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
June 30, 1995
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 June 30, 1995
------- ------------------------------
Common Stock - Class A 12,478,485
Common Stock - Class B 7,704,400
<PAGE>
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
JUNE 30, 1995
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - June 30, 1995
and March 31, 1995 (Audited) 2
Consolidated Statements of Income for the three
months ended June 30, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows
for the three months ended June 30, 1995 and 4
and 1994.
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 6/30/95 3/31/94
------- ---------
<S> <C> <C>
Current Assets:
Cash $ 9,528,000 $ 13,706,000
Marketable Securities at market 21,408,000 24,061,000
Accounts receivable, less allowances
of $3,386,000 (6/30/95) and
$3,222,000 (3/31/95) 115,667,000 114,656,000
Inventories:
Raw & packaging materials 36,566,000 41,033,000
Finished goods 78,079,000 72,386,000
Other current assets 31,188,000 30,045,000
----------- -----------
Total Current Assets 292,436,000 295,887,000
Property, Plant and Equipment, less
depreciation of $104,070,000
(6/30/95) and $98,549,000 (3/31/95) 231,722,000 229,446,000
Long Term Securities at market 262,409,000 260,076,000
Goodwill and Other Intangible Assets-
net of amortization 55,810,000 64,040,000
Other Assets 25,268,000 21,871,000
------------ ------------
Total Assets $867,645,000 $871,320,000
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and Bonds payable $ 52,440,000 $155,591,000
Accounts payable & accrued expenses 106,992,000 101,952,000
Income taxes payable 38,380,000 8,884,000
Dividends payable 3,368,000 3,365,000
----------- -----------
Total Current Liabilities 201,180,000 269,792,000
Notes and Bonds payable 15,252,000 15,273,000
Deferred compensation payable 10,441,000 10,638,000
Deferred Income Taxes 13,990,000 13,086,000
----------- -----------
Total Liabilities 240,863,000 308,789,000
Shareholders' Equity:
Class A Common Stock, non-voting, par
value $.10-15,000,000 shares authorized,
12,478,485 (6/30/95) and 12,466,172
(3/31/95) shares issued and outstanding 1,247,000 1,247,000
Class B Common Stock par value $.10-
30,000,000 shares authorized, 7,704,400
(1995 & 1994) shares issued and
outstanding 770,000 770,000
Capital in excess of par value 194,857,000 194,426,000
Retained earnings 421,293,000 367,325,000
Cumulative foreign currency translation
adjustment 2,902,000 (3,054,000)
Unrealized holding gain on marketable
securities 5,713,000 1,817,000
----------- -----------
Total Shareholders' Equity 626,782,000 562,531,000
------------ ------------
Total Liabilities & Shareholders' Equity $867,645,000 $871,320,000
============= ===========
</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
JUNE 30,
1995 1994
---- ----
Revenues:
<S> <C> <C>
Net sales $178,810,000 $146,728,000
Interest, dividends and
other income 8,392,000 6,807,000
----------- -----------
187,202,000 153,535,000
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Cost and Expenses:
Cost of Goods Sold 55,680,000 47,197,000
Selling, general and
administrative 113,596,000 93,039,000
----------- -----------
169,276,000 140,236,000
----------- -----------
Income from continuing operations
before taxes 17,926,000 13,299,000
Income taxes 3,678,000 2,781,000
----------- ------------
Income from continuing operations $14,248,000 $ 10,518,000
Discontinued operations (Note 2)
Income from discontinued operations,
net of taxes of $32,000 (1995) and
$861,000 (1994) 52,000 1,405,000
Gain on sale of Division, net of
taxes of $26,000,000 43,036,000
----------- -----------
Income from discontinued operations 43,088,000 1,405,000
----------- -----------
Net Income $57,336,000 $11,923,000
=========== ===========
Average Number of shares outstanding 20,174,052 20,132,759 (1)
=========== ============
Earnings per share:
From continuing operations $ .71 $ .52 (1)
From discontinued operations $ 2.13 $ .07 (1)
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Net earnings $ 2.84 $ .59
=========== ===========
Cash dividends per share of class A
common stock $ .27 $ .26
</TABLE>
(1) Restated to reflect 3% stock dividend.
-3-
See notes to consolidated financial statements.
<PAGE>
<TABLE>
BLOCK DRUG COMPANY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1995 1994
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES ($1,675,000) $ 15,886,000
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of business segment 106,000,000
Additions to Property, Plant & Equipment (7,080,000) ( 7,374,000)
Proceeds from Sales of long-term Securities 15,088,000 2,395,000
Purchases of long-term Securities (10,334,000)
Decrease (Increase) in Marketable Securities 132,000 (3,053,000)
----------- -----------
Net Cash Provided by (Used in) Investing
Activities 103,806,000 (8,032,000)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid to Shareholders ( 3,368,000) ( 3,080,000)
Payments of Notes Payable (956,000) ( 4,880,000)
Decrease in short-term Debt (102,216,000) ( 8,861,000)
------------ ------------
Net Cash Used in Financing
Activities (106,540,000) (16,821.000)
------------ -----------
Effect of Exchange Rates on Cash 231,000 71,000
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Decrease in Cash (4,178,000) (8,896,000)
Cash, Beginning of Period 13,706,000 8,896,000
------------ -----------
Cash, End of Period $ 9,528,000
============= ============
SUPPLEMENTAL CASH FLOW DATA
Cash Paid During the Year:
Interest $ 3,707,158 $ 2,272,900
Income taxes $ 2,166,800 $ 3,619,600
</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 quarter the Company sold selected assets of its
U.S. Reed & Carnrick Pharmaceutical Division with annual
sales of approximately $ 50,000,000. The Company's
international pharmaceutical businesses are not included
in the sale and will operate as they did prior to the
sale. This transaction is not expected to have
an unfavorable impact on the Company's operating results.
The gain on sale of the segment has been accounted for
as discontinued operations and prior year financial
statement has been restated to reflect the discontinuation
of the segment. Revenues of the segment for the quarter
ended June 30, 1995 and 1994 were $ 10,039,000 and
$13,266,000, respectively.
3. The Company has signed a contract to acquire the U.S. Rug
and Room Deodorizer business of Reckitt & Coleman, Inc.
The Company will purchase Carpet Fresh and Rug Fresh
trademarks and exclusive licenses for use of the Airwick
and Neutra Air trademarks in the Rug and Room Deodorizer
product category in the United States. This transaction
is subject to receipt of regulatory consents and is
expected to close in the third calender quarter of 1995.
4. During the three months ended June 30, 1995, the Company
reduced its net borrowings by $ 103,172,000 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 from continuing operations of $178.8 million in
the first quarter ended June 30, 1995 exceeded first quarter
sales of the prior year by 22%. Foreign sales increased 25%
for the quarter. Stated in local currency sales for the
quarter increased 16%. Domestic sales were higher due to
selective price increases and unit gains primarily in
Consumer Products Segment.
Interest, dividends and other income increased in the
quarter from the comparable year-ago period due to investment
in Block/Kobyashi Joint-Venture and a co-promotion
arrangement in Dental Products Segment.
The cost of goods sold percent to sales was 31.1% and
32.2% in the first quarter of the current and prior year
respectively. These percentages were affected by improved
manufacturing operations and mix of products sold, in
addition to selective price increases.
Selling, general and administrative expenses, most of
which are related to advertising and promotional activities
were 63.5% and 63.4% of sales in the first quarter of the
current year and the prior year, respectively. These
expenses reflect a major spending program to increase
advertising and promotion to meet significant competition and
build brand equities.
Due to the above factors, income before taxes were 10.0%
of sales in the first quarter of the current year and 9.1%
in the same period last year.
The effective income tax rates of 20.5% and 20.9% in the
first quarter of the current and prior year, respectively
reflect tax-exempt interest from government securities and
income from the lower tax areas of Puerto Rico and Ireland.
On June 30, 1995 the Company sold selected assets of its
U.S. Reed and Carnrick pharmaceutical division. The
International Pharmaceutical Business were not included in
this transaction. For additional information see note 2 to
- 6 -
<PAGE>
Consolidated Financial Statement. This divestiture renews
the Company's focus on its key areas of corporate strength to
help achieve its long-term growth objectives. The Company
will seek out new opportunities through acquisitions.
Research and Development outlays have been increased in the
continuing effort to develop new and improved products and
line extensions. During the quarter, the company signed a
contract to acquire the U.S. Rug and Room Deodorizer
Business of Reckitt and Colman, Inc. Pursuant to the
agreement, the Company will purchase the Carpet Fresh and Rug
Fresh trademarks and be granted exclusive licenses for use of
the Airwick and Neutra Air trademarks in the Rug and Room
Deodorizer product category in the United States. This
transaction is subject to receipt of regulatory consents and
is expected to close in the third calendar quarter of 1995.
Financial Condition
Cash decreased in the current quarter ended June 30,
1995 from year-end March 31, 1995 by $4.2 million. The
decrease resulted primarily from the reduction in debt and
increased capital expenditures partially offset by the
proceeds from the sale of business segment and increases in
taxes payable and accrued expenses.
In the prior year first quarter ended June 30, 1994 cash
decreased by $8.9 million. The decrease resulted primarily
from decreases in debt and an increase in capital
expenditures, accounts receivable, inventories and other
assets partially offset by an increase in accrued expenses
and decrease in other current assets. The increase in
accounts receivable was partially due to higher sales.
- 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 June 30,
1995.
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)
August 11, 1995 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
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