-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BiVX0fyVb48tQMu/KXcQThb7Kbv5qNBKX7yjGA7YAo25Zkb4I/QfdMxv0B8A9S62 Mbt2K4X+LffkpMlt+PuKaQ== 0000010427-95-000008.txt : 19950517 0000010427-95-000008.hdr.sgml : 19950517 ACCESSION NUMBER: 0000010427-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950516 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAUSCH & LOMB INC CENTRAL INDEX KEY: 0000010427 STANDARD INDUSTRIAL CLASSIFICATION: OPHTHALMIC GOODS [3851] IRS NUMBER: 160345235 STATE OF INCORPORATION: NY FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04105 FILM NUMBER: 95540090 BUSINESS ADDRESS: STREET 1: ONE CHASE SQUARE STREET 2: P O BOX 54 CITY: ROCHESTER STATE: NY ZIP: 14601-0054 BUSINESS PHONE: 7163388787 MAIL ADDRESS: STREET 1: ONE CHASE SQUARE STREET 2: P O BOX 54 CITY: ROCHESTER STATE: NY ZIP: 14601-0054 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended April 1, 1995 Commission File Number: 1-4105 BAUSCH & LOMB INCORPORATED Exact name of registrant as specified in its charter) New York (State or other jurisdiction of incorporation or organization) 16-0345235 IRS Employer Identification No.) One Chase Square, Rochester NY 14601-0054 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (716) 338-6000 Indicate by checkmark 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 The number of shares of Common stock of the registrant, outstanding as of April 1, 1995 was 58,179,608, consisting of 57,350,720 shares of Common stock and 828,888 shares of Class B stock which are identical with respect to dividend and liquidation rights, and vote together as a single class for all purposes. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Unaudited financial statements for the first quarters of 1995 and 1994 of Bausch & Lomb Incorporated and Consolidated Subsidiaries are presented on the following pages. The audited balance sheet at December 31, 1994 is presented for comparative purposes. Financial statements for the three months ended April 1, 1995 have been prepared by the Company in accordance with its usual accounting policies and are based in part on approximations. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements in accordance with generally accepted accounting principles have been included. All such adjustments were of a normal recurring nature. BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES STATEMENT OF EARNINGS Dollar Amounts In Thousands - Except Per Share Data
First Quarter Ended April 1, March 26, 1995 1994 Net Sales $465,601 $438,771 Costs And Expenses Cost of products sold 218,365 204,423 Selling, administrative and general 190,065 157,765 Research and development 14,923 15,289 ------- ------- 423,353 377,477 ------- ------- Operating Earnings 42,248 61,294 ------- ------- Other (Income) Expense Investment income (9,999) (8,349) Interest expense 12,139 8,967 Loss (gain) from foreign currency, net 1,592 (2,024) ------- -------- 3,732 (1,406) ------- --------- Earnings Before Income Taxes And Minority Interest 38,516 62,700 Provision for income taxes 13,258 21,588 ------- ------- Earnings Before Minority Interest 25,258 41,112 Minority interest in subsidiaries 4,974 5,452 ------- ------- Net Earnings $ 20,284 $ 35,660 Retained Earnings At Beginning Of Period 846,245 889,325 Cash Dividends Declared: Common stock, $0.245 per share in 1995 and $0.22 per share in 1994 14,257 13,027 ------- -------- Retained Earnings At End Of Period $852,272 $911,958 ------- ------- ------- ------- Net Earnings Per Common Share $ 0.34 $ 0.60 ------- ------- ------- ------- Average Common Shares Outstanding (000s) 58,861 59,919 ------- ------- ------- ------- See Notes to Financial Statements
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES BALANCE SHEET Dollar Amounts In Thousands
April 1, December 31, 1995 1994 ASSETS Current Assets Cash and cash equivalents $ 270,731 $ 230,369 Short-term investments, at cost which approximates market 2,275 2,173 Trade receivables, less allowances of $17,302 and $16,830, respectively 271,992 271,990 Inventories, net 334,842 312,781 Deferred income taxes, less valuation allowance of $17,882 40,372 40,372 Other current assets 112,164 96,281 --------- -------- 1,032,376 953,966 Property, Plant And Equipment, net 543,990 542,750 Goodwill And Other Intangibles, less accumulated amortization of $84,786 and $77,394, respectively 400,324 395,950 Other Investments 425,000 425,000 Other Assets 130,393 140,065 --------- --------- Total Assets $2,532,083 $2,457,731 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable $ 297,213 $ 252,783 Current portion of long-term debt 109,794 47,788 Accounts payable 77,555 71,718 Accrued compensation 69,902 71,742 Accrued liabilities 231,102 216,956 Federal and foreign income taxes 23,932 15,551 --------- -------- 809,498 676,538 Long-Term Debt, less current portion 232,525 289,504 Other Long-Term Liabilities 137,462 149,094 Minority Interest 428,944 428,208 --------- --------- Total Liabilities 1,608,429 1,543,344 --------- --------- Shareholders' Equity 4% Cumulative Preferred stock, par value $100 per share - - Class A Preferred stock, par value $1 per share - - Common stock, par value $0.40 per share, 60,198,322 shares issued 24,079 24,079 Class B stock, par value $0.08 per share, 1,211,563 and 1,072,880 shares issued, respectively 97 86 Capital in excess of par value 88,702 90,637 Cumulative translation adjustment 84,440 47,609 Retained earnings 852,272 846,245 --------- --------- 1,049,590 1,008,656 Common and Class B stock in treasury, at cost, 3,230,277 and 2,278,745 shares issued, respectively (125,936) (94,269) --------- --------- Total Shareholders' Equity 923,654 914,387 --------- --------- Total Liabilities And Shareholders' Equity $2,532,083 $2,457,731 --------- --------- --------- --------- See Notes To Financial Statements
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CASH FLOWS Dollar Amounts In Thousands
Three Months Ended April 1, March 26, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $20,284 $ 35,660 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation of property, plant and equipment 22,010 19,248 Amortization of goodwill and other intangibles 4,031 4,094 Increase in deferred income taxes (760) (58) Loss on retirement of fixed assets 155 737 Exchange (gain) loss (1,085) 1,198 Increase in undistributed earnings of subsidiaries 686 1,102 Decrease in accounts receivable 4,174 20,939 Increase in inventories (16,195) (21,097) Decrease (increase) in other current assets 3,617 (18,413) Increase (decrease) in accounts payable and accruals 12,585 (34,206) Increase (decrease) in tax reserves 6,278 (7,115) Decrease in other long-term liabilities (12,573) (4,345) -------- ------- Net cash provided by (used in) operating activities 43,207 (2,256) -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchases of property, plant and equipment (14,678) (30,056) Acquisition of businesses, net of cash and short-term investments acquired - (26,037) Other 5,877 (3,828) ------- -------- Net cash used in investing activities (8,801) (59,921) ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Repurchases of Common shares (34,858) (1,066) Exercise of stock options 1,267 4,839 Net proceeds from issuance of debt 41,004 76,458 Payment of dividends (14,505) (13,021) -------- -------- Net cash (used in) provided by financing activities (7,092) 67,210 -------- -------- Effect of exchange rate changes on cash, cash equivalents and short-term investments 13,150 1,575 -------- -------- Net increase in cash, cash equivalents and short-term investments 40,464 6,608 Cash, cash equivalents and short-term investments, beginning of period 232,542 546,036 ------- ------- Cash, cash equivalents and short-term investments, end of period $273,006 $552,644 ------- ------- ------- ------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 15,464 $ 12,237 Income taxes $ 8,782 $ 27,589 See Notes To Financial Statements
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE A: Earnings Per Share Net earnings per Common share are based on the weighted average number of Common and Class B shares outstanding during the period, adjusted for the assumed conversion of dilutive stock options. In computing the per share effect of assumed conversion, funds which would have been received from the exercise of options are considered to have been used to purchase Common shares at current market prices, and the resulting net additional Common shares are included in the calculation of average Common shares outstanding. The number of Common shares used to calculate net earnings per Common share were 58,861,000 at April 1, 1995 and 59,919,000 shares at March 26, 1994. See Exhibit 11 filed as a part of this Report for details regarding the computation of earnings per share. NOTE B: Inventories Inventories consisted of the following: (Dollar Amounts In Thousands)
April 1, December 31, 1995 1994 Raw materials and supplies $ 81,342 $ 79,295 Work in process 25,264 23,985 Finished products 240,864 222,079 ------- ------- 347,470 325,359 Less: Reserve for valuation of certain U.S. inventories at last-in, first-out cost 12,628 12,578 ------- ------- $334,842 $312,781 ------- ------- ------- -------
NOTE C: Property, Plant And Equipment Major classes of property, plant and equipment consisted of the following: (Dollar Amounts In Thousands) April 1, December 31, 1995 1994 Land $ 22,435 $ 21,474 Leasehold improvements 33,761 32,635 Buildings 374,838 366,003 Machinery and equipment 602,104 587,586 --------- --------- 1,033,138 1,007,698 Less: Accumulated depreciation 489,148 464,948 --------- --------- $ 543,990 $ 542,750 --------- --------- --------- --------- NOTE D: Subsequent Event On May 1, 1995 the Company announced that it had concluded the sale of its Sports Optics Division to Worldwide Sports and Recreation, Inc., an affiliate of Pexco Holdings, Inc. Total consideration included approximately $78 million in cash paid at closing, plus future payments and securities of Worldwide Sports and Recreation, Inc. The Sports Optics Division markets a full line of binoculars, riflescopes, telescopes, spotting scopes and sporting glasses. It contributed approximately $110 million to the Company's 1994 sales. The Company expects to record a non-recurring after- tax gain of approximately $21 million on the sale. The Company had previously announced it will use the proceeds from the divestiture primarily to increase its ongoing repurchases of Company stock in the open market. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This financial review, which should be read in conjunction with the accompanying financial statements, contains management's discussion and analysis of the Company's results of operations, liquidity and progress toward stated financial objectives. The Company seeks to manage its diverse operations to outperform peer companies on key financial measures such as sales and earnings growth and return on assets and equity. The Standard & Poor's Healthcare Composite Group has been formally adopted as the peer group against which Bausch & Lomb will systematically measure its financial progress. The Company also emphasizes the need for operational stability, predictability and profitability. RESULTS OF OPERATIONS Net Sales By Business Segment Bausch & Lomb's results are reported in two business segments. The healthcare segment includes personal health, medical and biomedical products. In the personal health sector, major lines include contact lens care products, eye care solutions, over-the-counter medications, skin care products and oral care products. Medical products include contact lenses and lens materials, prescription pharmaceuticals, hearing aids and dental implants. Biomedical products include purpose-bred laboratory animals for biomedical research, specific pathogen-free eggs for vaccine production and a variety of biotechnical and professional services provided to the scientific research community. Bausch & Lomb's optics segment includes sunglasses, binoculars, riflescopes, telescopes and optical thin film coating services and products. As announced on May 1, 1995, the Company completed the sale of its Sports Optics Division, which markets binoculars, riflescopes and telescopes, on April 28, 1995. Consolidated revenues for the quarter ended April 1, 1995 were $466 million, an increase of $27 million or 6% over the 1994 first quarter. The following is a summary of sales by business segment: Net Sales By Business Segment (Dollar Amounts in Millions) First Quarter 1995 1994 Healthcare $316.2 $284.5 Optics 149.4 154.3 ----- ----- Net Sales $465.6 $438.8 ----- ----- ----- ----- Healthcare Segment Revenues Revenues in the healthcare segment increased $32 million or 11% over the 1994 first quarter. Major product sector revenues as a percentage of total healthcare segment sales are presented below: Healthcare Segment Sales By Product Sector First Quarter 1995 1994 Personal Health 50% 50% Medical 35% 35% Biomedical 15% 15% Within the personal health sector, 1995 first quarter revenues improved 12% from the comparable 1994 level. Continued strong demand for the Company's lens care solutions products, including the ReNu, Boston and Bausch & Lomb lines, contributed to the revenue gain. Sales of over- the-counter medications in Europe advanced strongly as did eyecare products in the U.S., the result of incremental sales of Opcon-A, an antihistamine/decongestant introduced in the fourth quarter of 1994, which has received good initial acceptance. Skin care revenues were essentially even with the level of a year ago. Revenues for consumer oral care products declined from 1994 due to the realignment of operations outside the U.S. Within the U.S., sales of Interplak power toothbrushes were even with the prior year, as lower product pricing led to increased unit shipments. Sales of Clear Choice mouthwash trailed the prior year. Medical sector sales rose 11% from 1994 levels. Worldwide contact lens revenues advanced 4%, led by improved results for planned replacement lens products outside the U.S., most notably in Europe and Asia, based on the continued shift in market demand toward these types of lenses. Planned replacement lens revenues declined within the U.S. as compared to the prior year, reflecting both the absence of promotional programs in the current year which had generated revenues in the 1994 first quarter and competitive activity for these products. Sales of traditional contact lenses increased significantly in Japan, but these gains were more than offset by shortfalls in the U.S. from lower unit shipments due to the market shift toward planned replacement lenses. Increased worldwide revenues for rigid gas permeable (RGP) lenses and lens materials reflected the impact of the new Boston 7 lens material and also contributed to overall contact lens growth. Worldwide ophthalmic pharmaceutical revenues improved significantly. Within the U.S., these results were attributable to the success of recently introduced products, including Tobramycin and Levobunolol. Results also benefited from incremental sales of Crolom, which is indicated for seasonal allergic eye conditions. First quarter revenue growth for the Company's prescription pharmaceutical operations in Europe reflected increased shipments of glaucoma and anti-infective products to distributors, anticipating the end of a moratorium on price increases by the German government. Medical sector sales also benefited from increased demand for dental implant products and hearing aids. Hearing aid performance reflected stabilization in this market as well as consumer interest stimulated by the recently introduced Mirage completely in-the-canal product line. A 9% improvement in the Company's biomedical sector reflected increased volumes, which contributed to favorable results for animal operations outside the U.S., increased shipments of specific pathogen-free eggs and incremental sales generated by recent acquisitions. Optics Segment Revenues Revenues in the optics segment declined 3% to $149 million, compared to $154 million in 1994. Revenue shortfalls were evidenced for Ray-Ban sunglass products in the U.S. and Southeast Asia, which more than offset improved results in Europe and Japan. Shipments of Revo sunglasses were sharply above the levels of a year ago. Revenue growth was also attained for the Company's moderately-priced sunglasses, including the Liz Claiborne and Suncloud lines. Higher sales for sports optics products were led by increased demand for binoculars. The Company announced on May 1, 1995 that the divestiture of this business had been completed on April 28, 1995. Net Sales By Geographic Region Sales in markets outside the U.S. totaled $218 million, an increase of $31 million or 16% from the 1994 first quarter. Changes in currency exchange rates improved sales comparisons to 1994 by $17 million. In total, non-U.S. sales represented 47% of consolidated revenues, compared to 43% in the 1994 first quarter. European revenues increased 18% and benefited from the favorable impact of currency movements, particularly in Germany. This progress also reflected improved demand for the Company's over-the-counter medications, as well as lens care solutions, prescription pharmaceuticals, planned replacement lenses and sunglasses. Sales in Japan advanced 49%, attributable to favorable currency exchange rate fluctuations, as well as increased sales of contact lenses, sunglasses and lens care solutions. Elsewhere in Asia, revenues declined 8% despite favorable currency exchange rate movements, reflecting lower sunglass sales due to changes in business practices implemented during the second half of 1994 as well as revenue declines in China resulting from restrictive monetary controls in that market. Revenue growth of 7% was achieved in Latin America and Canada despite sales shortfalls in Mexico resulting from the devaluation of the peso and general economic uncertainty. U.S. sales totaled $247 million in the first quarter, a decrease of $4 million or 2% from 1994. The decline was primarily due to the decision to limit distributor promotions in the contact lens and Ray-Ban sunglass businesses. Offsetting these shortfalls were revenue increases for the pharmaceutical, lens care, hearing aid and dental implant businesses. U.S. pharmaceutical revenues advanced 33% in the first quarter, led by incremental shipments of recently introduced products. Costs And Expenses The cost of products sold ratio was 46.9% for the 1995 first quarter versus 46.6% for the comparable 1994 period. The higher ratio was primarily attributable to the growing significance of lower-margin planned replacement contact lenses, shifts in the U.S. sunglass business toward lower- margin contemporary styles, and reduced selling prices for Interplak products in the U.S. as compared to the prior year period. Due to competitive pressures, price reductions for Interplak products were implemented in the latter part of 1994. Selling, administrative and general expenses were 40.8% of sales in the first quarter of 1995 compared to 36.0% in 1994. The increase reflects promotional support for the launch of several new products, including Opcon-A and the New Day single use contact lens. Increased spending also included advertising to support Ray-Ban products in key markets, the establishment of a business development fund to support marketing programs directed toward contact lens patients, television advertising for Curel skin care products and support for next generation Interplak products. Corporate administration expense was 2.4% of sales in the first quarter of 1995 versus 2.5% for 1994 and reflected the Company's continuing success in managing these expenses to a targeted level of no more than 3% of sales. Research and development expense for the first three months of 1995 decreased 2% from 1994 levels. Spending in support of new pharmaceutical products and RGP lens materials was more than offset by comparisons against one-time strategic spending for the development of new technology Interplak products in 1994. Restructuring Reserves In the fourth quarter of 1993, the Company announced plans to restructure its sunglass, pharmaceutical and biomedical operations and recorded a pre-tax restructuring charge of $50 million. The following table sets forth the activity in the restructuring reserve through April 1, 1995: Dollar Amounts In Millions _________________________________________________________________________ Sunglass Pharmaceutical Biomedical Total - ------------------------------------------------------------------------- Total 1993 restructuring provisions $34.5 $9.0 $6.5 $50.0 Less charges against reserve: Non-cash items 14.6 2.4 2.1 19.1 Cash payments: 1993 1.4 2.2 1.4 5.0 1994 16.3 3.5 2.0 21.8 1995 1.0 - 0.8 1.8 - -------------------------------------------------------------------------- Balance at April 1, 1995 $ 1.2 $0.9 $0.2 $ 2.3 - -------------------------------------------------------------------------- All actions contemplated at the time of establishing the reserve have been completed or are expected to be fully completed by June 1995. Reserves remaining primarily represent liabilities for continuing severance payments and project expenses and are believed to be adequate. Business Segment And Operating Earnings Business segment earnings of $53 million for the first quarter of 1995 decreased $19 million or 26% compared to the 1994 first quarter. Improved operating results for contact lens care, prescription pharmaceuticals, over-the-counter medications in Europe and oral care products in the U.S. were more than offset by shifts in sales mix toward lower margin planned replacement lenses and sunglasses in the U.S. and by increased advertising and promotion activities to support several product lines. Operating earnings totaled $42 million, a decrease of $19 million or 31% from the prior year period. Other Income And Expenses Income from investments for the first quarter of 1995 totaled $10 million, compared to $8 million for the same period in 1994. The increase was due to higher non-U.S. investment levels and interest rates, offset by lower income earned on an interest rate swap associated with the Wilmington Partners L.P. transaction. Interest expense of $12 million for the 1995 first quarter increased $3 million over the first quarter of 1994, due to higher interest rates on U.S. borrowings. The Company realized a net foreign currency loss of $2 million, representing a decline of $4 million from the net $2 million gain realized in 1994. As had been anticipated, premium income on the Company's Irish pound hedge contracts decreased from the prior year. The Company provided for income taxes at a rate of 34.4% for the first quarters of 1995 and 1994. Liquidity And Financial Resources Cash Flows Provided By Operating Activities Net earnings adjusted for non-cash items, including depreciation, amortization and deferred taxes, decreased 23% from 1994. However, cash flows provided by operating activities totaled $43 million in the first quarter of 1995, an increase of $45 million from the prior year period. This change was primarily attributable to the timing of tax payments, cash realized from the net settlement of foreign currency hedge contracts and the comparisons against significant restructuring actions completed in the 1994 first quarter. These factors were moderated by collections in 1994 on the significant amount of accounts receivable outstanding at the end of 1993. Cash Flows Used In Investing Activities Cash flows used in investing activities decreased $51 million from 1994 to $9 million. Purchases of property, plant and equipment totaled $15 million, a decrease of $15 million from the 1994 first quarter. Higher capital spending in the prior year was primarily in support of the development of new contact lens technology. Capital expenditures are expected to total approximately $100 million in 1995. Major projects will include new cast mold technology for contact lenses and manufacturing improvements for sunglasses in the U.S., Europe and Asia-Pacific regions. Other investing activities in the first quarter of 1994 included the acquisition of the assets of Revo, a U.S.-based manufacturer of high performance sunglasses, while in 1995, the reported net inflows of cash included amounts received from a deposit refund and from collections of notes receivable. Cash Flows Used In Financing Activities Approximately $7 million in cash was used in financing activities, including repurchases of the Company's Common shares and the payment of dividends. Cash flow was provided from the proceeds of additional U.S. promissory note borrowings in the first quarter. Free Cash Flow The Company continues to improve cash flow and reduce its working capital requirements. The Company's goal is to maximize free cash flow which is defined as cash generated before dividends, the repayment of debt, stock repurchases and the acquisition of new businesses. Free cash flow for the three months ended April 1, 1995 totaled $48 million. For the three months ended March 26, 1994 free cash flow totaled a negative $35 million. The increase over the prior year is primarily attributable to changes in accrued liabilities levels and lower capital expenditures described previously. Financial Position The Company's total debt, consisting of short- and long- term borrowings, increased by $49 million from year-end 1994 to $640 million at the end of the 1995 first quarter. Borrowings were used to repurchase shares of Common stock and to pay dividends. Bausch & Lomb's ratio of total debt to equity stood at 69% in 1995 and 65% in 1994, the result of higher debt levels in 1995 and the impact of 1994 earnings performance on shareholders' equity. Cash and investments totaled $273 and $553 million at the end of the first quarter of 1995 and 1994, respectively. This change reflects the 1994 third quarter investment by the Company's subsidiary, Bausch & Lomb Ireland, in $425 million in securities issued by a wholly-owned subsidiary of a triple-A rated financial institution. This investment is reported as Other Investments on the Balance Sheet. Access to Financial Markets The Company maintains U.S. revolving credit agreements, typically with 364-day credit terms, totaling $290 million. The interest rate under the agreements is at the prime rate, or, at the Company's option, at a mutually acceptable market rate. No debt was outstanding under these agreements at April 1, 1995 nor were there any borrowings outstanding under the Company's $300 million medium-term note program. In addition, the Company maintains bank lines of credit for its financing requirements. The availability of adequate credit facilities provides the Company with a high degree of flexibility to meet its obligations, fund capital expenditures and invest in growth opportunities. Working Capital Working capital amounted to $223 million for the first quarter of 1995, versus $277 million at year-end 1994 and $670 million for the first quarter of 1994. The significant decrease from the first quarter of the prior year reflects the $425 million investment described earlier. The current ratio was 1.3 at April 1, 1995, 1.4 at December 31, 1994 and 1.9 at March 26, 1994. OTHER FINANCIAL DATA Dividends declared on Common stock were $0.245 per share in the first quarter of 1995 and $0.22 per share in the first quarter of 1994. As a result of the goodwill impairment charge recorded in December 1994 and lower earnings performance reported during the most recent twelve- month period, the return on average shareholders' equity for the twelve-month period ended April 1, 1995 was 0%. This return was 18% for the twelve-month period ended March 26, 1994. Excluding goodwill impairment and restructuring charges, the return on average shareholders' equity would have been 8% in 1995 versus 21% in 1994. OUTLOOK Worldwide sales for many of the Company's products are expected to continue to develop at a good rate for the remainder of 1995. However, anticipated sales growth is dependent on the success of several new product introductions scheduled for the remainder of the year in the pharmaceutical, contact lens and sunglass businesses. Additionally, the announced divestiture of the sports optics business will affect year-over-year sales growth comparisons. The Company continues to monitor improving economic conditions in Japan. Political and economic instability in Latin America is expected to continue to affect results negatively. Actions taken to implement the 1993 restructuring program are expected to generate total pre-tax savings of approximately $20 million in 1995 as compared to $15 million in 1994. PART II - OTHER INFORMATION Item 1. Legal Proceedings In its 1994 Annual Report on form 10-K, the Company described actions brought in California and Alabama State courts challenging the Company's long-standing policy to protect consumers' health by selling contact lenses only to licensed professionals. On April 11, 1995, a similar action was commenced in Tennessee State court seeking treble damages on behalf of consumers and injunctive relief. The Company defends its policy in the interest of safeguarding consumers' health. In its 1994 10-K, the Company reported on a proposed class action lawsuit alleging that the Company misled consumers in its marketing and sale of Sensitive Eyes saline solution and rewetting drops and Boston rewetting drops and conditioning solution. On May 3, 1995 the Company learned that a similar action had been filed in New York State court in Manhattan. Although the Company has not yet been served with the complaint in this action, media reports instituted by the plaintiffs' lawyers suggest that this matter, although similar to the action previously reported, also implicates the marketing and sale of the Sensitive Eyes Eyewash product. The Company will vigorously defend this action. Item 6. Exhibits and Reports on Form 8-K. (a) Item 601 Exhibits Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter for which this Report is filed. SIGNATURES Pursuant to the requirements 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. BAUSCH & LOMB INCORPORATED Date: May 16, 1995 By: (Jay T. Holmes) Jay T. Holmes Executive Vice President and Chief Administrative Officer Date: May 16, 1995 By: (Stephen C. McCluski) Stephen C. McCluski Senior Vice President, Finance EXHIBIT INDEX S-K Item 601 No. Document (4)-a Certificate of Incorporation of Bausch & Lomb Incorporated (filed as Exhibit (4)-a to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1985, File No. 1-4105, and incorporated herein by reference). (4)-b Certificate of Amendment of Bausch & Lomb Incorporated (filed as Exhibit (4)-b to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4105, and incorporated herein by reference). (4)-c Certificate of Amendment of Bausch & Lomb Incorporated (filed as Exhibit (4)-c to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1992, File No. 1-4105, and incorporated herein by reference). (4)-d Form of Indenture, dated as of September 1, 1991, between the Company and Citibank, N.A., as Trustee, with respect to the Company's Medium-Term Notes (filed as Exhibit (4)-a to the Company's Registration Statement on Form S-3, File No. 33-42858, and incorporated herein by reference). (4)-e Rights Agreement between the Company and The First National Bank of Boston, as successor to Chase Lincoln First Bank, N.A. (filed as Exhibit 1 to the Company's Current Report on Form 8-K dated July 25, 1988, File No. 1-4105, and incorporated herein by reference). (4)-f Amendment to the Rights Agreement between the Company and The First National Bank of Boston, as successor to Chase Lincoln First Bank, N.A. (filed as Exhibit 1 to the Company's Current Report on Form 8-K dated July 31, 1990, File No. 1-4105, and incorporated herein by reference). (11) Statement Regarding Computation of Per Share Earnings (filed herewith). (12) Statement Regarding Computation of Ratio of Earnings to Fixed Charges (filed herewith). (27) Financial Data Schedule Exhibit 11 Statement Regarding Computation of Per Share Earnings Dollars And Shares In Thousands- Except Per Share Data
THREE MONTHS ENDED April 1, March 26, 1995 1994 Net earnings $20,284 $35,660 ------ ------ ------ ------ Actual outstanding common shares at beginning of year 58,992 59,118 Average common shares issued for stock options and effects of assumed exercise of common stock equivalents and repurchase of common shares (131) 801 ------ ----- Average common shares outstanding 58,861 59,919 ------ ------ ------ ------ Net earnings per common and common share equivalent $ 0.34 $ 0.60 ------ ------ ------ ------
Exhibit 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges Dollar Amounts In Thousands
April 1, December 31, 1995 1994 Earnings before provision for income taxes and minority interest $38,516 $ 90,340 Fixed charges 12,623 42,954 Capitalized interest, net of current period amortization 65 260 ------ ------- Total earnings as adjusted $51,204 $133,554 ------ ------- ------ ------- Fixed charges: Interest (including interest expense and capitalized interest) $12,139 $ 41,379 Portion of rents representative of the interest factor 484 1,575 ------ ------ Total fixed charges $12,623 $ 42,954 ------ ------ ------ ------ Ratio of earnings to fixed charges 4.06 3.11 ------ ------ ------ ------ Excluding the effect of the goodwill impairment charge recorded in the fourth quarter of 1994, the ratio of earnings to fixed charges at December 31, 1994 would have been 4.86.
EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 3-MOS QTR-1 APR-01-1995 APR-01-1995 APR-01-1995 APR-01-1995 270,731 270,731 2,275 2,275 289,294 289,294 17,302 17,302 334,842 334,842 1,032,376 1,032,376 1,033,138 1,033,138 (489,148) (489,148) 2,532,083 2,532,083 809,498 809,498 232,525 232,525 24,176 24,176 0 0 0 0 1,025,414 1,025,414 2,532,083 2,532,083 465,601 465,601 465,601 465,601 218,365 218,365 218,365 218,365 204,988 204,988 2,467 2,467 12,139 12,139 38,516 38,516 13,258 13,258 20,284 20,284 0 0 0 0 0 0 20,284 20,284 0.34 0.34 0.34 0.34 Income Before Taxes and Minority Interest
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