SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): August 2, 1994
BAUSCH & LOMB INCORPORATED
(Exact name of Bausch & Lomb as specified in its charter)
New York
(State or other jurisdiction or incorporation)
1-4105
(Commission File Number)
16-0345235
(I.R.S. Employer Identification No.)
One Chase Square, Rochester NY 14601-0054
(Address of principal executive offices) (Zip Code)
Bausch & Lomb's telephone number, including area code: (716) 338-6000
Inapplicable
(Former name or former address, if changed since last report).
Item 5. OTHER EVENTS
On August 2, 1994, the Company's subsidiary, Bausch & Lomb
Ireland, transferred $425 million, formerly deposited in Eurodollar time
deposits with various major financial institutions, to an investment in
securities (the "Securities") issued by a wholly owned subsidiary of a
triple-A rated financial institution (the "Issuer").
BACKGROUND
The investment benefits the Company in two ways. First,
establishing this relationship with a strong financial institution and
its affiliates will further enhance the Company's overall ability to
raise capital and meet other financing needs, especially outside the
U.S. The Company further believes that this relationship will result in
more favorable terms for other types of financial transactions which the
Company enters into from time to time.
In addition, the investment responds to a recent change in U.S.
tax law. Historically, profits earned by the Company's foreign
subsidiaries have been used to provide capital and fund the growth of
its non-U.S. businesses. To the extent these earnings were not
immediately required for its businesses, the funds were invested in
Eurodollar time deposits with selected financial institutions. Under
the new U.S. tax regulations effective in 1994, holding "passive
investments", such as these time deposits, would subject foreign
earnings to U.S. tax, thereby depleting the capital available to fund
international growth. The Company believes the Securities constitute
qualifying "active" assets, which will avoid this result.
Although there are equity risks associated with these Securities,
based on the extremely high quality and stability of the Issuer this
investment is considered by management of the Company to be very secure.
SIGNIFICANT TERMS OF THE INVESTMENT
The significant terms of the investment are as follows:
- - The Securities rank senior to all other classes of the
Issuer's equity.
- - The Securities pay quarterly cumulative dividends at a
variable LIBOR-based rate.
- - In the event yield distributions are suspended and capital
is impaired, a committee of the Issuer's board of directors
will be appointed to represent the Company's interest.
- - The Securities rank junior to the secured and unsecured
liabilities of the Issuer, including subordinated debt
obligations.
- - Beginning in November 1994, the Issuer has a call option
upon 180 days notice, or 30 days notice after November 21,
2003.
- - The Securities have no fixed maturity.
- - After approximately nine and one half years, the Securities
will become freely transferable. At that time, the yield
rate will be reset, if necessary, to ensure that the market
value of the Securities, is equal to the par value.
The accounting and tax implications of this investment have been
reviewed by the Company's advisors.
FINANCIAL REPORTING
The Securities will be reported as a long-term asset, Other
Investments, in the Company's financial statements, given management's
ability and intention to hold the Securities for a period greater than
one year. The Company will apply the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" in
accounting for this investment. SFAS No. 115 requires that investments
in marketable equity securities and debt securities be designated as
held-to-maturity, available-for-sale or trading. This security will be
classified as available-for-sale under SFAS 115 and any material
unrealized holding gains and losses in market value, net of taxes, are
excluded from income and recognized as a separate component of
shareholders' equity until realized. Adoption of this standard in 1994
has not had a material effect on the Company's results of operations or
financial position.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Bausch & Lomb has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BAUSCH & LOMB INCORPORATED
Date: August 2, 1994
By: (Jay T. Holmes)
Jay T. Holmes
Senior Vice President,
Corporate Affairs and
Secretary
