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, 1996
_________________________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,_1996
Common Stock - Class A 13,130,772
Common Stock - Class B 7,704,400
<PAGE> 1
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
SEPTEMBER 30, 1996
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - September 30, 1996
and March 31, 1996 2
Consolidated Statements of Income for the three
and six months ended September 30, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows
for the six months ended September 30, 1996 and 4
and 1995.
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 __09/30/96__ __03/31/96__
<S> <C> <C>
Current Assets:
Cash $ 19,540,000 $ 16,388,000
Marketable securities,at market 9,020,000 13,433,000
Accounts receivable, less allowances
of $4,447,000 (9/30/96) and
$4,188,000 (3/31/96) 183,000,000 124,816,000
Inventories:
Raw & packaging materials 50,593,000 42,868,000
Finished goods 90,804,000 81,500,000
Other current assets ___67,442,000 __33,200,000
Total Current Assets 420,399,000 312,205,000
Property,plant and equipment, less
accumulated depreciation of $116,460,000
(9/30/96) and $114,724,000 (3/31/96) 246,824,000 242,552,000
Long term securities at market 227,134,000 222,667,000
Goodwill and other intangible assets-
net of amortization 131,243,000 127,047,000
Other assets ___ 7,828,000 __24,646,000
Total Assets $1,033,428,000 $929,117,000
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and bonds payable $ 97,392,000 $75,559,000
Accounts payable & accrued expenses 170,012,000 118,273,000
Income taxes payable 17,766,000 7,751,000
Dividends payable ____4,577,000 __4,572,000
Total Current Liabilities 289,747,000 206,155,000
Notes and bonds payable 59,140,000 56,143,000
Deferred compensation and other payables 14,787,000 15,364,000
Deferred income taxes ___11,814,000 _10,413,000
Total Liabilities __375,488,000 288,075,000
Shareholders' Equity:
Class A common stock, non-voting, par
value $.10-15,000,000 shares authorized,
13,130,772 (9/30/96) and 13,111,962
(3/31/96) shares issued and outstanding 1,313,000 1,311,000
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 217,940,000 219,207,000
Retained earnings 437,726,000 416,200,000
Cumulative foreign currency translation
adjustment (3,634,000) (2,476,000)
Unrealized holding gain on marketable
securities ____3,825,000 _ 6,030,000
Total Shareholders' Equity __657,940,000 _641,042,000
Total Liabilities & Shareholders' Equity $1,033,428,000 $929,117,000
============= ============
</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_30, SEPTEMBER_30,
_1996_____________1995____ _____1996________1995___
Revenues:
<S> <C> <C> <C> <C>
Net sales $203,523,000 $172,234,000 $409,030,000 $351,044,000
Interest, dividends
and other income ___8,678,000 ___8,222,000 __14,245,000 __16,614,000
_212,201,000 _180,456,000 _423,275,000 _367,658,000
Cost and Expenses:
Cost of goods sold 63,527,000 58,661,000 128,035,000 114,341,000
Selling, general and
administrative _127,273,000 _105,617,000 _251,849,000 _219,213,000
_ 190,800,000 _164,278,000 _379,884,000 _333,554,000
Income from continuing
operations before
income taxes 21,401,000 16,178,000 43,391,000 34,104,000
Income Taxes __6,139,000 ___3,279,000 12,714,000 __6,957,000
Income from continuing
operations _15,262,000 __12,899,000 _30,677,000 __27,147,000
Discontinued operations(Note 2)
Income from disconti-
nued operations net
of taxes of $32,000(1995) 52,000
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) 43,009,000
------------ ----------- ---------- ----------
Net income $15,262,000 $12,820,000 $30,677,000 $70,156,000
============= =========== =========== ==========
Average number of
shares outstanding 20,829,180 20,791,584 20,824,438 20,785,429
------------- ---------- ---------- ----------
Earnings per share:
From continuing
operations $ 0.73 $ 0.62 $ 1.47 $ 1.31
From discontinued
operations 2.07
----------- ---------- ----------- -----------
Net earnings $ 0.73 $ 0.62 $ 1.47 $ 3.38
=========== ========== ============ ===========
Cash dividends per share
Class A $ 0.29 $ 0.27 $ 0.58 $ 0.54
Class B $ 0.10 $ 0.10 $ 0.20 $ 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)
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30
_____1996_________1995____
<S> <C> <C>
CASH_FLOW_FROM_OPERATING_ACTIVITIES $ 11,223,000 $ 596,000
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of business segment 90,000,000
Additions to property, plant & equipment (19,655,000) (13,871,000)
Proceeds from sale of property 5,200,000
Proceeds from sales of long-term securities 4,944,000 18,002,000
Purchases of long-term securities (10,293,000) (25,858,000)
Decrease in marketable securities 2,686,000 3,800,000
Payment for products acquired (6,657,000) (7,472,000)
-------------- -----------
Net cash (used in) provided by investing
activities (23,775,000) 64,601,000
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to shareholders ( 9,151,000) ( 7,509,000)
Payments of notes payable ( 5,625,000) ( 4,380,000)
Additions to long-term debt 2,997,000
Increase (decrease) in short-term debt 27,458,000 (59,335,000)
------------ ------------
Net cash provided by (used in) financing
activities 15,679,000 (71,224,000)
Effect of exchange rates on cash ____ 25,000 ____567,000
Increase (decrease) in Cash 3,152,000 (5,460,000)
Cash, Beginning of Period __16,388,000 __13,706,000
Cash, end of Period $ 19,540,000 $8,246,000
============ ===========
SUPPLEMENTAL CASH FLOW DATA
Cash paid during the year:
Interest $ 5,032,300 $ 6,502,295
Income taxes $ 7,960,500 $ 23,291,388
</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 second quarter,the Company acquired Paradontax line
of oral hygiene products and Baby's Own brand which will be
marketed through Europe and Canada respectively.
3. Subsequent to the close of the quarter, the Company acquired
the Piriton allergy relief brand from Glaxo Wellcome Group.
Piriton will be marketed in the U.K. through Stafford-Miller
Limited, the Company's UK subsidiary.
4. During the six months ended September 30, 1996, the Company
increased its net borrowings by $ 24,830,000 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
Consolidated world wide net sales of $204 million in the
second quarter and $409 million in the first half year ended
September 30, 1996 were 18% and 17% respectively above sales
in the comparable prior year. Foreign sales increased 37%
for the quarter and 27% for the six month period due mainly
to new products and inclusion of Japanese operations as a
wholly-owned subsidiary.Stated in local currency sales for
the quarter increased 46% and 34% for the six month period.
Domestic sales were higher both for the quarter and six
months due to selective price increases and unit gains
primarily in the Household Products segment.
Interest, dividends and other income decreased in the
six month period from the comparable year-ago period due
primarily to the termination of its joint venture in Japan
which is now a wholly-owned subsidiary. Interest Income also
decreased due to sales of marketable securities to help
finance product line acquisitions.
The cost of goods sold percent to sales for the first
six months of the current year was 31.3% with 32.6% in the
prior period. 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 61.6% of sales in the first six months of the current
year, compared with 62.4% in the prior period. These expenses
reflect a major spending program to meet significant
competition and build brand equities.
Due to the above factors, income before taxes was 10.6%
in the first half of the current period compared to 9.7% in
the comparable prior year period.
The effective income tax rates of 29.3% and 20.4%
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. The increase in the current six month period
is due primarily to the effects of accounting for the
Company's Japanese operation as a wholly-owned subsidiary
following the termination of its joint venture in Japan.
- 6 -
<PAGE> 7
Financial Condition
Cash increased for the six month period ended September
30, 1996 to $19.5 million from $16.4 million at year-end
March 31, 1996. The increase resulted primarily from an
increase in accounts payable and short-term debt partially
offset by an increase in accounts receivable and capital
expenditures.
In the prior year six months cash decreased 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 capital expenditures partially
offset by the proceeds from the sale of business segment and
increases in taxes payable.
-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,
1996.
_____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)
11-5-96 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
<PAGE> 9
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0
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</TABLE>
