-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K+UKzwHKv2j4XP4qSLBhvw9cikaGI56oAQrn2a2FHPdfR3/NhlsC3tQtsSvGePzg HeYvlBirNr2s9dTUdI+u2Q== 0000010427-96-000040.txt : 19960515 0000010427-96-000040.hdr.sgml : 19960515 ACCESSION NUMBER: 0000010427-96-000040 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960330 FILED AS OF DATE: 19960514 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: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04105 FILM NUMBER: 96562527 BUSINESS ADDRESS: STREET 1: BAUSCH & LOMB INCORPORATED STREET 2: ONE BAUSCH & LOMB PLACE CITY: ROCHESTER STATE: NY ZIP: 14604-2701 BUSINESS PHONE: (716)338-6699 MAIL ADDRESS: STREET 1: ONE BAUSCH & LAMB PLACE CITY: ROCHESTER STATE: NY ZIP: 14604-2701 10-Q 1 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 March 30, 1996 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 Bausch & Lomb Place, Rochester NY 14604-2701 (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 March 30, 1996 was 56,752,608, consisting of 55,977,987 shares of Common stock and 774,621 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 consolidated financial statements for the first quarters of 1996 and 1995 of Bausch & Lomb Incorporated and Consolidated Subsidiaries are presented on the following pages. The audited balance sheet at December 30, 1995 is presented for comparative purposes. Financial statements for the three months ended March 30, 1996 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 March 30, April 1, 1996 1995 Net Sales $469,268 $465,601 Costs And Expenses Cost of products sold 207,889 218,365 Selling, administrative and general 197,322 190,065 Research and development 17,774 14,923 ------- ------- 422,985 423,353 ------- ------- Operating Earnings 46,283 42,248 ------- ------- Other (Income) Expense Investment income (9,714) (9,999) Interest expense 12,318 12,139 Loss (gain) from foreign currency, net (49) 1,592 ------- ------- 2,555 3,732 ------- ------- Earning Before Income Taxes And Minority Interest 43,728 38,516 Provision for income taxes 16,529 13,258 ------- ------- Earnings Before Minority Interest 27,199 25,258 Minority interest in subsidiaries 4,690 4,974 ------- ------- Net Earnings $ 22,509 $ 20,284 Retained Earnings At Beginning Of Period 900,095 846,245 Cash Dividends Declared: Common stock, $0.26 per share in 1996 and $0.245 per share in 1995 14,710 14,257 ------- ------- Retained Earnings At End Of Period $907,894 $852,272 ======= ======= Net Earnings Per Common Share $ 0.39 $ 0.34 ======= ======= Average Common Shares Outstanding (000s) 57,108 58,861 ======= ======= See Notes to Financial Statements
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES BALANCE SHEET Dollar Amounts In Thousands
March 30, December 30, 1996 1995 ASSETS Current Assets Cash and cash equivalents $ 118,389 $ 193,814 Short-term investments, at cost which approximates market 627 803 Trade receivables, less allowances of $11,763 and $11,232, respectively 275,424 250,587 Inventories, net 330,924 304,298 Deferred taxes, net 78,117 82,557 Other current assets 122,712 98,288 --------- --------- 926,193 930,347 Property, Plant And Equipment, net 549,989 550,366 Goodwill And Other Intangibles, less accumulated amortization of $95,758 and $96,597, respectively 459,909 381,495 Other Investments 558,180 561,232 Other Assets 138,051 126,626 --------- --------- Total Assets $2,632,322 $2,550,066 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable $ 426,549 $ 284,510 Current portion of long-term debt 44,977 98,990 Accounts payable 64,863 81,927 Accrued compensation 77,421 79,767 Accrued liabilities 275,515 275,936 Federal and foreign income taxes 27,163 38,347 --------- --------- 916,488 859,477 Long-Term Debt, less current portion 225,143 190,974 Other Long-Term Liabilities 139,840 139,925 Minority Interest 431,262 430,390 --------- --------- Total Liabilities 1,712,733 1,620,766 --------- --------- 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, 1,149,406 and 1,268,578 shares issued, respectively 92 101 Capital in excess of par value 95,829 107,788 Cumulative translation adjustment 84,121 85,122 Retained earnings 907,894 900,095 --------- --------- 1,112,015 1,117,185 Common and Class B stock in treasury, at cost, 4,595,120 and 4,525,844 shares, respectively (182,270) (178,730) Unearned compensation (6,156) (9,155) Unrealized holding loss on other investments (4,000) - --------- --------- Total Shareholders' Equity 919,589 929,300 --------- --------- Total Liabilities And Shareholders' Equity $2,632,322 $2,550,066 ========= ========= See Notes To Financial Statements
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CASH FLOWS Dollar Amounts In Thousands
CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $22,509 $ 20,284 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation of property, plant and equipment 23,075 22,010 Amortization of goodwill and other intangibles 5,079 4,031 Decrease/(increase) in deferred income taxes 4,590 (760) Loss on retirement of fixed assets 1,535 155 Exchange loss/(gain) 1,382 (1,085) Increase in minority interest 1,434 686 (Increase)/decrease in accounts receivable (21,837) 4,174 Increase in inventories (20,685) (16,195) (Increase)/decrease in other current assets (23,745) 3,617 (Decrease)/increase in accounts payable and accruals (22,093) 12,585 (Decrease)/increase in taxes payable (10,495) 6,278 Decrease in other long-term liabilities (7,152) (12,573) -------- -------- Net cash by (used in) provided by operating activities (46,403) 43,207 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchases of property, plant and equipment (25,588) (14,678) Acquisition of businesses, net of cash and short-term investments acquired (80,221) - Other (14,977) 5,877 -------- -------- Net cash used in investing activities (120,786) (8,801) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Repurchases of Common shares (9,858) (34,858) Exercise of stock options 1,050 1,267 Net proceeds from issuance of notes payable 142,413 44,487 Proceeds from issuance of long-term debt 34,270 - Repayment of long-term debt (51,166) (3,483) Payment of dividends (14,797) (14,505) Other (7,701) - -------- -------- Net cash provided by (used in) financing activities 94,211 (7,092) -------- -------- Effect of exchange rate changes on cash, cash equivalents and short-term investments (2,623) 13,150 -------- -------- Net (decrease) increase in cash, cash equivalents and short-term investments (75,601) 40,464 Cash, cash equivalents and short-term investments, beginning of period 194,617 232,542 -------- -------- Cash, cash equivalents and short-term investments, end of period $119,016 $273,006 ======= ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 16,639 $ 15,464 Income taxes $ 24,516 $ 8,782 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 57,108,000 at March 30, 1996 and 58,861,000 shares at April 1, 1995. 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)
March 30, December 30, 1996 1995 Raw materials and supplies $ 94,249 $ 76,834 Work in process 18,119 21,905 Finished products 227,739 214,901 ------- ------- 340,107 313,640 Less: Allowance for valuation of certain U.S. inventories at last-in, first-out cost 9,183 9,342 ------- ------- $330,924 $304,298 ======= =======
NOTE C: Property, Plant And Equipment Major classes of property, plant and equipment consisted of the following: (Dollar Amounts In Thousands)
March 30, December 30, 1996 1995 Land $ 21,833 $ 22,124 Leasehold improvements 33,571 33,720 Buildings 390,489 396,954 Machinery and equipment 653,666 629,952 --------- --------- 1,099,559 1,082,750 Less: Accumulated depreciation 549,570 532,384 --------- --------- $ 549,989 $ 550,366 ========= =========
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. Bausch & Lomb strives to maximize total return to shareholders through a combination of long-term growth in share price and the payment of cash dividends. The Company systematically measures its financial progress against the Standard & Poors Healthcare Composite Group, with the goal of placing Bausch & Lomb among the top performers for each of its selected financial objectives. To achieve this goal, the Company has established multi-year objectives of compound annual sales and earnings growth in the range of 10% and, on a longer term basis, a return on equity of approximately 20%. The Company also emphasizes the need for operational stability, predictability and profitability. The Company's management team is firmly committed to achieving these performance objectives on a going-forward basis. RESULTS OF OPERATIONS As announced on May 1, 1995, the Company completed the sale of its Sports Optics Division, which marketed binoculars, riflescopes and telescopes. 1995 first quarter amounts included the results of operations of this business which contributed approximately $18 million in optics segment revenues and generated an operating loss of approximately $1 million. 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 and optical thin film coating services and products. Optics segment results for 1995 also included the Company's Sports Optics Division. Consolidated revenues for the quarter ended March 30, 1996 were $469 million, an increase of approximately $4 million or 1% over the 1995 first quarter. When results for the divested Sports Optics Division are excluded from 1995 results, sales improved $22 million or 5%. The following is a summary of sales by business segment: Net Sales By Business Segment (Dollar Amounts in Millions)
First Quarter 1996 1995 Healthcare $333.9 $316.2 Optics 135.4 149.4 ----- ----- Net Sales $469.3 $465.6 ===== =====
Healthcare Segment Revenues Revenues in the healthcare segment increased $18 million or 6% over the 1995 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 1996 1995 Personal Health 49% 50% Medical 37% 35% Biomedical 14% 15%
Within the personal health sector, 1996 first quarter revenues improved 2% from the comparable 1995 level. The overall 4% improvement for lens care products reflected continued strong demand for the Company's lens care solutions products, including the ReNu(R), Boston(R) and Bausch & Lomb(R) lines. In the important U.S. market, lens care solutions sales were up modestly from the prior year. Sales gains were also achieved by the Company's lines of skin care products in the U.S. and over-the-counter medications in Europe. Revenues for eyecare products in the U.S. were below the prior year when incremental sales related to the introduction of Opcon-A(R), an antihistamine/decongestant, were recorded. Revenues for consumer oral care products declined from 1995 as weak sell through of Interplak(R) power toothbrushes during the 1995 holiday season in the U.S. constrained first quarter results. Medical sector sales increased 13% from 1995 levels. Worldwide contact lens revenues advanced 15%, led by significant gains for planned replacement contact lens products, most notably in the U.S., Europe and Asia. The continued shift in market demand toward planned replacement lenses led to a moderate decline in sales of traditional contact lenses, primarily in Asia and Latin America. Worldwide ophthalmic pharmaceutical revenues improved almost 10%. Within the U.S., gains were largely attributable to the success of recently introduced products, including Crolom(R), which is indicated for seasonal allergic eye conditions. Revenues in Europe also increased reflecting shipments of glaucoma and anti- infective products. Medical sector sales also benefited from increased demand for dental implant products and hearing aids. A modest improvement in revenues for the Company's biomedical sector reflected increased pricing for research animals and higher shipments of specific pathogen-free eggs and toxicology testing products in the period. Optics Segment Revenues Total revenues in the optics segment declined 9% to $135 million, compared to $149 million in 1995. When results for the divested sports optics business are excluded from the comparison, optics segment revenues improved 3% from the prior year. Revenues for sunglass products advanced approximately 10% in Europe and Asia. In the U.S. sales improvement included incremental 1996 revenues from the first quarter acquisition of the Arnette(R) sunglass line with products directed toward the important sport channel of trade. Shipments of Revo sunglasses improved strongly from the level of a year ago. Overall sales declined in markets in Latin America. An important measure for success in the sunglass business is the sale of new products, which accounted for more than 30% of revenues in the U.S. and other regions in the first quarter of 1996. Revenues for thin film coating products and services decreased significantly based on increased competition for core products from manufacturers outside the United States. Net Sales By Geographic Region The following analysis of trends excludes 1995 revenues from the sports optics business. Sales in markets outside the U.S. totaled $228 million, an increase of $14 million or 7% from the 1995 first quarter. Changes in currency exchange rates weakened sales comparisons to 1995 by $4 million or 1%. In total, non-U.S. sales represented 49% of consolidated revenues, compared to 48% in the 1995 first quarter. European revenues increased 9%, reflecting improved demand for the Company's over-the-counter medications, lens care solutions, prescription pharmaceuticals, planned replacement lenses and sunglasses. Sales in Asia advanced 6%, attributable to increased sales of contact lenses and sunglasses. Revenues declined 20% in Latin America as economic issues constrained sales of sunglass products. U.S. sales totaled $241 million in the first quarter, a gain of $7 million or 3% from 1995. The improvement was primarily due to growth for planned replacement lens and pharmaceutical products, and incremental sales from the acquisition of the Arnette(R) sunglass lines. Costs And Expenses The ratio of cost of products sold to sales was 44% for the 1996 first quarter versus 47% for the comparable 1995 period. The improvement was primarily attributable to the significant profitability gains for all classes of contact lens products. Selling, administrative and general expenses were 42% of sales in the first quarter of 1996 compared to 41% in 1995. The increase reflects promotional support for core products including contact lens, lens care and sunglass products and the incremental investment to maintain or increase share for lens care products in the important U.S. market. Corporate administration expense was 2.8% of sales in the first quarter of 1996 versus 2.4% in 1995. Research and development expense for the first three months of 1996 increased 19% from 1995 levels. Higher spending was in support of new contact lens, lens care and pharmaceutical products. Restructuring Reserves In the fourth quarter of 1995, the Company's Board of Directors approved plans to restructure portions of the sunglass, biomedical and contact lens operations, as well as certain corporate administrative functions, and a pre-tax restructuring charge of $27 million was recorded. The following table sets forth the activity in the restructuring reserve through March 30, 1996: Dollar Amounts In Millions
Contact Corporate Sunglass Biomedical Lens Administration Total Total 1995 restructur- ing provisions $15.8 $4.8 $3.1 $3.0 $26.7 Less charges against reserve: Non-cash items 3.4 2.2 3.1 1.0 9.7 Cash payments 0.5 0.3 - 0.1 0.9 ---- --- --- --- ---- Balance at March 30, 1996 $11.9 $2.3 $ - $1.9 $16.1 ==== === === === ====
Business Segment And Operating Earnings Business segment earnings of $59 million for the first quarter of 1996 increased $6 million or 11% compared to the 1995 first quarter. When results for the sports optics business are excluded from the comparison, business segment earnings increased 9%. The return to profitability for contact lens products contributed significantly to the overall improvement. Operating earnings totaled $46 million, a gain of $4 million or 10% from the prior year period. Other Income And Expenses Income from investments for the first quarters of 1996 and 1995 totaled approximately $10 million. Interest expense of $12 million for the 1996 first quarter was essentially flat with the first quarter of 1995. Overall, the impact of lower interest rates was more than offset by the increase in the total debt. The Company realized a slight foreign currency gain in the first quarter of 1996, representing an improvement of $2 million from 1995. This was based primarily on favorable results from hedging activities. The Company provided for income taxes at rates of 37.8% and 34.4% for the first quarters of 1996 and 1995, respectively. The higher rate in 1996 reflected shifts in the geographic mix of earnings. Liquidity And Financial Resources Cash Flows Provided By Operating Activities Net earnings adjusted for depreciation, amortization and deferred taxes, increased 21% from 1995. However, cash flows used in operating activities totaled $46 million in the first quarter of 1996, compared to a positive $43 million provided by operations in the prior year period. This change was primarily attributable to a build in inventories to support new product introductions in 1996, the timing of tax payments, cash paid for the net settlement of foreign currency hedge contracts and the comparison against the significant reductions in trade receivables achieved in the 1995 first quarter. Cash Flows Used In Investing Activities Cash flows used in investing activities increased $112 million from 1995 to $120 million. Purchases of property, plant and equipment totaled $26 million, $11 million higher than the 1995 first quarter. Increased capital spending in the current year has been primarily in support of the development of new planned replacement contact lens technology and enhanced sunglass manufacturing capacity. Capital expenditures are expected to total approximately $130 million in 1996. Other investing activities in the first quarter of 1996 included the acquisitions of Arnet Optic Illusions, a U.S.-based company marketing sunglasses to the sport market, and Award plc, manufacturer of a high water daily disposable lens based in Scotland. Cash Flows Used In Financing Activities Approximately $94 million in cash was provided by financing activities in the 1996 first quarter, mainly through the issuance of U.S. short-term debt. Repurchases of the Company's Common shares have totaled $10 million in 1996 compared to $35 million in 1995. The higher level of repurchases in 1995 was in consideration of the expected cash proceeds to be received from the sale of the Sports Optics Division. Free Cash Flow Management continues to emphasize the generation of cash flow and management of its working capital requirements. The Company's goal is to maximize free cash flow which is defined as cash generated before financing activities and the acquisition and divestiture of businesses. Free cash flow for the three months ended March 30, 1996 totaled a negative $90 million. For the three months ended April 1, 1995 free cash flow totaled a positive $48 million. The change from the prior year is primarily attributable to the operating cash flow factors described earlier. Financial Position The Company's total debt, consisting of short- and long-term borrowings, increased by $122 million from year-end 1995 to $697 million at the end of the 1996 first quarter. Borrowings have been used to finance acquisitions and repurchase shares of Common stock. Bausch & Lomb's ratio of total debt to equity stood at 76% in the first quarter of 1996 compared to 69% in the first quarter of 1995. Cash and investments totaled $119 and $273 million at the end of the first quarters of 1996 and 1995, respectively. This change primarily reflects the 1995 fourth quarter investment by the Company's subsidiary, Bausch & Lomb Ireland, in approximately $136 million in securities issued by a subsidiary of a triple- A rated financial institution. This investment has been reported with 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 March 30, 1996 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 $10 million at the end of the first quarter of 1996, versus $71 million at year-end 1995 and $223 million at March 1995. The significant decrease from the first quarter of the prior year primarily reflects the $136 million investment described earlier. The current ratio was 1.0 at March 30, 1996, 1.1 at December 30, 1995 and 1.3 at April 1, 1995. OTHER FINANCIAL DATA Dividends declared on Common stock were $0.26 per share in the first quarter of 1996 and $0.245 per share in the first quarter of 1995. As a result of the restructuring charge recorded in 1995, the return on average shareholders' equity for the twelve-month period ended March 30, 1996 was 12%. This return was 2% for the twelve-month period ended April 1, 1995. Excluding 1994 goodwill impairment and 1995 restructuring charges, the return on average shareholders' equity would have been 12% for the 1996 period versus 9% in 1995. OUTLOOK Worldwide sales for many of the Company's products are expected to continue to develop at a good rate for the remainder of 1996. However, anticipated sales growth is dependent on the success of several scheduled new product introductions, with particular emphasis in the contact lens and sunglass businesses. The acquisitions of Arnet Optic Illusions, Inc. and Award plc also should impact favorably on results. The Arnette(R) line, with its distinctive high-performance designs, enhances the Company's position in the sport market through its strong position in niches such as surfing, snowboarding, skateboarding and mountain biking. Award is a manufacturer of a high water daily disposable lens using a patented cast mold manufacturing technology and highly efficient distribution process. This acquisition should enhance the Company's competitive position in Europe. The Company is also pursuing approval to market this lens in other key global markets. Earnings performance is projected to benefit from the progress of announced efforts to reduce annualized costs by $50 million by 1998. Actions will primarily include a reduction in corporate administration costs, principally headcount, and the consolidation of administrative functions around the world. The cost of severance and asset write-offs for projects which had been approved by management prior to year end were reflected in the 1995 restructuring reserve. Additional expenses for these projects and new actions are expected to be incurred in 1996. In addition, the Company regularly reevaluates its existing portfolio of businesses and pursues opportunities to maximize shareholder return. This led to the sale of the Sports Optics Division in 1995 and the announcement in 1996 that the Company would explore the sale of its Oral Care Division which markets the Interplak(R) line of products. OTHER INFORMATION The statements in this financial review which are not historical facts are forward looking statements that involve risks and uncertainties. This includes but is not limited to risks associated with product demand and consumer acceptance; the development of new manufacturing technologies including initiatives in the contact lens and sunglass businesses; the effect of economic conditions and changes in interest and exchange rates; the impact of competitive products and pricing, product development and regulatory approval risks, particularly for personal health and medical sector products; capacity, distribution and supply constraints or difficulties; the results of financing efforts; the effect of the Company's accounting policies and other risks detailed in this report and other public filings. PART II - OTHER INFORMATION Item 1. Legal Proceedings In the Company's Annual Report for 1995 on Form 10-K, it discussed an action pending in the United States District Court for the Northern District of Alabama on behalf of a nationwide class pursuing claims relating to the Company's marketing and sale of the Optima FW(R), Medalist(R) and SeeQuence2(R) contact lens systems and other related proceedings. On May 2, 1996, the Company was served with a Statement of Claim filed in Ontario, Canada, naming the Company and Bausch & Lomb Canada. The plaintiff seeks to represent a class of similarly situated Canadian consumers. 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 14, 1996 By: (STEPHEN A. HELLRUNG) Stephen A. Hellrung Senior Vice President, Secretary and General Counsel Date: May 14, 1996 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 E - 1 Exhibit 11 Statement Regarding Computation of Per Share Earnings Dollars And Shares In Thousands-Except Per Share Data
THREE MONTHS ENDED March 30, April 1, 1996 1995 Net earnings $22,509 $20,284 ====== ====== Actual outstanding common shares at beginning of year 56,941 58,992 Average common shares issued for stock options and effects of assumed exercise of common stock equivalents and repurchase of common shares 167 (131) ------ ------ Average common shares outstanding 57,108 58,861 ====== ====== Net earnings per common and common share equivalent $ 0.39 $ 0.34 ====== ====== E - 2
Exhibit 12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges
Dollar Amounts In Thousands March 30, December 30, 1996 1995 Earnings before provision for income taxes and minority interest $43,728 $211,847 Fixed charges 12,723 47,584 Capitalized interest, net of current period amortization 80 (260) ------ ------- Total earnings as adjusted $56,531 $259,691 ====== ======= Fixed charges: Interest (including interest expense and capitalized interest) $12,318 $ 45,765 Portion of rents representative of the interest factor 405 1,819 ------ ------- Total fixed charges $12,723 $ 47,584 ====== ======= Ratio of earnings to fixed charges 4.44 5.461 ====== ======= 1 Excluding the effects of the gain on sale of Sports Optics Division and restructuring changes recorded in 1995, the ratio of earnings to fixed charges at December 30, 1995 would have been 5.26.
E - 3 EX-27 2
5 3-MOS 3-MOS DEC-28-1996 DEC-30-1995 MAR-30-1996 APR-01-1995 118,389 270,731 627 2,275 287,187 289,294 11,763 17,302 330,924 334,842 926,193 1,032,376 1,099,559 1,033,138 (549,570) (489,148) 2,632,322 2,532,083 916,488 809,498 225,143 232,525 24,171 24,176 0 0 0 0 895,418 899,478 2,632,322 2,532,083 469,268 465,601 469,268 465,601 207,889 218,365 207,889 218,365 215,096 204,988 1,719 2,644 12,318 12,139 43,728 38,516 16,529 13,258 22,509 20,284 0 0 0 0 0 0 22,509 20,284 0.39 0.34 0.39 0.34 Income Before Taxes and Minority Interest
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