital expenditures for the full year 2004 will be approximately $9.0 million.



The Company expects that funds provided from operations and available borrowings of $85.0 million under its six-year revolving credit facility, none of which was drawn at April 2, 2004, will provide sufficient funds
to operate its business, to make expected capital expenditures and to meet foreseeable liquidity requirements, including debt service on the notes and the senior credit facilities. There can be no assurance, however, that the Companys business
will generate sufficient cash flows or that future borrowings will be available in an amount sufficient to enable it to service its debt or to fund its other liquidity needs. If the Company is unable to pay its obligations, it will be required to
pursue one or more alternative strategies, such as selling assets, refinancing or restructuring indebtedness or raising additional capital. However, the Company cannot give assurance that any alternative strategies will be feasible or prove
adequate. However, management believes that operating cash flow, coupled with the Companys access to credit markets, will be sufficient to meet the anticipated cash requirements for the coming year.



Recent Accounting Pronouncements



In January 2003, the FASB issued Financial Interpretation No. 46 (FIN No.
46) Consolidation of Variable Interest Entities, as amended in December 2003 by FIN No. 46R. FIN No. 46 sets forth criteria to be used in determining whether an investment in a variable interest entity (VIE) should be consolidated and is
based on the general premise that companies that control another entity through interests other than voting interests should consolidate the controlled entity. FIN No. 46 would require the immediate consolidation of specified VIEs created after
January 31, 2003. For specified VIEs created before February 1, 2003, FIN No. 46 would require consolidation in interim or annual financial statements issued for periods beginning after December 15, 2003. The Company adopted FIN No. 46R and
determined that it would not have a material impact to its consolidated financial statements.



In December 2003, the FASB issued a revised version of SFAS No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106. This
Statement retained the disclosure requirements as originally included in SFAS No. 132 and contained additional disclosure requirements. The Company has included the required disclosures in Note 11 to its financial statements.



In January 2004, the FASB issued FASB Staff Position (FSP) No. 106-1
Accounting and Disclosure Requirements to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy
to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The FSP permits a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a
one-time election to defer accounting for the effects of the Act. The Company does not believe that the effects of the Act apply to its postretirement health care plans and it will not have a material impact on its consolidated financial statements.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK



There have not been any material changes during the three month period ended April, 2, 2004. For further information, please refer to the Companys December 31, 2003 Annual Report on Form 10-K.



ITEM 4. CONTROLS AND PROCEDURES



(a) Evaluation of
Disclosure Controls and Procedures



The Companys
management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness the Companys disclosure controls and procedures as of the end of the period covered by this report.Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable
assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is recorded, processed,summarized and reported within the time periods specified in the SECs rules and
forms. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within a company have been detected.



(b) Change in
Internal Control over Financial Reporting



No change in the
Companys internal control over financial reporting occurred during the Companys first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial
reporting.



CAUTIONARY NOTE ON FORWARD LOOKING INFORMATION



This report contains forward-looking statements relating, among other
things, to short- and long-term financial objectives, sales and earnings growth, gross margin, and cash flow. These statements represent the intentions, plans, expectations and beliefs of the Company, and are subject to risks, uncertainties and
other factors, many of which are outside the Companys control and could cause actual results to differ materially from such forward-looking statements. The uncertainties include assumptions as to market growth and consumer demand (including
the effect of political and economic events on consumer demand), raw material and energy prices, the financial condition of major customers, trade, competitive and consumer reactions to the Companys products and other factors described in the
Companys quarterly and annual reports with the SEC.



The
Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the Company makes on related
subjects in our filings with the U.S. Securities and Exchange Commission. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.



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PART II  Other Information



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



a. Exhibits



|     |  |                                                                                                                                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certifications of the Chief Executive Officer of Armkel, LLC required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
|     | 
|31.2 |  | Certifications of the Chief Financial Officer of Armkel, LLC required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
|     | 
|32.1 |  | Certifications of the Chief Executive Officer of Armkel, LLC required by Rule 13a-14(b) under the Securities Exchange Act of 1934.
|     | 
|32.2 |  | Certifications of the Chief Financial Officer of Armkel, LLC required by Rule 13a-14(b) under the Securities Exchange Act of 1934.



b. No reports on Form
8-K were filed for the three months ended April 2, 2004.



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



|                   |  |                             
|------------------ |  | ----------------------------
|                   |  | ARMKEL, LLC.                
|                   |  | (REGISTRANT)                
|                   | 
|DATE: May 12, 2004 |  | /s/ Maureen K. Usifer       
|                   |  | MAUREEN K. USIFER           
|                   |  | CHIEF FINANCIAL OFFICER AND 
|                   |  | PRINCIPAL ACCOUNTING OFFICER
|                   | 
|DATE: May 12, 2004 |  | /s/ Zvi Eiref               
|                   |  | ZVI EIREF                   
|                   |  | DIRECTOR                    



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