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, 1994
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, 1994
- ------------------------ --------------------------------
Common Stock - Class A 11,868,708
Common Stock - Class B 7,704,400
<PAGE>
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
DECEMBER 31, 1994
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - December 31, 1994
and March 31, 1994 2
Consolidated Statements of Income for the three
amd nine months ended December 31, 1994 and 1993 3
Condensed Consolidated Statements of Cash Flows
for the nine months ended December 31, 1994 4
and 1993.
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>
12/31/94 3/31/94
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 12,550,000 $ 8,896,000
Marketable Securities, at cost, which
approximates market value 30,101,000 19,338,000
Accounts receivable, less allowances
of $2,421,000 (12/31/94) and
$2,709,000 (3/31/94) 103,253,000 97,814,000
Inventories:
Raw and packaging materials 35,108,000 32,398,000
Finished goods 72,062,000 56,588,000
Other current assets 29,547,000 34,079,000
------------- ------------
Total Current Assets 282,621,000 249,113,000
Property, Plant and Equipment, less
accumulated depreciation of $94,935,000
(12/31/94) and $81,940,000 (3/31/94) 221,873,000 207,474,000
Long Term Securities at cost; market
value $253,196,000 (12/31/94) and
$281,601,000 (3/31/94) 256,955,000 275,574,000
Goodwill and Other Intangible Assets-
net of amortization 61,730,000 21,721,000
Other Assets 22,064,000 17,186,000
------------ ------------
Total Assets $845,243,000 $771,068,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes and Bonds payable $141,752,000 $114,983,000
Accounts payable and accrued expenses 103,657,000 88,359,000
Income taxes payable 6,176,000 10,056,000
Dividends payable 3,203,000 3,078,000
----------- -----------
Total Current Liabilities 254,788,000 216,476,000
Notes and Bonds payable 15,622,000 17,880,000
Deferred compensation and other payables 10,290,000 10,167,000
Deferred Income Taxes 12,287,000 11,424,000
----------- -----------
Total Liabilities 292,987,000 255,947,000
----------- -----------
Stockholders' Equity:
Class A Common Stock, non-voting, par
value $.10-15,000,000 shares authorized,
11,868,708 (12/31/94) and 11,839,501
(3/31/94) shares and outstanding 1,187,000 1,184,000
Class A Common Stock Dividend distributable 59,000
Class B Common Stock par value $.10-
30,000,000 shares authorized, 7,704,400
(1994&1993) shares issued and outstanding 770,000 770,000
Capital in excess of par value 194,043,000 173,372,000
Retained earnings 356,846,000 349,500,000
Cumulative foreign currency translation
adjustment (649,000) (9,705,000)
----------- -----------
Total Stockholders' Equity 552,256,000 515,121,000
----------- -----------
Total Liabilities & Stockholders' Equity $845,243,000 $771,068,000
============ ============
</TABLE>
-2-
See notes to consolidated financial statements.
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
----------- ----------- ----------- -----------
Revenues:
<S> <C> <C> <C> <C>
Net Sales $163,644,000 $155,644,000 $489,532,000 $459,659,000
Interest, Dividends
and Other Income 5,509,000 4,546,000 17,831,000 17,822,000
----------- ----------- ----------- -----------
169,153,000 160,190,000 507,363,000 477,481,000
Cost and Expenses:
Cost of Goods Sold 50,980,000 52,461,000 155,512,000 154,683,000
Selling, General and
Administrative 102,960,000 93,324,000 304,783,000 274,651,000
----------- ----------- ----------- -----------
153,940,000 145,785,000 460,295,000 429,334,000
----------- ----------- ----------- -----------
Income Before Inc Tax 15,213,000 14,405,000 47,068,000 48,147,000
Income Taxes 2,993,000 3,545,000 10,543,000 10,833,000
----------- ------------ ------------ ------------
Net Income $12,220,000 $ 10,860,000 $ 36,525,000 $ 37,314,000
=========== ============ ============ ============
Average Number of
Shares Outstanding 20,153,316 20,120,709 20,143,210 20,110,919
Net Income per
Share of Common Stock $ .61 $ .54 $ 1.81 $ 1.85
=========== ========= ============ ============
Cash Dividends per
Share of Class A
Common Stock $ .27 $ .25 $ .79 $ .76
=========== ========== ============ ===========
</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
_____1994_________1993____
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES $_42,791,000 $ 60,406,000
CASH FLOW FROM INVESTING ACTIVITIES
Increase in Goodwill & Intangibles (40,630,000)
Additions to Property Plant & Equipment (22,192,000) (26,483,000)
Proceeds from Sales of Long-Term Securities 25,750,000 17,889,000
Purchases of Long-Term Securities (14,752,000) (41,498,000)
(Increase) Decrease in Marketable Securities, net (3,267,000) 5,578,000
------------ -----------
Net Cash Used in Investing Activities (55,091,000) (44,514,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid to Shareholders ( 9,366,000) ( 8,554,000)
Payments of Notes Payable ( 3,198,000) ( 578,000)
(Decrease) Increase in Short-Term Debt 27,709,000 ( 3,254,000)
----------- -----------
Net Cash Provided by (Used in) Financing
Activities 15,145,000 (12,386,000)
---------- -----------
Effect of Exchange Rates on Cash 809,000 ( 432,000)
---------- -----------
Increase in Cash 3,654,000 3,074,000
Cash Beginning of Period 8,896,000 6,627,000
----------- -----------
Cash, End of Period $ 12,550,000 $ 9,701,000
============= ============
SUPPLEMENTAL CASH FLOW DATA
Cash Paid During the Year:
Interest $ 5,748,037 $ 5,544,754
Income taxes $ 11,924,675 $ 11,579,492
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
3% Stock Dividend $ 19,813.000 $ 18,353.000
</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. It is
suggested that these financial statements be read in
conjunction with financial statements and notes thereto
included in the Company's 1994 annual report on Form 10-K
and subsequent quarterly filing.
2. During the nine months ended December 31, 1994, the Company
borrowed $24,511,000 mainly from lines of credit from
various banks bearing interest at variable rates.
3. The Company acquired Goody's Pharmaceutical Company on
December 16, 1994. The effect of this acquisition is not
material to consolidated financial position or results of
operations of the Company.
-5-
<PAGE>
BLOCK DRUG COMPANY, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATING RESULTS AND FINANCIAL CONDITION
Operating Results
Sales of $163.6 million in the third quarter and $489.5
million in the nine months ended December 31, 1994 were 5%
and 6%, respectively above sales for the comparable prior
year. Foreign sales increased 15% for the quarter and 9% for
the nine month period. Stated in local currency, sales for
the quarter increased 10% and 8% for the nine months,
respectively. Domestic sales were higher due to selective
price increases and unit gains.
Interest, dividends and other income for the nine month
period approximated the prior year.
The cost of goods sold percentage to sales was 31.8% and
33.7% in the first nine months of the current and prior year,
respectively. These percentages were affected by selective
price increases, mix of products sold as well as improved
manufacturing operations.
Selling, general and administrative expenses which
consist mainly of advertising and promotional expenditures
were 62.2% of sales in the first nine months of the current
year, compared with 59.8% in the prior period. These
expenses have increased to reflect a major spending program
to meet significant competition and build brand equities.
Due to the above factors, pretax income was 9.6% of
sales in the nine months of the current period compared to
10.5% in the comparable period last year.
The effective income tax rates of 22.4% and 22.5% in the
first nine months of the current and prior year,
respectively, reflect tax-exempt interest from government
securities and income from the lower tax jurisdictions of
Puerto Rico and Ireland.
-6-
<PAGE>
Liquidity_&_Capital_Resources
Cash increased for the nine months ended December 31,
1994 to $12.6 million from $8.9 million at year-end March 31,
1994. The net increase resulted primarily from a positive
cash flow from operating activities, an increase in accrued
expenses and higher short-term borrowings. This effect was
partially offset by increases in goodwill and other
intangible assets, capital expenditures and inventories.
The increase in goodwill and other intangible assets and
short-term borrowings were mainly due to the Goody's
acquisition.
In the prior year nine months cash increased 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.
-7-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8K
(a) Exhibit required by item 601 (c), Regulation S-K
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8K - there were no reports on
Form 8K for the three months ended December 31,
1994.
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 14, 1995 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<CASH> 12,550
<SECURITIES> 30,101
<RECEIVABLES> 105,674
<ALLOWANCES> 2,421
<INVENTORY> 107,170
<CURRENT-ASSETS> 282,621
<PP&E> 316,808
<DEPRECIATION> 94,935
<TOTAL-ASSETS> 845,243
<CURRENT-LIABILITIES> 254,788
<BONDS> 157,374
<COMMON> 1,957
0
0
<OTHER-SE> 550,299
<TOTAL-LIABILITY-AND-EQUITY> 845,243
<SALES> 489,532
<TOTAL-REVENUES> 507,363
<CGS> 155,512
<TOTAL-COSTS> 155,512
<OTHER-EXPENSES> 299,961
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,945
<INCOME-PRETAX> 47,068
<INCOME-TAX> 10,543
<INCOME-CONTINUING> 36,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,525
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.81
</TABLE>
