<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-K/A
Amendment No. 2 to Annual Report Pursuant
to Section 13 or 15(d) of
The Securities Exchange Act of 1934
_____________________
For the fiscal year ended Commission file number
December 25, l993 1-4105
BAUSCH & LOMB INCORPORATED
(Exact name of registrant as specified in its charter)
NEW YORK 16-0345235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
ONE BAUSCH & LOMB PLACE, ROCHESTER, NEW YORK 14604-2701
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code:(716) 338-6000
Securities registered pursuant to Section 12(b) of the
Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.40 par value New York Stock Exchange
Securities registered pursuant to
Section 12(g) of the Act: None
[Cover page 1 of 2 pages]
<PAGE>
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No ___
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this Form 10-K/A or any amendment to this
Form 10-K/A. [ X ]
The aggregate market value (based on the
consolidated tape closing price on February 11, 1994)
of the voting stock held by non-affiliates of the
registrant was $3,056,170,482. For the sole purpose of
making this calculation, the term "non-affiliate" has
been interpreted to exclude directors and corporate
officers. Such interpretation is not intended to be,
and should not be construed to be, an admission by
Bausch & Lomb Incorporated or such directors or
corporate officers that such directors and corporate
officers are "affiliates" of Bausch & Lomb
Incorporated, as that term is defined under the
Securities Act of 1933.
The number of shares of common stock of the
registrant, outstanding as of February 11, 1994 was
59,150,228, consisting of 58,632,444 shares of Common
Stock and 517,784 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.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II The Bausch & Lomb 1993 Annual
Report to Shareholders for fiscal year ended December
25, 1993 ("Annual Report"). With the exception of the
pages of the Annual Report specifically incorporated by
reference herein, the Annual Report is not deemed to be
filed as a part of this Report on Form
10-K/A.
Part III Bausch & Lomb Incorporated Proxy
Statement, dated March 21, 1994 ("Proxy Statement"). With
the exception of the pages of the Proxy Statement specifically
incorporated by reference herein, the Proxy Statement is
not deemed to be filed as part of this Report on Form 10-K/A.
[Cover page 2 of 2 pages]
FORM 10-K/A
AMENDMENT NO. 2
TO
ANNUAL REPORT ON FORM 10-K
OF BAUSCH & LOMB INCORPORATED
This Amendment No. 2 is being filed to amend
the Annual Report on Form 10-K for the year ending
December 25, 1993, filed with the Securities and
Exchange Commission (the "Commission") by Bausch & Lomb
Incorporated (the "Company") on March 24, 1994, as
amended by the Form 10-K/A for the year ending
December 25, 1993 filed with the Commission on
March 15, 1996 (together, the "1993 10-K"), as follows:
Item 14(c) "Item 601 Exhibits" of the 1993 10-K
is being amended hereby by filing Exhibit 13, pages 22
through 32 and 34 through 65 of the Bausch & Lomb
1993 Annual Report to Shareholders for the fiscal
year ended December 25, 1993. With the exception
of the pages of the Annual Report specifically
incorporated by reference into the 1993
10-K, the Annual Report is not deemed to be filed as
a part of this Report on Form 10-K/A.
Except as described above, the Amendment makes no
changes to Item 14(c)of the 1993 10-K nor to any of the
documents listed in Item 14(c) and filed as part of the
1993 10-K. Exhibit 13 has been filed with this Amendment.
All other Exhibits to the 1993 10-K were filed with
the 1993 10-K, are not amended by the Amendment and
are not included with this Amendment.
Pursuant to Rule 12b-15 of the Rules and Regulations
under the Securities and Exchange Act of 1934, as amended,
the complete text of Item 14(c), as amended, is included
in this Amendment.
Part IV
Item 14(c) 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 with the 1993 10-K and such
listing is incorporated herein by reference. Each of
Exhibits (10)-a through (10)-u is a management contract
or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14(c) of this
report.
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to
be signed on its behalf by the undersigned, thereunto
duly authorized.
BAUSCH & LOMB INCORPORATED
Date: March 26, 1996 By:/s/ Stephen A. Hellrung
Stephen A. Hellrung
Senior Vice President, Secretary
and General Counsel
1993
Annual
Report
Meeting
Global
Needs
Bausch
& Lomb
Healthcare and Optics
Worldwide
[Photograph]
<PAGE>
The Healthcare Segment
The Healthcare Segment Five-Year Summary Of Results
- ------------------------------------------------------------
(Dollars In Millions)
1989 1990 1991 1992 1993
- ------------------------------------------------------------
Net Sales 779.6 856.4 943.8 1,033.2 1,169.2
Earnings 136.2 142.3 102.4* 176.1 192.3**
- ------------------------------------------------------------
*Includes restructuring and special charges of $50.3 million.
**Includes restructuring charges of $15.9 million.
Bausch & Lomb's healthcare segment revenues increased 13% in 1993 to $1,169
million. Growing worldwide demand for lens care products led this progress.
Excluding restructuring charges, earnings rose 18% in response to higher sales
of lens care products and operating performance gains for the U.S.pharmaceutical
business.
The Personal Health Sector
- --------------------------------------------------------------------------------
In Bausch & Lomb's personal health sector, contact lens care and general eye
care products enjoyed strong worldwide demand. Technological leadership and
close working relationships with health care professionals are the foundation of
this success.
Contact Lens Care Products
[Photograph]
The ReNu and Boston lines are the world's most technologically advanced products
for the care and cleaning of contact lenses.
Bausch & Lomb enhanced its leadership of the more than $1.5 billion global
contact lens care market in 1993. Total lens care revenues rose by 11% over
1992, and operating earnings grew rapidly in response to increasing sales of
ReNu multi-purpose solution and the Boston line of rigid gas permeable (RGP)
solutions, the world's most technologically advanced products for the care and
cleaning of contact lenses.
The fastest rate of revenue growth occurred in Latin America, where sales
rose by more than 50% over last year, with particularly notable gains in Brazil
and Mexico. Outstanding demand in China, Japan, and Hong Kong caused revenues in
the Asia-Pacific region to increase more than 15%. In the U.S., sales grew by
more than 10%, while in Europe, the adverse effect of fluctuations in currency
exchange rates held revenues in line with 1992.
Geographic Mix Of Bausch & Lomb's Lens Care Revenues
- --------------------------------------------------------------------------------
U.S. 63%
Asia-Pacific 16%
Europe, Middle East,
and Africa 15%
Latin America and Canada 6%
Global shipments of contact lens care products were led again this year by
the ReNu line, which achieved worldwide sales of almost $200 million in 1993.
Consumers and vision care specialists throughout the world have made ReNu
multi-purpose solution the product of first choice for the cleaning and
disinfection of soft contact lenses. In the U.S., sales of ReNu multi-
22
<PAGE>
purpose solution increased by more than 30% over the previous year.
The recommendations of vision care professionals remain the foundation of the
success of the ReNu line. Patients started on the ReNu solution regimen when
first receiving their contact lenses stay very loyal to the brand. Bausch &
Lomb's efforts to educate doctors about the benefits of the ReNu line led to a
record increase in the Company's share of starter care kits given to new contact
lens patients in the U.S. Similar results were evident in other markets
throughout the world, including Latin America, where doctor recommendations
helped revenues for the ReNu line to increase significantly. Sales of ReNu
multi-purpose solution doubled in Brazil during 1993 and the Company became the
leader of that market.
Worldwide Sales For The ReNu Product Line
- --------------------------------------------------------------------------------
(Dollars In Millions)
1989 77
1990 89
1991 111
1992 152
1993 197
Worldwide sales for solutions used for the care of RGP lenses, including the
Boston line, increased by more than 15% in 1993. This line earned its largest
share ever of the U.S. market, where sales grew by more than 10%. Revenues in
markets outside the U.S. rose by more than 30%, led by Europe, where sales
increased 40%.
Private label manufacturers in the U.S. have not affected results for the
ReNu and Boston lines. The advanced, proprietary formulations and superior value
of these products present formidable barriers to this type of competition. To
date, private label solutions have gained less than 5% of contact lens care
industry sales.
During 1993, the construction of a new contact lens solutions manufacturing
plant in China was completed. In another important Asian market, India, sales
grew rapidly in 1993 after Bausch & Lomb's joint venture opened a new solutions
plant at the end of 1992. Emerging markets in Asia and Latin America now
constitute 9% of total solutions sales. The Company's progress in developing
markets where contact lens and solutions usage is in its infancy has been
important to Bausch & Lomb's success.
The outlook for 1994 is quite positive. Lens care revenues and earnings
should increase at a good rate owing to continuing share gains in the U.S. and a
growing population of contact lens wearers in high-growth markets throughout the
world.
Oral Care Products
[Photograph]
The Company's oral care line includes Clear Choice alcohol-free mouthwash, the
Interplak line of power toothbrushes, and Interplak dentifrice.
Stimulated by the introduction of Clear Choice alcohol-free mouthwash, the
Company's oral care sales rose by 10% in 1993.
Clear Choice, the first alcohol-free mouthwash to be distributed nationally
in the U.S., is formulated to kill germs and freshen breath without harsh
ingredients. Its positioning in the market contrasts it with leading brands, and
it has appealed to health-conscious consumers and dental professionals. Clear
Choice mouthwash is being supported by the same manufacturing, marketing, and
distribution resources that underpin the Company's contact lens care products.
A 32-ounce size of Clear Choice mouthwash was introduced during the second
half of 1993. As the most popular mouthwash size, it is expected to increase the
visibility of the product on display shelves
23
<PAGE>
as distribution widens, and to reinforce its position as the leading brand in
its category. Media spending in 1994 will remain strong as the Company supports
the continued growth of this product.
Consolidated worldwide revenues for the Interplak line increased modestly
from their depressed levels of the previous year. New Interplak power toothbrush
models and improvements to quality resulted in fewer product returns in the U.S.
and increased profitability during the year. Better operating results were
especially evident in Asia.
Two new models of the Interplak power toothbrush are scheduled to be
introduced during 1994. They provide significant technological and quality
improvements over earlier models. These advances will allow the Interplak power
toothbrush to be produced in a compact size for patients who prefer a smaller
toothbrush, and for children. New models will also offer consumers improved
reliability and convenience.
For 1994 the Company expects oral care revenues to grow moderately. Clear
Choice mouthwash should solidify its position as the leading non-alcoholic brand
of mouthwash, while efforts in the Interplak power toothbrush business will
focus on the introduction of new models in the second half of the year.
Skin Care Products
[Photograph]
Curel and Soft Sense lotions deliver long-lasting moisturizing ingredients
without a greasy, oily feeling.
Bausch & Lomb entered the skin care market in 1993 by acquiring two solidly
established product lines, Curel and Soft Sense, which are ideally positioned to
benefit from the Company's health care marketing expertise and broad base of
retail distribution. Curel lotion holds the number three position in the
therapeutic portion of the hand and body lotion market, the fastest growing
category in the industry. Currently estimated at $250 million in manufacturers'
sales, this part of the market has grown at a compound annual rate of 9% over
the past five years.
The Curel line has earned broad support among dermatologists for its
proprietary formulation, which provides delivery of long-lasting moisturizing
ingredients without a greasy, oily feeling. This formulation has made Curel
lotion the standard against which leading moisturizers and creams are measured.
Curel lotion will receive enhanced advertising and broader distribution in 1994.
Eye Care Products
Increased shipments of Bausch & Lomb Moisture Drops and Allergy Drops solutions
led to outstanding results for Bausch & Lomb's general eye care business in
1993. Total revenues rose by more than 25% over 1992, and the Company's share in
this $200 million retail market also increased. Since Bausch & Lomb introduced
its first product in 1985, sales in this category have grown at a compound
annual rate of 20%.
Revenues for Bausch & Lomb Moisture Drops artificial tears increased by more
than 35% in 1993, strengthening its market position. Demand for Bausch & Lomb
Maximum Strength Allergy Drops solution was also outstanding, and its sales
jumped almost 70%.
During 1994 the Company expects to receive approval from the FDA to market
the first over-the-counter version of a prescription drug used to treat eye
allergies. It is expected to gain broad acceptance among consumers who currently
use the prescription version of this medication and by others who require a
highly effective product for the treatment of itchy eyes and other allergy
symptoms.
24
<PAGE>
Over-the-Counter Medications
Revenues in the Company's over-the-counter medications business rose by
approximately 10%, despite the adverse effects of fluctuations in currency
exchange rates in Europe during 1993. Products in this line include analgesics,
sedatives, sleep aids, hay fever remedies, nasal moisturizers, and otic
products. Most of Bausch & Lomb's over-the-counter medications business is based
in Germany.
Favorable trade acceptance of the Company's new Vivivit Q10 vitamins was an
important factor in Bausch & Lomb's sales growth. Vivivit Q10 is a food
supplement containing co-enzyme Q10, also called ubichinone, which aids the
process of energy conversion in human cells. Within two months, the Company was
able to place this product in 70% of all pharmacies in Germany.
The over-the-counter medications business is expected to continue to grow in
the coming year as distribution for its products widens.
The Medical Sector
- --------------------------------------------------------------------------------
Within the medical sector, shipments of contact lenses used in planned
replacement programs advanced sharply during the year. Increased revenues and
improved operating performance were also visible in the U.S. pharmaceutical
business.
Contact Lenses
[Photograph]
The new Occasions multi-focal lens and the Medalist 66 high-water content lens
are part of the industry's broadest line of products.
Led by sales of soft contact lenses used in planned replacement programs and the
introduction of new products, Bausch & Lomb's worldwide contact lens revenues
rose 5% in 1993. Unit shipments advanced in response to sharply increased demand
for SeeQuence and Medalist lenses, which address the fast-growing disposable
and planned replacement segments of the market.
From a geographical perspective, sales rose more than 10% in the U.S. and 20%
in Latin America and Canada combined. Recessionary economies in Europe and Japan
and adverse currency exchange rate fluctuations moderated the rate of growth on
a worldwide basis. Sales in Europe declined by 9%, while revenues in Asia,
constrained by results in Japan, were equal to the prior year. Worldwide sales
of rigid gas permeable lenses remained even with 1992.
Geographic Mix of Bausch & Lomb's Contact Lens Revenues
- --------------------------------------------------------------------------------
U.S. 48%
Asia-Pacific 26%
Europe, Middle East,
and Africa 19%
Latin America and Canada 7%
During the year, Bausch & Lomb strengthened its leading position in the $1.5
billion global contact lens market. SeeQuence and Medalist lenses continued to
post excellent results, with sales rising over 60%. SeeQuence disposable contact
lenses are designed to be discarded after being worn for one or two weeks, and
Medalist planned replacement lenses are designed to be changed every one to six
months. Replacement of lenses at monthly or quarterly intervals provides most of
the same benefits as disposables, but at a lower cost.
More than 35% of soft contact lens wearers in the U.S. now use disposable or
planned replacement lenses. This trend is expected to continue, since 65% of
soft lens wearers in the U.S.--more than 13 million patients--still use
traditional lenses which are replaced once a year.
25
<PAGE>
The rate of contact lens usage among vision- corrected people living outside
the developed U.S. and European markets remains below 5%, providing significant
opportunities for growth throughout the world. To address this potential, the
Company continues to aggressively broaden distribution for SeeQuence, Medalist,
and other lenses in new markets. In Latin America, for example, sales of
SeeQuence and Medalist lenses doubled in 1993 and they were marketed in
Venezuela and Colombia for the first time.
New products also play an important role in the Company's strategy to raise
the rate of contact lens usage. The Medalist 66 lens was introduced in
Scandanavia during the fourth quarter of 1993. This lens is non-ionic, which
means that proteins and other contaminants do not accumulate on it during normal
wear, and it also offers the higher water content preferred by European eye care
specialists. It is manufactured by Bausch & Lomb's advanced cast molding
process, which allows the Company to make high-quality lenses in large
quantities at low cost. Medalist 66 lenses should be well accepted by patients
in Europe, where high-water materials account for over 60% of all lenses sold to
new patients. This line will be introduced throughout the rest of Europe and in
the U.S. in 1994.
Percentage of U.S. Soft Contact Lens Wearers Using
Disposable, Planned Replacement, And Traditional Lenses
- --------------------------------------------------------------------------------
Traditional 65%
Disposable 18%
Planned Replacement 17%
The successful launch of the Occasions line in the U.S. was an important
development in 1993. Occasions contact lenses are worn only once before being
discarded, and will be especially beneficial in selected situations when contact
lenses are preferred over spectacles. The Occasions multi-focal lens for
correction of presbyopia was the first product in this line to be marketed. They
are more comfortable, easier to adapt to, and provide better vision than
previous multi-focal lenses. During 1994, Bausch & Lomb will introduce
additional contact lenses in the Occasions line, including lenses for near- or
far-sighted patients and toric lenses for astigmatic patients.
Clinical tests of a new highly oxygen-permeable lens material developed by
the Company have yielded very encouraging results. Lack of oxygen flow to the
cornea is harmful and is implicated in a variety of serious eye conditions. This
patented new formulation is up to 10 times more oxygen permeable than current
soft lens materials. A daily-wear version of a lens made from this material will
be submitted to the FDA for approval during 1994.
Index of Worldwide Unit Shipments For
Bausch & Lomb's Soft And Rigid Gas Permeable Lenses
- --------------------------------------------------------------------------------
(Percent)
1989 100
1990 130
1991 177
1992 252
1993 355
For the coming year, the Company expects further good revenue growth for its
contact lens business in the U.S. and increased sales to emerging markets.
Pharmaceuticals
[Photograph]
Bausch & Lomb's pharmaceutical line includes generic products such as Tobramycin
Ophthalmic Solution and proprietary products such as the OptiPranolol line.
A major turnaround in U.S. pharmaceutical operations began in 1993. After
protracted regulatory delays, the Company received its first license to produce
a new generic drug in its state-of-the-art plant in Tampa, Florida, during the
fourth quarter. This product, Tobramycin Ophthalmic Solution, USP, 0.3%, is the
26
<PAGE>
first substitutable version of Tobrex, a widely prescribed antibiotic on which
patent protection had expired. Additional product approvals are anticipated in
1994.
The approval of Tobramycin solution was one of many positive developments in
U.S. pharmaceutical operations. Total revenues rose by more than 15% during the
year while operating losses declined by $4 million. Increased shipments of
OptiPranolol solution, the leading value-priced glaucoma medication in the U.S.,
contributed importantly to this progress. Worldwide pharmaceutical sales rose by
close to 5%, while operating earnings declined modestly, excluding the effect of
restructuring charges. Results for the Company's Dr. Mann Pharma subsidiary
declined from the previous year owing to the effects of German health care
reform legislation and adverse currency exchange rate movements. Despite these
challenges, Dr. Mann Pharma remained very profitable and ended the year with its
solid market position intact.
By the second quarter of 1994, the Company expects to have a sufficient
number of products approved to transfer U.S. production to its Tampa facility,
which is one of the most advanced manufacturing plants in the industry. It is
highly automated, providing Bausch & Lomb with a significant cost advantage over
other producers. The facility meets new, stricter FDA standards, which represent
a barrier to entry for competitors.
Composition Of U.S. Opthalmic Pharmaceuticl Market
- --------------------------------------------------------------------------------
(Percent)
Beta Blocker 25%
Miotic/Glaucoma 16%
Corticoids 13%
Anti-Infectives 11%
Artificial Tears 9%
Decongestants 8%
Other 18%
The opportunities in the generic ophthalmic pharmaceutical market remain
excellent. Several pharmaceutical products with substantial industry sales have
recently lost patent protection. Among the abbreviated new drug applications
(ANDAs) that the Company has filed with the FDA are several applicable to these
products, which represent approximately $100 million in industry sales.
Approvals are expected over the course of the year.
The outlook for worldwide pharmaceutical operations in 1994 is increasingly
positive. Sales should rise at a good rate in the U.S. and in Germany, where
market conditions are expected to improve. Earnings are expected to show
substantial improvement over previous years as U.S. operations become
profitable.
Hearing Care
[Photograph]
The Miracle-Ear line offers a wide selection of hearing aids including
soft-shell units and models that fit behind the ear and in the ear canal.
During 1993, Bausch & Lomb acquired Dahlberg, Inc., manufacturer of the
Miracle-Ear line of hearing aids and the number two company in the U.S. market.
The acquisition followed a four-year-long evaluation of the hearing care field
and the successful development of Bausch & Lomb's unique soft-shell hearing aid.
Miracle-Ear is the most widely recognized brand name in its field, and
Dahlberg has been a leading provider of hearing aids for more than 20 years.
With more than 1,000 franchised Miracle-Ear hearing centers, and a plan to reach
2,000 within the next decade, Bausch & Lomb now has the most extensive
distribution system in the industry. The Company offers a complete line of
hearing aids, including programmable units and models that fit behind the ear or
in the ear canal.
The hearing aid market did not experience growth in 1993, as consumers
delayed purchases as a result of uncertainties in the marketplace. The impact of
health care reform legislation and adverse publicity surrounding actions by the
Federal Trade Commission (FTC) and
27
<PAGE>
FDA to heighten regulatory oversight of the industry slowed demand for hearing
aids. Despite the temporary effect on the market, the Company believes that
increased regulatory supervision will work in favor of consumers and the
industry. As a company familiar with the requirements of the FDA, Bausch & Lomb
is well equipped to operate in this new regulatory environment.
The coming year will be a period of investment as the Company strengthens the
Miracle-Ear management structure and meets new marketing challenges.
Additionally, Bausch & Lomb will implement the best warranty and customer
satisfaction policies in the industry. An aggressive schedule for the
development and introduction of new products is also planned, including the
launch of the SoftChoice hearing aid, which is expected to retail for less than
$700. The Company further intends to introduce AudioChoice, a high-value,
mid-priced line of hearing aids. These actions, coupled with the introduction of
the Bausch & Lomb name throughout the Miracle-Ear distribution system, should
bolster confidence in this product category.
Dental Implants
During the first quarter of the year, Bausch & Lomb acquired Steri-Oss, Inc., a
company which has established a leading position in the $300 million global
market for dental implants. Steri-Oss manufactures devices that are implanted
into the jawbone providing a permanent anchor for artificial teeth. This
acquisition was consistent with Bausch & Lomb's strategy to market specialized
oral care products that prevent or treat conditions related to periodontal
disease and tooth loss. Steri-Oss has earned a growing share of the dental
implant market as a result of the breadth of its line of coated and uncoated
titanium implants, technical and clinical research excellence, and a highly
trained sales force that calls directly on dental professionals.
Widened distribution and the introduction of several new implant designs led
to solid revenue growth in this business in 1993. Steri-Oss is now the number
four manufacturer of dental implants in the U.S., and is poised to improve on
that standing.
Bausch & Lomb will increase the Steri-Oss sales force in the U.S. to reach a
wider audience of dental professionals while also increasing their familiarity
and confidence with implant procedures. Opportunities also exist to grow
revenues in markets outside the U.S., and Steri-Oss will provide increasing
support to its distribution network in these markets. Based on these factors,
dental implant revenues in 1994 are expected to progress strongly.
The Biomedical Sector
- --------------------------------------------------------------------------------
The biomedical sector provides researchers throughout the world with
purpose-bred, highly-defined, live animal models essential to the discovery and
validation of new pharmaceuticals. These products are marketed through the
Company's Charles River Laboratories subsidiary.
Consolidated revenues from biomedical products and services marketed through the
Company's Charles River Laboratories subsidiary increased more than 5% in 1993.
Sales of purpose-bred rodents used in scientific research rose modestly, while
revenues for bioprocessing services and products--primarily monoclonal
antibodies--declined as a result of regulatory delays encountered by clients
awaiting product approvals by the FDA. Incremental sales of specific
pathogen-free eggs for vaccine production led results for the year. During 1993,
operating earnings declined as a result of reduced bioprocessing sales,
increased costs relating to two new facilities, and plans to restructure global
operations. Nonetheless, Charles River remained highly profitable, providing the
Company with excellent cash flow.
28
<PAGE>
Research Animals
Cost containment efforts prompted by health care reform legislation in the U.S.
caused demand for laboratory research animals to decline throughout the
industry. However, in a market where cost and quality are the primary concerns
for researchers, sales of Charles River's high-quality and specialized rodent
lines grew 4%. Fluctuations in currency exchange rates affected results
adversely in Europe, where sales declined by 6%, but favorably in Japan, where
revenues grew by more than 15%.
Specialized research animals range from models developed through a process of
spontaneous mutation to transgenic animals altered by the insertion of specific
genes which produce a particular illness. Models sold by Charles River include
immunodeficient mice such as the Nude mouse and the Fox Chase SCID (Severe
Combined Immuno Deficient) mouse, which are used widely in AIDS and infectious
disease research, and the OncoMouse, a transgenic animal which has an increased
susceptibility to cancer.
Distribution Of Charles River Laboratories'
Research Animal Revenues
- --------------------------------------------------------------------------------
Pharmaceutical and
Private Labs 60%
Colleges and Universities 22%
Government 6%
Hospitals 6%
Biotechnology Companies 6%
Sales of technical services that are required for the care and maintenance of
transgenic animal species also grew rapidly during 1993. While researchers have
the resources to develop and refine transgenic animals, they frequently lack the
capability for the ongoing care and production of these models. Charles River's
customers for these services include universities, research institutions, and
pharmaceutical companies. Although these sales still represent only a small
percentage of total revenues, this market is growing at a very good rate.
Bioprocessing Services
Researchers using Charles River's monoclonal antibodies benefit from high
product quality and low cost.
[Photograph]
Charles River is the world's leading in-vivo contract producer of bulk
monoclonal antibodies, which are bioengineered versions of proteins naturally
produced in the body. Regulatory delays encountered by clients using Charles
River's monoclonal antibodies have affected sales for the past two years.
However, each year more researchers initiate projects using monoclonal
antibodies produced in-vivo, due to higher product quality and lower cost. As a
result, demand is expected to increase.
Products Derived From Specific Pathogen-Free Eggs
Charles River acquired the Connecticut-based firm, SPAFAS, the world's largest
producer of specific pathogen-free (SPF) eggs, during the fourth quarter of
1992. Sales grew at an outstanding rate during 1993, and the Company expanded
production capacity. SPAFAS' products are currently used for poultry vaccine
products, in the production of human vaccines (including vaccines for chicken
pox, measles, and influenza), and in growing the sendai virus used to make
natural interferon.
Outlook
For 1994, the Company expects biomedical revenues to increase modestly.
Operating results should improve as a result of streamlining programs.
29
<PAGE>
The Optics Segment
Optics segment revenues increased one percent in 1993 to $661 million. Sluggish
demand for sunglasses in Asia and Europe offset the good progress achieved by
the sports optics business during the year. Excluding restructuring charges,
earnings were 17% below 1992.
The Optics Segment Five-Year Summary Of Results
- ------------------------------------------------------------
(Dollars In Millions)
1989 1990 1991 1992 1993
- ------------------------------------------------------------
Net Sales 440.7 512.2 576.3 675.9 660.9
Earnings 95.1 112.4 137.9 135.5 79.6*
- ------------------------------------------------------------
*Includes restructuring charges of $32.9 million.
Sunglasses
[Photograph]
New products such as the Ray-Ban Survivors line and Ray-Ban
Driving series sunglasses featuring ChroMax color-contrast technology represent
a growing portion of sunglass revenues.
Marketing conditions for sunglasses were particularly challenging in 1993.
Europe and Japan, which traditionally account for more than 30% of the Company's
sunglass revenues, experienced deep recessions, and sales in both areas fell by
more than 10%. However, worldwide sales were only modestly below 1992 as a
result of good progress in Latin America and incremental U.S. sales from the Liz
Claiborne and Suncloud product lines. The sluggish worldwide sales led to a
decline in sunglass earnings, a development that drew a rapid response.
Recent enhancements to sunglass manufacturing operations have resulted in
increased productivity, especially in core production centers in Waterford,
Ireland, Rochester, New York, Oakland, Maryland, and San Antonio, Texas. This
made it possible to implement a plan for reductions in excess worldwide
production capacity and to undertake other measures to improve profitability in
the wake of sluggish worldwide demand. The Company is closing one of its older
plants, and will implement a series of other steps recognized in a restructuring
charge during 1993. These actions are expected to increase margins as unit
volumes improve.
The Company remains the world's leading manufacturer of premium-priced
sunglasses. The Ray-Ban line is the best selling and most coveted in the world,
enjoying a market share five times greater than its nearest rival.
Consumers have shown growing interest in sunglass lines that provide special
performance features, and Bausch & Lomb has responded to this trend. Sales of
the Company's Killer Loop line were outstanding, increasing by more than 60%
over 1992. Endorsed by leading athletes in a variety of professional sports,
Killer Loop sunglasses feature high-impact resistant polycarbonate lenses. The
lenses are available in seven different colors, allowing the wearer to create
a sports shield that is right for any light condition.
In the first quarter of 1994, the Company acquired the Revo line of high
performance sunglasses.
30
<PAGE>
Featuring multi-coated lenses and sleek frames, Revo sunglasses compete in the
high end of the premium-priced category of the market, where sunglasses retail
for $150 and above. The superior lens technology and styling of the Revo line
have earned it significant growth over the past four years. This collection will
be strengthened by Bausch & Lomb's expertise in sunglass manufacturing and
distribution.
An important technological enhancement introduced by the Company in 1993 was
the patented DiamondHard scratch protection system. This is an advanced,
non-peeling, amorphous diamond coating which renders glass lenses 10 times more
scratch resistant than uncoated glass. DiamondHard coatings were featured on the
Company's Ray-Ban Survivors line, which proved popular with active,
outdoor-oriented consumers.
Geographic Mix of Bausch & Lomb's Sunglass Revenues
- --------------------------------------------------------------------------------
U.S. 47%
Europe, Middle East,
and Africa 25%
Asia-Pacific 18%
Latin America and Canada 10%
In 1994, the Company's emphasis on product performance enters an important
new phase as marketing programs give far greater recognition to the potentially
harmful effects of ultraviolet (UV) rays. Vision care professionals and
clinicians have implicated UV radiation in a variety of serious eye conditions
ranging from snowblindness to cataracts. The introduction of the Ray-Ban UV
Index will educate the public about these effects in the following manner: A
network of monitoring sites throughout the U.S. will relay readings
electronically to Accu-Weather in Pennsylvania, the world's leading commercial
weather firm. Calculations made from those readings will produce an
easy-to-understand index on a 1-to-10 scale representing the amount of harmful
radiation in a particular location. The Ray-Ban UV Index will be highlighted
during television weather broadcasts and in major radio and newspaper reports
throughout the U.S.
An extensive array of new products is also planned for 1994. The Ray-Ban
Driving series, featuring ChroMax color contrast technology, are the most
advanced sunglasses for motorists ever made. Selected as the "official sunglass"
of Road & Track Magazine, they use new technology to increase the intensity and
contrast of driving colors: red, green, and amber. These sunglasses, to be
introduced throughout the world during the first half of 1994, should contribute
importantly to revenues. Also new for 1994 is the Senova line, which combines
classic styling with state-of-the-art components in a sunglass specially
designed for women. This new technology provides the same strength and
protection consumers have come to expect from Ray-Ban sunglasses, but with
lenses that are much lighter in weight. In 1994, the Company will also introduce
Killer Loop Xtreme Pro series shields with polycarbonate lenses carrying the
Company's DiamondHard scratch-resistant coating. This coating renders
polycarbonate lenses three times more scratch resistant than regular shields
while also enhancing their ability to repel water.
The outlook for the Company's sunglass business is more favorable than a year
ago. Improving market conditions in the U.S. and Latin America are expected to
result in moderate growth in sales and profitability for the year.
Sports Optics
[Photograph]
The Bausch & Lomb Elite line meets the requirements of consumers who demand the
highest quality sports optics products.
31
<PAGE>
Bausch & Lomb's sports optics business had a very successful year in 1993.
Revenues grew 11% as the result of good demand across all major product lines.
Progress was also made towards established goals for cash flow and return on
invested assets. The expected benefits of the Company's relocation in 1992 from
Southern California to Kansas were realized in the form of increased U.S. market
share, reduced operating and distribution costs, and improved customer service.
Sports Optics Revenue By Product Line
- --------------------------------------------------------------------------------
Binoculars 58%
Riflescopes 25%
Spotting Scopes 9%
Telescopes/Other 8%
In the binocular area, strong demand for the Powerview and InstaVision models
drove overall sales up by 13%. Powerview binoculars feature contemporary styling
and design and are equipped with the patented Insta-Focus system. InstaVision
binoculars combine focus-free operation, amber-coated optics, and a patented
hand strap for convenient use. The Bushnell Mini-Compact binocular, featuring
small, high-tech styling and lenses that reduce UV and infrared light, also
proved to be popular with consumers. The Company's share of the North American
binocular market reached record levels during the year and Bausch & Lomb now
commands almost half of this $130 million retail product category.
Sales of riflescopes increased almost 25% over the previous year, based on
the successful launch of the Bausch & Lomb Elite model and wider distribution of
the Bushnell Sportview riflescope. Elite riflescopes have multi-coated optics,
one-piece durable construction, and proven accuracy. Bausch & Lomb's share in
this important category of the sports optics market continues to benefit from
partnerships with leading retailers through electronic data interchanges.
Spotting scopes and astro telescopes also did well in 1993, with revenues
increasing by more than 15% and 10%, respectively. Design enhancements,
which were prompted by consumer responses to these lines, aided
product success.
During 1994 the Company plans to introduce several new products within the
Bausch & Lomb Discoverer line of binoculars. They will include high-end,
multi-coated, waterproof binoculars which are expected to retail for
approximately $500. The Discoverer line will also offer a binocular model
designed for astronomical or long-range surveillance. These new products are
expected to fill a gap between the high-end Elite line of Bausch & Lomb
binoculars and the moderately priced Bushnell line. Additionally, the mid-priced
Trophy line will be marketed for the first time in 1994. Waterproof, fog-proof,
and rubber-armored, Trophy binoculars feature a top-quality optical system and
are designed to work under all weather conditions.
For 1994, the Company expects balanced growth across all product lines, along
with continued progress toward the other financial goals established for this
business.
Optical Thin Films
Revenues from optical thin film coatings increased modestly during 1993. This
business remained profitable, though economic conditions in Europe, from where
it derives approximately 50% of its revenues, impacted results. Sales to Asia, a
future source of growth, increased during the year. Uncertainty about the impact
of government health care reform legislation contributed to a decline in medical
lighting sales.
Moderate growth in sales of optical thin film coating products is expected in
1994.
32
<PAGE>
Financial Contents
34. Financial Review
46. Financial Statements
49. Notes to Financial Statements
63. Report of Independent Accountants
64. Selected Financial Data
Report of Management
The following financial statements of Bausch & Lomb Incorporated were prepared
by the Company's management, which is responsible for their reliability and
objectivity. The statements have been prepared in conformity with generally
accepted accounting principles and, as such, include amounts based on informed
estimates and judgments of management with consideration given to materiality.
Financial information elsewhere in this annual report is consistent with that in
the financial statements.
Management is further responsible for maintaining a system of internal
controls to provide reasonable assurance that Bausch & Lomb's books and records
reflect the transactions of the Company; that assets are safeguarded; and that
its established policies and procedures are followed. Management systematically
reviews and modifies the system of internal controls to improve its
effectiveness. The internal control system is augmented by the communication of
accounting and business policies throughout the Company; the careful selection,
training, and development of qualified personnel; the delegation of authority
and establishment of responsibilities; and a comprehensive program of internal
audit.
Independent accountants are engaged to audit the financial statements of the
Company and issue a report thereon. They have informed management and the audit
committee that their audits were conducted in accordance with generally accepted
auditing standards which require a review and evaluation of internal controls to
determine the nature, timing, and extent of audit testing. The Report of
Independent Accountants is on page sixty three of this report.
The recommendations of the internal auditors and independent accountants are
reviewed by management. Control procedures have been implemented or revised as
appropriate to respond to these recommendations. No material control weaknesses
have been brought to the attention of management. In management's opinion, as of
December 25, 1993, the internal control system was functioning effectively and
accomplished the objectives discussed herein.
[Signature]
WILLIAM H. WALTRIP
Chairman and Chief Executive Officer
[Signature]
STEPHEN C. McCLUSKI
Senior Vice President
Finance
Report of the Audit Committee
The audit committee of the board of directors is comprised of three outside
directors. The members of the committee are: Kenneth L. Wolfe, Chairman; Linda
Johnson Rice; and Alvin W. Trivelpiece, Ph.D. The committee held three meetings
during 1993.
The audit committee meets with the independent accountants, management, and
the internal auditors to provide reasonable assurance that management fulfills
its responsibilities in the preparation of the financial statements and in the
maintenance of an effective system of internal controls. The audit committee
reviews the performance and fees of the independent accountants, recommends
their appointment, and meets with them and the internal auditors, without
management present, to discuss the scope and results of their audit work. Both
the independent accountants and the internal auditors have full access to the
audit committee.
[Signature]
KENNETH L. WOLFE
Chairman
Bausch & Lomb Incorporated and Consolidated Subsidiaries 33
<PAGE>
Financial Review
This financial review, which should be read in conjunction with the accompanying
financial statements, contains management's discussion and analysis of the
Company's operational results, liquidity, and progress toward stated business
objectives. The Company strives to maximize shareholder value over time and
places particular emphasis on predictability of performance. Given stable global
economies, the Company's goal is for annualized growth in the range of 15%, with
a return on equity target of 20%. Management believes it is also essential to
maintain a fairly conservative debt to equity ratio while optimizing the
Company's overall cost of capital.
As more fully described in Note 2--Restatement of Financial Information, 1993
financial information has been restated to reflect the decision to account for
shipments under a fourth quarter 1993 U.S. contact lens distributor program as
consigned inventory and to record revenues when the products were sold by the
distributors to their customers. Additionally, a restatement was made to
correct the improper recording of certain 1993 sunglass distributor sales in
Southeast Asia.
The Company has historically maintained a relatively low level of net debt,
defined as borrowings less cash, cash equivalents, and short-term investments.
Bausch & Lomb manages its established core businesses for both growth and cash
flow, and continuously seeks opportunities to improve asset management and
reduce operating costs. At the same time, management has not been reluctant to
invest in development-stage businesses that can become a source of attractive
future returns. Financial results for the three-year period covered in this
review reflect such expenditures.
Results Of Operations
- --------------------------------------------------------------------------------
OPERATING RESULTS BY BUSINESS SEGMENT
Bausch & Lomb's operating results are reported in two business segments. The
healthcare segment includes contact lens care products, contact lenses and lens
materials, eye care solutions, oral care products, skin care products,
over-the-counter medications, prescription pharmaceuticals, dental implants,
hearing aids, purpose-bred research animals, and bioprocessing services. These
products accounted for 64% of the Company's 1993 revenues and 71% of its
business segment earnings. Bausch & Lomb's optics segment includes sunglasses,
binoculars, riflescopes, telescopes, and optical thin film coating services and
products. These products accounted for 36% of Bausch & Lomb's consolidated
revenues and 29% of its business segment earnings in 1993. Excluding the
restructuring charges recorded in 1993 and described in Note 3 to the Financial
Statements, the healthcare and optics segments would have comprised 65% and 35%
of business segment earnings, respectively.
NET SALES
Consolidated revenues totaled $1,830 million in 1993. This was an increase of
$121 million or 7% from 1992, net of the effect of unfavorable changes in
exchange rates which reduced the growth in sales in U.S. dollars by $30 million
or 2%. Sales in 1992 increased $189 million or 12% from 1991, including the
positive effect of changes in currency exchange rates which contributed $19
million. Consolidated revenues have increased at rates of 10% and 13% for the
most recent three- and five-year periods, respectively. In general, the effects
of weakened economies in North America, Europe, and Japan have moderated overall
revenue growth during the most recent three years. A summary of sales by
business segment follows:
Net Sales By Business Segment
-------------------------------
Dollar Amounts In Millions 1993 1992 1991
- ----------------------------------------------------------
Healthcare $1,169.2 $1,033.2 $ 943.8
Optics 660.9 675.9 576.3
-------------------------------
Net sales $1,830.1 $1,709.1 $1,520.1
===============================
34 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
HEALTHCARE SEGMENT REVENUES
Healthcare segment revenues advanced $136 million or 13% over 1992 to $1,169
million. Major product sector revenues as a percentage of total segment sales
are presented in the following table:
Healthcare Segment Sales By Product Sector
----------------------------------
1993 1992 1991
- ---------------------------------------------------------
Personal health 53% 52% 52%
Medical 33% 33% 32%
Biomedical 14% 15% 16%
==================================
Within the personal health sector, 1993 revenues for lens care products
advanced 11% from 1992, primarily due to higher unit shipments. Continued strong
demand for the Company's ReNu and Boston lines of lens care solutions was
reflected in improved results in all geographic regions except Europe. Worldwide
oral care revenues increased by 10% over the prior year. The successful
implementation of quality and customer service enhancements for the Interplak
product line substantially reduced the level of returns from 1992. This more
than offset the effects of increased competition and a weakened U.S. economy on
sales. Also included in total oral care sales was a full year of shipments of
the Company's Clear Choice alcohol-free mouthwash, introduced in the fourth
quarter of 1992. Revenue growth in the personal health sector also benefited
from incremental sales contributed by the Curel and Soft Sense skin care product
lines acquired in the second quarter of 1993.
In the Company's medical sector, revenues advanced 14% over 1992. Worldwide
contact lens revenues increased 5%, due to significantly higher demand for
SeeQuence and Medalist lenses used in disposable and planned replacement lens
programs. In addition, the successful launch of the Company's Occasions
multi-focal lens contributed incremental sales in 1993. Offsetting these
positive trends, traditional contact lens revenues declined 11%, reflecting a
shift in consumer demand toward disposable and planned replacement lenses and
reduced pricing. Ophthalmic pharmaceutical revenues advanced moderately, as
strong gains for U.S. operations were partially offset by the adverse effect of
changes in government regulations on the Company's prescription pharmaceutical
operations in Germany. Revenues in the medical sector also included results
from the first quarter acquisition of Steri-Oss, Inc., a U.S. manufacturer of
dental implants, and the third quarter acquisition of Dahlberg, Inc.,
manufacturer of the Miracle-Ear line of hearing aids.
The 6% revenue growth in the biomedical sector was led by incremental sales
resulting from the fourth quarter 1992 acquisition of SPAFAS, Inc., the world's
largest producer of specific pathogen-free eggs used as media for vaccine
products, as well as improved pricing for research animals.
Mix Of Healthcare Sales By Product Sector
- --------------------------------------------------------------------------------
(Dollars In Millions) 1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Biomedical 121 134 153 160 168
Medical 245 273 298 339 388
Personal Health 414 449 493 534 613
---- ---- ---- ---- ----
780 856 944 1,033 1,169
[Mountain Graph: Mix Of Healthcare Sales By Product Sector]
In 1992, healthcare revenues advanced $89 million from 1991 to $1,033
million. In the personal health sector, worldwide sales of lens care products
increased 18% from 1991 levels. Heightened demand for the Company's ReNu and
Boston lines of lens care products was evidenced in all geographic regions.
These gains more than offset a decline in revenues for oral care products, which
were impacted by weak market conditions in the U.S. and Japan, product returns
from retail channels, and the effect of increased competition.
In the Company's medical sector, all major product lines contributed to an
overall revenue gain of 14%. Sales of contact lenses increased significantly,
led by sharply higher worldwide demand for SeeQuence disposable lenses and the
Medalist line of contact lenses used in planned replacement programs. Combined
sales for these two product lines rose 65% during the year. Ophthalmic
pharmaceutical revenues advanced 18% over 1991, reflecting gains for the
Company's operations in Germany and the U.S.
Revenues in the biomedical sector advanced moderately over 1991. Year-to-year
comparisons were adversely affected by an unusually high order rate for
bioprocessing services in 1991 from a customer that experienced subsequent
delays in FDA approval to market its products.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 35
<PAGE>
OPTICS SEGMENT REVENUES
Revenues for the Company's optics segment totaled $661 million in 1993, a
decrease of $15 million or 2%. Worldwide sunglass sales declined modestly, as
sluggish demand in Asia and Europe was compounded by adverse currency exchange
rate changes in Europe. These factors were somewhat offset by substantial gains
in Latin America and the favorable results from new sunglass lines acquired in
1992. Sales of premium-priced sunglasses in the U.S. trailed 1992 levels, due to
the weakened U.S. economy as well as further actions taken to prevent the
diversion of sunglasses to other markets. These actions are not expected to
cause further erosion in U.S. unit volumes in 1994. Revenues for the Company's
sports optics business improved by 11% from 1992 reflecting gains for Bushnell
branded products, particularly binoculars and riflescopes. The Company's optical
thin film coating business achieved modest revenue gains despite unfavorable
economic conditions in Europe, which represents approximately half of its
business.
In 1992, optics revenues of $676 million advanced $100 million or 17% over
1991. Excellent demand for sunglasses in the Asia-Pacific region and in Europe
enabled sales for these products to increase by 15%. Sunglass revenues also
benefited from the second quarter acquisition of a U.S. based sunglass company,
International Tropic-Cal, Inc., which provided the Company entry into the
moderate-priced sunglass market in the U.S. and Canada. Sales for premium-priced
sunglass products in the U.S. were even with 1991 levels. U.S. price increases
were essentially offset by lower volumes resulting from programs instituted by
Bausch & Lomb to curtail the diversion of sunglasses by U.S. wholesalers to
markets ordinarily supplied by the Company's non-U.S. subsidiaries. In the
Company's sports optics business, revenues advanced 40%, reflecting incremental
sales contributed by the acquisition of the Jason Empire product line in January
1992 as well as heightened demand for binoculars and riflescopes in the U.S. The
Company's optical thin film coating business also achieved good sales gains over
the prior year.
BUSINESS SEGMENT AND OPERATING EARNINGS
Business segment earnings for 1993 totaled $272 million, a decline of $40
million or 13% from 1992. These results included $49 million in restructuring
charges recorded in 1993. Excluding these charges, business segment earnings
would have been $321 million, an advance of $9 million or 3% from the prior
year. Unfavorable currency exchange rates reduced business segment earnings in
U.S. dollars by $8 million or 3%. In 1992, business segment earnings totaled
$312 million, an increase of $21 million or 7% from 1991. Favorable changes in
exchange rates increased 1992 business segment earnings by $2 million or 1%.
When the effect of 1991 non-recurring charges is included in this comparison,
1992 business segment earnings improved by $71 million or 30%. The ratio of
business segment earnings to sales was 14.9% in 1993. Excluding the impact of
restructuring charges, it would have been 17.5% in 1993, as compared to the
18.2% return achieved in 1992. This ratio reflects continuing investments in new
markets, products, and acquisitions; promotional programs; and spending to
increase consumer awareness of the features which differentiate Bausch & Lomb
branded products from those of its competitors.
Business Segment Earnings
- --------------------------------------------------------------------------------
(Dollars In Millions)
1989 231
1990 255
1991 240
290*
1992 312
1993 272
321**
* Before restructuring and special charges of $50 million.
** Before restructuring charges of $49 million.
[Bar Graph: Business Segment Earnings]
Operating earnings of $225 million in 1993 decreased $45 million or 17% from
1992. Excluding restructuring charges, operating earnings would have advanced
$5 million or 2% over the comparable 1992 result. In 1992, operating earnings
improved $23 million or 9% from 1991. This comparison excludes 1991
non-recurring charges of $76 million. Business segment and operating earnings
for the last three years are presented below:
Business Segment And Operating Earnings
-----------------------------
Dollar Amounts In Millions 1993 1992 1991
- ----------------------------------------------------------
Healthcare $192.3 $176.1 $102.4
Optics 79.6 135.5 137.9
-----------------------------
Business segment earnings 271.9(1) 311.6 240.3(3)
Corporate administration
expense 47.0(2) 41.4 69.5(4)
-----------------------------
Operating earnings $224.9 $270.2 $170.8
=============================
1 Includes restructuring charges of $48.8 million as follows: Healthcare,
$15.9; Optics, $32.9.
2 Includes restructuring charges of $1.2 million.
3 Includes restructuring and special charges of $50.3 million in the Healthcare
segment.
4 Includes special charges of $26.0 million.
36 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
COSTS AND EXPENSES
The cost of products sold ratio was 45% in 1993, compared to 46% in 1992 and 44%
in 1991. The improvement in this ratio during 1993 resulted from production
efficiencies in the Company's sunglass and contact lens manufacturing operations
in Europe and the U.S., as well as the favorable impact of currency exchange
rates on the cost of products sourced from Ireland. Improvements also resulted
from a shift towards higher margin lens care products, the success of cost
reduction programs in the U.S. pharmaceutical business, and a lower rate of
product returns for U.S. oral care operations. These benefits were moderated by
a shift toward lower margin planned replacement contact lenses and the impact of
lower sales levels and promotional programs on results for premium-priced
sunglass products.
The change in the 1992 cost of products sold ratio from the previous year
resulted from the unfavorable currency exchange rate effect on the cost of
products manufactured in Ireland, coupled with lower margins on U.S. oral care
and sunglass product sales. Margin improvements generated by production
efficiencies in the lens care and contact lens businesses together with
successful cost reductions in the U.S. pharmaceutical business partially offset
these factors.
Selling, administrative, and general expenses, including corporate
administration expense, were 37% of sales in 1993 and 36% of sales in 1992 and
1991. These amounts reflected the cost of geographic expansion, new product
launches, and product awareness efforts, such as worldwide sponsorship of the
Olympic Games. Over the past five years, advertising and promotion expenses have
grown from $173 million to $290 million. Costs in 1993 included expenses related
to U.S. contact lens promotional programs and the introduction of the Occasions
multi-focal lens in the U.S., the launch of Clear Choice mouthwash, and spending
to support the newly-acquired skin care, hearing care, and dental implant
product lines. The cost of these programs was partially offset by expense
reductions to manage the increase in discretionary spending to a rate below that
of revenue growth.
Advertising And Promotion Expenses
- --------------------------------------------------------------------------------
(Dollars In Millions)
1989 173
1990 205
1991 229
1992 260
1993 290
[Bar Graph: Advertising and Promotion Expenses]
Corporate administration expense totaled $47 million in 1993, compared to $41
million in 1992, and $43 million in 1991. This represented 2.6% of sales in
1993, 2.4% in 1992, and 2.9% in 1991. These ratios reflect the Company's
continued success in managing these expenses to a targeted level of no more than
3% of sales. Including non-recurring charges, total corporate administration
expense was $64 million in 1991, and reflected charges to reserve for litigation
exposures related to discontinued operations. Subsequent to the 1991 year end,
the Company settled the principal matters within the recorded reserve amount.
Research and development expenditures totaled $58 million in 1993 compared to
$53 million in 1992, an increase of 9%. These costs were $49 million in 1991.
Research and development costs have risen at a compound rate of 13% over the
past five years. The Company continues to invest in programs to enhance
technical leadership in all of its key businesses. The majority of these
expenditures related to the contact lens, lens care, pharmaceutical, and
sunglass businesses.
HEALTHCARE SEGMENT EARNINGS
Earnings of $192 million for the healthcare segment in 1993 advanced $16 million
or 9%. These results included $16 million in costs for restructuring the
Company's ophthalmic pharmaceutical and biomedical operations, including the
shutdown of a pharmaceutical production facility in New York and other actions
to increase efficiency and reduce costs. Excluding restructuring charges,
healthcare segment earnings would have totaled $208 million in 1993, an increase
of $32 million or 18% over comparable 1992 results, despite support for the U.S.
launch of Clear Choice mouthwash. Margins for the healthcare segment were 16.4%
in 1993. Excluding non-recurring charges, the margin would have been 17.8%,
compared to 17.0% in 1992 and 16.2% in 1991. These results include the Company's
continued discretionary spending to develop opportunities from which substantial
growth in sales and earnings should be realized in the future. The rate of
earnings growth exceeded that of revenues based on the worldwide sales increase
for higher margin products in the lens care business and excellent gains in
profitability for U.S. eye care products. Improved operating results for planned
replacement lenses were essentially offset by the effect of a decline in pricing
for traditional lens products. Results for U.S. ophthalmic pharmaceutical
operations improved from 1992 based on successful cost
Bausch & Lomb Incorporated and Consolidated Subsidiaries 37
<PAGE>
reduction efforts and improved product margins. However, this progress was
largely offset by a sales related decline in Germany. Earnings also reflected
consumer reaction to recent regulatory actions in the hearing aid business.
Biomedical sector earnings principally benefited from the acquisition of SPAFAS,
Inc., the world's leading producer of specific pathogen-free eggs.
1992 healthcare segment earnings of $176 million increased $23 million or 15%
from 1991, exclusive of non-recurring charges. This growth was attributable to
improved margins on higher worldwide sales of lens care solutions, the higher
margins contributed by the close-out of a U.S. consignment lens program, and a
significant reduction in operating losses for U.S. pharmaceutical operations.
Earnings for oral care products declined from 1991 due to lower net sales
levels. Results for the healthcare segment also included significant
expenditures to launch new products in Japan and the U.S. as well as costs
associated with the Company's sponsorship of the 1992 Olympic Games.
OPTICS SEGMENT EARNINGS
Optics segment earnings of $80 million in 1993 were $56 million or 41% below
1992 levels. These results include a $33 million charge recorded in 1993,
principally to restructure global sunglass operations by closing a metal frame
fabrication facility in Germany and realigning manufacturing in the Company's
remaining facilities. Excluding the impact of this charge, optics segment
earnings would have been $112 million in 1993, a decline of $23 million or 17%
from 1992. Optics segment margins were 12.0% in 1993. Exclusive of restructuring
charges, this margin would have been 17.0% compared to 20.1% in 1992, and 23.9%
in 1991. The decline in 1993 was largely attributable to volume reductions
resulting from anti-diversion actions and promotional programs in the U.S.
premium-priced sunglass market. Earnings for sunglass products declined in
Europe and the Asia-Pacific region as a result of the effect of weakened
economic conditions on consumer demand. However, earnings improved in Latin
America, primarily Brazil and Mexico. Significant gains in profitability for
sports optics products stemmed from increased demand for the higher margin
Bushnell brand binoculars.
Earnings for the optics segment in 1992 were $136 million, a decrease of $2
million or 2% from 1991. Earnings were adversely affected by actions taken to
control unauthorized diversion of sunglasses sold to U.S. wholesalers who were
reselling these products in geographic regions better served by the Company's
established subsidiaries. The Company's measures to stem product diversion
included the discontinuation of relationships with 35 U.S. wholesale customers.
Margins on sunglasses sourced from Ireland were reduced by adverse exchange rate
changes. Gains in profitability for sports optics products and revenue-driven
gains in earnings for the optical thin film coating business partially offset
this decline.
OPERATING RESULTS BY GEOGRAPHIC REGION
NET SALES
Sales outside the U.S. totaled $817 million in 1993, a decrease of $8
million or 1% from 1992. Non-U.S. sales represented 45% of consolidated revenues
in 1993, 48% in 1992, and 46% in 1991. These revenues had been expected to
approach 50% of total sales in 1993. The relative percentage decline from 1992
resulted from foreign currency changes, which reduced revenue growth by $30
million or 4%, coupled with the slower rate of economic recovery in non-U.S.
markets. Meanwhile, increased sales from established core businesses and recent
acquisitions contributed to overall growth in U.S. sales. European revenues in
total declined by $24 million or 6% from 1992, reflecting the unfavorable impact
of currency exchange rate changes and the effect of adverse economic conditions
on consumer demand in several markets. The successful introduction of new
over-the-counter products in Germany offset the impact of new government
regulations on drug pricing and prescribing in that market. Sales in the
Asia-Pacific region declined $7 million or 2% from 1992 levels, as lower sales
of sunglass products more than offset higher demand for lens and lens care
products in markets outside Japan. The strengthening of the yen benefited
revenue results in Japan by $16 million, while in local currency sales remained
slightly below prior year levels due to the continued weakness in consumer
spending. Significant growth in Canada and Latin America was attributable to
double digit sales gains for lens care, contact lens, and sunglass products.
Brazil and Mexico showed marked improvement over 1992 results.
38 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
U.S. revenues in 1993 exceeded the one billion dollar level for the first
time in the Company's history. Sales of $1,013 million increased $129 million or
15% from 1992. Acquisitions completed in 1993 in the skin care, hearing care,
and dental implant businesses led this improvement over the prior year. The full
year effect of 1992 acquisitions and the introduction of Clear Choice mouthwash
further contributed to this advance. Overall, the Company experienced excellent
gains in revenues in the lens care and sports optics businesses. Contact lens
revenues benefited from the launch of the Occasions multi-focal lens and
increased sales of planned replacement lenses. This was somewhat offset by a
decline in traditional lens revenues resulting from pricing and the shift in
consumer preference to planned replacement products. U.S. pharmaceutical
revenues advanced 17%, led by higher shipments of OptiPranolol and the fourth
quarter launch of Tobramycin Ophthalmic Solution USP, 0.3%, the first generic
version of Tobrex, a widely prescribed antibiotic. In the premium-priced
sunglass business, sales declined from the prior year, reflecting both the
weakened economy and further initiatives to curtail product diversion by U.S.
wholesalers.
Geographic Mix Of 1993 Net Sales
- --------------------------------------------------------------------------------
U.S. 55%
Europe, Middle East
and Africa 22%
Asia-Pacific 16%
Latin America and Canada 7%
[Pie Chart: Geographic Mix of 1993 Net Sales]
In 1992, sales of $825 million in markets outside the U.S. increased by $129
million or 19% over 1991. Favorable currency exchange rates contributed
approximately $19 million or 3% to this growth. Good results were attained in
Europe and the Asia-Pacific region, where growth was driven by increased demand
for contact lenses, lens care solutions, and sunglasses. This progress was based
on significant gains in established markets such as Spain, Italy, Japan, Hong
Kong, and Mexico. Subsidiary operations were also expanded into a number of new
markets in 1992, including Turkey, India, Indonesia, and Colombia.
U.S. sales of $884 million in 1992 advanced $60 million or 7% over 1991. This
growth was led by a 14% improvement for lens care products based on excellent
demand for the ReNu line of solutions. Sales for contact lens products advanced
16% due primarily to strong growth for disposable and planned replacement
lenses. 1992 revenues for the Company's U.S. pharmaceutical operations advanced
13% from 1991 despite continuing delays in regulatory approval for manufacturing
at a new facility in Florida. Oral care revenues were constrained by weak
economic conditions, retail inventory returns, and increased competition. Optics
segment sales in the U.S. benefited from revenues contributed by two
acquisitions and increased demand for riflescopes and binoculars.
BUSINESS SEGMENT EARNINGS
1993 business segment earnings in markets outside the U.S. totaled $118 million,
a decline of $12 million or 9% from 1992. They represented 43% of total business
segment earnings in 1993. Excluding restructuring charges, business segment
earnings in non-U.S. markets would have been $143 million, an increase of $13
million or 10% from the prior year. This would have accounted for 45% of
business segment earnings in 1993, compared to 42% in 1992 and 1991. These
results benefited from the favorable margin impact of higher lens care volumes
in 1993, plus cost reduction initiatives and the favorable impact of currency on
the cost of Irish-sourced sunglasses and contact lenses. Non-U.S. results also
reflected the relatively greater advertising support for U.S. based acquisitions
and new product launches, which will be expanded to other markets in the future.
Overall, currency reduced the year-over-year earnings improvement by $8 million
or 3%, primarily in Europe. Currency significantly aided sales in Japan, but had
a limited effect on earnings, due to changes in product mix.
U.S. business segment earnings in 1993 decreased $28 million or 15% from
1992 after recognizing $24 million in restructuring charges. Excluding these
costs, business segment earnings would have declined $4 million or 2% from the
prior year. The decline resulted from a continued shift in consumer demand from
traditional to disposable and planned replacement lenses as well as reduced
pricing for traditional lenses. In addition, sunglass earnings declined from
1992, reflecting lower sales of premium-priced products, the costs of
promotional programs, new product activity and the implementation of continuous
flow manufacturing processes. Operating results in the lens care,
pharmaceutical, and sports optics businesses improved from 1992, and the
addition of the Curel and Soft Sense skin care product lines also aided 1993
earnings. These factors were moderated by incremental spending to launch the
Occasions multi-focal contact lens and Clear Choice mouthwash. Earnings for the
Miracle-Ear line of hearing aids were adversely impacted by reduced consumer
demand in the wake of regulatory actions initiated by the FDA and FTC.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 39
<PAGE>
Business segment earnings in markets outside the U.S. were $130 million in
1992, an increase of $8 million or 6% from 1991, reflecting improved margins on
higher sales of lens care products in all regions and higher sunglass sales in
the Asia-Pacific region. Earnings gains were moderated by costs to expand
product distribution into new markets. Favorable exchange rate changes also
improved earnings by $2 million or 1% from 1991.
In U.S. markets, 1992 business segment earnings were $182 million, an
increase of $13 million or 8% over the prior year's $168 million. This advance
was the result of significant margin improvements in the lens care and contact
lens businesses, the close-out of a consignment lens program, and revenue gains
in the sports optics business. Effective cost reduction programs in the
pharmaceutical business significantly reduced operating losses from 1991 levels.
Earnings for oral care products declined from 1991 due to a sales shortfall.
Sunglass earnings were adversely affected by the continued recessionary
environment and the Company's efforts to ensure that products sold to U.S.
wholesalers were not diverted to other markets. Including the effect of 1991
non-recurring charges, 1992 business segment earnings advanced $64 million or
54% from the prior year.
OTHER INCOME AND EXPENSES
Income from investments was $14 million in 1993, $13 million in 1992, and $15
million in 1991. Although short-term interest rates have declined over the
three-year period, this trend was offset by an increase in average investment
levels in 1993.
Interest expense was $34 million in 1993, compared to $30 and $39 million in
1992 and 1991, respectively. The higher expense in 1993 was attributable to the
acquisition-related increase in average outstanding debt, which more than offset
the favorable effect of declining interest rates over the three-year period.
The following table summarizes the pre-tax components of foreign currency
gains and losses for the last three years:
-------------------------------
Dollar Amounts In Thousands 1993 1992 1991
- --------------------------------------------------------
Transaction gains $(22,473) $(14,691) $(8,520)
Translation losses 11,405 6,006 6,628
-------------------------------
Gains from foreign
currency $(11,068) $ (8,685) $(1,892)
===============================
The Company amortizes forward premiums or discounts on currency hedge
positions as transaction gains or losses. The amount realized from hedge
positions is substantially based on interest rate differentials between the
various currencies being traded. The increase in transaction gains over the
three-year period reflected higher premium income on Irish pound hedges of the
net investment in certain financing subsidiaries and other Irish pound
denominated exposures.
In accordance with Statement of Financial Accounting Standards (SFAS) No. 52,
the Company has recorded translation gains and losses as adjustments to
shareholders' equity. Translation adjustments relating to subsidiaries in
countries with highly inflationary economies have been included in net earnings,
along with all transaction gains and losses. Translation losses increased in
1993, primarily in Brazil. In general, while operating results have improved in
hyperinflationary economies, translation losses have increased, reflecting the
effect of currency changes on the resulting higher trade receivable and net
working capital levels.
On an after-tax basis, foreign currency fluctuations increased both 1993 and
1992 earnings by $2 million or $0.03 per share, compared to a decrease of $2
million or $0.04 per share in 1991.
INCOME TAXES
The Company's income tax rate for 1993 was 33.5% compared to 32.5% for 1992 and
39.7% for 1991. Excluding 1991 non-recurring charges which were not deductible
for U.S. tax purposes, the income tax rate would have been 32.1% for that year.
The Company adopted SFAS No. 109, "Accounting for Income Taxes", at the
beginning of 1992. In accordance with the provisions of the Standard, the
Company recognized the impact of U.S. tax rate changes enacted in 1993 on its
deferred tax benefit. This was not material to earnings results in 1993. The
Company's income tax rates were below statutory levels due to the proportion of
pre-tax earnings generated by subsidiaries in countries with lower statutory tax
rates than in the U.S.
40 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
Liquidity And Financial Resources
- --------------------------------------------------------------------------------
The Company evaluates its liquidity on several bases, including the ability to
generate earnings and positive cash flows, financial position, access to
financial markets, and the adequacy of working capital levels.
CASH FLOWS
Traditionally, the Company has generated cash flows from operations in excess of
dividend payments and funds needed for capital reinvestment in existing
businesses. Increased borrowings in 1993 and 1992 have been used to make
strategic acquisitions in the hearing care, oral care, and skin care businesses,
and to extend product offerings in the Company's core businesses.
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings adjusted for after-tax restructuring charges of $36 million and
other non-cash items, including depreciation, amortization, and deferred taxes,
declined from 1992. Total cash flows from operating activities in 1993
decreased $50 million or 26% from 1992 to $142 million. This decline was
primarily attributable to sales related increases in receivables and extended
credit terms. Inventories increased from 1992, resulting from higher contact
lens levels to support growth in the planned replacement business and
acquisitions. However, inventory management continued to improve as evidenced by
a reduction in inventory months on hand. The increase in other current assets
principally reflected the prepayment of fees associated with the Company's
sponsorship of the Olympic Games.
Cash flows from operations totaled $192 million in 1992, a decrease of 17%
from 1991. Higher earnings were more than offset by an increase in net operating
assets, primarily accounts receivable. The increase in trade receivables
reflected the growth in sales, the impact of currency exchange rate changes, and
extended credit terms, particularly in markets outside the U.S.
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash flows used in investing activities increased $235 million from 1992 to $388
million. This increase was primarily attributable to 1993 acquisitions,
including Dahlberg, Inc. and its Miracle-Ear line of hearing aids and the Curel
and Soft Sense brands of skin care products. Other investing activities included
the formation of Wilmington Partners L.P., described in Note 13 to the Financial
Statements.
Purchases of property, plant, and equipment totaled $107 million in 1993, a
decrease of $12 million or 10% from the prior year. Expenditures included
manufacturing capacity expansion for contact lenses in the U.S. and Europe, for
lens care solutions in Europe and China, improved biomedical production
facilities, plus investment in continuous flow manufacturing for the sunglass
business.
Capital Expenditures And Depreciation Expense
- --------------------------------------------------------------------------------
(Dollars In Millions)
Capital Expenditures Depreciation Expense
1989 100 41
1990 108 50
1991 89 57
1992 119 63
1993 107 72
[Bar Graph: Capital Expenditures and Depreciation Expense]
Higher cash flows used in investing activities in 1992 reflected capital
spending, which increased $31 million or 35% from 1991. Major 1992 projects
included expansion of manufacturing capacity for disposable and planned
replacement contact lenses and sunglass products, an additional production
facility for the U.S. biomedical products business, and the purchase of the
Company's European headquarters facility. Other investing activities in 1992
included the acquisitions of the sunglass lines of International Tropic-Cal,
Inc. and SPAFAS, Inc., the world's largest producer of specific pathogen-free
eggs.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 41
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by financing activities totaled $400 million in 1993. Sources
of cash included funds realized upon the creation of Wilmington Partners L.P.,
$85 million in additional borrowings under the Company's medium term note
program, and a $45 million increase in non-U.S. debt. Funds were used to
exercise the call provision on the Company's 8% notes due in 1996, the payment
of dividends, and repurchases of the Company's Common shares. Dividends are
maintained at a payout level of between 30% and 35% of the previous year's
earnings before non-recurring charges. The repurchase of up to 6,000,000 Common
shares has been authorized by the Company's board of directors. At December 25,
1993, 3,114,000 shares have been purchased under the authorization terms. The
amount of repurchases in any year is based on market conditions, cash flows, and
other business factors.
FINANCIAL POSITION
The Company's objective of achieving a 20% return on shareholders' equity
requires the cost of capital to be minimized. Net debt, or total borrowings less
cash, cash equivalents, and short-term investments, has been conservative
whether compared to the Company's cash flow or total capital. The effective use
of debt financing has lowered the Company's cost of capital and resulted in an
increased return to shareholders.
In total, short- and long-term borrowings increased by $79 million to $566
million in 1993. The net increase in borrowings was attributable to the level of
U.S. acquisition activities. Bausch & Lomb's ratio of total debt to equity stood
at 62% and 54% at year-end 1993 and 1992, respectively. The Company also
maintains a significant balance of cash and investments, which totaled $546
million in 1993 and $417 million in 1992. Cash equivalents consist primarily of
U.S. and Euro time deposits with maturities of less than three months.
Short-term investments include Euro time deposits and other income producing
securities of less than one-year maturity. These investments were carried at
cost which approximated market value. After considering hypothetical taxes
payable upon repatriation of non-U.S. cash and investments, tax-effected net
debt totaled $166 million compared to $206 million in 1992. The ratio of
tax-effected net debt to equity stood at 16% in 1993 and 23% in 1992,
demonstrating that the Company has the financial flexibility needed to pursue
strategic business opportunities.
ACCESS TO FINANCIAL MARKETS
Bausch & Lomb's reputation, coupled with its strong financial position and cash
flows, continue to provide ready access to financing in markets around the
world. The Company's commercial paper has been rated A-1 by Standard & Poor's
and P-1 by Moody's Investor Services. Its long-term debt is rated A+ and A2 by
S&P and Moody's, respectively. This enables the Company to raise funds at a low
effective cost. To support its liquidity requirements, the Company maintains
U.S. revolving credit and term loan agreements with 364-day credit terms
totaling $205 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 December 25, 1993. The Company filed a
shelf registration with the Securities and Exchange Commission in November 1993
for up to $300 million in debt. Approval of the specific form of a medium term
note program in conjunction with this registration will be obtained during 1994.
In addition, the Company maintains bank lines of credit for its financing
requirements. At year end, unused U.S. bank lines of credit amounted to
approximately $73 million. For limited periods during the year, intercompany
borrowings from non-U.S. subsidiaries may be used to reduce U.S. short-term
debt. 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. Information relating to the Company's
short-term debt is set forth in the following table:
----------------------
Dollar Amounts In Millions 1993 1992
- ----------------------------------------------------------
Average interest rates at year end:
U.S. 3.2% 3.3%
Non-U.S.* 5.3% 6.5%
Aggregate* 3.4% 3.6%
Average interest rates for the year* 3.6% 4.5%
Highest month-end balance $592.3 $329.2
Average month-end balance $258.7 $148.6
======================
* Excludes the effect of short-term borrowings in the highly inflationary
economy of Brazil.
WORKING CAPITAL
The Company's overall financial condition remained strong at year-end 1993.
Working capital amounted to $670 million compared to $515 million in the prior
year. The current ratio was 1.9 at year-end 1993 and 1992.
42 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
Outlook
- --------------------------------------------------------------------------------
Worldwide sales for the Company's products should continue to develop at a good
rate in 1994. Revenues in the U.S. are expected to increase as a percent of
total sales, based on incremental volume from 1993 acquisitions, as well as the
January 1994 acquisition of the assets of Revo, Inc. The latter provides entry
into the high end of the premium-priced sunglass market, primarily in the U.S.
Revenues are also expected to benefit from the introduction and expanded
distribution of other new products in the U.S. The Company remains cautious
regarding any improvement in economic conditions in Europe and Japan and will
manage discretionary spending in these markets accordingly. Restructuring
actions are expected to generate cost savings of approximately $15 million in
1994. Further earnings improvements are anticipated in subsequent years as the
full benefit of these actions is realized.
Within the healthcare segment, revenues and earnings in the personal health
sector will continue to expand with worldwide growth in lens care product
demand. Oral care product revenues are expected to improve from 1993, based on
the planned introduction of new products and expanded distribution of Clear
Choice mouthwash. Increased advertising and broader distribution should lead to
gains in skin care product revenues and earnings in 1994. Medical sector results
are expected to benefit from increasing worldwide consumer acceptance of
disposable and planned replacement contact lenses, manufacturing efficiencies,
and the introduction of new products. The FDA licensed the manufacture of three
pharmaceutical products at the Company's Tampa facility in 1993, and additional
product approvals are expected in 1994. It is anticipated that U.S.
pharmaceutical operations will turn profitable as the benefits of restructuring
actions are realized. Increased sales of over-the-counter products together with
the normalization of prescription patterns following 1993 regulatory changes
should improve results for the Company's Dr. Mann Pharma subsidiary in Germany.
Results for the Miracle-Ear line of hearing aids will include higher levels of
spending to comply with regulatory actions, introduce new warranty and customer
satisfaction policies, and invest in programs aimed at increasing consumer
acceptance of hearing aids. Sales of biomedical products should improve
moderately, while earnings will benefit from actions to restructure global
operations. The Company will continue to invest in new and emerging businesses
in the healthcare segment.
Performance in the optics segment will benefit from expected growth in the
sunglass business in the U.S., Asia-Pacific, and Latin America, while the
January 1994 acquisition of Revo, Inc. will boost U.S. sales and modestly
benefit earnings. Results for the worldwide sports optics business should
improve moderately, based on demand for Bushnell branded products and planned
new product introductions.
Other expenses are expected to increase substantially as a result of a
reduction in currency transaction gains. A decline in Irish interest rates will
result in lower premium income from the Company's hedge positions. Minority
interest expense related to Wilmington Partners L.P. will also increase in 1994.
Cash flow from operating activities is planned to increase based on growth in
net earnings and programs to reduce working capital levels, especially
receivables and inventories.
Capital expenditures are expected to exceed $125 million in 1994. Major
projects will include new manufacturing capacity for contact lenses in the U.S.
and Europe and actions to further improve sunglass manufacturing efficiencies.
Finally, return on equity is expected to again meet the Company's 20% target
in 1994.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 43
<PAGE>
Other Information
- --------------------------------------------------------------------------------
DIVIDENDS
The annual dividend declared on Common stock was $0.88 per share in 1993, $0.80
per share in 1992, and $0.72 per share in 1991. Quarterly dividends declared on
Common stock were raised 10% to $0.22 per share in 1993 compared to $0.20 per
share in 1992. The 1992 quarterly dividend rate was 11% higher than the 1991
amount of $0.18 per share. These increases reflect the Company's desire to
increase its dividend on an annual basis while maintaining a payout rate of
between 30% to 35% of the previous year's earnings.
RETURNS ON EQUITY AND CAPITAL
Return on average shareholders' equity was 15.5% in 1993, compared with
20.3% in 1992 and 10.3% in 1991. The results in both 1993 and 1991 include the
impact of non-recurring charges. Excluding these charges, return on equity would
have been 19.5% in 1993 and 17.7% in 1991. The 1993 decrease from 1992 stemmed
from lower earnings in the contact lens and sunglass product lines. The 1992
advance from the previous year reflected improved results in the lens care,
contact lens, and U.S. pharmaceutical businesses. Including the impact of the
cumulative effect of the accounting change associated with the adoption of SFAS
No. 106, return on equity was 3.5% in 1991.
Return On Equity, Excluding The Cumulative Effect
Of An Accounting Change
- --------------------------------------------------------------------------------
(Percent)
1989 17.5
1990 17.2
1991 10.3
17.7*
1992 20.3
1993 15.5
19.5**
* Before restructuring and special charges
** Before restructuring charges
[Bar Graph: Return On Equity, Excluding The Cumulative Effect of
An Accounting Change]
Excluding the cumulative translation adjustment, return on equity for 1993
was 15.9%, compared with 22.5% for 1992 and 19.1% for 1991. After including the
earnings effect of the cumulative adjustment associated with the adoption of
SFAS No. 106, return on equity was 3.9% in 1991.
Return on average capital employed was 11.0% for 1993, 15.9% for 1992, and
14.7% for 1991. Again, excluding non-recurring charges, return on capital would
have been 13.4% in 1993 and 15.6% in 1991. The decrease in the return in 1993
was primarily due to the higher average debt levels included in the capital
base. Again, including the impact of the cumulative effect adjustment associated
with the adoption of SFAS No. 106, the return on capital was 4.8% in 1991.
ENVIRONMENT
The Company believes it is in compliance in all material respects with
applicable environmental laws and regulations. The Company is presently involved
in remediation efforts at certain locations, some of which are Company owned. At
all such locations, the Company believes such efforts will not have a materially
adverse effect on its results of operations or financial position.
44 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
QUARTERLY RESULTS
The following table presents net sales, gross profit (net sales less cost of
products sold and research and development expense), earnings, and earnings per
share for each quarter during the past three years. All per share amounts
reflect the two-for-one stock split effective July 1, 1991.
<TABLE>
<CAPTION>
Earnings Earnings (Loss)
(Loss) Before Per Share Before
Cumulative Cumulative
Effect Of Effect Of
Change In Change In Net Earnings
Dollar Amounts In Thousands-- Net Gross Accounting Net Earnings Accounting (Loss)
Except Per Share Data Sales Profit Principle (Loss) Principle Per Share
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993
First $407,605 $206,005 $32,851 $32,851 $ 0.54 $0.54
Second 479,429 254,731 47,028 47,028 0.78 0.78
Third 490,136 258,989 52,022 52,022 0.87 0.87
Fourth 452,880 223,578 7,001(1) 7,001(1) 0.12(1) 0.12(1)
--------------------------------------------------------------------------------------
Total $1,830,050 $943,303 $138,902 $138,902 $ 2.31 $2.31
======================================================================================
1992
First $371,871 $189,186 $28,668 $28,668 $ 0.47 $0.47
Second 447,497 230,866 41,055 41,055 0.68 0.68
Third 461,310 235,885 49,961 49,961 0.83 0.83
Fourth 428,408 221,197 51,736 51,736 0.86 0.86
--------------------------------------------------------------------------------------
Total $1,709,086 $877,134 $171,420 $171,420 $ 2.84 $2.84
======================================================================================
1991
First $339,432 $176,818 $24,827 $ (33,484)(2) $ 0.41 $(0.55)(2)
Second 396,792 209,381 35,816 35,816 0.59 0.59
Third 396,942 206,981 43,599 43,599 0.72 0.72
Fourth 386,938 205,461 (18,301)(3) (18,301)(3) (0.30)(3) (0.30)(3)
--------------------------------------------------------------------------------------
Total $1,520,104 $798,641 $85,941 $27,630 $ 1.42 $0.46
======================================================================================
<FN>
(1) REFLECTS THE AFTER-TAX EFFECT OF RESTRUCTURING CHARGES OF $36.5 MILLION OR $0.61 PER SHARE.
(2) RESTATED TO REFLECT THE AFTER-TAX CHARGE OF $58.3 MILLION OR $0.96 PER SHARE RESULTING FROM THE CUMULATIVE EFFECT OF THE
CHANGE IN ACCOUNTING PRINCIPLE ASSOCIATED WITH THE ADOPTION OF SFAS NO. 106.
(3) REFLECTS THE AFTER-TAX EFFECT OF RESTRUCTURING AND SPECIAL CHARGES OF $63.3 MILLION OR $1.05 PER SHARE.
</FN>
</TABLE>
QUARTERLY STOCK PRICES
Bausch & Lomb Common stock is listed on the New York Stock Exchange and is
traded under the symbol BOL. The following table shows the price range of the
Common stock for each quarter for the past three years:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
1993 1992 1991
Price Per Share Price Per Share Price Per Share
--------------------------------------------------------------------------------
High Low High Low High Low
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $57 1/2 $50 3/4 $60 1/2 $47 1/4 $42 1/8 $31 3/4
Second 55 3/8 47 7/8 51 44 1/2 44 3/8 39 1/4
Third 50 3/4 43 53 5/8 47 1/4 48 3/8 40 1/8
Fourth 53 1/2 45 1/8 59 1/4 48 1/2 57 1/2 44 7/8
</TABLE>
Bausch & Lomb Incorporated and Consolidated Subsidiaries 45
<PAGE>
Statement of Earnings
<TABLE>
<CAPTION>
-----------------------------------------------
FOR THE YEARS ENDED
-----------------------------------------------
Dollar Amounts In Thousands-- December 25, December 26, December 28,
Except Per Share Data 1993* 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $1,830,050 $1,709,086 $1,520,104
Costs And Expenses
Cost of products sold 828,883 778,684 672,208
Selling, administrative, and general 668,436 606,889 551,530
Research and development 57,864 53,268 49,255
Restructuring charges 50,000 -- 40,305
Special charges -- -- 36,008
-----------------------------------------------
1,605,183 1,438,841 1,349,306
-----------------------------------------------
Operating Earnings 224,867 270,245 170,798
-----------------------------------------------
Other (Income) Expense
Investment income (14,289) (13,254) (15,431)
Interest expense 34,202 29,540 38,603
Gain from foreign currency, net (11,068) (8,685) (1,892)
-----------------------------------------------
8,845 7,601 21,280
-----------------------------------------------
Earnings Before Income Taxes, Minority Interest,
And Cumulative Effect Of Change In Accounting Principle 216,022 262,644 149,518
Provision for income taxes 72,404 85,125 59,426
-----------------------------------------------
Earnings Before Minority Interest And Cumulative
Effect Of Change In Accounting Principle 143,618 177,519 90,092
Minority interest in subsidiaries 4,716 6,099 4,151
-----------------------------------------------
Earnings Before Cumulative Effect Of Change In
Accounting Principle 138,902 171,420 85,941
Cumulative effect of change in accounting principle,
net of tax -- -- (58,311)
-----------------------------------------------
Net Earnings 138,902 171,420 27,630
Retained Earnings At Beginning Of Year 785,044 661,182 676,315
Cash Dividends Declared - Common Stock 52,266 47,558 42,763
-----------------------------------------------
Retained Earnings At End Of Year $871,680 $785,044 $661,182
-----------------------------------------------
Earnings Per Common Share
Earnings before cumulative effect of change in
accounting principle $2.31 $2.84 $1.42
Cumulative effect of change in accounting principle -- -- (0.96)
-----------------------------------------------
Net earnings $2.31 $2.84 $0.46
-----------------------------------------------
</TABLE>
* Amounts have been restated for certain items as more fully described in Note
2--Restatement of Financial Information.
SEE NOTES TO FINANCIAL STATEMENTS
46 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
Balance Sheet
<TABLE>
<CAPTION>
-----------------------------
December 25, December 26,
Dollar Amounts In Thousands 1993* 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $513,241 $381,364
Short-term investments, at cost which approximates market 32,795 35,409
Trade receivables, less allowances of $13,753 and $11,834, respectively 345,139 277,338
Inventories 309,754 279,825
Deferred income taxes, less valuation allowances of $13,206
and $10,977, respectively 79,897 30,327
Other current assets 102,304 77,452
-----------------------------
1,383,130 1,081,715
Property, Plant, And Equipment, net 541,061 503,922
Goodwill And Other Intangibles, less accumulated amortization
of $59,396 and $48,310, respectively 456,944 217,791
Other Assets 111,862 70,261
-----------------------------
Total Assets $2,492,997 $1,873,689
=============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $222,642 $198,197
Current portion of long-term debt 21,935 10,657
Accounts payable 85,306 72,434
Accrued compensation 66,077 60,057
Accrued liabilities 248,661 188,353
Federal and foreign income taxes 68,882 37,100
-----------------------------
713,503 566,798
Long-Term Debt, less current portion 320,953 277,740
Other Long-Term Liabilities 128,328 110,852
Minority Interest 421,031 20,115
-----------------------------
Total Liabilities 1,583,815 975,505
-----------------------------
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, 936,348 shares issued
(891,600 shares in 1992) 75 71
Capital in excess of par value 88,101 89,088
Cumulative translation adjustment 8,915 63,465
Retained earnings 871,680 785,044
-----------------------------
992,850 961,747
Common and Class B stock in treasury, at cost, 2,016,430 shares
(1,646,055 shares in 1992) (83,668) (63,563)
-----------------------------
Total Shareholders' Equity 909,182 898,184
-----------------------------
Total Liabilities And Shareholders' Equity $2,492,997 $1,873,689
=============================
</TABLE>
* Amounts have been restated for certain items as more fully described in Note
2--Restatement of Financial Information.
SEE NOTES TO FINANCIAL STATEMENTS
Bausch & Lomb Incorporated and Consolidated Subsidiaries 47
<PAGE>
Statement of Cash Flows
<TABLE>
<CAPTION>
-----------------------------------------------
FOR THE YEARS ENDED
-----------------------------------------------
December 25, December 26, December 28,
Dollar Amounts In Thousands 1993* 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $138,902 $171,420 $27,630
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation of property, plant, and equipment 72,001 63,349 57,325
Amortization of goodwill and other intangibles 12,595 8,681 11,332
(Increase) decrease in deferred income taxes (31,626) 4,625 (15,729)
Cumulative effect of change in accounting principle, net of tax -- -- 58,311
Restructuring and special charges, net of tax 36,463 -- 63,291
Loss (gain) on retirement of fixed assets 2,721 (844) 5,082
Exchange (gain) loss (1,240) 5,249 3,214
Increase in undistributed earnings of subsidiaries 1,996 4,132 5,421
Increase in accounts receivable (66,722) (71,132) (583)
(Increase) decrease in inventories (35,103) 928 (13,479)
Increase in other current assets (35,794) (8,263) (6,117)
Increase in accounts payable and accruals 2,803 1,118 19,577
Increase in tax reserves 33,944 1,050 12,970
Increase in other long-term liabilities 11,315 11,904 2,597
-----------------------------------------------
Net cash provided by operating activities 142,255 192,217 230,842
-----------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchases of property, plant, and equipment (107,232) (119,331) (88,589)
Acquisition of businesses, net of cash and
short-term investments acquired (244,197) (18,611) (3,637)
Other (36,138) (14,611) (25,636)
-----------------------------------------------
Net cash used in investing activities (387,567) (152,553) (117,862)
-----------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchases of Common shares (28,753) (30,497) (17,910)
Exercise of stock options 5,845 12,715 11,833
Tax benefit of stock transactions with employees 1,777 6,019 4,518
Restricted stock awards 43 3,030 6,241
Net proceeds from issuance (repayment) of debt 72,548 35,477 (50,447)
Proceeds from formation of Wilmington Partners L.P. 400,000 -- --
Payment of dividends (51,112) (46,446) (41,734)
-----------------------------------------------
Net cash provided by (used in) financing activities 400,348 (19,702) (87,499)
-----------------------------------------------
Effect of exchange rate changes on cash, cash equivalents,
and short-term investments (25,773) (14,933) 241
Net increase in cash, cash equivalents, and short-term investments 129,263 5,029 25,722
Cash, cash equivalents, and short-term investments, beginning of year 416,773 411,744 386,022
-----------------------------------------------
Cash, cash equivalents, and short-term investments, end of year $546,036 $416,773 $411,744
===============================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $29,307 $26,801 $38,490
Income taxes $61,056 $70,189 $72,119
===============================================
</TABLE>
* Amounts have been restated for certain items as more fully described in Note
2--Restatement of Financial Information.
SEE NOTES TO FINANCIAL STATEMENTS
48 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
Notes to Financial Statements
1. Accounting Policies
- --------------------------------------------------------------------------------
CONSOLIDATION
The financial statements include all majority-owned U.S. and non-U.S.
subsidiaries. Intercompany accounts, transactions, and profits are eliminated.
FISCAL YEAR
The fiscal year is the 52 or 53 week period ending the last Saturday in
December.
CASH AND CASH EQUIVALENTS
Cash equivalents include time deposits and highly liquid investments with
original maturities of three months or less.
INVENTORIES
Inventories are valued at the lower of cost or market. In general, inventories
are valued using the first-in, first-out (FIFO) method. However, cost is
determined by using the last-in, first-out (LIFO) method for a major portion of
U.S. inventories.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment, including improvements that significantly add to
productive capacity or extend useful life, are recorded at cost, while
maintenance and repairs are expensed currently. Interest costs on significant
projects constructed for the Company's own use are capitalized as part of the
cost of the newly constructed facilities. Upon retirement or disposal of assets,
the cost and related accumulated depreciation are removed from the balance sheet
and any gain or loss on the transaction is reflected in earnings for the period.
Depreciation of property, plant, and equipment, including the amortization of
capital lease obligations and capitalized interest, is calculated for financial
reporting purposes using the straight-line method based on the estimated useful
lives of the assets as follows: buildings, 30 to 40 years; machinery and
equipment, 2 to 10 years; and leasehold improvements, the lease periods.
GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangible assets represent the excess of the cost of net
tangible assets acquired in purchase transactions over their fair value and
acquired license agreements and patents. These assets are amortized on a
straight-line basis over periods ranging from 5 to 40 years. The Company
regularly evaluates the remaining amortization periods for these assets and
adjustments are made when deemed necessary.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of certain non-U.S. subsidiaries have been translated at
current exchange rates, and related revenues and expenses have been translated
at average exchange rates in effect during the period. Adjustments resulting
from the translation of financial statements and gains and losses on forward
contracts designated as hedges of foreign intercompany investments of a
long-term nature have been recorded as a currency component in shareholders'
equity. Translation adjustments relating to non-U.S. subsidiaries in countries
with highly inflationary economies are included in net earnings, along with all
transaction gains and losses for the period.
FOREIGN EXCHANGE INSTRUMENTS
The Company enters into forward exchange and foreign currency options contracts
to minimize the impact of foreign currency fluctuations on the asset and
liability positions of certain U.S. operations and non-U.S. subsidiaries. The
gains or losses on these contracts are included in income in the period in which
the exchange rates change. The cash flows related to these gains and losses are
classified in the Statement of Cash Flows as part of cash flows from operating
activities. Gains and losses on contracts which hedge specific foreign currency
denominated commitments are deferred and recognized in the period in which the
transaction is completed.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 49
<PAGE>
INCOME TAXES
The Company adopted SFAS No. 109, "Accounting for Income Taxes", as of the
beginning of 1992. SFAS No. 109 requires recognition of deferred tax liabilities
and assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, these
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities applying
enacted statutory tax rates in effect for the year in which the differences are
expected to reverse. This method gives immediate effect to changes in income tax
rates upon enactment. The Standard's provisions were adopted prospectively and
accordingly, earnings for 1991 were not restated. This change in accounting
principle did not have a material effect on net earnings for 1992.
Prior to 1992, the Company applied the provisions of Accounting Principles
Board (APB) Opinion No. 11, "Accounting for Income Taxes". A provision for
deferred taxes was recorded when the period in which a transaction affected
taxable income differed from the period the transaction was included in pre-tax
accounting income. Such amounts were determined using the tax rate in effect in
the period the timing differences originated.
The Company does not provide for additional U.S. and foreign income taxes on
undistributed earnings considered to be permanently reinvested in its non-U.S.
subsidiaries. Such earnings would become taxable upon the sale or liquidation of
the subsidiary, or the remittance of dividends. At December 25, 1993 earnings
considered to be permanently reinvested in non-U.S. subsidiaries totaled
$584,000,000.
Under the Omnibus Budget Reconciliation Act of 1993, additional U.S. taxes
could be assessed on the current earnings of certain non-U.S. subsidiaries. At
this time, the Company does not anticipate that any earnings of foreign
subsidiaries will become subject to U.S. income taxes under this provision.
EARNINGS PER SHARE
Net earnings per Common share are based on the weighted average number of Common
and Class B shares outstanding during the year, 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.
FINANCIAL STATEMENT
RECLASSIFICATION / RESTATEMENTS
Certain amounts in the prior years' financial statements have been reclassified
to conform with the current year's presentation.
2. Restatement of Financial Information
- --------------------------------------------------------------------------------
The Company has restated its financial statements for the year ended
December 25, 1993. This action was taken as a result of an ongoing investigation
which identified uncertainties surrounding the execution of a fourth quarter
1993 contact lens sales program and the improper recording of 1993 sunglass
sales in Southeast Asia. In the fourth quarter of 1993 a marketing program was
initiated to implement a business strategy to shift responsibility for the sale
and distribution of a portion of the U.S. traditional contact lens business to
optical distributors. The investigation of this marketing program disclosed
instances where unauthorized terms may have been or were offered which were
inconsistent with the stated terms and conditions of the program. The resulting
uncertainties relating to the execution of this marketing program led to a
decision to restate the 1993 financial statements to account for shipments under
the program as consigned inventory and to record revenues when the products were
sold by the distributors to their customers. The investigation of Southeast Asia
sunglass sales disclosed that in certain instances distributor transactions
recorded as revenues in 1993 had not actually resulted from a sale to those
customers, and thus were improperly recorded. The 1993 financial statements have
been restated to reverse the improperly recorded sales. In the opinion of
management, all material adjustments necessary to correct the financial
statements have been recorded. The impact of these adjustments on the Company's
financial results as originally reported is summarized below:
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
(Except Per Share Data) 1993
-------------------------- ------------------------------
As Reported As Restated
----------- ------------
<S> <C> <C>
Net Sales:
Healthcare $1,191,467 $1,169,192
Optics 680,717 660,858
---------- ----------
Total $1,872,184 $1,830,050
========== ==========
Business Segment Earnings:
Healthcare $ 210,393 $ 192,318
Optics 87,456 79,529
---------- ----------
Total $ 297,849 $ 271,847
========== ==========
Net Earnings $ 156,547 $ 138,902
========== ==========
Net Earnings Per Share $ 2.60 $ 2.31
========== ==========
Retained Earnings at End of Year $ 889,325 $ 871,680
========== ==========
</TABLE>
3. Restructuring And Special Charges
- --------------------------------------------------------------------------------
In December 1993, the Company recorded $50,000,000 in restructuring charges for
reducing excess capacity and operating costs in its sunglass, pharmaceutical,
and biomedical operations. These actions include the shutdown of facilities for
sunglass frame fabrication in Pforzheim, Germany and pharmaceutical production
in Long Island, New York and the transfer or closing of certain other
operations. The charges include costs for employee severance and the recognition
of net losses expected to be realized upon the disposal of assets. Cost savings
resulting from these actions are expected to more than offset these charges over
the next three years.
1991 restructuring charges totaling $40,305,000 related to the Company's U.S.
pharmaceutical operations. The Company acquired Pharmafair, Inc., a manufacturer
of generic pharmaceuticals, in 1987. Since that time the Company had
substantially reshaped its U.S. pharmaceutical operations in the wake of massive
changes in the regulatory environment. These efforts included the construction
of a new state-of-the-art manufacturing facility in Tampa, Florida and
discontinuing the use of the Pharmafair name on the Company's generic
pharmaceutical products. As the present operations bore little resemblance to
those acquired, the value of goodwill recorded as a result of the acquisition
was determined to have been impaired. The restructuring charge primarily related
to writing off the unamortized balance of this asset.
1991 special charges totaled $36,008,000. These charges recognized inherent
losses in the carrying value of assets related to several small product lines,
50 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
including the Company's periodontal diagnostic equipment business, and an
accrual related to businesses divested by the Company in the mid-1980s. Among
other things, the accrual provided for potential exposures stemming from
litigation involving Bausch & Lomb and a number of other companies. These
matters were resolved in 1992 for amounts which did not exceed the established
reserve.
4. Geographic Region And Business Segment Information
- --------------------------------------------------------------------------------
The Company's operations are classified into two business segments, healthcare
and optics.
Operations within the healthcare segment include the production, manufacture,
and sale of solutions used in the care of contact lenses and for relief of eye
irritation; contact lenses and materials; contact lens accessories; oral care
products and dental implants; skin care products; hearing aids; over-the-counter
and prescription pharmaceuticals; laboratory animals, principally rats, mice,
and guinea pigs, specially bred for use in biomedical research; and specialized
biotechnical services, primarily the contract production of monoclonal
antibodies.
The optics segment manufactures and sells products used by consumers for the
enhancement or protection of vision. These include sunglasses, binoculars,
riflescopes, and telescopes. This segment also includes optical thin film
coating services and products.
Inter-area sales to affiliates represent products which are transferred
between geographic regions on a basis intended to reflect the market value of
the products as nearly as possible.
Business segment earnings are defined as sales less operating costs and
expenses. Income and expenses not allocated to business segments or geographic
regions include corporate administration expenses, which are included in
selling, administrative, and general expenses, investment income, interest
expense, and foreign currency gains and losses. Operating earnings are defined
as business segment earnings adjusted for corporate administration expense.
Identifiable assets are those assets used exclusively in the operations of
each business segment or geographic region, or which are allocated when used
jointly. Corporate assets are principally cash and cash equivalents, short-term
investments, and certain property, plant, and equipment.
The following tables show sales and other financial information by geographic
region and business segment for the years 1993, 1992, and 1991:
GEOGRAPHIC REGION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Europe,
Middle East, Canada And
Dollar Amounts In Thousands United States And Africa Asia-Pacific Latin America Consolidated
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Sales to unaffiliated customers $1,012,690 $396,909 $292,183 $128,268 $1,830,050
Inter-area sales to affiliates 130,093 94,949 2,139 2,397 229,578
Business segment earnings 153,928 89,980 17,724 10,215 271,847(1)
Identifiable assets 1,306,114 837,007 266,333 83,543 2,492,997
=======================================================================
1992
Sales to unaffiliated customers $883,738 $421,118 $299,033 $105,197 $1,709,086
Inter-area sales to affiliates 154,063 71,084 1,291 2,315 228,753
Business segment earnings 181,678 79,827 36,839 13,260 311,604
Identifiable assets 839,660 735,422 232,654 65,953 1,873,689
=======================================================================
1991
Sales to unaffiliated customers $823,907 $354,196 $249,673 $92,328 $1,520,104
Inter-area sales to affiliates 143,686 50,481 413 3,341 197,921
Business segment earnings 118,030(2) 72,518 35,501 14,209 240,258(2)
Identifiable assets 779,017 698,962 200,750 59,790 1,738,519
=======================================================================
<FN>
(1) INCLUDES RESTRUCTURING CHARGES OF $48.8 MILLION AS FOLLOWS: UNITED STATES, $23.5; EUROPE, MIDDLE EAST, AND AFRICA, $16.6;
ASIA-PACIFIC, $4.6; CANADA AND LATIN AMERICA, $4.1.
(2) INCLUDES RESTRUCTURING AND SPECIAL CHARGES OF $50.3 MILLION.
</FN>
</TABLE>
Bausch & Lomb Incorporated and Consolidated Subsidiaries 51
<PAGE>
BUSINESS SEGMENT
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Dollar Amounts In Thousands 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales
Healthcare $1,169,192 $1,033,233 $943,777
Optics 660,858 675,853 576,327
--------------------------------------------------------------------
$1,830,050 $1,709,086 $1,520,104
====================================================================
Earnings Before Taxes And Minority Interest
Healthcare $192,318 $176,095 $102,348
Optics 79,529 135,509 137,910
--------------------------------------------------------------------
Business segment earnings 271,847(1) 311,604 240,258(3)
Corporate administration expense 46,980(2) 41,359 69,460(4)
--------------------------------------------------------------------
Operating earnings 224,867 270,245 170,798
Interest expense, net 19,913 16,286 23,172
Gain from foreign currency, net (11,068) (8,685) (1,892)
--------------------------------------------------------------------
$216,022 $262,644 $149,518
====================================================================
Depreciation
Healthcare $46,778 $41,509 $37,331
Optics 22,043 19,423 17,676
Corporate 3,180 2,417 2,318
--------------------------------------------------------------------
$72,001 $63,349 $57,325
====================================================================
Identifiable Assets
Healthcare $1,329,854 $979,666 $936,102
Optics 492,507 466,738 407,580
Corporate 670,636 427,285 394,837
--------------------------------------------------------------------
$2,492,997 $1,873,689 $1,738,519
====================================================================
Capital Expenditures
Healthcare $83,460 $78,965 $56,050
Optics 21,254 33,995 29,892
Corporate 2,518 6,371 2,647
--------------------------------------------------------------------
$107,232 $119,331 $88,589
====================================================================
<FN>
(1) INCLUDES RESTRUCTURING CHARGES OF $48.8 MILLION AS FOLLOWS: HEALTHCARE, $15.9; OPTICS, $32.9.
(2) INCLUDES RESTRUCTURING CHARGES OF $1.2 MILLION.
(3) INCLUDES RESTRUCTURING AND SPECIAL CHARGES OF $50.3 MILLION IN THE HEALTHCARE SEGMENT.
(4) INCLUDES SPECIAL CHARGES OF $26.0 MILLION.
</FN>
</TABLE>
5. Inventories
- --------------------------------------------------------------------------------
Inventories consisted of the following:
---------------------------
December 25, December 26,
Dollar Amounts In Thousands 1993 1992
- --------------------------------------------------------
Raw materials and supplies $66,768 $60,851
Work in process 24,640 25,245
Finished products 226,518 202,066
---------------------------
317,926 288,162
Less: Reserve for valuation of
certain U.S. inventories at
last-in, first-out cost 8,172 8,337
---------------------------
$309,754 $279,825
===========================
Inventories valued using the LIFO method were approximately $98,680,000 and
$93,224,000 at December 25, 1993 and December 26, 1992, respectively.
6. Property, Plant, And Equipment
- --------------------------------------------------------------------------------
Major classes of property, plant, and equipment consisted of the following:
---------------------------
December 25, December 26,
Dollar Amounts In Thousands 1993 1992
---------------------------
Land $20,784 $22,368
Leasehold improvements 25,530 21,520
Buildings 350,173 336,166
Machinery and equipment 542,912 473,031
---------------------------
939,399 853,085
Less: Accumulated depreciation 398,338 349,163
---------------------------
$541,061 $503,922
===========================
52 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
7. Provision For Income Taxes
As discussed in Note 1 -- Accounting Policies, the Company adopted SFAS No. 109
as of the beginning of 1992. An analysis of the components of earnings before
income taxes, minority interest, and the cumulative effect of the change in
accounting principle and the related provision for income taxes is presented
below:
<TABLE>
<CAPTION>
-----------------------------------------------------
Dollar Amounts In Thousands 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes, minority interest, and
cumulative effect of change in accounting principle:
<S> <C> <C> <C>
U.S. $ 92,645 $141,463 $39,046
Non-U.S. 123,377 121,181 110,472
-----------------------------------------------------
$216,022 $262,644 $149,518
=====================================================
Provision for income taxes before cumulative
effect of change in accounting
principle:
Federal
Current $63,118 $51,438 $39,448
Deferred (22,526) (1,329) (12,165)
State
Current 10,274 9,013 7,418
Deferred (4,127) (129) (2,882)
Foreign
Current 41,940 22,502 20,881
Deferred (16,275) 3,630 6,726
-----------------------------------------------------
Provision for income taxes $72,404 $85,125 $59,426
=====================================================
</TABLE>
Deferred income taxes for 1993 and 1992 recognized the impact of temporary
differences between the amounts of assets and liabilities recorded for financial
reporting purposes and such amounts as measured in accordance with tax laws. In
general, these temporary differences are more inclusive than timing differences
recognized under previously applicable accounting principles. The items which
comprise a significant portion of deferred tax assets and liabilities were as
follows:
<TABLE>
<CAPTION>
---------------------------------------------------------
December 25, 1993 December 26, 1992
---------------------------------------------------------
Deferred Tax Deferred Tax Deferred Tax Deferred Tax
Dollar Amounts In Thousands Assets Liabilities Assets Liabilities
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserve for postretirement medical and life insurance benefits $46,942 $ -- $41,252 $ --
Reserve for other benefit plans 7,442 4,551 5,492 1,849
Vacation accrual 4,704 -- 3,867 --
Intercompany profit elimination 13,028 -- 10,241 --
Inventory and product reserves 12,638 1,031 9,905 --
Restructuring reserves 17,804 -- 1,886 --
Unrealized foreign exchange losses 16,116 -- 2,046 --
Tax loss and credit carryforwards 14,199 -- 12,461 --
State income tax accruals -- 6,668 -- 5,936
Sales and allowance reserves 15,546 -- 1,385 --
Reserve for bad debts 3,733 -- 3,265 --
Advertising reserves 3,842 -- 5,185 --
Depreciation 3,474 37,375 2,644 30,805
Amortization 3,326 19,928 3,534 13,139
Other accruals 5,942 6,080 3,494 13,624
---------------------------------------------------------
168,736 75,633 106,657 65,353
Less: Valuation allowance 13,206 -- 10,977 --
---------------------------------------------------------
Deferred income taxes $155,530 $75,633 $95,680 $65,353
=========================================================
</TABLE>
Deferred income taxes included the tax impact of net operating loss
carryforwards. Realization of these assets is contingent on future taxable
earnings in certain non-U.S. tax jurisdictions. In accordance with the
provisions of SFAS No. 109, valuation allowances of $13,206,000 at December 25,
1993 and $10,977,000 at December 26, 1992 were recorded to reserve for these and
other items which may not be realized.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 53
<PAGE>
Reconciliations of the statutory U.S. federal income tax rate to effective
tax rates were as follows:
---------------------
1993 1992 1991
- ----------------------------------------------------------
Statutory tax rate 35.0% 34.0% 34.0%
State income taxes,
net of federal tax benefit 1.9 2.2 2.0
Difference between
foreign and U.S. tax rates (8.1) (5.7) (6.7)
Rate differential for
Subpart F income 6.3 2.3 3.2
Restructuring and special charges
with no income tax benefit -- -- 9.1
Other (1.6) (0.4) (1.9)
---------------------
Effective tax rate 33.5% 32.4% 39.7%
=====================
In April 1991, the Internal Revenue Service (the Service) issued a Notice of
Deficiency relating to its examination of the Company's federal income tax
returns for the 1983-1984 period. In July 1991, the Company filed a petition in
the U.S. Tax Court to contest these alleged deficiencies. In September 1991, the
Company and the Service settled issues relating to the Company's overseas
contact lens operations. The basis of this settlement was similar to that used
by the U.S. Tax Court in deciding these issues for an earlier period and
subsequently affirmed by the United States Court of Appeals for the Second
Circuit. The remaining issues in this matter relate primarily to the Company's
sunglass operations in Ireland and Hong Kong.
In December 1991, the Service issued a Notice of Deficiency proposing
adjustments to the amount of the Company's income taxes for the 1985-1987
period. The Notice included an adjustment which was consistent with prior
settlements relating to the Company's overseas contact lens operations. On this
basis, the Company has resolved the federal income tax liability for its contact
lens operations through 1987, and for which it had been adequately reserved.
This Notice also raised issues similar to those contested in the Petition for
the 1983-1984 period relating to the Company's overseas sunglass operations, as
well as other unrelated issues. The Company and the Service have agreed on a
basis for settling substantially all of the unrelated issues within the
Company's tax provision. However, taxes and accrued interest associated with the
Service's proposed adjustments for the sunglass issues total approximately $18
million, and exceed the Company's tax provision for the years in question. In
January 1992, the Company filed a petition in the U.S. Tax Court contesting
these proposed adjustments.
In September 1993, the Service issued notices of proposed adjustments
relating to an examination of the Company's federal income tax returns for the
1988-1989 period. The predominant issues raised in the notices were similiar to
those being contested relating to overseas sunglass operations. The notices also
included unrelated issues for the 1988-1989 period which the Company will
contest through the Service's administrative appeals processes. At this time,
litigation for these unrelated issues is not anticipated and tax provisions for
the years in question are considered adequate to provide for any adverse
determinations.
In December 1993, the trial on the overseas sunglass issues for the 1983-1984
and the 1985-1987 periods was held in the U.S. Tax Court. Following the trial,
under the U.S. Tax Court's rules of procedure, both the Company and the Service
are required to file briefs, the last of which is due in July 1994. The Court is
not expected to render its decision before the fourth quarter of 1994. Based on
an assessment of the evidence introduced and the arguments advanced by both
parties during the trial, management continues to believe that any tax liability
related to the sunglass issues which may arise from this litigation, or for
subsequent years, will not have a materially adverse effect on the financial
position of the Company.
54 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
8. Short-Term Debt And Compensating Bank Balances
- --------------------------------------------------------------------------------
Short-term debt at December 25, 1993 consisted of $201,500,000 in U.S.
commercial paper and $21,142,000 in non-U.S. borrowings. At December 26, 1992
short-term debt consisted of $179,000,000 in U.S. commercial paper and
$19,197,000 in non-U.S. borrowings.
Short-term bank debt and commercial paper are borrowed at below prime rates
in the U.S. and at the equivalent of prime rates in other countries and are
unsecured. All compensating balance arrangements are informal and do not
restrict the withdrawal of funds. Under these arrangements, the Company
maintained average compensating bank balances of $2,500,000 in 1993.
9. Long-Term Debt
- --------------------------------------------------------------------------------
Long-term debt at year end consisted of the following:
--------------------------
December 25, December 26,
Dollar Amounts In Thousands 1993 1992
- --------------------------------------------------------------------------------
Notes payable:
5.5% due in 1994 $ 13,145 $ --
6.7% due in 1995 40,000 40,000
6.8% due in 1996 40,000 40,000
Variable rate due in 1996 45,600 --
6.48% due in 1997 85,000 85,000
5.95% due in 2003 85,000 --
9.47% due semi-annually through 1994 -- 10,591
8% due in 1996 -- 73,005
Other 13,669 14,749
Mortgages payable 3,035 4,940
Capital lease obligations:
Industrial Development Bonds due in 2015 8,500 8,500
Other 8,939 11,612
--------------------------
342,888 288,397
Less: Current portion 21,935 10,657
--------------------------
$320,953 $277,740
==========================
Long-term borrowing maturities during the next five years are $21,935,000 in
1994, $42,708,000 in 1995, $89,367,000 in 1996, $86,664,000 in 1997, and
$1,634,000 in 1998.
10. Leases
- --------------------------------------------------------------------------------
The Company leases land, buildings, machinery, and equipment under noncancelable
operating leases. As of December 25, 1993, future minimum payments under these
leases are as follows:
Dollar Amounts In Thousands
- --------------------------------------------------------
1994 $22,381
1995 14,937
1996 8,064
1997 5,706
Later years 12,067
-------
Total minimum lease payments $63,155
=======
Total rental expense for the years ended December 25, 1993, December 26,
1992, and December 28, 1991 amounted to $26,862,000, $20,830,000, and
$18,821,000, respectively.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 55
<PAGE>
11. Retirement Benefits
- --------------------------------------------------------------------------------
The Company and its consolidated subsidiaries sponsor several retirement plans
which, in the aggregate, cover substantially all U.S. employees and certain
employees in other countries. In general, retirement benefits are based on years
of service and the employee's compensation near retirement. Certain non-U.S.
pension arrangements also provide termination indemnity payments. For the
largest U.S. pension plan, employees are eligible to participate upon the
attainment of age 21 and the completion of one year of service. These employees
are vested in the plan after five years of service or the attainment of age 55.
The Company's funding policy is to contribute an amount annually which falls
between the minimum and maximum amounts that can be deducted for federal income
tax purposes. The plan's investments consist primarily of marketable securities
and pooled investments in the general assets of certain major insurance
companies.
The components of net periodic pension cost consisted of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
1993 1992 1991
--------------------------------------------------------------------------------
U. S. Non-U. S. U. S. Non-U. S. U. S. Non-U. S.
Dollar Amounts In Thousands Plans Plans Plans Plans Plans Plans
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the period $4,493 $1,696 $3,888 $1,508 $3,606 $1,274
Interest cost on projected
benefit obligation 9,615 1,230 9,104 1,103 8,665 943
Actual return on plan assets (12,322) (3,140) (9,812) (361) (21,485) (746)
Net amortization and deferral 3,981 2,643 1,855 (153) 15,721 275
--------------------------------------------------------------------------------
Net periodic pension cost $5,767 $2,429 $5,035 $2,097 $6,507 $1,746
================================================================================
</TABLE>
The decrease in the net periodic pension cost for U.S. plans from the 1991
level was attributable to the recognition of significant unrealized asset gains.
Key economic assumptions used in completing the actuarial determinations
were:
<TABLE>
<CAPTION>
------------------------------------------------------------
1993 1992
------------------------------------------------------------
U.S. Non-U.S. U.S. Non-U.S.
Plans Plans Plans Plans
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate 7.0% 5.5-8.0% 9.0% 5.5-8.0%
Rate of increase in compensation levels 5.0% 4.2-6.5% 6.0% 4.5-6.5%
Expected long-term rate of return on plan assets 10.0% 5.5-9.0% 10.0% 5.5-9.0%
============================================================
</TABLE>
SFAS No. 87, "Employers' Accounting for Pensions", requires the measurement
of plan assets and obligations as of a date not more than three months prior to
the date of the financial statements. In December 1993, the Company elected to
revise its assumptions in recognition of lower current levels of long-term
interest rates and expected inflation trends. The discount rate assumption was
reduced from 9% to 7% and the expected rate of increase in compensation levels
was reduced from 6% to 5%. In accordance with the provisions of SFAS No. 87, net
periodic pension cost for 1993 was determined based on the December 1992
assumptions. The assumption changes will not have a material effect on 1994
financial results.
The table of actuarially computed plan assets and benefit obligations for
U.S. and non-U.S. plans at December 25, 1993 and December 26, 1992 follows. The
unrecognized projected benefit obligation in excess of plan assets is being
amortized against net periodic pension cost over the remaining service lives of
the plan participants. For both periods, the projected benefit obligation of the
Company's largest U.S. retirement plan exceeded the value of plan assets. The
Company has recorded an additional liability to give recognition to this
underfunded position. An intangible asset reflecting the related unrecognized
prior service cost has also been recorded.
56 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------
December 25, 1993 December 26, 1992
--------------------------------------------------------
U.S. Non-U.S. U.S. Non-U.S.
Dollar Amounts In Thousands Plans Plans Plans Plans
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $118,519 $ -- $95,229 $ --
Non-vested benefits 4,142 -- 2,428 --
--------------------------------------------------------
Accumulated benefit obligation 122,661 13,732 97,657 12,563
Effect of projected future salary increases 18,968 4,930 12,894 4,013
--------------------------------------------------------
Projected benefit obligation 141,629 18,662 110,551 16,576
Plan assets at fair value 119,688 12,505 99,783 7,500
--------------------------------------------------------
Projected benefit obligation in excess of plan assets 21,941 6,157 10,768 9,076
Unrecognized net (loss) gain from past experience
different from that assumed (13,188) 3,015 9,571 133
Unrecognized prior service costs (10,994) 20 (12,121) --
Unrecognized net transition obligation (5,694) (1,290) (6,502) (809)
Additional liability 15,494 -- 1,164 259
--------------------------------------------------------
Accrued pension liability $ 7,559 $ 7,902 $ 2,880 $ 8,659
========================================================
</TABLE>
12. Other Postretirement Benefits
- --------------------------------------------------------------------------------
As of the beginning of 1991, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", for its U.S. plans.
As permitted by SFAS No. 106, the Company elected to expense the transition
obligation immediately rather than to amortize this amount over 20 years. This
election was given recognition in the financial statements as the cumulative
effect of a change in accounting principle and totaled $91,111,000 ($58,311,000
or $0.96 per share after taxes).
The adoption of SFAS No. 106 recognized that, in addition to a retirement
plan, the Company and its consolidated subsidiaries sponsor two participatory
defined benefit postretirement plans providing medical and life insurance
benefits to substantially all U.S. employees. Effective in 1993, these plans
provide benefits to retirees who have attained age 55 with ten years of service.
Prior to 1993, vesting in the plan occurred when retired employees attained age
55 with five years of service. This change in vesting did not have a material
effect on the Company's expense for these benefits. Covered spouses and certain
employees on disability also qualify for participation in the plans. In general,
under the medical benefits plan participants receive a stated percentage of most
medical expenses, reduced for annual and lifetime deductibles and any payments
made by government programs and other group coverage.
During the fourth quarter of 1992, the Company approved the establishment of
a Voluntary Employee Benefit Association (VEBA) to provide for payment of these
benefits. A contribution of $5,000,000 was made to the VEBA trust in 1993.
Earnings from the investments in this trust will eventually reduce the expense
associated with providing these benefits. The Company intends to continue a
program of prefunding for these benefits on an annual basis, but the amount of
any future contributions is discretionary.
The components of net periodic postretirement benefit cost consisted of the
following:
<TABLE>
<CAPTION>
--------------------------------------
Dollar Amounts In Thousands 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits earned during the period $ 4,107 $ 3,681 $ 4,422
Interest cost on accumulated benefit obligation 8,869 8,549 7,986
Actual return on plan assets 377 -- --
Net amortization and deferral (792) (78) --
--------------------------------------
Net periodic postretirement benefit cost $12,561 $12,152 $12,408
======================================
</TABLE>
The healthcare cost trend rate assumption has a significant effect on the
expense reported. For example, a 1% increase in the medical care cost trend rate
would have increased the aggregate of the service and interest cost components
of net periodic postretirement benefit cost by approximately $2,000,000 or 16%
in 1993.
Key economic assumptions used in completing the actuarial determinations
were:
---------------------------------
1993 1992 1991
- --------------------------------------------------------
Discount rate 7% 9% 9%
Rate of increase in 5% 6% 6%
compensation levels
Medical care cost
trend rate 12% 17% 18%
=================================
Bausch & Lomb Incorporated and Consolidated Subsidiaries 57
<PAGE>
SFAS No. 106 requires the measurement of plan assets and obligations as of a
date not more than three months prior to the date of the financial statements.
In December 1993, the Company elected to revise its assumptions in recognition
of lower current levels of long-term interest rates and expected trends in
inflation and medical care cost increases. The discount rate was reduced from 9%
to 7%, the expected rate of increase in compensation levels was lowered from 6%
to 5%, and a 12% annual rate of increase in per capita medical care costs was
applied. This rate will be assumed to decrease one percent per year to 6% in the
year 2000 for future valuations. Prior to this change, the 1991 assumption of an
18% annual rate of increase in the per capita medical care cost rate had been
assumed to decrease one percent per year to 7% in the year 2002. In accordance
with the provisions of SFAS No. 106, net periodic postretirement benefit cost
for 1993 was determined based on the December 1992 actuarial assumptions. The
assumption changes will not have a material effect on 1994 financial results.
The table of actuarially computed benefit
obligations for the Company's U.S. plans follows.
---------------------------
December 25, December 26,
Dollar Amounts In Thousands 1993 1992
- --------------------------------------------------------
Accumulated postretirement
benefit obligations:
Retirees $67,355 $64,312
Active, eligible participants 9,164 9,180
Other active participants 35,842 30,993
---------------------------
112,361 104,485
Plan assets at fair value 4,623 --
---------------------------
Projected benefit obligation in
excess of plan assets 107,738 104,485
Unrecognized prior service cost 1,239 1,317
Unrecognized net loss (482) (331)
---------------------------
Accrued postretirement
benefit liability $108,495 $105,471
===========================
Increasing the assumed medical care cost trend rate by one percentage point
would have increased the accrued postretirement benefit liability as of December
25, 1993 by approximately $13,300,000 or 12%. This reflects the significant
effect this assumption has on the calculation of the obligation.
The provisions of this Statement will be adopted for non-U.S. plans no later
than 1995. The Company is in the process of developing an estimate of the effect
adoption will have on its consolidated financial position and results of
operations.
13. Minority Interest
- --------------------------------------------------------------------------------
In December 1993, four wholly-owned subsidiaries of the Company contributed
operating and financial assets with an estimated market value of $1,006 million
to Wilmington Partners L.P., a newly formed Delaware limited partnership (the
"Partnership"), in exchange for an aggregate 72 percent general and limited
partnership interest. Additionally, an outside investor contributed $400 million
in cash to the Partnership in exchange for a 28 percent limited partnership
interest. Wilmington Management Corp., a wholly-owned subsidiary of the Company,
manages the activities of Wilmington Partners L.P. and has fiduciary
responsibilities to the Partnership. This transaction did not result in any gain
or loss for the Company.
The Partnership is a separate legal entity from the Company. The
Partnership's purpose is to own and manage a portfolio of assets. Those assets
include portions of the Company's biomedical operations at Charles River
Laboratories, Inc. (including small research animals, bioprocessing, and
ovum-derived vaccine products), the manufacture and sale of rigid gas permeable
contact lens materials and lens care solutions at Polymer Technology
Corporation, cash and cash equivalents, a long-term note guaranteed by the
Company, and certain floating rate demand notes due from certain of the
Company's subsidiaries. At December 25, 1993, the Company had $400 million of
borrowings from the Partnership which were used to reduce U.S. short-term
borrowings. For financial reporting purposes, the assets, liabilities, and
earnings of the Partnership entities have continued to be included in the
Company's consolidated financial statements. The outside investor's limited
partnership interest in the Partnership has been recorded as minority interest.
58 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
14. Shareholders' Equity
At December 25, 1993, 10,000 shares of 4% Cumulative Preferred stock, 25,000,000
shares of Class A Preferred stock, 15,000,000 shares of Class B stock, and
200,000,000 shares of Common stock were authorized. The Company issues treasury
shares to fulfill its obligations under the stock option plans. The difference
between the cost of treasury shares issued and the option price is charged to
capital in excess of par value. Changes in Common and Class B stock, capital in
excess of par value, and treasury stock are summarized below:
<TABLE>
<CAPTION>
----------------------------------------------------------------
Common And Class B Capital In Excess Treasury
--------------------- --------------------
Amounts In Thousands Shares Amount Of Par Value Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 29, 1990 30,377 $14,392 $83,943 789 $44,609
Two-for-one stock split 30,410 9,737 (9,737) 757 --
Shares issued under stock option
plans and restricted stock awards 124 7 271 (382) (22,314)
Repurchase of Common and Class B stock -- -- -- 265 17,910
----------------------------------------------------------------
Balance at December 28, 1991 60,911 24,136 74,477 1,429 40,205
Shares issued under stock option plans
and restricted stock awards 179 14 14,611 (411) (7,139)
Repurchase of Common and Class B stock -- -- -- 628 30,497
----------------------------------------------------------------
Balance at December 26, 1992 61,090 24,150 89,088 1,646 63,563
Shares issued under stock option plans
and restricted stock awards 45 4 (987) (217) (8,648)
Repurchase of Common and Class B stock -- -- -- 587 28,753
----------------------------------------------------------------
Balance at December 25, 1993 61,135 $24,154 $88,101 2,016 $83,668
================================================================
</TABLE>
In April 1991, the Company's board of directors approved a two-for-one split
of the Company's Common and Class B stock. This action became effective on July
1, 1991 for shareholders of record as of June 3, 1991. A total of 30,409,678
shares of Common and Class B stock were issued in connection with the split,
including 756,875 shares issued for Common and Class B stock held in treasury. A
total of $9,737,000 was reclassified from capital in excess of par value to the
par value of Common and Class B stock in connection with the stock split. The
par value of Common and Class B stock remains unchanged.
The board of directors has authorized the repurchase, at management's
discretion, of a total of up to 6,000,000 of the Company's issued shares of
Common stock. At December 25, 1993, up to 2,885,900 shares may be repurchased
under the terms of this authorization.
In 1988, the Company's board of directors approved the adoption of a
shareholder rights plan, in which preferred share purchase rights were
distributed as a dividend at the rate of one right for each outstanding share of
the Company's Common and Class B stock. Common and Class B shares issued
subsequent to the adoption of the rights plan automatically have preferred share
purchase rights attached to them. Under certain circumstances, each right
entitles shareholders to purchase one two-hundredth of a share of Series A
Preferred stock, par value $1.00 per share. The rights become exercisable and
transferable, apart from the Company's Common and Class B stock, ten days after
a person or group either acquires 20% or more of the shares of the outstanding
Common and Class B stock or announces an offer which would result in such person
or group owning 20% or more of such shares. If the Company is acquired in a
merger or other business combination at any time after the rights become
exercisable, each such right will entitle its holder, other than the acquiror,
to purchase common shares of the acquiring company having a market value of
twice the exercise price of each right. If the Company is the surviving company,
each holder, other than the acquiror, would have the right to purchase Common
stock of the Company having a market value of twice the exercise price of each
right. The board of directors may substitute common stock equivalent preferred
shares for Common shares for the exercise of stock purchase rights. Until the
rights become exercisable, they have no dilutive effect on earnings per Common
share.
The rights, which are non-voting, expire on July 1, 1998 and may be redeemed
by the Company at a price of $0.005 per right at any time prior to the
acquisition by a person or group of 20% of the outstanding shares of the
Company's Common and Class B stock. In the event a person or group has acquired
20%, but not more than 50%, of such shares, the Company may redeem the rights of
each holder, other than the acquiror, in exchange for either one share of Common
stock or one two-hundredth of a share of Series A Preferred stock.
Bausch & Lomb Incorporated and Consolidated Subsidiaries 59
<PAGE>
15. Stock Option Plans
- --------------------------------------------------------------------------------
Under the 1970, 1975, 1982, 1987, and 1990 stock option plans approved by the
shareholders, Class B stock has been authorized for issuance to employees. Class
B stock, which is used only in connection with the plans, has the same voting,
dividend, and liquidation rights as Common stock. Options granted under
the 1970 and 1975 plans expire either five years (qualified) or ten years
(nonqualified) from the date of grant. All options granted under the 1982, 1987,
and 1990 stock incentive plans expire ten years from the date of grant. The
following table summarizes data for the Company's stock option plans:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
1993 1992 1991
-------------------------------------------------------------------------------------------
Number Of Option Price Number Of Option Price Number Of Option Price
Shares Per Share Shares Per Share Shares Per Share
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares under option at
beginning of year 2,866,741 $9.84-$58.88 2,804,862 $9.84-$52.94 2,644,838 $9.84-$34.75
Options granted 1,332,265 $46.63-$52.00 684,713 $49.00-$58.88 788,686 $32.63-$52.94
Options exercised (236,757) $9.84-$52.94 (529,072) $9.84-$42.69 (566,468) $9.84-$34.75
Options cancelled (56,696) $9.84-$55.44 (93,762) $30.13-$49.31 (62,194) $12.34-$42.69
-------------------------------------------------------------------------------------------
Shares under option at
end of year 3,905,553 $9.84-$58.88 2,866,741 $9.84-$58.88 2,804,862 $9.84-$52.94
===========================================================================================
Total options exercisable at
end of year 2,038,238 $9.84-$58.88 1,591,382 $9.84-$52.94 1,532,872 $9.84-$42.88
===========================================================================================
Shares available for future
grants at end of year 2,543,890 2,547,370 2,536,861
===========================================================================================
</TABLE>
Under these plans, employees may borrow an amount equal to the purchase price
of shares secured by pledge agreements with the Company. Participants'
borrowings were $3,483,000 in 1993, $2,835,000 in 1992, and $1,403,000 in 1991.
16. Foreign Currency Translation
- --------------------------------------------------------------------------------
The cumulative translation adjustment includes the effects of translating assets
and liabilities of certain non-U.S. subsidiaries at current exchange rates.
Translation adjustments relating to non-U.S. subsidiaries in countries with
highly inflationary economies have been included in net earnings.
An analysis of the changes in the cumulative translation adjustment component
of shareholders' equity is as follows:
----------------------
Dollar Amounts In Thousands 1993 1992
- --------------------------------------------------------
Balance at beginning of year $63,465 $99,686
Current year translation
adjustments (54,550) (36,221)
----------------------
Balance at end of year $8,915 $63,465
======================
60 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
17. Financial Instruments And Off-Balance-Sheet Risk
- --------------------------------------------------------------------------------
Financial instruments consisted of the following:
<TABLE>
<CAPTION>
-------------------------------------------------------
December 25, 1993 December 26, 1992
-------------------------------------------------------
Carrying Fair Carrying Fair
Dollar Amounts In Thousands Value Value Value Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 513,241 $ 513,241 $ 381,364 $ 381,364
Short-term investments $ 32,795 $ 32,795 $ 35,409 $ 35,409
Foreign exchange instruments:
Other current assets $ 18,911 $ -- $ -- $ --
Accrued liabilities (51,084) -- -- --
-------------------------------------------------------
$ (32,173) $ (20,400) $ (7,994) $ (27,600)
Long-term debt, including current portion $(342,888) $(357,178) $(288,397) $(295,742)
Interest rate instruments $ 1,919 $ 3,067 $ 62 $ 744
=======================================================
</TABLE>
CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS
The carrying amount of cash, cash equivalents, and short-term investments
approximates fair value because their maturity is generally less than one year
in duration. The Company places its temporary cash investments with financial
institutions and limits the amount of credit exposure with any one financial
institution. The Company actively evaluates the creditworthiness of the
financial institutions with which it invests.
FOREIGN EXCHANGE INSTRUMENTS
The Company enters into forward exchange and options contracts to hedge foreign
currency transactions on a continuing basis for periods consistent with its
commited exposures. This hedging minimizes the impact of foreign exchange rate
movements on the Company's operating results. The Company's foreign exchange
contracts do not subject the Company's results of operations to risk due to
exchange rate movements because gains and losses on these contracts generally
offset losses and gains on the assets and liabilities being hedged. The Company
also hedges certain firm commitments and anticipatory transactions. Gains and
losses on these positions are deferred and included in the basis of the
transaction when it is completed. As a matter of policy, the Company does not
hedge to protect the translated results of foreign operations or other economic
exposures for which speculative accounting treatment of the hedging instruments
would be required, nor does it engage in currency speculation. As of December
25, 1993, the Company had approximately $888,000,000 of outstanding foreign
exchange contracts in which foreign currencies were purchased, and approximately
$328,000,000 in which foreign currencies were sold. The respective amounts as of
December 26, 1992 were $658,000,000 and $283,000,000. At year-end 1993,
approximately 49% or $591,000,000 of outstanding foreign exchange contracts
served to hedge assets and liabilities, approximately 4% or $49,000,000 hedged
firm purchase commitments, and approximately 47% or $576,000,000 hedged net
investments in foreign subsidiaries. The forward exchange contracts have varying
maturities with none exceeding twenty-four months. The Company makes net
settlements for foreign exchange contracts at maturity, based on rates agreed to
at inception of the contracts. The Company had no foreign currency option
contracts outstanding as of December 25, 1993 and December 26, 1992.
In accordance with accounting standards, the Company recognized in its
results of operations the amortization of forward premium or discount of the
foreign currencies traded over the forward exchange contract term. For 1993, the
amortization of such premiums and discounts resulted in income of approximately
$24,300,000, most of which was attributable to Irish pound contracts. Such
premiums and discounts are substantially the result of interest rate
differentials in the countries of the currencies being traded.
Carrying value as presented in the table does not reflect unrecognized net
premium income totaling $9,968,000 and $18,637,000 at December 1993 and 1992,
respectively. After considering these amounts, outstanding forward exchange
contracts were in a net unrealized negative cash flow position of approximately
$22,205,000 at December 1993 and a net unrealized positive cash flow position of
approximately $10,643,000 at December 1992. This net position is highly
sensitive to changes in foreign exchange rates. As noted earlier, the Company
staggers the maturities of the forward exchange contracts to mitigate the impact
of contract settlements on cash flow in any
Bausch & Lomb Incorporated and Consolidated Subsidiaries 61
<PAGE>
given period. The periodic cash inflows or outflows from maturing forward
exchange contracts impact the Company's short-term debt position, but are not of
sufficient magnitude to jeopardize the Company's ability to adequately fund
operations or other business opportunities.
The estimate of fair value for these foreign exchange contracts was
determined based upon a model which compares the face value of these items using
contract rates at inception and estimated market rates at year end.
INTEREST RATE INSTRUMENTS
The Company enters into interest rate swap agreements to exchange fixed and
variable rate interest payment obligations without the exchange of the
underlying principal amounts in order to manage interest rate exposures in a
manner consistent with the Company's policy. These agreements have been used to
adjust interest on certain fixed and variable rate obligations. Net payments or
receipts under the agreements are recorded as adjustments to interest expense.
The Company also enters into interest rate swap-option agreements, wherein the
purchaser of the option retains the right, but not the obligation, to commence
the underlying swap at some specified later date. The Company has sold such
swap-options in order to reduce its interest rate obligations under existing
swap agreements and to manage future interest rate exposures. In all cases, the
swap-option agreements are related to specific portions of the Company's debt
and other obligations, and are of notional amounts and maturities that are
consistent with such commitments.
As of December 25, 1993, the Company had swap agreements outstanding with an
aggregate notional amount of $687,000,000. Of this amount, $380,000,000 is
associated with distributions from Wilmington Partners L.P., $242,000,000 is
associated with public short- and long-term debt placed by the Company, and
$65,000,000 is associated with a future seven-year lease commitment for an
office facility, the construction of which commenced in 1993. Also as of
December 25, 1993, the Company had outstanding swap-option agreements with an
aggregate notional amount of $157,000,000. These agreements are associated with
public short- and long-term debt placed by the Company.
As of December 25, 1993, the Company further had outstanding an interest rate
cap on variable rate obligations, which protects the Company from rising
interest rates. This cap is associated with the Company's future lease
obligation for an office facility, and has a notional amount of $65,000,000.
Under the interest rate environment existing as of December 25, 1993, the net
fair value of the Company's swap agreements was a gain of approximately
$1,400,000, and the net fair value of the Company's swap-option agreements was a
loss of approximately $4,600,000. The interest rate cap agreement had a fair
value reflecting a gain of approximately $100,000 as of December 25, 1993.
Consistent with accounting standards, the Company amortizes premium income or
expense incurred by buying or selling swap-options over the life of the
agreements. This premium income or expense is included in the Company's results
of operations. For the fiscal year 1993, the Company recognized approximately
$700,000 of income related to these items.
LONG-TERM DEBT
Fair value is estimated based on either quoted market prices for the same or
similar issues or the current rates offered to the Company for debt with the
same remaining maturities.
COMMITMENTS
The Company has entered into an agreement with an unaffiliated third party to
act as agent for construction of an office facility and has guaranteed its
completion. Upon completion, the Company will enter into a seven-year operating
lease with annual rent payments estimated to be $5,100,000 and a residual value
guarantee in an amount not to exceed $54,600,000.
CONCENTRATIONS OF CREDIT RISK
Other financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers comprising the Company's customer base, and
their dispersion across different businesses and geographic regions. As of
December 25, 1993 and December 26, 1992, the Company had no significant
concentrations of credit risk.
62 Bausch & Lomb Incorporated and Consolidated Subsidiaries
<PAGE>
18. Litigation
- --------------------------------------------------------------------------------
In the fourth quarter of 1991, the Company established a reserve for
discontinued operations of approximately $26,000,000 to provide for, among other
things, potential legal exposures stemming from litigation involving Bausch &
Lomb and a number of other companies. One of the matters related to patent
infringement litigation concerning XY plotters and mechanisms for moving plotter
paper produced by Houston Instruments, a company sold by Bausch & Lomb in 1985.
In February 1992, a settlement was reached on this patent litigation within the
range of contemplated exposure, including legal expenses. The reserve balance
was adequate in providing for the resolution of the remaining matters.
The Company was involved in other litigation, investigations of a routine
nature, and various legal matters during 1993 which are being defended and
handled in the ordinary course of business. These matters are not considered
material to the financial condition of the Company.
Report of Independent Accountants
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF BAUSCH & LOMB INCORPORATED
In our opinion, the accompanying consolidated financial statements
appearing on pages 46 through 63 of this 1993 annual report of Bausch & Lomb
Incorporated after the restatement described in Note 2 present fairly, in all
material respects, the financial position of Bausch & Lomb Incorporated and its
subsidiaries at December 25, 1993 and December 26, 1992, and the results of
their operations and their cash flows for each of the three years in the period
ended December 25, 1993, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
[Signature: Price Waterhouse]
Rochester, New York
January 23, 1996
Bausch & Lomb Incorporated and Consolidated Subsidiaries 63
<PAGE>
Selected Financial Data
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Dollar Amounts In
Millions - Except
Per Share Data 1993* 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR
Net sales $1,830.1 $1,709.1 $1,520.1 $1,368.6 $1,220.3 $ 978.3 $ 840.3 $ 698.9 $ 596.2 $ 533.6 $ 477.3
Earnings from
continuing operations
before cumulative
effect of change in
accounting principle 138.9 171.4 85.9 131.4 114.4 97.9 85.3 74.7 66.8 58.8 51.0
Cumulative effect of
change in accounting
principle -- -- (58.3) -- -- -- -- -- -- -- --
Loss from discontinued
operations, net of
taxes -- -- -- -- -- -- -- -- -- (8.6) (2.6)
Net earnings 138.9 171.4 27.6 131.4 114.4 97.9 85.3 74.7 66.8 50.2 48.4
Earnings from
continuing operations
before cumulative
effect of change in
accounting principle
and non-recurring
charges 175.4 171.4 149.2 131.4 114.4 97.9 85.3 74.7 66.8 58.8 51.0
Average shares
outstanding (000s) 60,115 60,399 60,455 60,150 60,435 59,894 60,758 60,578 59,922 59,431 59,242
-----------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Earnings from
continuing operations
before cumulative
effect of change in
accounting
principle $ 2.31 $ 2.84 $ 1.42 $ 2.19 $ 1.89 $ 1.63 $ 1.40 $ 1.23 $ 1.11 $ 0.99 $ 0.86
Cumulative effect
of change in
accounting principle -- -- (0.96) -- -- -- -- -- -- -- --
Loss from
discontinued
operations -- -- -- -- -- -- -- -- -- (0.14) (0.04)
Net earnings 2.31 2.84 0.46 2.19 1.89 1.63 1.40 1.23 1.11 0.85 0.82
Earnings from
continuing operations
before cumulative
effect of change in
accounting principle
and non-recurring
charges 2.92 2.84 2.47 2.19 1.89 1.63 1.40 1.23 1.11 0.99 0.86
Shareholders' equity 15.38 15.11 13.77 13.95 11.96 10.55 9.70 8.16 6.84 5.52 5.31
Dividends 0.88 0.80 0.72 0.66 0.58 0.50 0.43 0.39 0.39 0.39 0.39
-----------------------------------------------------------------------------------------------------------
AT YEAR END
Working capital $ 669.6 $ 514.9 $ 405.3 $ 341.9 $ 316.3 $ 217.3 $ 372.4 $ 348.5 $ 260.0 $ 199.4 $ 218.6
Property, plant,
and equipment 541.1 503.9 457.9 418.8 351.0 294.3 226.5 205.6 150.9 127.6 138.3
Total assets 2,493.0 1,873.7 1,738.5 1,677.4 1,429.2 1,212.6 978.7 885.7 627.3 566.7 553.4
Short-term debt 244.6 208.9 256.1 285.2 228.2 184.7 18.6 22.1 21.4 51.6 34.9
Long-term debt 321.0 277.7 195.7 214.5 219.1 152.5 160.5 206.9 81.3 76.6 82.6
Shareholders' equity 909.2 898.2 819.3 825.5 713.3 629.0 576.6 490.8 408.1 327.2 314.0
-----------------------------------------------------------------------------------------------------------
STATISTICS
Before Cumulative
Effect Of Change
In Accounting
Principle
Return on sales 7.6% 10.0% 5.7% 9.6% 9.4% 10.0% 10.2% 10.7% 11.2% 11.0% 10.7%
Return on average
shareholders'
equity 15.5% 20.3% 10.3% 17.2% 17.5% 16.6% 15.9% 16.6% 18.7% 18.3% 17.0%
Return on average
total assets 6.8% 9.5% 5.0% 8.5% 8.7% 8.9% 9.2% 9.9% 11.2% 10.5% 9.5%
Before Cumulative
Effect Of Change
In Accounting
Principle And
Non-recurring
Charges
Return on sales 9.6% 10.0% 9.8% 9.6% 9.4% 10.0% 10.2% 10.7% 11.2% 11.0% 10.7%
Return on average
shareholders'
equity 19.5% 20.3% 17.7% 17.2% 17.5% 16.6% 15.9% 16.6% 18.7% 18.3% 17.0%
Return on average
total assets 8.6% 9.5% 8.7% 8.5% 8.7% 8.9% 9.2% 9.9% 11.2% 10.5% 9.5%
Average income tax
rate 33.5% 32.4% 39.7% 32.6% 32.6% 33.3% 36.8% 33.8% 33.8% 30.9% 29.1%
Current ratio 1.9 1.9 1.7 1.6 1.7 1.6 3.1 3.1 3.2 2.3 2.5
Total debt to
shareholders' equity 62.2% 54.2% 55.1% 60.5% 62.7% 53.6% 31.1% 46.7% 25.2% 39.2% 37.4%
Total debt to capital 38.3% 35.1% 35.5% 37.7% 38.5% 34.9% 23.7% 31.8% 20.1% 28.2% 27.2%
Capital expenditures $ 107.2 $ 119.3 $ 88.6 $ 108.4 $ 100.3 $ 103.1 $ 49.4 $ 50.3 $ 34.1 $ 33.3 $ 25.9
Employees 15,900 14,500 13,700 13,000 12,500 10,000 8,300 8,000 7,600 8,300 9,200
Common shareholders
of record 8,100 7,700 8,400 6,900 6,700 7,100 6,200 6,300 6,500 6,700 5,500
-----------------------------------------------------------------------------------------------------------
*Amounts have been restated for certain items as more fully described in Note 2--Restatement of Financial Information.
</TABLE>
64 Bausch & Lomb Incorporated and Consolidated Subsidiaries
Bausch & Lomb Incorporated and Consolidated Subsidiaries 65
<PAGE>
Bausch
& Lomb
Healthcare and Optics
Worldwide
Bausch & Lomb
Corporate Offices
One Bausch & Lomb Place
Rochester, New York
14604-2701
(716) 338-6000
(800) 344- 8815
Printed in U. S. A.
M-1918-93
