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, 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_December 31,_1995
Common Stock - Class A 12,498,016
Common Stock - Class B 7,704,400
<PAGE> 1
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
DECEMBER 31, 1995
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - December 31, 1995
and March 31, 1995 2
Consolidated Statements of Income for the three
and nine months ended December 31, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows
for the nine months ended December 31, 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 __12/31/95__ __03/31/95__
<S> <C> <C>
Current Assets:
Cash $ 12,646,000 $ 13,706,000
Marketable securities,at market 20,635,000 24,061,000
Accounts receivable, less allowances
of $3,129,000 (12/31/95) and
$3,222,000 (3/31/95) 112,372,000 114,656,000
Inventories:
Raw & packaging materials 39,621,000 41,033,000
Finished goods 79,944,000 72,386,000
Other current assets ___39,407,000 __30,045,000
Total Current Assets 304,625,000 295,887,000
Property,plant and equipment, less
accumulated depreciation of $112,382,000
(12/31/95) and $98,549,000 (3/31/95) 237,855,000 229,446,000
Long term securities at market 231,210,000 260,076,000
Goodwill and other intangible assets-
net of amortization 71,064,000 64,040,000
Other assets ___26,239,000 __21,871,000
Total Assets $870,993,000 $871,320,000
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and bonds payable $ 71,800,000 $155,591,000
Accounts payable & accrued expenses 96,622,000 101,952,000
Income taxes payable 10,003,000 8,884,000
Dividends payable ____4,394,000 __3,365,000
Total Current Liabilities 182,819,000 269,792,000
Notes and bonds payable 18,427,000 15,273,000
Deferred compensation and other payables 10,131,000 10,638,000
Deferred income taxes ___16,318,000 _13,086,000
Total Liabilities __227,695,000 308,789,000
Shareholders' Equity:
Class A Common stock, non-voting, par
value $.10-15,000,000 shares authorized,
12,498,016 (12/31/95) and 12,466,172
(3/31/95) shares issued and outstanding 1,250,000 1,247,000
Class A Common stock distributable 61,000
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 218,859,000 194,426,000
Retained earnings 414,094,000 367,325,000
Cumulative foreign currency translation
adjustment 46,000 (3,054,000)
Unrealized holding gain on marketable
securities ___8,218,000 _ 1,817,000
Total Shareholders' Equity _643,298,000 _562,531,000
Total Liabilities & Shareholders' Equity $870,993,000 $871,320,000
============= ============
</TABLE>
-2-
See notes to consolidated financial statements.
<PAGE>3
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION> (UNAUDITED)
THREE_MONTHS_ENDED NINE_MONTHS_ENDED
DECEMBER_31, DECEMBER_31,
_1995_____________1994____ _______1995________1994___
Revenues:
<S> <C> <C> <C> <C>
Net sales $174,351,000 $148,676,000 $525,395,000 $450,380,000
Interest, dividends
and other income ___6,557,000 ___5,509,000 __23,171,000 __17,831,000
_180,908,000 _154,185,000 _548,566,000 _468,211,000
Cost and Expenses:
Cost of goods sold 58,090,000 46,080,000 172,431,000 144,599,000
Selling, general and
administrative _105,406,000 __94,705,000 _324,619,000 _281,520,000
_ 163,496,000 _140,785,000 _497,050,000 _426,119,000
Income from continuing
operations before
income taxes 17,412,000 13,400,000 51,516,000 42,092,000
Income taxes __4,325,000 ___2,475,000 11,282,000 __9,013,000
Income from continuing
operations _13,087,000 __10,925,000 _40,234,000 __33,079,000
Dicontinued operations(Note 2)
Income from disconti-
nued operations net
of taxes of$32,000(1995)
and $1,530,000(1994) 1,295,000 52,000 3,446,000
Gain(loss) on sale of
Division,net of taxes of
$25,568,000(1995) (1,241,000) 41,716,000
----------- ---------- ---------- ----------
Income (loss)from
discontinued operations (1,241,000) 1,295,000 41,768,000 3,446,000
------------ ----------- ---------- ----------
Net Income $11,846,000 $12,220,000 $82,002,000 $36,525,000
============= =========== =========== ==========
Average number of
shares outstanding 20,801,205 20,757,915 20,790,688 20,747,507
------------- ---------- ---------- ---------
Net income per share:
From continuing
opearations $ 0.63 $ 0.53 $ 1.94 $ 1.59
From discontinued
operations (0.06) 0.06 2.00 0.17
----------- ---------- ----------- -----------
Net income per share $ 0.57 $ 0.59 $ 3.94 $ 1.76
=========== ========== ============ ===========
Cash dividends per share
Class A $ 0.29 $ 0.27 $ 0.83 $ 0.79
Class B $ 0.10 $ 0.20
</TABLE>
-3-
See notes to consolidated financial statements
<PAGE> 4
<TABLE>
BLOCK DRUG COMPANY INC.AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
DECEMBER 31
<CAPTION> ___1995_________1994____
<S> <C> <C>
CASH_FLOW_FROM_OPERATING_ACTIVITIES $ 8,580,000 $ 42,791,000
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of business segment 80,000,000
Additions to property, plant & equipment (21,989,000) (22,192,000)
Proceeds from sales of long-term securities 67,986,000 25,750,000
Purchases of long-term securities (25,858,000) (14,752,000)
Increase in marketable securities (1,105,000) (3,267,000)
Payments for products acquired (16,682,000) (40,630,000)
-------------- -----------
Net Cash Provided by(used in)Investing Activities 82,352,000 (55,091,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt 3,154,000
Dividends paid to shareholders (11,903,000) (9,366,000)
Payments of notes payable (935,000) (3,198,000)
(Decrease)increase in short-term debt,net (82,856,000) 27,709,000
------------ ------------
Net Cash (Used in) provided by Financing
Activities (92,540,000) 15,145,000
Effect of exchange rates on cash ____548,000 ____809,000
(Decrease)Increase in Cash (1,060,000) 3,654,000
Cash, Beginning of Period __13,706,000 __8,896,000
Cash, End of Period $ 12,646,000 $12,550,000
============ ===========
SUPPLEMENTAL CASH FLOW DATA
Cash paid during the year:
Interest $ 8,555,337 $ 5,748,037
Income taxes $ 33,805,317 $ 11,924,675
Supplemental schedule of non-cash
financing and investing activities
3% Stock dividend $ 23,330,000 $ 19,813,000
</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. During the quarter,the Company acquired Nature's Remedy
laxative brand for U.S. and Canadian business and Setlers
antacid brand for U.K. from SmithKline Beecham, and the
Parodontax line of Oral hygiene products was purchased from
Madaus AG for European,Asian and Latin American markets.
Had these aquisitions occrued as of the beginning of the
period,they would not have had a significant effect on the
operating results of the Company.
3. During the quarter,the Company signed an agreement to terminate
its joint venture agreement in Japan with Kobayashi.Under the
agreement,the shares in joint venture company owned by Kobayashi
will be retired,in April 1996,giving the Company sole ownership
at that time.
4. During the nine months ended December 31, 1995, the Company
reduced its net borrowings by $ 80,637,000 mainly from
lines of credit from various banks bearing interest at
variable rates.
5. In January 1996 the Company acquired the Lava bar soap brand
from Procter & Gamble.
-5-
<PAGE> 6
BLOCK DRUG COMPANY, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATING RESULTS AND FINANCIAL CONDITION
OPERATING RESULTS
Sales of $174 million in the third quarter and $525 million in the nine
months ended December 31, 1995 were 17% above sales for the comparable prior
periods. Foreign sales increased 13% for the quarter and 17% for the nine month
period. Stated in local currency,sales for the quarter increased 9% and 10% for
the nine month period. Domestic sales were higher both in the quarter and 9
months due to selected price increases and unit gains primarily in Consumer
Products Segment.
Interest, dividends and other income increased for the nine 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 32.8% and 32.1% in the first
nine months of the current and prior year respectively. These percentages were
affected by selective price increases, mix of products sold in addition to
improved manufacturing operations.
Selling, general and administrative expenses, most of which are related to
advertising and promotional activities, were 61.7% of sales in the first nine
months of the current year, compared to 62.5% 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 9.8% of sales in the first nine
months of the current period compared to 9.3% in the comparable prior year
period.
The effective income tax rate of 21.9% and 21.4% 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 areas of Puerto Rico and
Ireland.
The Company has realigned its business strategy during the past 12 months,
renewing its focus on marketing and manufacturing of its core business segments;
dental, consumer and household products. This fundamental change in strategy
led to the divestiture of the Reed & Carnrick pharmaceutical division and the
subsequent purchase of a number of key brands in support of core segments.
In January, 1996 the Company acquired the Lava bar soap brand from Procter
and Gamble. During the third quarter, the Naure's remedy laxative brand in the
United States and the Setlers Antacid brand in the UK were acquired from
SmithKline Beecham; and the Parodontax line of oral hygiene products was
purchased from Madaus AG for European, Asian and Latin American markets.
-6-
<PAGE> 7
In another strategic move in the third quarter, the Company signed an
agreement to terminate its joint venture agreement in Japan with Kobayashi and
will acquire sole ownership of the Joint Venture Company in April, 1996. The
Company is desirous of becoming more involved in the day to day management of
the business in Japan which represents a significant portion of the Company's
international operations in over-the-counter oral care products.
Also during the past year, the Company entered into an agreement with U.S.
Biomaterials Corporation for the marketing and selling of PerioGlas brand dental
implant material to dental professionals. the PerioGlas material is indicated
for the treatment of intrabony defects caused by periodontal disease. This
product is detailed to dentists through the Company's Dental Consultants.
Detailing, advertising and telemarketing of PerioGlas commenced in the third
fiscal quarter.
Other product line acquisitions completed during the past twelve months as
part of the strategic realignment include the Goody's brand of headache powders
from Goody's Pharmaceuticals, Inc. and the Carpet Fresh and Neutra-Air brands of
carpet fresheners from Reckitt & Colman.
FINANCIAL_CONDITION
Cash decreased for the nine months ended December 31, 1995 to $12.6 million
from $13.7 million at year-end March 31, 1995. The decrease resulted primarily
from the reduction in debt, payment for products acquired and increases
in capital expenditures,partially offset by the proceeds from the sale of
business segment and net sales of securities.
In the prior year nine months cash increased 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.
-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 December 31,
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)
1-30-96 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
<PAGE> 9
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<S> <C>
<PERIOD-TYPE> 9-MOS
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<PERIOD-END> DEC-31-1995
<CASH> 12646
<SECURITIES> 20635
<RECEIVABLES> 115501
<ALLOWANCES> 3129
<INVENTORY> 119565
<CURRENT-ASSETS> 304625
<PP&E> 350237
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<COMMON> 2020
0
0
<OTHER-SE> 641278
<TOTAL-LIABILITY-AND-EQUITY> 870993
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<CGS> 172431
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<OTHER-EXPENSES> 317527
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<INTEREST-EXPENSE> 7092
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</TABLE>
