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
December 31, 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_December 31,_1997
Common Stock - Class A 13,574,895
Common Stock - Class B 7,935,532
<PAGE>1
BLOCK DRUG COMPANY, INC.
INDEX TO FORM 10-Q
DECEMBER 31,1997
____________________________
Part I - Financial Information - Unaudited Page No.
Consolidated Balance Sheets - December 31,1997
and March 31,1997 3
Consolidated Statements of Income for the three
and nine months ended December 31,1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended December 31,1997 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 __12/31/97__ __03/31/97__
<S> <C> <C>
Current Assets:
Cash $ 26,678,000 $ 13,862,000
Marketable securities,at market 26,683,000 24,923,000
Accounts receivable, less allowances
of $4,450,000 (12/31/97) and
$4,504,000 (3/31/97) 138,872,000 164,104,000
Inventories:
Raw & packaging materials 54,604,000 44,334,000
Finished goods 102,729,000 94,345,000
Other current assets 66,908,000 51,508,000
------------ -----------
Total current assets 416,474,000 393,076,000
------------ -----------
Property,plant and equipment, less
accumulated depreciation of $133,246,000
(12/31/97) and $122,095,000 (3/31/97) 239,516,000 235,486,000
Long term securities at market 253,179,000 225,999,000
Goodwill and other intangible assets-
net of amortization 185,709,000 153,425,000
Other assets 4,324,000 6,937,000
-------------- --------------
Total assets $1,099,202,000 $1,014,923,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and bonds payable $182,763,000 $118,522,000
Accounts payable & accrued expenses 171,155,000 167,744,000
Income taxes payable 9,283,000 11,612,000
Dividends payable 5,148,000 5,026,000
----------- -----------
Total current liabilities 368,349,000 302,904,000
----------- -----------
Notes and bonds payable 55,840,000 55,943,000
Deferred compensation and other payables 17,896,000 16,012,000
Deferred income taxes 12,081,000 8,744,000
----------- -----------
Total liabilities 454,166,000 383,603,000
----------- -----------
Shareholders' Equity:
Class A common stock, non-voting, par
value $.10-15,000,000 shares authorized,
13,574,895 (12/31/97) and 13,544,460
(3/31/97) shares issued and outstanding 1,357,000 1,354,000
Class A common stock dividend distributable 41,000
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
Class B common stock dividend distributable 24,000
Capital in excess of par value 281,556,000 249,375,000
Retained earnings 373,199,000 377,202,000
Cumulative foreign currency translation
adjustment (15,182,000) 2,044,000
Unrealized holding gain on marketable
securities 3,247,000 551,000
-------------- -------------
Total shareholders' equity 645,036,000 631,320,000
-------------- --------------
Total liabilities & shareholders' equity $1,099,202,000 $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 NINE_MONTHS_ENDED
DECEMBER_31, DECEMBER_31,
_1997_____________1996____ _______1997________1996___
Revenues:
<S> <C> <C> <C> <C>
Net sales $208,284,000 $216,409,000 $630,368,000 $625,439,000
Interest, dividends
and other income 6,065,000 9,431,000 19,182,000 23,676,000
------------ ------------ ------------ ------------
214,349,000 225,840,000 649,550,000 649,115,000
------------ ------------ ------------ ------------
Cost and expenses:
Cost of goods sold 67,957,000 71,335,000 205,034,000 199,370,000
Selling, general and
administrative 133,297,000 135,353,000 389,424,000 387,202,000
------------ ------------ ------------ ------------
201,254,000 206,688,000 594,458,000 586,572,000
------------ ------------ ------------ ------------
Income from operations
before income taxes 13,095,000 19,152,000 55,092,000 62,543,000
Income taxes 1,663,000 2,922,000 13,002,000 15,636,000
------------ ----------- ----------- ----------
Net income 11,432,000 16,230,000 42,090,000 $46,907,000
============= =========== ========== ===========
Average number of
shares outstanding 22,148,000 22,108,000 22,138,000 22,098,000
=========== =========== ========== ==========
Net earnings per share $ 0.51 $ 0.73 $ 1.90 $ 2.12
=========== =========== =========== ==========
Cash dividends per share
Class A $ 0.315 $ 0.31 $ 0.935 $ 0.89
Class B $ 0.11 $ 0.1075 $ 0.325 $ 0.3075
</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> NINE MONTHS ENDED
DECEMBER 31
_____1997_________1996____
<S> <C> <C>
CASH_FLOW_FROM_OPERATING_ACTIVITIES $ 52,230,000 $ 46,463,000
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant & equipment (28,148,000) (30,544,000)
Proceeds from sale of property 1,900,000 5,200,000
Proceeds from sales of long-term securities 42,571,000 47,200,000
Purchases of long-term securities (70,587,000) (31,981,000)
Decrease(increase) in marketable securities 3,337,000 (23,326,000)
Payment for products acquired (39,150,000) (27,525,000)
------------ ------------
Net cash used in investing
activities (90,077,000) (60,976,000)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from the issuance of debt 2,947,000
Dividends paid to shareholders (15,284,000) (14,052,000)
Payments of notes payable ( 5,625,000)
Increase in short-term debt 64,138,000 38,135,000
------------- ------------
Net cash provided by financing
activities 48,854,000 21,405,000
Effect of exchange rates on cash 1,809,000 28,000
----------- ----------
Increase in Cash 12,816,000 6,920,000
Cash, beginning of period 13,862,000 16,388,000
------------- ------------
Cash, end of period $ 26,678,000 $ 23,308,000
============= ============
SUPPLEMENTAL CASH FLOW DATA
Cash paid during the year:
Interest $ 9,063,000 $ 6,694,133
Income taxes $ 10,483,000 $ 14,791,092
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
3 % Stock dividend $ 30,809,000 $ 28,465,000
</TABLE>
-5-
See notes to consolidated financial statements.
<PAGE>5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 nine months ended December 31, 1997, the Company
increased its net borrowings by $ 64,138,000 mainly from
lines of credit from various banks bearing interest at
variable rates ranging from 1.63% to 33.75%.
-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 for the third quarter of $208.3 million were
4% below the comparable prior year period.Were it not for the effect of
currency changes,however,sales would have incerased by 1% to $219.3 million.
For the nine months period, the consolidated worldwide sales of $630.4 million
increased 1% over the comparable year ago sales of $625.4 million.Had it not
been for the weakening of foreign currencies,sales would have increased 5% to
$656.4 million.Foreign sales decreased 10.1% for the quarter and 1.8% for the
nine month period. Excluding the impact of exchange rates foreign sales for
the nine months period increased 5.2%. Domestic sales were higher for the
quarter and nine months by 6.2% and 4.6% respectively due to the introduction
of new products and line extensions.
Interest dividends and other income decreased in the nine month period from the
comparable year-ago period due primarily to lower co-promotion income.
The cost of goods sold percent to sales was 32.5% and 31.9% for the nine months
of the current and prior year, respectively. The strong U.S.dollar has
adversely affected the cost of goods sold percentage, 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 61.8% of sales in the nine months
of the current year, compared with 61.9% 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 8.7% of sales in the nine
months of the current year compared to 10.0% in the comparable prior year
period.
The effective income tax rates of 23.6% and 25% for the 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.
Financial Condition
Cash increased for the nine month period ended December 31,1997 to $26.7
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 inventory and payments for products
acquired.
In the prior year nine months cash increased to $23.3 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 payments
for products acquired 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 December 31,
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)
2-10-98 MELVIN KOPP
________________ ______________________________
DATE Melvin Kopp
Senior Vice President &
Chief Financial Officer
-8-
<PAGE>8
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 26678
<SECURITIES> 26683
<RECEIVABLES> 143322
<ALLOWANCES> 4450
<INVENTORY> 157333
<CURRENT-ASSETS> 416474
<PP&E> 372762
<DEPRECIATION> 133246
<TOTAL-ASSETS> 1099202
<CURRENT-LIABILITIES> 368349
<BONDS> 0
0
0
<COMMON> 2216
<OTHER-SE> 642820
<TOTAL-LIABILITY-AND-EQUITY> 1099202
<SALES> 630368
<TOTAL-REVENUES> 649550
<CGS> 205034
<TOTAL-COSTS> 205034
<OTHER-EXPENSES> 379144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10280
<INCOME-PRETAX> 55092
<INCOME-TAX> 13002
<INCOME-CONTINUING> 42090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42090
<EPS-PRIMARY> 1.9
<EPS-DILUTED> 1.9
</TABLE>
