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
September 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_September 30,_1995
Common Stock - Class A 12,487,592
Common Stock - Class B 7,704,400
<PAGE> 1
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
SEPTEMBER 30, 1995
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - September 30, 1995
and March 31, 1995 2
Consolidated Statements of Income for the three
and six months ended September 30, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows
for the six months ended September 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> 2
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION> (Unaudited)
ASSETS __09/30/95__ __03/31/95__
<S> <C> <C>
Current Assets:
Cash $ 8,246,000 $ 13,706,000
Marketable securities,at market 17,961,000 24,061,000
Accounts receivable, less allowances
of $3,045,000 (9/30/95) and
$3,222,000 (3/31/95) 115,955,000 114,656,000
Inventories:
Raw & packaging materials 40,107,000 41,033,000
Finished goods 76,808,000 72,386,000
Other current assets ___31,665,000 __30,045,000
Total Current Assets 290,742,000 295,887,000
Property,plant and equipment, less
accumulated depreciation of $108,170,000
(9/30/95) and $98,549,000 (3/31/95) 234,562,000 229,446,000
Long term securities at market 276,569,000 260,076,000
Goodwill and other intangible assets-
net of amortization 62,667,000 64,040,000
Other assets ___27,221,000 __21,871,000
Total Assets $891,761,000 $871,320,000
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and bonds payable $ 95,321,000 $155,591,000
Accounts payable & accrued expenses 101,499,000 101,952,000
Income taxes payable 17,002,000 8,884,000
Dividends payable ____4,141,000 __3,365,000
Total Current Liabilities 217,963,000 269,792,000
Notes and bonds payable 11,828,000 15,273,000
Deferred compensation and other payables 9,910,000 10,638,000
Deferred income taxes ___15,075,000 _13,086,000
Total Liabilities __254,776,000 308,789,000
Shareholders' Equity:
Class A Common stock, non-voting, par
value $.10-15,000,000 shares authorized,
12,487,592 (9/30/95) and 12,466,172
(3/31/95) shares issued and outstanding 1,249,000 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 195,202,000 194,426,000
Retained earnings 429,972,000 367,325,000
Cumulative foreign currency translation
adjustment 2,650,000 (3,054,000)
Unrealized holding gain on marketable
securities ____7,142,000 _ 1,817,000
Total Shareholders' Equity __636,985,000 _562,531,000
Total Liabilities & Shareholders' Equity $891,761,000 $871,320,000
============= ============
</TABLE>
-2-
See notes to consolidated financial statements.
<PAGE> 3
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION> THREE_MONTHS_ENDED SIX_MONTHS_ENDED
SEPTEMBER_31, SEPTEMBER_31,
_1995_____________1994____ _______1995________1994___
Revenues:
<S> <C> <C> <C> <C>
Net sales $172,234,000 $154,976,000 $351,044,000 $301,704,000
Interest, dividends
and other income ___8,222,000 ___5,515,000 __16,614,000 __12,322,000
_180,456,000 _160,491,000 _367,658,000 _314,026,000
Cost and Expenses:
Cost of goods sold 58,661,000 51,322,000 114,341,000 98,519,000
Selling, general and
administrative _105,617,000 __93,776,000 _219,213,000 _186,815,000
_ 164,278,000 _145,098,000 _333,554,000 _285,334,000
Income from continuing
operations before
income taxes 16,178,000 15,393,000 34,104,000 28,692,000
Income Taxes __3,279,000 ___3,757,000 _6,957,000 __6,538,000
Income from continuing
operations _12,899,000 __11,636,000 _27,147,000 __22,154,000
Dicontinued operations(Note 2)
Income from disconti-
nued operations net
of taxes of$32,000(1995)
and $1,012,000(1994) 746,000 52,000 2,151,000
Gain(loss) on sale of
Division,net of taxes of
$26,328,000(1995) (79,000) 42,957,000
----------- ---------- ---------- ----------
Income (loss)from
discontinued operations (79,000) 746,000 43,009,000 2,151,000
------------ ----------- ---------- ----------
Net Income $12,820,000 $12,382,000 $70,156,000 $24,305,000
============= =========== =========== ==========
Average number of
shares outstanding 20,186,004 20,143,557 20,180,028 20,138,157
------------- ---------- ---------- ----------
Earnings per share:
From continuing
opearations $ 0.64 $ 0.58 $ 1.35 $ 1.10
From discontinued
operations 0.04 2.13 0.11
----------- ---------- ----------- -----------
Net Earnings $ 0.64 $ 0.62 $ 3.48 $ 1.21
=========== ========== ============ ===========
Cash dividends per share
Class A $ 0.27 $ 0.26 $ 0.54 $ 0.52
Class B $ 0.10 $ 0.10
</TABLE>
-3-
See notes to consolidated financial statements
<PAGE> 4
<TABLE>
BLOCK DRUG COMPANY INC.AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
<CAPTION> SEPTEMBER 30
_____1995_________1994____
<S> <C> <C>
CASH_FLOW_FROM_OPERATING_ACTIVITIES $ 596,000 $ 21,973,000
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of business segment 90,000,000
Additions to property, plant & equipment (13,871,000) (13,273,000)
Proceeds from sales of long-term securities 18,002,000 24,541,000
Purchases of long-term securities (25,858,000) (4,846,000)
Decrease in marketable securities 3,800,000 4,535,000
Payment for products acquired (7,472,000)
-------------- -----------
Net Cash Provided by Investing Activities 64,601,000 10,957,000
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to shareholders ( 7,509,000) ( 6,162,000)
Payments of notes payable ( 4,380,000) ( 3,198,000)
Decrease in short-term debt (59,335,000) (16,518,000)
------------ ------------
Net Cash Used in Financing
Activities (71,224,000) (25,878,000)
Effect of Exchange Rates on Cash ____567,000 ____466,000
(Decrease)Increase in Cash (5,460,000) 7,518,000
Cash, Beginning of Period __13,706,000 __8,896,000
Cash, End of Period $ 8,246,000 $16,414,000
============ ===========
SUPPLEMENTAL CASH FLOW DATA
Cash paid during the year:
Interest $ 6,502,295 $ 4,144,586
Income taxes $ 23,291,388 $ 8,905,029
</TABLE>
-4-
See notes to consolidated financial statements.
<PAGE> 5
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. As of June 30,1995 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 the prior year financial
information has been restated to reflect the discontinuation
of the segment.
3. During the quarter the Company acquired the U.S. Rug
and Room Deodorizer business of Reckitt & Coleman, Inc.
The Company purchased 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.
4. During the six months ended September 30, 1995, the Company
reduced its net borrowings by $ 63,715,000 mainly from
lines of credit from various banks bearing interest at
variable rates.
-5-
<PAGE> 6
BLOCK DRUG COMPANY, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATING RESULTS AND FINANCIAL CONDITION
OPERATING RESULTS
Sales of $172 million in the second quarter and $351 million in the first
half year ended September 30,1995 were 11% and 16% respectively above sales for
the comparable prior year. Foreign sales increased 12% for the quarter and 18%
for the six month period. Stated in local currency sales for the quarter
increased 6% and 11% for the six month period. Domestic sales were higher both
for the quarter and 6 months due to selective price increases and unit gains
primarily in the Consumer Products Segment.
Interest, dividends and other income increased for the six month period
from the comparable year-ago period due to investment in Block/Kobyashi Joint-
Venture and a co-promotion arrangement in Dental Products Segment.
The costs of goods sold percentage to sales for the first six months was
comparable with the prior-year period at 32.6% and 32.7% respectively. These
percentages were affected by selective price increases, mix of products sold as
well as improved manufacturing operations.
Selling, general and administrative expenses, most of which are related to
advertising and promotional activities,were 62.4% of sales in the first six
months of the current year, compared with 61.9% in the prior period. These
expenses reflect a major spending program to meet significant competition and
build brand equities.
Due to the above factors, pretax income was 9.7%of sales in the first half
of the current period compared to 9.5% in the comparable prior year period.
The effective income tax rate of 20.4% and 22.8% in the first half 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
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 acquired the U.S. Rug and Room Deodorizer Business of Reckitt and
Colman, Inc. Pursuant to the agreement, the Company purchased the Carpet Fresh
and Rug Fresh trademarks and is granted exclusive licenses for use of the
Airwick and Neutra Air trademarks in the Rug and Room Deodorizer product
category in the United States.
-6-
<PAGE> 7
FINANCIAL_CONDITION
Cash decreased for the six month period ended September 30, 1995 to $8.2
million from $13.7 million at year-end March 31, 1995. The decrease resulted
primarily from the reduction in debt, net purchases of securities and increases
in capital expenditures partially offset by the proceeds from the sale of
business segment and increases in taxes payable.
In the prior year six months cash increased to $16.4 million from $8.9
million at year-end March 31, 1994. The net increase resulted primarily from
net sales of securities, a decrease in other current assets and an increase in
accrued expenses. This was partially offset by decreases in debt, capital
expenditures and increases in inventories, accounts receivable and other
assets.
- 7 -
<PAGE> 8
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 September 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)
11-5-95 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
<PAGE> 9
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<ALLOWANCES> 3045
<INVENTORY> 116915
<CURRENT-ASSETS> 290742
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0
0
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<CGS> 114341
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<OTHER-EXPENSES> 215300
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</TABLE>
