SECURITIES AND EXCHANGE COMMISSION
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, 1997
_________________________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,_1997
Common Stock - Class A 13,564,537
Common Stock - Class B 7,935,532
<PAGE>1
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
SEPTEMBER 30, 1997
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - September 30, 1997
and March 31, 1997 3
Consolidated Statements of Income for the three
and six months ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
for the six months ended September 30, 1997 and 5
and 1996.
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Operating
Results and Financial Condition 7
Part II - Other Information 8
<PAGE>2
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION> (Unaudited)
ASSETS __09/30/97__ __03/31/97__
<S> <C> <C>
Current Assets:
Cash $ 30,625,000 $ 13,862,000
Marketable securities,at market 36,336,000 24,923,000
Accounts receivable, less allowances
of $4,495,000 (9/30/97) and
$4,504,000 (3/31/97) 149,283,000 164,104,000
Inventories:
Raw & packaging materials 54,604,000 44,334,000
Finished goods 97,975,000 94,345,000
Other current assets ___72,089,000 __51,508,000
Total current assets 440,912,000 393,076,000
Property,plant and equipment, less
accumulated depreciation of $128,924,000
(9/30/97) and $122,095,000 (3/31/97) 236,238,000 235,486,000
Long term securities at market 235,733,000 225,999,000
Goodwill and other intangible assets-
net of amortization 187,811,000 153,425,000
Other assets ___ 4,447,000 __ 6,937,000
Total assets $1,105,141,000 $1,014,923,000
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and bonds payable $186,468,000 $118,522,000
Accounts payable & accrued expenses 174,802,000 167,744,000
Income taxes payable 11,769,000 11,612,000
Dividends payable ____5,057,000 __5,026,000
Total current liabilities 378,096,000 302,904,000
Notes and bonds payable 55,870,000 55,943,000
Deferred compensation and other payables 17,302,000 16,012,000
Deferred income taxes ___11,031,000 _ 8,744,000
Total liabilities __462,299,000 383,603,000
Shareholders' Equity:
Class A common stock, non-voting, par
value $.10-15,000,000 shares authorized,
13,564,537 (9/30/97) and 13,544,460
(3/31/97) shares issued and outstanding 1,356,000 1,354,000
Class B common stock par value $.10-
30,000,000 shares authorized, 7,935,532
(1997 & 1996) shares issued and
outstanding 794,000 794,000
Capital in excess of par value 250,319,000 249,375,000
Retained earnings 397,724,000 377,202,000
Cumulative foreign currency translation
adjustment (9,781,000) 2,044,000
Unrealized holding gain on marketable
securities ____2,430,000 _ 551,000
Total shareholders' equity __642,842,000 _631,320,000
Total liabilities & shareholders' equity $1,105,141,000 $1,014,923,000
============= ==============
</TABLE>
-3-
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,
_1997_____________1996____ _______1997________1996___
Revenues:
<S> <C> <C> <C> <C>
Net sales $221,878,000 $203,523,000 $422,084,000 $409,030,000
Interest, dividends
and other income ___6,790,000 ___8,678,000 __13,117,000 __14,245,000
_228,668,000 _212,201,000 _435,201,000 _423,275,000
Cost and expenses:
Cost of goods sold 77,628,000 63,527,000 137,077,000 128,035,000
Selling, general and
administrative _129,829,000 _127,273,000 _256,127,000 _251,849,000
_207,457,000 _190,800,000 _393,204,000 _379,884,000
Income from operations
before income taxes 21,211,000 21,401,000 41,997,000 43,391,000
Income taxes 5,934,000 6,139,000 11,339,000 12,714,000
------------ ----------- ----------- ----------
Net income 15,277,000 15,262,000 30,658,000 $30,677,000
============= =========== ========== ===========
Average number of
shares outstanding 21,493,053 21,454,055 21,488,434 21,449,171
=========== =========== ========== ==========
Net earnings per share $ 0.71 $ 0.71 $ 1.43 $ 1.43
=========== =========== =========== ==========
Cash dividends per share
Class A $ 0.31 $ 0.29 $ 0.62 $ 0.58
Class B $ 0.1075 $ 0.10 $ 0.2150 $ 0.20
</TABLE>
-4-
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
_____1997_________1996____
<S> <C> <C>
CASH_FLOW_FROM_OPERATING_ACTIVITIES $_30,869,000 $_11,223,000
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant & equipment (16,351,000) (19,655,000)
Proceeds from sale of property 5,200,000
Proceeds from sales of long-term securities 39,062,000 4,944,000
Purchases of long-term securities (49,637,000) (10,293,000)
(Increase)decrease in marketable securities (7,312,000) 2,686,000
Payment for products acquired (39,008,000) (6,657,000)
------------- ------------
Net cash used in investing
activities (73,246,000) (23,775,000)
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid to shareholders (10,136,000) ( 9,151,000)
Payments of notes payable ( 5,625,000)
(Decrease)increase in long-term debt (73,000) 2,997,000
Increase in short-term debt 67,946,000 27,458,000
----------- ------------
Net cash provided by financing
activities 57,737,000 15,679,000
Effect of exchange rates on cash __1,403,000 ____ 25,000
Increase in Cash 16,763,000 3,152,000
Cash, beginning of period __13,862,000 __16,388,000
Cash, end of period $ 30,625,000 $ 19,540,000
============ ============
SUPPLEMENTAL CASH FLOW DATA
Cash paid during the year:
Interest $ 6,369,200 $ 5,032,300
Income taxes $ 8,325,300 $ 7,960,500
</TABLE>
-5-
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 Beano,a food
dietary supplement.
3. During the six months ended September 30, 1997, the Company
increased its net borrowings by $ 67,873,000 mainly from
lines of credit from various banks bearing interest at
variable rates.
-6-
<PAGE>6
BLOCK DRUG COMPANY, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATING RESULTS AND FINANCIAL CONDITION
OPERATING RESULTS
Consolidated worldwide net sales of $221.9 million in the second quarter and
$422.1 million in the first half year ended September 30, 1997 were 9% and 3.2%
respectively above sales in the comparable prior year periods. Foreign sales
increased 8.2% for the quarter and 2.7% for the six month period. Excluding
the impact of exchange rates foreign sales for the first half of the year
increased 9%. Domestic sales were higher for the quarter and six months by
10.1% and 3.9% respectively due to the introduction of new products and line
extensions.
Interest dividends and other income decreased in the six month period from the
comparable year-ago period due primarily to lower co-promotion income. Gains on
sales of securities was offset by lower interest income from securities.
The cost of goods sold percent to sales was 32.5% and 31.3% for the first six
months of the current and prior year, respectively. The strong U.S.dollar has
adversely affected the cost of goods sold, particularly from the Ireland
facility which serves both Europe and Japan.
Selling, general and administrative expenses, most of which are related to
advertising and promotional activities,were 60.7% of sales in the first six
months of the current year, compared with 61.6% in the prior year 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 9.9% of sales in the first
half of the current year compared to 10.6% in the comparable prior year period.
The effective income tax rates of 27% and 29.3% 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.
Financial Condition
Cash increased for the six month period ended September 30, 1997 to $30.6
million from $13.9 million at year-end March 31, 1997. The increase resulted
primarily from a decrease in accounts receivable and an increase in short-term
debt partially offset by an increase in other current assets,capital
expenditures and payments for products acquired.
In the prior year six months cash increased 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.
- 7 -
<PAGE>7
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,
1997.
_____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)
11-10-97 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
<PAGE>8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 30625
<SECURITIES> 36336
<RECEIVABLES> 153778
<ALLOWANCES> 4495
<INVENTORY> 152579
<CURRENT-ASSETS> 440912
<PP&E> 365162
<DEPRECIATION> 128924
<TOTAL-ASSETS> 1105141
<CURRENT-LIABILITIES> 378096
<BONDS> 0
0
0
<COMMON> 2150
<OTHER-SE> 640692
<TOTAL-LIABILITY-AND-EQUITY> 1105141
<SALES> 422084
<TOTAL-REVENUES> 435201
<CGS> 137077
<TOTAL-COSTS> 137077
<OTHER-EXPENSES> 249776
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6351
<INCOME-PRETAX> 41997
<INCOME-TAX> 11339
<INCOME-CONTINUING> 30658
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30658
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.43
</TABLE>
