United States
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File
September 23, 2000 Number: 1-4105
BAUSCH & LOMB INCORPORATED
(Exact name of registrant as specified in its charter)
New York 16-0345235
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Registrant's telephone number, including area code: (716) 338-
6000
Indicate by checkmark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares of Common stock of the registrant
outstanding as of September 23, 2000 was 53,353,079, consisting
of 52,946,477 shares of Common stock and 406,602 shares of Class
B stock which are identical with respect to dividend and
liquidation rights, and vote together as a single class for all
purposes.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying unaudited interim consolidated financial
statements of Bausch & Lomb Incorporated and Consolidated
Subsidiaries have been prepared by the company in accordance with
the accounting policies stated in the company's 1999 Annual
Report on Form 10-K and should be read in conjunction with the
Notes To Financial Statements appearing therein, and are based in
part on approximations. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation in accordance with generally
accepted accounting principles have been included in these
unaudited interim consolidated financial statements.
<TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Third Quarter Nine Months Ended
Ended
Dollar Amounts In Millions - Sept. 23, Sept. 25, Sept. 23, Sept. 25,
Except Per Share Data
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net Sales $440.9 $446.3 $1,300.6 $1,289.5
Costs And Expenses
Cost of products sold 178.3 176.3 540.9 516.3
Selling, administrative and
general 172.0 167.8 510.4 519.0
Research and development 28.1 26.8 81.6 72.7
Purchased in-process research
and development 23.8 - 23.8 -
Restructuring reserve
adjustment (2.1) - (2.1) -
Other expense - - 8.4 -
400.1 370.9 1,163.0 1,108.0
Operating Income 40.8 75.4 137.6 181.5
Other (Income) Expense
Interest and investment income (14.0) (9.5) (42.9) (27.6)
Interest expense 16.6 20.7 50.8 69.0
(Gain) Loss from foreign
currency, net (3.0) 1.6 (10.3) (5.0)
Other income - (6.7) (23.6) (6.7)
(0.4) 6.1 (26.0) 29.7
Income From Continuing Operations
Before Income Taxes And Minority
Interest 41.2 69.3 163.6 151.8
Provision for income taxes 23.1 25.0 66.5 54.6
Income From Continuing Operations
Before Minority Interest 18.1 44.3 97.1 97.2
Minority interest in
subsidiaries 3.4 2.7 8.6 11.7
Income from Continuing Operations 14.7 41.6 88.5 85.5
Discontinued Operations
Income from discontinued
operations, net of tax - 8.4 - 34.0
Gain on disposals of
discontinued operations, net
of tax - 181.8 - 308.1
14.7 190.2 88.5 342.1
Net Income $ 14.7 $231.8 $ 88.5 $ 427.6
Basic Earnings Per Share:
Continuing Operations $ 0.28 $ 0.72 $ 1.63 $ 1.49
Discontinued Operations - 3.31 - 5.99
$ 0.28 $ 4.03 $ 1.63 $ 7.48
Diluted Earnings Per Share:
Continuing Operations $ 0.27 $ 0.71 $ 1.60 $ 1.46
Discontinued Operations - 3.23 - 5.83
$ 0.27 $ 3.94 $ 1.60 $ 7.29
Average Shares Outstanding - Basic
(000s) 53,363 57,477 54,400 57,198
Average Shares Outstanding -
Diluted (000s) 53,942 58,862 55,166 58,695
See Notes to Financial Statements
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
September 23, December 25,
Dollar Amounts In Millions 2000 1999
ASSETS
<C> <C>
Current Assets
Cash and cash equivalents $ 628.2 $ 827.1
Other investments, short-term 56.9 125.0
Trade receivables, less allowances
of $23.1 and $19.6, respectively 439.7 438.0
Inventories, net 234.4 239.6
Other current assets 184.6 156.0
Net assets held for disposal, short-
term 2.3 24.6
1,546.1 1,810.3
Property, Plant And Equipment, net 510.5 524.8
Goodwill And Other Intangibles,
less accumulated amortization
of $159.7 and $129.3, respectively 775.9 606.8
Other Investments 98.1 173.8
Other Assets 179.7 153.1
Net Assets Held For Disposal, long-term 3.1 4.7
Total Assets $3,113.4 $3,273.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued liabilities $ 335.6 $ 356.0
Federal, state and foreign income
taxes payable 73.6 47.3
Accounts payable 67.8 94.8
Accrued compensation 79.5 74.6
Notes payable 40.6 45.9
Current portion of long-term debt 206.7 1.0
803.8 619.6
Long-Term Debt, less current portion 779.9 977.0
Deferred Income Taxes 171.6 117.7
Other Long-Term Liabilities 91.7 99.6
Minority Interest 225.1 225.6
Total Liabilities 2,072.1 2,039.5
Shareholders' Equity
4% Cumulative Preferred stock - -
Class A Preferred stock - -
Common stock, par value $0.40
Per share 60,198,322 shares issued 24.1 24.1
Class B stock, par value $0.08 per
share, 614,284 and 613,324 shares
Issued, respectively - -
Capital in excess of par value 92.3 89.6
Common and Class B stock
In treasury, at cost, 7,459,527 and
3,435,738 shares, respectively (377.0) (150.1)
Retained earnings 1,314.8 1,268.4
Accumulated other comprehensive income (5.0) 9.0
Other shareholders' equity (7.9) (7.0)
Total Shareholders' Equity 1,041.3 1,234.0
Total Liabilities And Shareholders'
Equity $3,113.4 $3,273.5
See Notes To Financial Statements
</TABLE>
<TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
Nine Months Ended
September 23, September, 25,
Dollar Amounts In Millions 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 88.5 $427.6
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities
Gain on divestitures - (475.0)
Depreciation 77.2 82.0
Amortization 31.0 34.0
Restructuring reserve adjustment (2.1) -
Purchased in-process research and
development 23.8 -
Change in deferred income taxes 2.9 129.1
Loss on retirement of fixed assets 8.3 1.1
Changes in assets and liabilities:
Trade receivables (3.3) (59.7)
Inventories 17.9 (24.5)
Other current assets (27.9) (45.1)
Accounts payable and accruals (2.2) 6.7
Income taxes 28.1 79.7
Other long-term liabilities (21.0) (4.0)
Net cash provided by operating
activities 221.2 151.9
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (60.8) (102.0)
Net cash paid for acquisition of
businesses (208.8) (43.1)
Net cash received from divestitures - 1,048.5
Proceeds from liquidation of other
investments 171.8 300.0
Other (46.0) 11.2
Net cash (used in) provided by
investing activities (143.8) 1,214.6
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of additional interest in
partnership - (400.0)
Proceeds from third-party investor for
partnership interest - 200.5
Repurchase of Common and Class B shares (251.1) (13.5)
Exercise of stock options 26.8 55.3
Net repayments of notes payable (4.6) (342.2)
Net proceeds from long-term debt 9.1 -
Payment of dividends (43.3) (42.2)
Net cash used in financing activities (263.1) (542.1)
Effect of exchange rate changes on cash and
cash equivalents (13.2) (2.5)
Net (decrease) increase in cash and cash
equivalents (198.9) 821.9
Cash and cash equivalents - beginning of
period 827.1 129.2
Cash and cash equivalents - end of period $628.2 $951.1
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 68.2 $ 77.1
Income taxes $ 49.4 $ 42.5
See Notes To Financial Statements
</TABLE>
BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Dollar Amounts in Millions - Except Per Share Data
NOTE A: Inventories
<TABLE>
Inventories consisted of the following:
September 23, December 25,
2000 1999
<C> <C>
Raw materials and supplies $ 63.1 $ 54.0
Work in process 21.9 15.9
Finished products 149.4 169.7
$234.4 $239.6
</TABLE>
NOTE B: Property, Plant And Equipment
<TABLE>
Major classes of property, plant and equipment consisted
of the following:
September 23, December 25,
2000 1999
<S> <C> <C>
Machinery and equipment $ 796.7 $ 772.1
Buildings 225.7 212.8
Leasehold improvements 30.3 35.2
Land 15.1 12.0
1,067.8 1,032.1
Less: Accumulated
depreciation (557.3) (507.3)
$ 510.5 $ 524.8
</TABLE>
NOTE C: Comprehensive Income
<TABLE>
The components of the company's total comprehensive
income were:
Three Months Nine Months
Ended Ended
Sept. 23, Sept. 25, Sept. 23, Sept. 25,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income $14.7 $231.8 $88.5 $427.6
Foreign currency
translation adjustments (19.0) (5.4) (38.0) (39.5)
Unrealized holding
gains on available for
sale security, net of
taxes 24.1 - 24.1 -
Total Comprehensive
Income $19.8 $226.4 $74.6 $388.1
</TABLE>
NOTE D: Restructuring and Exit Activities
1999 Program
In December 1999, the company's board of directors announced that
it was implementing a comprehensive program to exit certain
contact lens manufacturing platforms and take additional steps to
further reduce the administrative cost structure throughout the
company. As a result, the company recorded a pre-tax charge of
$56.7 in 1999, the major components of which are summarized in
the table below:
<TABLE>
Vision Other/
Care Administrive Total
Provisions
<S> <C> <C> <C>
Employee terminations $ 27.1 $ 3.7 $ 30.8
Asset write-offs 25.8 0.1 25.9
$ 52.9 $ 3.8 $ 56.7
Less 1999 Activity:
Cash payments (1.0) - (1.0)
Non-cash items (25.8) (0.1) (25.9)
Remaining reserve at
December 25, 1999 $ 26.1 $ 3.7 $ 29.8
Less 2000 Activity:
Cash payments (10.4) (0.6) (11.0)
Restructuring reserve
adjustment (2.1) - (2.1)
Remaining reserve at
September 23, 2000 $ 13.6 $ 3.1 $ 16.7
</TABLE>
The restructuring program within the vision care segment is
focused on the elimination of certain contact lens manufacturing
platforms that employ less cost-effective technologies. The
programs included under other/administrative are focused
primarily on further reducing overhead costs throughout the
company. The plan was adopted and announced and all major actions
in this restructuring plan were implemented in the fourth quarter
of 1999 and it is anticipated that they will be completed by
December 2000.
The restructuring programs will result in the termination of
approximately 1,000 employees. Terminations in the vision care
segment include 810 employees in production and 116
administrative staff. The other/administrative actions include
the termination of approximately 80 staff in both administrative
and sales roles. As of September 23, 2000, 478 employees have
been involuntarily terminated under this restructuring plan with
$12.0 of related costs being charged against the liability.
During the third quarter of 2000, the company reduced the
1999 reserve by a net amount of $2.1. The company reversed
approximately $3.5 of severance related costs that are not
required. The reversal is primarily the result of the expansion
of vision care manufacturing operations required to meet
unplanned market demand for new products and lower outplacement
costs. The company increased the reserve in the third quarter of
2000 by $1.4 for severance expenses associated with additional
actions announced in August. These actions were the result of
achieving greater efficiencies due to the operational
restructuring in the U.S. The job classifications and location of
employees impacted were identical to those that were identified
at the time the initial reserve was established. All actions
related to the 1999 program will be completed in the fourth
quarter and remaining reserves, if any, will be reversed.
In addition to employee terminations, the 1999 Program
resulted in $25.9 of asset write-offs, primarily for the
abandonment of manufacturing equipment. The disposition and/or
decommissioning of these assets occurred in the fourth quarter of
1999 and January 2000.
Accrual for Acquisition-Related Exit Activities
As part of the integration of Chiron Vision and Storz, management
developed a formal plan that included the shutdown of duplicate
facilities in the U.S., Europe and Asia, the elimination of
duplicate product lines and the consolidation of certain
administrative functions. The exit activities were committed to
by management and formally communicated to employees shortly
after the acquisitions were consummated. The major components of
the accrual were as follows:
<TABLE>
Employee
Severance and Facilities Contract
Relocation Closure Costs Terminations Total
<S> <C> <C> <C> <C>
Accrued at acquisition date $21.7 $5.5 $0.9 $28.1
Less 1998 Activity:
Cash payments (6.3) (0.7) (0.9) (7.9)
Non-cash items - (0.3) - (0.3)
Balances at December 26, 1998 $15.4 $4.5 $ - $19.9
Less 1999 Activity
Cash payments (10.7) (0.4) - (11.1)
Non-cash items - (2.6) - (2.6)
Balances at December 25, 1999 $ 4.7 $1.5 $ - $ 6.2
Less 2000 Activity
Cash payments (2.1) (0.4) - (2.5)
Non-cash items - - - -
Balances at September 23, 2000 $ 2.6 $1.1 $ - $ 3.7
</TABLE>
The costs of employee terminations related to 596 employees in
production, R&D, selling and administration. During the first
nine months of 2000, 33 employees were terminated. During 1999
and 1998, 384 and 100 employees were terminated, respectively.
The remaining 79 are expected to be terminated in 2000 and are
comprised of those in a foreign jurisdiction that involved a
lengthy statutory process of notice and approval prior to
termination. Management does not believe such process will result
in severance payments or other costs materially different from
those accrued. The facilities closure costs primarily represented
leasehold termination payments and fixed asset writedowns
relating to duplicate facilities. The closures and consolidations
in the U.S. were substantially completed in 1999. The closures
and consolidations outside the U.S. were commenced in 1999 and
are expected to be completed in 2000. Involuntary termination
benefits of $18.1 were accrued in 1998. Amounts paid and charged
against the liability were $2.0 in the first nine months of 2000,
$8.4 in 1999 and $5.4 in 1998.
NOTE E: Business Segment Information
The company is organized by product line for management reporting
purposes with operating earnings being the primary measure of
segment profitability. Certain distribution and general and
administrative expenses, including some centralized services, are
allocated among the segments for management reporting. No items
below operating earnings are allocated to segments. The
accounting policies used to generate segment results are the same
as the company's overall accounting policies.
The company's operating results are reported in three
business segments: vision care, pharmaceuticals and surgical. The
vision care segment includes contact lenses, lens care products
and vision accessories. The pharmaceutical segment includes
generic and proprietary prescription and over-the-counter (OTC)
products with an emphasis on ophthalmic medications. The surgical
segment includes products and equipment for cataract, refractive
and retinal surgery.
The following table presents sales and operating earnings by
business segment for the quarters ended September 23, 2000 and
September 25, 1999. The company does not have material
intersegment sales. Other significant charges consisted of a
charge for $23.8 for purchased in-process research and
development and a purchase accounting inventory adjustment of
$1.0. Both adjustments related to the Groupe Chauvin acquisition.
The restructuring reserve adjustment is described in Note D:
Restructuring and Exit Activities and other expense is described
in Note F: Other Expense.
<TABLE>
Third Quarter
2000 1999
Net Operating Net Operating
Sales Earnings Sales Earnings
<S> <C> <C> <C> <C>
Vision Care $260.6 $60.6 $265.1 $58.2
Pharmaceuticals 68.7 2.6 74.4 15.1
Surgical 111.6 10.6 106.8 16.2
440.9 73.8 446.3 89.5
Corporate administration - (10.3) - (14.1)
Purchase accounting adjustments - (24.8) - -
Restructuring reserve adjustment - 2.1 - -
$440.9 $40.8 $446.3 $75.4
</TABLE>
<TABLE>
Nine Months Ended
September 23, 2000 September 25, 1999
Net Operating Net Operating
Sales Earnings Sales Earnings
<S> <C> <C> <C> <C>
Vision Care $ 749.8 $143.0 $ 758.9 $139.8
Pharmaceuticals 206.5 24.5 219.0 48.3
Surgical 344.3 40.5 311.6 41.0
1,300.6 208.0 1,289.5 229.1
Corporate administration - (39.3) - (47.6)
Purchase accounting adjustments - (24.8) - -
Restructuring reserve adjustment - 2.1 - -
Other expense - (8.4) - -
$1,300.6 $137.6 $1,289.5 $181.5
</TABLE>
NOTE F: Other Expense
Other expense of $8.4 for the nine months ended September 23,
2000 consists of direct and incremental costs of $3.7 related to
the proposed acquisition of Wesley Jessen VisionCare, Inc. and
$4.7 related to the settlement of litigation, Both charges were
reported in the second quarter.
Bausch & Lomb commenced a cash tender offer for all of the
outstanding shares of Wesley Jessen VisionCare, Inc. for
approximately $692 on April 13, 2000. The company subsequently
increased the tender offer to $723 on May 9, 2000. On May 30,
2000, the company withdrew its offer to acquire Wesley Jessen due
to a competing, and significantly higher, offer by the eye-care
unit of Novartis. The direct and incremental costs associated
with the proposed combination consist of fees of $3.7 paid to
outside legal and financial advisors.
The litigation settlement is related to a consumer class
action lawsuit dating back to 1995 concerning the marketing and
labeling of certain of the company's lens care and eye care
solutions. While the company continues to believe its previous
marketing of these products was appropriate, it chose to settle
the matter rather than continue to expend valuable time and
resources in multi-year litigation. The settlement was formally
approved at a fairness hearing held on September 13, 2000. The
charge represents the cost of attorney's fees and the estimated
liability for the redemption of coupons to be placed in product
packages under the settlement.
NOTE G: Discontinued Operations
During fiscal 1999, the company completed the sale of its
sunglass business to Luxottica Group S.p.A for $636.0 in cash.
The company recorded an after-tax gain on the disposal of
discontinued operations of $126.3 or $2.16 per diluted share.
Luxottica Group S.p.A. has proposed certain adjustments to the
closing balance sheet in connection with their purchase that
could potentially impact the resulting gain on the sale. It is
too early to estimate with any certainty the potential
adjustment, if any, to the gain. The company does not believe
that the outcome of these proceedings will have a material
adverse effect on its financial condition.
NOTE H: Minority Interest
The minority interest in subsidiaries primarily represents the
outside partnership interest in Wilmington Partners L.P. (the
Partnership). The partnership interests are held by four wholly
owned subsidiaries of the company along with an outside partner
holding a 22% interest. The Partnership is a separate legal
entity from the company, but for financial reporting purposes,
assets, liabilities and earnings from the Partnership are
included in the company's consolidated financial results. The
outside investor's limited partnership interest is recorded as
minority interest in the company's consolidated financial
statements.
NOTE I: Acquisition
On August 8, 2000, Bausch & Lomb completed the acquisition of a
European-based ophthalmic pharmaceuticals company headquartered
in Montpellier, France, and several related companies
collectively referred to as Groupe Chauvin, for approximately
$213.0 million net of cash acquired and including acquisition
costs.
Groupe Chauvin manufactures and markets prescription and over-
the-counter ophthalmic pharmaceutical and surgical products to
treat a number of eye conditions, including glaucoma, ocular
inflammation, allergies, cataracts and dry eye. Combined, the
companies have annual sales of nearly $100 million, employ nearly
800 people, and have operations in France, Germany, the U.K.,
Switzerland, the Benelux countries, and Portugal. This
acquisition makes Bausch & Lomb one of the leading full-line
ophthalmic pharmaceutical companies in Europe.
The acquisition will allow the company to expand its
pharmaceuticals presence outside of the U.S. and Germany, and
give it a framework to extend the distribution of its current
ophthalmic products to a broader geographic base. In addition,
the marketing, distribution, regulatory and clinical capabilities
gained through the transaction will be attractive to new
technology partners and will enable Bausch & Lomb to more rapidly
commercialize in Europe innovative products now in development,
including those that incorporate Envision TD(TM) technology for
treating back-of-the-eye diseases.
Bausch & Lomb financed the acquisition through the use of a
portion of its cash reserves generated offshore. The acquisition
is expected to be dilutive to earnings by $.06 to $.07 in each of
the next three quarters and turn accretive thereafter, excluding
one-time customary purchase accounting adjustments recorded in
the third quarter.
A preliminary valuation of the assets acquired has been
completed and in connection with an integration plan will be
finalized in the fourth quarter. The acquisition was accounted
for as a purchase, whereby the purchase price, including
acquisition costs, was allocated to identified assets, including
tangible and intangible assets, purchased in-process research and
development and liabilities based upon their respective fair
values. The company recorded purchased in-process research and
development expense of $23.8. The excess of the purchase price
over the value of identified assets and liabilities was recorded
as goodwill. Identified goodwill and intangibles will be
amortized on a straight line basis over lives ranging between
twenty and thirty years.
NOTE J: Other Investments, Short-Term
Under SFAS No. 115, Accounting for Certain Investments in Debt
and Equity Securities, certain investments are classified as
available-for-sale. Accordingly, unrealized holding gains and
losses, net of taxes, are excluded from income and recognized as
a component of accumulated other comprehensive income. Fair value
of these investments is determined based on market prices. At the
end of the third quarter, the company owned common stock in
Charles River Laboratories, Inc. which represents the retention
of a minority equity interest from the sale of the Charles River
Laboratories business during the prior year, as reported in the
company's Form 10-K for the year ended December 25, 1999. The
investment was valued at $57 at the end of the third quarter. A
resulting unrealized holding gain, net of taxes, of $24 for the
quarter was recorded as reflected in Note C: Comprehensive
Income. The company is restricted from trading the stock until
the beginning of the fiscal year 2001.
NOTE K: New Accounting Pronouncements
During May 2000, the Emerging Issues Task Force ("EITF") issued
EITF Issue No. 00-14, "Accounting for Certain Sales Incentives".
EITF No. 00-14 addresses the classification of various sales
incentives and will be effective for the fourth quarter of 2000.
In July 2000, the EITF issued EITF Issue No. 00-10, "Accounting
for Shipping and Handling Fees and Costs". EITF No. 00-10
addresses the income statement classification of amounts charged
to customers for shipping and handling and will be effective for
the fourth quarter of 2000. The company has determined that the
adoption of EITF Issue No. 00-14 and No. 00-10 will have no
material effect on its financial position. The company is in the
process of determining the potential effect on its statements of
income presentation and upon adoption, if necessary, previously
issued financial statements may need to be restated to conform to
the new presentation.
In December 1999, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements", which summarizes certain of
the SEC's views in applying generally accepted accounting
principles to revenue recognition in financial statements. The
SEC delayed the date by which registrants must apply the
accounting and disclosures described in SAB No. 101 until the
fourth quarter of 2000. Management believes the company's revenue
recognition policies comply with the guidance contained in SAB
101 and, therefore, the company's results of operations will not
be materially affected.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 133
"Accounting for Derivative Instruments and Hedging Activities"
(SFAS 133). This standard was amended by Statement of Financial
Accounting Standards No. 137 "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date
of FASB Statement No. 133" and changed the effective date for
SFAS 133 to all fiscal quarters of fiscal years beginning after
June 15, 2000. In June 2000, the FASB issued SFAS 138,
"Accounting for Certain Derivative Instruments and Certain
Hedging Activities, an amendment of SFAS 133". SFAS 133 (as
amended by SFAS 138) requires that all derivative instruments be
recorded on the balance sheet at their respective fair values.
Changes in the fair value of derivatives are recorded each period
in current earnings or other comprehensive income, depending on
the designation of the hedge transaction. The company will adopt
SFAS 133 (as amended by SFAS 138) in the first quarter of 2001
and is still evaluating the effect on the company's financial
position.
NOTE L: Subsequent Event
Subsequent to the close of the third quarter, the company
announced a new organizational structure intended to more fully
realize the operational and commercial synergies that exist among
its eye-care product lines, enhance responsiveness to its
customers and increase shareholder value. At the core of the
company's initiative is the designation of regional managers who
will be responsible for the commercial operations of all of the
company's businesses within specified markets, and the
centralization of the product development and product supply
functions. The regional management of commercial operations will
enable the company to move key decisions to a level that is
closer to the customer. Management of the product development and
product supply functions on a company-wide basis is expected to
maximize the utilization of resources and expertise across all
product lines. The changes will result in the elimination of
redundant support functions and overhead, providing the
opportunity to achieve significant cost savings. The company has
identified approximately $20-30 million in annualized cost
savings to be achieved through the elimination of approximately
450 non-manufacturing positions over the next several months,
primarily in its North American facilities. The cost of
implementing these initiatives is estimated to be $30-35 million
primarily severance related to the terminations, and will be
recorded as a charge in the fourth quarter.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Dollar Amounts in Millions - Except Per Share Data
This financial review, which should be read in conjunction with
the accompanying financial statements, contains management's
discussion and analysis of the company's results of operations,
liquidity and an updated 2000 outlook. Discussion of 1999
operating results excludes the discontinued businesses.
References within this financial review to earnings per share
refer to diluted earnings per share.
CONTINUING OPERATIONS
Net Sales By Business Segment And Geographic Region
Total net sales for the third quarter and nine months ended
September 23, 2000 were $440.9 and $1,300.6, respectively. Net
sales decreased 1% for the quarter and increased 1% year to date
over the prior year. On a constant dollar basis (excluding the
effect of foreign currency exchange rates) revenue increased 2%
and 3% for the quarter and nine month periods, respectively.
Vision care and pharmaceuticals segment revenues decreased as
compared to the prior year for both the quarter and year to date.
Surgical segment revenue increased both for the quarter and year
to date.
Vision Care Segment Revenues
Revenues in this segment were $260.6 for the third quarter of
2000, a decrease of 2% compared to the same period last year. In
constant dollars, sales were flat as compared to the same period
last year. Contact lenses comprised 50% of revenues, with
combined lens care and vision accessories making up the remaining
50% of third quarter revenues. In the third quarter of 1999, this
mix was 46% lens and 54% lens care and vision accessories.
Contact lens revenues increased 6% over the third quarter of
1999, driven by double-digit growth in the company's planned
replacement and disposable lenses. These gains were partially
offset by declines in older product offerings. Contact lens
revenues in the U.S. were up 14%, driven by continued strong
growth in sales of SofLens66 toric and PureVision, the company's
newer products, and a strong launch of the Bausch & Lomb Two Week
lens. Non-U.S. sales of contact lenses grew 2% in the third
quarter. Gains in Asia were partially offset by modest declines
in European lens revenues primarily due to the continued
weakening of the Euro.
Lens care and vision accessories revenues decreased 8% from
the prior-year quarter. U.S. sales of lens care and vision
accessories products decreased 13% for the quarter. These
declines were driven by market dynamics, where the company's
retail customers' reductions in inventory-carrying requirements
continued to negatively impact buying patterns. Outside the U.S.,
lens care and vision accessories revenues were flat for the
quarter.
Year to date, vision care revenues decreased 1% in actual and
constant dollars, reflecting the decreased sales for both lens
care and vision accessories products offset by the strong
performance of the company's new contact lens products.
Pharmaceuticals Segment Revenues
Revenues in this segment were $68.7 for the third quarter, a
decrease of 8% from the same period last year. Excluding the
impact of currency, revenues were down 1% compared to the third
quarter of the prior year. In the U.S., pharmaceutical revenues
were down 20% for the quarter and 9% year to date. These results
reflect higher sales of Lotemax and Alrex, the company's
proprietary ophthalmic anti-inflammatory drops, which were more
than offset by revenue declines in the company's lines of generic
ear drops and multi-source ophthalmic products, resulting from
significantly intensified competitive pricing pressures. Outside
the U.S., pharmaceuticals sales were up 20% for the quarter and
were flat year to date. These results reflect incremental
revenues from the acquisition of Groupe Chauvin. The company's
Dr. Mann Pharma subsidiary in Germany had a slight increase in
sales over the prior year quarter which was more than offset by
the impact of currency exchange rates. For the year to date
period, total segment sales were down 6% and 1% in constant
dollars.
Surgical Segment Revenues
Revenues from the company's surgical business for the third
quarter of 2000 were $111.6, a 4% increase over the same period
in 1999. On a year to date basis, total surgical revenues
increased 11%. Excluding the impact of currency, revenues
increased 9% for the quarter and 14% year to date. Revenues in
the U.S. surgical business were flat compared to the prior year
third quarter with strong growth in sales of refractive surgery
products offset by declines in sales of products for cataract
surgery. Year to date revenues in the U.S. increased 6% over the
prior year. Outside the U.S., sales grew 11% for the quarter and
18% on a year to date basis. Increased sales of cataract products
and products for refractive surgery were partially offset by the
weakening Euro and delays in installation of lasers at customers'
locations during the third quarter.
Net Sales By Geographic Region
Sales in markets outside the U.S. totaled $217 in the third
quarter of 2000, an increase of $11 or 5% compared with the 1999
period, and represented approximately 49% of consolidated
revenues in 2000 and 46% in 1999. These amounts include
incremental revenue of $8 as a result of the acquisition of
Groupe Chauvin in the current quarter. Excluding the impact of
currency, revenues increased 12%. Year to date, sales totaled
$629, an increase of 5% (9% in constant dollars). Non-U.S. sales
as a percentage of consolidated revenues on a year to date basis
were 48% as compared to 46% in 1999.
Third quarter sales in the Asia-Pacific region increased 14%
versus 1999. In constant dollars, sales increased by 12%. This
increase was primarily due to Japan where revenues were $57 for
the quarter, an increase of 21% over 1999 or 17% in constant
dollars. Revenues in Europe continued to remain flat versus 1999,
but increased 13% on a constant dollar basis.
U.S. sales totaled $224 in the third quarter, a decrease of
$16 or 7% from the comparable period in 1999. For the year, sales
decreased $20 or 3% from 1999.
Costs & Expenses and Operating Earnings
Amounts in this section are calculated on a "management basis"
and comparisons to 1999 exclude discontinued operations,
restructuring charges and asset write-offs, acquisition costs and
other non-recurring items.
The ratio of costs of products sold to sales was 40.2% during
the third quarter of 2000, versus 39.5% for the same period of
1999. For the nine-month period, this ratio was 41.5% in 2000
compared to 40.0% in 1999. The majority of the margin decline
from the prior year quarter is a result of negative currency
trends. Margins have also been impacted by price declines in the
U.S. generic pharmaceutical business as a result of intense
competitive activity. These trends were largely offset by
significantly improved margins in the vision care business,
resulting from cost savings that were realized from the company's
initiatives to consolidate contact lens manufacturing.
Selling, administrative and general expenses, including
corporate administration, were 39.0% of sales in the third
quarter of 2000 compared to 37.6% in 1999, reflecting higher
marketing and administrative expenses associated with new product
launches in the vision care business. Year to date, these
expenses were 39.2% versus 40.3%. The decrease is due to lower
administrative expenses in the vision care and pharmaceuticals
businesses, respectively.
Research and development expenses totaled $28 in the third
quarter of 2000, an increase of $1 over 1999. This represented
6.4% of sales in 2000, up from 6.0% in 1999. Year to date, the
ratio was 6.3% versus 5.6% in 1999. This increase in research and
development as a percentage of sales is in line with previous
projections and is primarily related to investments to develop
the implant technology for treating back of the eye disease.
Operating earnings for the third quarter of 2000 decreased
$12, to $64, a 16% decrease from the prior year period. The
quarterly decrease in profitability was driven by price declines
in certain pharmaceutical products, higher spending on marketing
and advertising on new products, increased spending on research
and development and the negative impact of currency. This
decrease was mitigated by cost savings from restructuring in the
vision care business. Year to date, operating earnings of $169
were down 7% as compared to 1999.
Other Income And Expenses
Income from investments totaled $14 for the third quarter of
2000, an increase of $4 compared to the same period in 1999.
Higher average investment balances and interest rates in the
current year were the reasons for this increase. Interest expense
of $17 decreased $4 compared to the same period in 1999. The
lower level of short-term debt due to cash proceeds from
divestitures of the sunglass and healthcare businesses in 1999
was the primary driver of this variance. Foreign currency gains
of $3 during the third quarter of 2000 increased as compared to
the prior year period loss of $2.
LIQUIDITY AND FINANCIAL RESOURCES
Cash Flows From Operating Activities
Cash provided by operating activities was $221 through the third
quarter of 2000, compared to $152 for the same 1999 period. For
2000, decreases in inventory and the timing of collections of
receivables contributed to the increase. This was partially
offset by a decrease in other long-term liabilities. For 1999,
tax deferrals associated with the refinancing of Wilmington
Partners L.P. and increased profitability contributed to the
positive cash flow. This was partially offset by increases in
inventory and receivables.
Cash Flows From Investing Activities
Cash used in investing activities was $144 through the third
quarter of 2000 versus $1,215 provided by investing activities
for the comparable period in 1999. In the current year, cash used
to acquire Groupe Chauvin was partially offset by the proceeds
from the liquidation of short-term investments. The prior year
proceeds were related to divestitures of certain businesses.
Capital spending of $61, which decreased $41 compared to the
prior year period, is expected to be approximately $100 for 2000.
Cash Flows From Financing Activities
Through the first nine months of 2000, $263 was used in financing
activities, primarily to repurchase Common shares. Using the cash
generated from the 1999 divestitures, the company repurchased
approximately 5,100,000 shares through the third quarter of the
current year. The program has reached its completion as all
shares authorized have been repurchased. In the comparable 1999
period, $542 was used in financing activities, primarily related
to repayment of notes payable and transactions involving
Wilmington Partners L.P.
Free Cash Flow
The company strives to maximize its free cash flow, defined as
cash generated before the payment of dividends, the borrowing or
repayment of debt, stock repurchases and the acquisition or
divestiture of businesses. Free cash flow through the first nine
months of 2000 was $101, an improvement of $43 from the prior
year period. The increase is due mostly to the operational cash
flow factors described above, decreases in expenditures for
property, plant and equipment and the proceeds from a patent
litigation settlement with Alcon Laboratories as previously
reported in the report on Form 10-Q for the quarter ended March
25, 2000. The Cash Flow Statement also reflects changes in asset
and liability levels due to the divested eyewear and healthcare
businesses in the prior year.
Financial Position
The company's total debt, consisting of short- and long-term
borrowings, was $1,027 at the end of the third quarter of 2000,
up $3 from year-end 1999 and lower than the September 1999 amount
by $101. The ratio of total debt to capital was 49.7% at the end
of the third quarter of 2000 compared to 45.3% at the end of 1999
and 47.5% at September 1999. The ratio decreased from September
1999 to December 1999 due to a reduction of debt levels using
cash generated from divestitures. The increase from December 1999
to September 2000 is primarily due to a reduction in
shareholders' equity that resulted from the share repurchase
program.
Cash and cash equivalents totaled $628 and $951 at the end of
the third quarters of 2000 and 1999, respectively, and $827 at
the end of 1999. The decrease in cash is primarily due to the
acquisition of Groupe Chauvin and the share repurchase program
partially offset by the liquidation of a short-term investment.
Access to Financial Markets
The company maintains 364-day bilateral revolving credit
agreements totaling $525. The interest rate under these
agreements is based on LIBOR, or at the company's option, such
other rate as may be agreed upon by the company and the banks. No
debt was outstanding under these agreements at September 23,
2000. These facilities will expire during the fourth quarter; the
company anticipates replacing these facilities with a new
revolving credit agreement. In addition, the company maintains
other lines of credit on which it may draw to meet its financing
requirements. The company believes its existing credit facilities
combined with cash flows from operations provide adequate
liquidity to meet obligations, fund capital expenditures and
invest in potential growth opportunities.
During the third quarter, Standard & Poor's and Moody's
Investor Service downgraded the company's long- and short-term
debt. The ratings now stand at BBB- and A3 for Standard &
Poor's, and Baa3 and Prime-3 for Moody's Investors Service, for
the long-term and short-term debt respectively.
Working Capital
Working capital was $742 and $1,104 at the end of the third
quarter of 2000 and 1999, respectively. At year end 1999, working
capital was $1,191. The decline since year end 1999 is due
primarily to the repurchase of common shares as discussed
previously and $197 debt that can be put back to the company by
the holder on August 1, 2001. The current ratio was 1.9 and 2.4
at the end of September 2000 and September 1999, respectively,
and 2.9 at year end 1999.
OTHER FINANCIAL DATA
Dividends declared on common stock were $0.26 per share in the
third quarters of both 2000 and 1999. The return on average
shareholders' equity was 9.5% and 41.4% for the twelve-month
periods ended September 23, 2000 and September 25, 1999,
respectively. The decrease primarily reflects the gains on
divestitures from both the sunglass and healthcare businesses
recorded in 1999. Excluding the gain, the return on average
shareholders' equity was 8.8% for the comparable period ended
September 25, 1999.
THE EURO
On January 1, 1999, 11 of the 15 member countries of the European
Union began operating with a new currency, the Euro, which was
established by irrevocably fixing the value of legacy currencies
against this new common currency. The Euro may be used in
business transactions along with legacy currencies until 2002, at
which time it will become the sole currency of the participating
countries.
The company has processes in place to address the issues
raised by this currency conversion, including the impact on
information technology and other systems, currency risk,
financial instruments, taxation and competitive implications. The
company expects no material impact to its financial position or
its results of operations arising from the Euro conversion.
OUTLOOK
In the vision care segment, the company expects to report fourth
quarter revenues that are about even with comparable results in
1999. This reflects the impact to prior guidance of currency rate
changes, as well as a somewhat softer fourth quarter for the U.S.
contact lens business following a strong third quarter, which
benefited from initial placements of Bausch & Lomb Two Week.
In the pharmaceuticals segment, fourth quarter revenues are
expected to be at about the same level as the third quarter. This
reflects a continuation of trends noted through the first nine
months, including the negative impact of currency as well as
intense price competition for several lines of generic
pharmaceuticals, offset by incremental revenues generated by the
Groupe Chauvin acquisition.
In the surgical segment, the company expects revenue growth
in the mid- to upper single digits in the fourth quarter, down
from previous guidance due to the impact of currency, as well as
a more cautious view of the near term outlook as the company
addresses issues in the cataract business and a more dynamic
competitive environment in the U.S. refractive business.
In total, revenues for 2000 are expected to increase slightly
from the prior year in actual dollars and to increase in the mid-
single digits in constant dollars. This, as well as the preceding
guidance by product segment, assumes that currency rates remain
relatively unchanged from the end of the third quarter.
Specifically, one Euro was assumed equivalent to $0.85.
The company expects to incur higher research and development
spending in the fourth quarter than it had previously anticipated
in order to accelerate the Envision TD program. As a result of
this higher spending, combined with the earnings impact of
currency rate changes, the company now expects to post fourth
quarter earnings per share in the range of $0.73 to $0.75,
presuming there is no further deterioration in foreign exchange
rates from levels at the end of the third quarter.
Should the company be successful in accelerating the Envision
TD program, obligations to make milestone payments to the
development partner could also be accelerated. The impact of any
acceleration in such milestone payments has not been factored
into the company's revised earnings estimates for the fourth
quarter.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
When used in this discussion, the words "anticipate," "should,"
"expect," "estimate," "project" and similar expressions are
intended to identify forward-looking statements. The forward-
looking statements contained in this report are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements involve predictions of
future company performance, and are thus dependent on a number of
factors affecting the company's performance. Where possible,
specific factors that may impact performance materially have been
identified in connection with specific forward-looking
statements. Additional risks and uncertainties include, without
limitation, the impact of competition, seasonality and general
economic conditions in the global vision care and ophthalmic
surgical and pharmaceutical markets where the company's
businesses compete, changes in global and localized economic and
political conditions, changing trends in practitioner and
consumer preferences and tastes, changes in technology, medical
developments relating to the use of the company's products, legal
proceedings initiated by or against the company, changes in
government regulation of the company's products and operations,
changes in private and regulatory schemes providing for the
reimbursement of patient medical expenses, difficulties or delays
in the development, production, testing, regulatory approval or
marketing of products, the successful completion and integration
of acquisitions announced by the company, the effect of changes
within the company's organization, and such other factors as are
described in greater detail in the company's filings with the
Securities and Exchange Commission, including its 1999 Annual
Report on Form 10-K.
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
In connection with the acquisition of Groupe Chauvin, the company
immediately expensed $23.8, representing amounts for in-process
research and development (IPR&D) estimated at fair value using
the methodology described below. The expensed IPR&D represented
the value of projects that had not yet reached technological
feasibility and for which the assets to be used in such projects
had no alternative future uses. The company expects that products
developed from the acquired IPR&D will begin to generate sales
and positive cash flows in the time frames discussed in the
following paragraphs. However, development of these technologies
remains a risk due to the remaining effort to achieve technical
viability, rapidly changing customer markets, uncertain standards
for new products and competitive threats.
The following is a more detailed discussion of the purchased
in-process research and development associated with this
acquisition. The company believes that the assumptions and
forecasts used in valuing purchased in-process research and
development were reasonable at the time of the business
combination. No assurance can be given, however, that future
events will transpire as estimated. As such, actual results may
vary from the projected results.
A discounted cash flow analysis was used to estimate the fair
value of the IPR&D projects. Successful completion of a project
is deemed to occur when the new product or process has been
defined and technological feasibility has been objectively
demonstrated. The fair values of purchased in-process research
and development projects are based on estimates prepared by
management. These estimates utilize explicit assumptions about
the range of possible estimated cash flows and their respective
probabilities to determine the expected cash flow for each
project. Under this approach, projected cash flows are developed
for each project. The projected cash flows are adjusted for risks
prior to being discounted to present value. Risks addressed
include completion risk, competitive risk and timing risk.
IPR&D of $23.8 was allocated to the following projects:
Immobacter ($16.9), Carteol ($3.5), Other Pharmaceutical products
($1.7) and Surgical products ($1.7). Set forth below are
descriptions of the acquired IPR&D projects, including their
status at the end of September 2000.
Immobacter - Revenues attributed to Immobacter, a preservative-
free multidose delivery system, are expected to be generated by
licensing the technology to other manufacturers. Licensing
revenues are expected to be $4.1, $9.7 and $12.4 starting in 2004
through 2006. At the acquisition date, costs to complete the R&D
efforts were expected to be $1.7. The probability factor and
stage of completion used to derive the IPR&D amount were 70.0%
and 49.3%, respectively.
Carteol - Revenues attributed to Carteol Multidose, a
glaucoma drug product extension that allows for once a day usage
versus the current twice a day, were expected to be $2.8 in 2002,
$6.3 in 2003, $6.9 in 2004 and $7.6 in 2005, with the rate of
revenue growth then decreasing 5% annually in 2006 to 2010. At
the acquisition date, costs to complete the R&D efforts were
expected to be $0.9. The probability factor and stage of
completion used to derive the IPR&D amount were 95.0% and 76.1%,
respectively.
Other Pharmaceutical Products - Revenues are expected to
average approximately $2.7 per annum in 2003-2007. At the
acquisition date, costs to complete the R&D efforts were expected
to be $1.6. The average probability factor and stage of
completion used to derive the IPR&D amount were 75.8% and 74.1%,
respectively.
Other Surgical Products - Revenues attributed to various
miscellaneous surgical products, were expected to average $2.5
per annum in 2001-2006. At the acquisition date, costs to
complete the R&D efforts were expected to be $1.2. The average
probability factor and stage of completion used to derive the
IPR&D amount were 70.3% and 47.7%, respectively.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In its 1999 Annual Report on Form 10-K the company
discussed a class action pending before a New York Supreme
Court alleging that the company misled consumers in the
marketing and sale of Sensitive Eyes Rewetting Drops,
Boston Rewetting Drops, ReNu Rewetting Drops and Bausch &
Lomb Eyewash (the "Products"). As reported in the company's
Quarterly Report on Form 10-Q filed on August 7, 2000, on
May 8, 2000, the court gave its preliminary approval to a
proposed settlement. The settlement was approved at a
fairness hearing held on September 13, 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Due to the divestitures in 1999, the company is in a
position in which its floating rate assets exceed its
floating rate liabilities. This represents a change in the
interest rate exposure as disclosed in Item 7(a) of the
company's 10-K. A sensitivity analysis to measure the
potential impact that a change in interest rates would
have, net of hedging, on the company's net income indicates
that a one percentage point decrease in global interest
rates would negatively effect financial income by
approximately $4.9 million on an annualized basis.
Item 6. Exhibits and Reports on Form 8-K
(a) Item 601 Exhibits
Those exhibits required to be filed by Item 601 of
Regulation S-K are listed in the Exhibit Index immediately
preceding the exhibits filed herewith and such listing is
incorporated herein by reference.
(b) Reports on Form 8-K.
A report on Form 8-K announcing that Bausch & Lomb was
revising its estimate for revenues and earnings for the
second half of 2000 and for fiscal year 2001, attaching
copies of a related press release and related remarks of
Mr. William M. Carpenter, Chairman and Chief Executive
Officer of Bausch & Lomb, was filed by the company on
August 24, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BAUSCH & LOMB INCORPORATED
Date: November 7, 2000 By: /s/ Robert B. Stiles
Robert B. Stiles
Senior Vice President
and General Counsel
Date: November 7, 2000 By: /s/ Stephen C. McCluski
Stephen C. McCluski
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
S-K Item 601 No. Document
(3)-a Certificate of Incorporation of Bausch & Lomb
Incorporated (filed as Exhibit (3)-a to the
company's Annual Report on Form 10-K for the
fiscal year ended December 29, 1985, File No. 1-
4105, and incorporated herein by reference).
(3)-b Certificate of Amendment of Bausch & Lomb
Incorporated (filed as Exhibit (3)-b to the
company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988, File No. 1-
4105, and incorporated herein by reference).
(3)-c Certificate of Amendment of Bausch & Lomb
Incorporated (filed as Exhibit (3)-c to the
company's Annual Report on Form 10-K for the
fiscal year ended December 26, 1992, File No. 1-
4105, and incorporated herein by reference).
(3)-d By-Laws of Bausch & Lomb Incorporated, as
amended, effective October 26, 1998 (filed as
Exhibit (3)-a to the company's Form 10-Q for the
quarter ended September 26, 1998, File No. 1-
4105, and incorporated herein by reference).
(4)-a See Exhibit 3(a).
(4)-b See Exhibit 3(b).
(4)-c See Exhibit 3(c).
(4)-d Form of Indenture, dated as of September 1,
1991, between the company and Citibank, N.A., as
Trustee, with respect to the company's Medium-
Term Notes (filed as Exhibit 4-(a) to the
company's Registration Statement on Form S-3,
File No. 33-42858, and incorporated herein by
reference).
(4)-e Supplemental Indenture No. 1, dated May 13,
1998, between the company and Citibank, N.A.
(filed as Exhibit 3.1 to the company's Current
Report on Form 8-K, dated July 24, 1998, File
No. 1-4105, and incorporated herein by
reference).
(4)-f Supplemental Indenture No. 2, dated as of July
29, 1998, between the company and Citibank N.A.
(filed as Exhibit 3.2 to the company's Current
Report on Form 8-K, dated July 24, 1998, File
No. 1-4105, and incorporated herein by
reference).
(10)-ee Separation Agreement dated October 9, 2000
between Bausch & Lomb Incorporated and Carl E.
Sassano, former President and Chief Operating
Officer (filed herewith).
(11) Statement Regarding Computation of Per Share
Earnings (filed herewith).
(27) Financial Data Schedule (filed herewith).
