SECURITIES AND EXCHANGE COMMISSSION
WASHINGTON, D.C. 20549
_________________________________
Form 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Three Months Ended Commission File number 0-6436
December 31, 1993
_________________________BLOCK DRUG COMPANY, INC._________________________
(Exact name of registrant as specified in its charter)
___New Jersey_________________________________________________22-1375645__
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
257 Cornelison Avenue, Jersey City, N.J._______________________07302______
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 434-3000
Indicate by check mark whether the registrant (1) has filed all Commission
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 periods that the
registrant is required to file such reports) and (2) has been subject to such
filing requirements for the past
90 days. YES_X__ NO_____
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the close of the period covered by this report.
_____Class______________ Outstanding_at_December_31,_1993
Common Stock - Class A 11,268,941
Common Stock - Class B 7,704,400
<PAGE>
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
DECEMBER 31, 1993
____________________________
Part I - Financial Information - unaudited Page No.
Consolidated Balance Sheets - December 31, 1993
and March 31, 1993 2
Consolidated Statements of Income for the three
and nine months ended December 31, 1993 and 1992 3
Consolated Statements of Cash Flows for the
nine months ended December 31, 1993 and 1992 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of Operating
Results and Financial Condition 6 - 7
Part II - Other Information 8
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
ASSETS DECEMBER 31, 1993 March 31, 1993
<S> <C> <C>
Current Assets:
Cash $ 9,701,000 $ 6,627,000
Marketable securities, at cost, which
approximates market value 20,705,000 26,283,000
Accounts receivable, less allowances
of $2,613,000 (12/31/93) and
$2,815,000 (3/31/93) 87,224,000 95,743,000
Inventories:
Raw and packaging materials 29,568,000 34,982,000
Finished goods 59,408,000 61,476,000
Other current assets 29,287,000 29,728,000
------------- ------------
Total Current Assets 235,893,000 254,839,000
Property, Plant and Equipment, less
accumulated depreciation of $79,459,000
(12/31/93) and $70,550,000 (3/31/93) 202,812,000 189,251,000
Long Term Securities at cost; market
value $287,598,000 (12/31/93) and
$257,861,000 (3/31/93) 270,090,000 246,984,000
Goodwill and Other Intangible Assets,
net 21,967,000 22,430,000
Other Assets 18,118,000 12,993,000
------------ ------------
Total Assets $748,880,000 $726,497,000
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $114,654,000 $117,908,000
Accounts payable and accrued expenses 70,389,000 70,700,000
Income taxes payable 13,447,000 12,218,000
Dividends payable 2,929,000 2,810,000
-------------- -----------
Total Current Liabilities 201,419,000 203,636,000
Notes Payable 6,632,000 7,210,000
Long-Term Debt 11,950,000 11,950,000
Deferred Income Taxes 9,799,000 8,433,000
Deferred Compensation Payable 10,232,000 9,970,000
------------- -----------
Total Liabilities 240,032,000 241,199,000
Stockholders' Equity:
Class A Common Stock, non-voting, par
value $.10-15,000,000 shares authorized,
11,268,941 (12/31/93) and 11,241,377
(3/31/93) shares issued and outstanding 1,127,000 1,124,000
Class A Common Stock dividend distributable 57,000
Class B Common Stock par value $.10-
30,000,000 shares authorized, 7,704,400
(1993&1992) shares issued and outstanding 770,000 770,000
Capital in excess of par value 173,322,000 153,996,000
Retained earnings 342,040,000 331,633,000
Cumulative foreign currency translation
adjustment (8,468,000) (2,225,000)
------------ ------------
Total Stockholders' Equity 508,848,000 485,298,000
------------ ------------
Total Liabilities & Stockholders' Equity $748,880,000 $726,497,000
============= =============
</TABLE>
-2-
See notes to consolidated financial statements.
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<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
1993 1992 1993 1992
Revenues:
<S> <C> <C> <C> <C>
Net Sales $155,644,000 $157,311,000 $459,659,000 470,005,000
Interest, Dividends
and Other Income 4,546,000 4,759,000 17,822,000 17,193,000
------------ ----------- ----------- ----------
160,190,000 162,070,000 477,481,000 487,198,000
Cost and Expenses:
Cost of Goods Sold 52,461,000 48,229,000 154,683,000 152,009,000
Selling, General and
Administrative 93,324,000 95,228,000 274,651,000 276,846,000
----------- ------------ ------------ ------------
145,785,000 143,457,000 429,334,000 428,855,000
Income Bef. Income Taxes 14,405,000 18,613,000 48,147,000 58,343,000
Income Taxes 3,545,000 3,723,000 10,833,000 11,669,000
----------- ------------ ------------ ------------
Net Income $10,860,000 $ 14,890,000 $ 37,314,000 $ 46,674,000
=========== ============ ============ ============
Average Number of
Shares Outstanding 19,534,669 19,506,024 19,525,155 19,502,098
Net Income per
Share of Common Stock $ .56 $ .76 $ 1.91 $ 2.39
=========== ========== ========== ===========
Cash Dividends per
Share of Class A
Common Stock $ .26 $ .25 $ .76 $ .70
=========== ========== ========== ===========
</TABLE>
-3-
See notes to consolidated financial statements.
<PAGE>
<TABLE>
BLOCK DRUG COMPANY,INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31
1993 1992
-------------- ---------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES $60,514,000 $39,367,000
------------ ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in Goodwill & Intangibles 0 (6,000,000)
Additions to Property, Plant and Equipment (26,483,000) (30,924,000)
Proceeds from Sales of L-T Securities 17,889,000 36,203,000
Purchases of Long-Term Securities (41,498,000) (56,005,000)
(Incr.) Decr. in Marketable Securities 5,578,000 (1,709,000)
------------ ---------------
Net Cash Used in Investing Activities (44,514,000) (58,435,000)
------------ ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid to Shareholders (8,554,000) (7,206,000)
Payments of Notes Payable (578,000) (106,000)
Increase (Decrease) in Short-Term Debt (3,254,000) 23,283,000
------------ ---------------
Net Cash Prov. (Used) in Fin. Activities (12,386,000) 15,971,000
------------ ---------------
Effect of Exchange Rates on Cash (540,000) 268,000
------------ ---------------
Increase (Decrease) in Cash 3,074,000 (2,829,000)
Cash, Begining of Period 6,627,000 7,264,000
------------ ---------------
Cash, End of Period $9,701,000 $4,435,000
============ ===============
SUPPLEMENTAL CASH FLOW DATA
Cash Paid during the Year:
Interest $5,544,754 $5,380,918
Income taxes $11,579,492 $11,241,463
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
3% Stock Dividend $18,353,000 $25,647,000
</TABLE>
-4-
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying consolidated
financial statements include all adjustments (consisting of
only normal recurring adjustments) necessary for a fair
presentation of the data for the interim periods.
2. During the nine months ended December 31, 1993, the Company reduced
its net borrowings by 3,254,000 mainly from lines of credit from
various banks bearing interest at variable rates.
-5-
<PAGE>
BLOCK DRUG COMPANY, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATING RESULTS AND FINANCIAL CONDITION
Operating Results
Sales of $155.6 million in the third quarter and $459.7
million in the nine months ended December 31, 1993 trailed the
comparable year-ago periods by 1.1% and 2.2%, respectively. Foreign
sales suffered the effects of a stronger U.S. dollar relative to
foreign currencies. Stated in local currency, foreign sales posted
increases for the quarter and year-to-date periods. Domestic sales
continued to be unfavorably impacted by the combination of a soft
economy and numerous new product introductions by major competitors.
Interest, dividends and other income for the first nine
months was higher than the comparable prior-year period, reflecting an
increase in the level of marketable and long-term securities.
The cost of goods sold percentage to sales was 33.7% and 32.3% in
the first nine months of the current and prior year, respectively.
These percentages were affected by selective price increases and
reflect the mix of products sold.
Selling, general and administrative expenses, most of which are
related to advertising and promotional activities, were 59.8% of sales
in the first nine months of the current year, compared to 58.9% in the
prior-year period. Advertising and other selling expenses increased
in the current year, both in absolute dollar terms and as a percentage
of sales. Other expenses were lower than in the prior year in both
dollar terms and as a percentage of sales.
Due to the above factors, the percentage of pretax income to
sales was 10.5% of sales in the first nine months of the current year
and 12.4% in the comparable period last year. The effective income
tax rates of 22.5% and 20.0% in the first nine months of the current
and prior year, respectively, reflect tax-exempt interest from
government securities and income from the low-tax jurisdictions of
Puerto Rico and Ireland. SFAS No. 109, "Accounting for Income
Taxes", which has been adopted effective April 1, 1993, had no
significant effect on net income. Also, effective April 1, 1993, the
Company has adopted SFAS no. 106, "Accounting for Postretirement
Benefits Other than Pensions," which requires companies to accrue
postretirement benefits during the years employees are working prior
to eligibility for retirement. The Company elected the delayed
recognition option with respect to the transition obligation, and
accordingly, such adoption did not have a significant effect on net
income.
-6-
<PAGE>
Financial Condition
Cash increased in the nine months ended December 31, 1993 to $9.7
million from $6.6 million at year-end March 31, 1993. The net
increase resulted primarily from a positive cash flow from operations,
partially offset by net purchases of securities, capital expenditures
and a reduction in notes payable. In the prior-year first nine months
ended December 31, 1992, cash was $4.4 million, compared with $7.3
million at year-end March 31, 1992. The net decrease resulted
primarily from capital expenditures and net purchases of securities,
partially offset by a positive cash flow from operations and the
issuance of debt. The increase in accounts receivable was principally
due to increased sales and to extra dating terms for certain products.
Working capital decreased during the first nine months to $34.5
million from $51.2 million at year-end March 31, 1993, and the ratio
of current assets to current liabilities at December 31, 1993 was 1.2
compared to 1.3 at year-end March 31, 1993. The decline in working
capital and the current ratio was attributable to a combination of
factors, including the investment of funds in capital equipment and
long-term securities, together with reductions in accounts receivable
and inventories, partially offset by a decrease in short-term debt.
-7-
<PAGE>
PART II. OTHER INFORMATION
Item 6.__________Exhibits and Reports on Form 8K___________
(b) Reports on Form 8K - there were no reports on Form
8K for the three months ended
December 31, 1993
_____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.
__BLOCK DRUG COMPANY, INC.__
(Registrant)
February 11, 1993 MELVIN KOPP
- ---------------- -------------------------------
DATE Melvin Kopp
Vice President - Controller
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