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.
<TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF EARNINGS
Dollar Amounts In Thousands -
Except Per Share Data
<CAPTION>
First Quarter Ended
April 1, March 26,
1995 1994
<S> <C> <C>
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
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
Dollar Amounts In Thousands
<CAPTION>
April 1, December 31,
1995 1994
<S> <C> <C>
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
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
Dollar Amounts In Thousands
<CAPTION>
Three Months Ended
April 1, March 26,
1995 1994
<S> <C> <C>
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
</TABLE>
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
<TABLE>
Inventories consisted of the following:
(Dollar Amounts In Thousands)
<CAPTION>
April 1, December 31,
1995 1994
<S> <C> <C>
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
------- -------
------- -------
</TABLE>
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
<TABLE>
Exhibit 11
Statement Regarding Computation of Per Share Earnings
Dollars And Shares In Thousands-
Except Per Share Data
<CAPTION>
THREE MONTHS ENDED
April 1, March 26,
1995 1994
<S> <C> <C>
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
------ ------
------ ------
</TABLE>
<TABLE>
Exhibit 12
Statement Regarding Computation of Ratio of Earnings to
Fixed Charges
Dollar Amounts In Thousands
<CAPTION>
April 1, December 31,
1995 1994
<S> <C> <C>
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 <FN01>
------ ------
------ ------
<FN01> 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.
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS QTR-1
<FISCAL-YEAR-END> APR-01-1995 APR-01-1995
<PERIOD-END> APR-01-1995 APR-01-1995
<CASH> 270,731 270,731
<SECURITIES> 2,275 2,275
<RECEIVABLES> 289,294 289,294
<ALLOWANCES> 17,302 17,302
<INVENTORY> 334,842 334,842
<CURRENT-ASSETS> 1,032,376 1,032,376
<PP&E> 1,033,138 1,033,138
<DEPRECIATION> (489,148) (489,148)
<TOTAL-ASSETS> 2,532,083 2,532,083
<CURRENT-LIABILITIES> 809,498 809,498
<BONDS> 232,525 232,525
<COMMON> 24,176 24,176
0 0
0 0
<OTHER-SE> 1,025,414 1,025,414
<TOTAL-LIABILITY-AND-EQUITY> 2,532,083 2,532,083
<SALES> 465,601 465,601
<TOTAL-REVENUES> 465,601 465,601
<CGS> 218,365 218,365
<TOTAL-COSTS> 218,365 218,365
<OTHER-EXPENSES> 204,988 204,988
<LOSS-PROVISION> 2,467 2,467
<INTEREST-EXPENSE> 12,139 12,139
<INCOME-PRETAX> 38,516 <F1> <F1> 38,516
<INCOME-TAX> 13,258 13,258
<INCOME-CONTINUING> 20,284 20,284
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 20,284 20,284
<EPS-PRIMARY> 0.34 0.34
<EPS-DILUTED> 0.34 0.34
<FN>
<F1>
Income Before Taxes and Minority Interest
</FN>
</TABLE>
