Bausch & Lomb Details Actions to Improve Operating Profitability by $90 Million.Business Editors ROCHESTER, N.Y.--(BUSINESS WIRE)--July 25, 2002 Bausch & Lomb (NYSE NYSE See: New York Stock Exchange :BOL BOL Bolivia (ISO Country code) BOL Books Online BOL Bole (SIL code, Nigeria) BOL Bill Of Lading BOL Beginning Of Line BOL Best Of Luck BOL Buzz Out Loud BOL Bruin Online BOL Beginning Of Life ) today announced detailed actions to increase operating profitability and realize its previously announced goal of mid-teen annual operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by 2004. The actions will increase annual operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. by approximately $90 million in 2005, with nearly 60 percent of the savings realized by 2004. The actions are a result of a comprehensive review of the Company's cost structure and business processes that began with the arrival of Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Ronald L. Zarrella at the end of last year. The comprehensive plan includes plant closures and consolidations; manufacturing efficiencies and yield enhancements; procurement process enhancements; the rationalization of certain contact lens contact lens, thin plastic lens worn between the eye and eyelid that may be used instead of eyeglasses. Actors, models, and others wear them for appearance, and athletes use them for safety and convenience. and surgical product lines; distribution initiatives; the development of a global information technology (IT) platform; and the elimination of approximately 450 jobs worldwide associated with those actions. "The plans we announced today will provide us with a competitive cost structure and the right organizational model to achieve our profitability targets for the next three years," said Zarrella. "Our emphasis will now be on speedy and flawless execution of these plans, so we can then intensify our focus on opportunities for increased top-line growth." Restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and asset write-offs associated with these initiatives are expected to be as much as $20 million before taxes, and will be recorded entirely in the third quarter of 2002. The final amount of the charge will depend on the resolution of details pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to certain of the actions. Bausch & Lomb indicated that it expects to eliminate approximately 450 positions in executing its plans, which are incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. to previously announced workforce reductions. Earlier in 2002, the Company recorded restructuring charges and asset write-offs totaling $23.5 million before taxes. Those charges were independent of, and incremental to, any charges associated with the plans announced today. A table summarizing the details of the profitability improvement plan, which are described in more detail in the following paragraphs, is at the end of this news release. Plant Closures and Consolidations To lower production costs and increase manufacturing efficiencies, Bausch & Lomb will close or consolidate certain plants that make contact lens and surgical products starting in the third quarter of 2002 and continuing through the third quarter of 2003. Approximately 325 jobs in several locations will be eliminated. These actions are expected to deliver annual cost savings of approximately $16 million by 2005. The Company expects to record charges of up to $16 million before taxes in the third quarter of 2002 in connection with planned plant closures and consolidations. In the contact lens area, for example, the Company will combine manufacturing for finished rigid gas permeable gas permeable gas adj (lenses) → luftdurchlässig (RGP RGP Rigid Gas Permeable (contact lens material) RGP Redemption Grace Period (domain name registrar management) RGP Rice Genome Project RGP Raster Graphics Processor RGP Rapport Général sur la Pauvreté ) contact lenses contact lenses contact npl → verres mpl de contact contact lenses contact npl → Kontaktlinsen pl contact lenses npl into a single "focused factory" in Hastings, England, and exit its RGP plants in Barcelona, Spain, and Umsong, Korea. Bausch & Lomb will combine all manufacturing of its Optima(R) FW contact lenses into a single location in Waterford, Ireland, transferring production out of its Rochester, New York This article is about the city of Rochester in Monroe County. For the town in Ulster County, see Rochester, Ulster County, New York. Rochester, once known as The Flour City, and more recently as The Flower City or , plant, which will focus on manufacturing newer technology products like the new bifocal lens bifocal lens n. A lens having one section that corrects for distant vision and another section that corrects for near vision. . These initiatives will result in lower overall production costs. With the introduction of its next-generation advanced-technology microkeratome in 2003, Bausch & Lomb will transition to a new manufacturing methodology and close a microkeratome manufacturing facility in Miami, Florida “Miami” redirects here. For the Native American tribe, see Miami tribe. Miami is a major city in southeastern Florida, in the United States. It is the county seat of Miami-Dade County. Miami is a gamma world city with an estimated population of 404,048. . The Company also will reduce some production activities in its Heidelberg, Germany facility. Manufacturing Efficiencies and Yield Enhancements Best-practice manufacturing processes in several of the Company's current facilities will be expanded to other facilities on a worldwide basis in order to leverage additional cost saving opportunities. This expansion includes automated packaging technologies for contact lenses, further automation of certain other manufacturing procedures, and the application of specific technologies to reduce cycle times in the manufacture of contact lenses and intraocular lenses Intraocular lens Lens made of silicone or plastic placed within the eye; can be corrective. Mentioned in: Cataract Surgery . The Company expects to generate annual savings of approximately $20 million by 2005 as a result of these manufacturing process enhancements. Enhancements to Procurement Processes Bausch & Lomb has consolidated all procurement activities into a global function with responsibility and accountability for supervising its purchasing policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental , and aggressively pursuing the most favorable terms for all Company purchases. As a result of consolidating these activities, specific actions are being implemented that are expected to generate annual savings of approximately $11 million by 2005. These actions include negotiating favorable volume discounts on raw material purchases and employing alternate lower-cost sources for certain lens care and pharmaceuticals materials and products. Product Rationalization Initiatives Bausch & Lomb will immediately begin an orderly rationalization of several contact lens and certain surgical product "stock keeping units" (SKUs). Combined, the product rationalization actions are expected to result in cost savings of approximately $9 million by 2005. Within its broad contact lens product portfolio, Bausch & Lomb is focusing investments on newer-technology planned replacement and disposable lenses that offer higher growth potential. The Company will rationalize or discontinue certain low volume contact lens product lines and implement strategies to improve the profitability of those older-technology products it will continue to support. Specific contact lens product lines, comprising some 6,000 SKUs, have been identified for elimination. Those products to be phased out will be announced to the trade beginning in September of 2002, and the vast majority of the SKUs will be eliminated by the end of 2003. Phase-out of the remaining products will occur in an orderly fashion as newer-technology products receive regulatory approvals and are launched into various global markets. The Company will also discontinue approximately 3,800 SKUs in its lines of PMMA PMMA polymethyl methacrylate. intraocular lenses, and consolidate the manufacture of its remaining PMMA lenses onto a single common platform. This action reflects the market's shift to foldable intraocular lenses for cataract surgery Cataract Surgery Definition Cataract surgery is a procedure performed to remove a cloudy lens from the eye; usually an intraocular lens is implanted at the same time. Purpose The purpose of cataract surgery is to restore clear vision. , and reinforces the Company's focus on this higher-margin portion of its IOL IOL Intraocular lens, see there portfolio. Products will be discontinued on a systematic basis beginning in the third quarter of 2002, and continuing through the end of 2003. Bausch & Lomb will continue to offer an optimized range of PMMA products to support customer needs. The Company also will rationalize its offerings of disposable surgical packs, generating savings in direct labor and inventory carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. . Distribution Initiatives Bausch & Lomb announced it will consolidate distribution and warehousing operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. from three to two locations, resulting in the elimination of approximately 50 jobs. Annual cost savings are expected to be approximately $4 million by 2005. Charges associated with these initiatives are expected to total less than $1 million. Currently, each of the three distribution centers focuses almost exclusively on order fulfillment Order fulfillment (in BE also: order fulfilment) is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes Order fulfillment for a specific product category. To enhance customer service, to reduce shipping costs through freight bundling, and to lower labor and overhead costs overhead costs see fixed costs. , the distribution center in St. Louis, Missouri, will close in the third quarter of 2003 and its functions will be consolidated into the Lynchburg, Virginia Lynchburg is an independent city located in the Commonwealth of Virginia. As of the 2006 census, the city had a total population of 67,720, but is at about 70,000 residents as of 2007. , facility. Surgical and contact lens products will be handled in Lynchburg, and the distribution center in Greenville, South Carolina
Greenville is a mid-sized city located in the upstate of South Carolina. It is the county seat of Greenville CountyGR6 will continue to handle solutions and pharmaceutical distribution. Development of Global Information Technology Platform In a major, business-critical initiative, Bausch & Lomb is developing a global enterprise Information Technology (IT) system. In addition to improving efficiencies, the development of a single IT platform will reduce overall IT expense, which now is approximately 5% of consolidated sales. Specific actions include eliminating incompatible IT systems that were in place in companies that Bausch & Lomb acquired, and the consolidation of IT support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services , including the creation of a single global data center. Actions associated with development and implementation of a global IT platform will occur over the remainder of 2002 and continue through 2005. The initiative is expected to generate annual cost savings of approximately $30 million by 2005. Because of the long-term nature of the project, the vast majority of these savings, which include lower software maintenance costs, license fees, and depreciation, will not be realized until after 2004. Charges of up to $4 million before taxes are expected to be recorded in connection with this initiative, and relate to the elimination of approximately 75 positions in 2003. Over the course of the project, additional positions are expected to be eliminated, primarily through attrition.
BAUSCH & LOMB INCORPORATED
SUMMARY OF PROFITABILITY IMPROVEMENT PLAN
----------------------------------------------------------------------
No. of
Positions to
Estimated Estimated Annual be Eliminated Timing
Charge Savings
by 2005
----------------------------------------------------------------------
Total Program Up to $20 Approximately 450
million $90 million
----------------------------------------------------------------------
Plant Closures
and Q302
Consolidations Up to $16 Approximately 325 through
million $16 million Q303
----------------------------------------------------------------------
Manufacturing
Efficiencies
and Yield
Enhancements N/A Approximately N/A Beginning
$20 million Q302
----------------------------------------------------------------------
Enhanced
Procurement
Policies N/A Approximately N/A Beginning
$11 million Q302
----------------------------------------------------------------------
Rationalization of
Contact Lens and
Surgical Product
Portfolios N/A Approximately N/A Beginning
$9 million Q302
----------------------------------------------------------------------
Distribution
Initiatives Less than Approximately 50 Q303
$1 million $4 million
----------------------------------------------------------------------
Develop Global Up to Approximately 75 Beginning
IT Platform $4 million $30 million Q302
----------------------------------------------------------------------
This press release contains, among other things, certain statements of a forward-looking nature relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future events or the future business performance of Bausch & Lomb. Such statements involve a number of risks and uncertainties including those concerning economic conditions, currency exchange rates, product development, enrollment and completion of clinical trials, regulatory approvals, product introductions, the financial well-being of key customers, the successful execution of marketing strategies, the continued successful implementation of its efforts in managing and reducing costs and expenses including successful execution of the company's profitability improvement plan, continued positive relations with third party financing sources, as well as the risk factors listed from time to time in the Company's SEC filings, including but not limited to the Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed on June 14, 2002 and the Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 30, 2002. Bausch & Lomb Incorporated is the preeminent global technology-based healthcare Company for the eye, dedicated to helping consumers see, look and feel better through innovative technology. Its core businesses include soft and rigid gas permeable contact lenses, lens care products, ophthalmic surgical and pharmaceutical products. The Company is advantaged with some of the most respected brands in the world starting with its name, Bausch & Lomb, and including SofLens, PureVision, Boston, ReNu, Storz and Technolas. Founded in 1853 in Rochester, N.Y., where it continues to have its headquarters, the Company had revenues of approximately $1.7 billion in 2001, and employs approximately 12,000 people in more than 50 countries. Bausch & Lomb products are available in more than 100 countries around the world. Additional information about the Company can be found on Bausch & Lomb's Worldwide Web site at http://www.bausch.com. Copyright Bausch & Lomb Incorporated The trademarks of Bausch & Lomb Incorporated and its affiliates are italicized. |
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