Bausch & Lomb Third-quarter Results Driven by 11% Sales Increase.Business Editors/Health & Medical Writers ROCHESTER Rochester (rŏch`ĕstər, –ĭstər). 1 City (1990 pop. 70,745), seat of Olmsted co., SE Minn.; inc. 1858. , N.Y.--(BUSINESS WIRE)--Oct. 17, 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 -- Comparable-basis EPS of $0.48 improve $0.10 versus 2001 -- Company records net restructuring charges and asset write-offs of $25.5 million before taxes -- Company comfortable with current consensus EPS estimate of $0.55 for fourth-quarter and targets full-year 2003 comparable-basis EPS growth of approximately 20 percent Bausch & Lomb (NYSE:BOL) today announced that third-quarter worldwide sales of $466.7 million increased 11% over the third quarter of 2001. Double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. increases in the company's pharmaceuticals, 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 lens care categories drove these overall results, while the company also posted mid-single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. revenue increases 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. products and essentially flat performance for its refractive surgery Refractive surgery A surgical procedure that corrects visual defects. Mentioned in: Photorefractive Keratectomy and Laser-Assisted In-Situ Keratomileusis refractive surgery category. Excluding the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of currency, sales increased 9% for the quarter that ended September September: see month. 28, 2002. For the first nine months of 2002, the company reported worldwide sales of $1.339 billion, up $115.7 million or 9% over 2001, with currency having no impact on year-over-year results. Bausch & Lomb also reported net earnings of $9.4 million and earnings per share of $0.17 for the third quarter. These results compare to prior-year reported earnings of $23.3 million, or $0.43 per share. Both periods reflect the impact of non-recurring items. Excluding such items, comparable-basis earnings per share were $26.1 million or $0.48 per share in the third quarter of 2002 as compared to $20.5 million or $0.38 per share in the prior-year period. "Our results this quarter exhibit continued solid progress toward improving operational performance," said Bausch & Lomb's Chief Executive Officer, Ronald L. Zarrella. "As we execute on our plans to reduce costs and operate with a more disciplined business approach, we are establishing good momentum toward achieving our three-year financial targets." 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 Included in the reported third-quarter 2002 results were net restructuring charges and asset write-offs totaling $25.5 million before taxes ($16.7 million or $0.31 per share after taxes). Of this amount, $26.5 million before taxes related to the profitability improvement plan Bausch & Lomb announced on July July: see month. 27, 2002 as well as to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when associated with the transfer of PureVision (TM) extended wear contact lens manufacturing to Waterford Waterford, county, Republic of Ireland Waterford (wô`tərfərd), county (1991 pop. 91,624), 710 sq mi (1,839 sq km), S Republic of Ireland. The county seat is the port town of Waterford. , Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. following a ruling against the company in a U.S. patent lawsuit lawsuit: see procedure; tort. . Additionally, a portion of previously recorded restructuring charges was reversed, as it was no longer needed. The components of the third-quarter charge follow.
Dollars in Millions
----------------------------------------
Asset
Write- Total Positions
Severance offs Charge Eliminated
------------ --------- ---------- --------------
Profitability
improvement plan $19.4 $3.4 $22.8 465
PureVision charges 3.7 - 3.7 145
------------ --------- ---------- --------------
$23.1 $3.4 $26.5 610
--------------
Reversal of prior
reserves (1.0) - (1.0)
------------ --------- ----------
Total charge $22.1 $3.4 $25.5
------------ --------- ----------
Bausch & Lomb had previously estimated the charges associated with the profitability improvement plan to total up to $20 million. The final charges reflect refinement of the estimates used in developing the original disclosures. The company continues to expect the profitability improvement plan to yield annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost savings of approximately $90 million in 2005, with nearly 60 percent of the savings realized in 2004. Reconciliation of Reported Results to Comparable-Basis Results A reconciliation of reported net earnings and earnings per share to comparable-basis net earnings and earnings per share is presented in the following tables.
Dollars in Millions,
Except Per Share Data
---------------------- Third Quarter 2002 Year-to-Date 2002
----------------------- ----------------------
$ Per Share $ Per Share
----------------------- ----------------------
Reported net earnings $9.4 $0.17 $40.1 $0.74
Restructuring
charges and asset
write-offs, net
of reversals 16.7 0.31 32.1 0.59
Gain on sale of stock
investment - - (18.1) (0.33)
Minority interest
charge - - 7.0 0.13
---------- ------------ ---------- -----------
Comparable-basis
net earnings $26.1 $0.48 $61.1 $1.13
---------- ------------ ---------- -----------
Dollars in Millions,
Except Per Share Data
---------------------- Third Quarter 2001 Year-to-Date 2001
----------------------- ----------------------
$ Per Share $ Per Share
----------------------- ----------------------
Reported net earnings $23.3 $0.43 $29.1 $0.54
Gain on adoption of
SFAS 133 - - (0.3) -
Restructuring charges
and asset write-offs,
net of reversals - - 11.0 0.20
CEO Termination 1.8 0.03 1.8 0.03
Gain on sale of stock
investment (9.1) (0.16) (12.6) (0.23)
Pro forma impact of
SFAS 142 4.5 0.08 13.1 0.23
---------- ------------ ---------- -----------
Comparable-basis
net earnings $20.5 $0.38 $42.1 $0.77
---------- ------------ ---------- -----------
The only reconciling items for the current-year quarter are the restructuring charges and asset write-offs discussed above. Reconciling items for the prior-year quarter include previously disclosed costs associated with the termination of the Company's former 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. and a gain recorded on the sale of stock in a divested business, as well as the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma impact of adopting Statement of Financial Accounting Standards No. 142 - Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. at the beginning of 2002. Under the terms of this new accounting pronouncement, the company no longer amortizes goodwill recorded on its balance sheet, and prior periods cannot be restated. Had the pronouncement been in effect in 2001, third-quarter amortization expense would have been reduced by $7.0 million before taxes, or $4.5 million after taxes ($0.08 per share). Third-Quarter Revenues by Geography U.S. revenues of $201.0 million increased 12% over the prior year, and constituted 43% of total company sales. Outside the U.S., reported revenues increased 11%, and were up 7% in constant dollars. Revenue increases in both actual and constant dollars for each of the company's geographic operating segments were as follows:
Actual $ Constant $
-----------------------------------------------------
Americas + 11% + 12%
Europe, Middle East
and Africa + 8% + 0%
Asia + 18% +17%
These operating segment revenue trends are largely the result of the factors discussed below which influence each of the company's product categories. Third-Quarter Revenues by Product Category Contact lens revenues increased 13% from the third quarter of 2001, and were up 10% in constant dollars, powered by double-digit gains in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and increases approaching 10% in both the Americas A·mer·i·cas , theSee America. and Asia regions. These trends were driven by strong sales of the company's newer-technology lens offerings. Lens care revenues increased 10% from the prior year in actual dollars, and were up essentially the same percentage in constant dollars. The Americas region, where U.S. sales have rebounded from 2001, largely drove these gains. Strong double-digit actual and constant dollar growth was also reported in Asia, largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Japan. In Europe, lens care revenues were essentially flat with the prior year, as currency benefits offset moderate sales declines. Pharmaceutical revenues increased 19% over the prior year, and were up 17% in constant dollars. As in the past two quarters, exceptionally strong performance in the Americas region led these results, with 30% growth over the prior year. Sales growth was achieved for proprietary and multisource pharmaceuticals, as well as for the company's lines of ocular ocular /oc·u·lar/ (ok´u-lar) 1. of, pertaining to, or affecting the eye. 2. eyepiece. oc·u·lar adj. 1. Of or relating to the eye or the sense of sight. vitamins Vitamins Definition Vitamins are organic components in food that are needed in very small amounts for growth and for maintaining good health. The vitamins include vitamin D, vitamin E, vitamin A, and vitamin K, or the fat-soluble vitamins, and folate , which benefited from the launch of Ocuvite(R) PreserVision(TM). In Europe, a favorable currency environment offset modest constant dollar sales declines that were largely due to the company's decision to exit certain non-strategic product lines acquired with Groupe Chauvin Chauvin is a common French name.
Cataract surgery product revenues were up 5% from the prior year, and increased 2% in constant dollars. The results were driven by higher sales of IOLs and phacoemulsification phacoemulsification /phaco·emul·si·fi·ca·tion/ (-e-mul?si-fi-ka´shun) a method of cataract extraction in which the lens is fragmented by ultrasonic vibrations and simultaneously irrigated and aspirated. equipment in Asia, which offset flat performance in the Americas and moderate constant dollar declines in Europe. Refractive surgery product revenues were essentially flat with the third quarter of 2001, and declined 1% in constant dollars. Strong growth in Asia was offset by declines in Europe and the Americas, with softness noted in the refractive refractive capacity to refract light. refractive error a difference between the focal length of the cornea and lens, and the length of the eye, resulting in myopia or hyperopia. market in both those regions. Balance Sheet and Cash Flow Highlights The Company's liquidity remains strong. Cash and investments stood at $342.8 million at the end of the third quarter, compared to $534.4 million at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2001. The overall decrease reflects the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of a $200.0 million minority interest obligation and debt reduction of $70.0 million earlier in the year. Free cash flow continued to be strong, with $45.8 million generated in the 2002 third quarter, bringing the full-year figure to $150.3 million. Inventory reduction was a significant contributor to the third quarter's free cash flow, and remains a key focus in asset management. Bausch & Lomb had originally expected to issue up to $200 million in borrowings during the third quarter under its current shelf registration. Strong free cash flow generation during the quarter, coupled with generally unfavorable prevailing market conditions, led the company to elect not to pursue these plans. The company is targeting to issue between $150 million and $200 million in debt when market conditions improve. Company Comments on Expectations for Fourth Quarter and 2003 Bausch & Lomb indicated it is comfortable with the current First Call consensus estimate of $0.55 for the fourth quarter of 2002, which would result in full-year comparable-basis earnings per share of $1.68. The company's expectations for full-year revenue growth in the upper-single digits remain unchanged, and it expects the revenue trends noted in the first nine months of the year in each of its product categories to continue. For 2003, the company is projecting revenue growth in the mid-single digits. Full-year comparable-basis earnings per share will benefit from cost savings realized from the company's ongoing profitability improvement program, and are targeted to increase by approximately 20%, and to be between $2.00 and $2.05 per share. Zarrella commented, "We spent much of 2002 identifying areas of opportunity to take cost out of the business and developing action plans to do so. Successful execution against those plans should generate leveraged earnings improvement in 2003. With those efforts behind us, our focus will now turn to growing the top line, and identifying how we can assure sustainable, attractive growth in each of our businesses beyond 2003." Note: All per share amounts in this release are calculated on the diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, as defined by Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 128.
Investor Conference Call Information
10:00 a.m. (ET)
The News Media is invited to listen only on this call.
Call-in Number: 913-981-5507
Rebroadcast Number: 719-457-0820
Confirmation #628198
The rebroadcast of the conference call will be available starting at 1:30 p.m. ET October October: see month. 17, 2002 through midnight October 21, 2002. Additionally, the investor call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . It can be accessed from the Investor Relations Investor relations The process by which the corporation communicates with its investors. page of the company's Web site, www.bausch.com, or at www.vcall.com. This press release contains, among other things, certain statements of a forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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, government pricing changes and initiatives with respect to healthcare products, product development and rationalization rationalization, in psychology: see defense mechanism. , enrollment and completion of clinical trials, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals, the outcome of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , including a decision in the Company's appeal of the Federal District Court's ruling on June June: see month. 26, 2002 that the Company's PureVision continuous wear contact lens product infringes a patent owned by Wesley Jessen, 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, 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 10-Q Form 10-Q See 10-Q. for the quarter ended June 29, 2002. Bausch & Lomb Incorporated is the preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae 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 gas permeable gas adj (lenses) → luftdurchlässig contact lenses contact lenses contact npl → verres mpl de contact contact lenses contact npl → Kontaktlinsen pl contact lenses npl , lens care products, ophthalmic ophthalmic /oph·thal·mic/ (of-thal´mik) ocular (1). oph·thal·mic adj. Of or relating to the eye; ocular. Ophthalmic Pertaining to the eye. 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 Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. , ReNu ReNu® is a brand of soft contact lens care products produced by Bausch & Lomb[1]. The brand recently made headlines regarding a report from the United States Centers for Disease Control and Prevention suggesting an increased incidence of fungal keratitis in people using , Storz For the beer, see Storz Brewing Company. Storz is a type of hose coupling invented by Carl August Guido Storz in 1882 comprised of interlocking hooks and flanges. It is sometimes referred to as a sexless coupling, because rather than having a male and female end connected 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.
Bausch & Lomb
STATEMENT OF EARNINGS
Quarter Ended Nine Months Ended
---------------------- ----------------------
Dollar Amounts in
Millions- Sept. 28, Sept. 29, Sept. 28, Sept. 29,
Except Per Share
Data 2002 2001 2002 2001
----------------- ---------- ---------- ---------- ----------
Net Sales
Americas $ 221.4 $ 200.1 $ 630.1 $ 562.0
Europe 148.9 137.5 449.8 428.6
Asia-Pacific 96.4 81.8 259.4 233.0
---------- ---------- ---------- ---------
466.7 419.4 1,339.3 1,223.6
Costs and Expenses
Cost of products
sold 205.5 190.4 584.0 563.5
Selling,
administrative
and general (5) 172.6 164.1 527.2 496.6
Research and
development 31.9 29.0 93.2 90.5
Restructuring
charges (1) 25.5 - 49.0 16.9
---------- ---------- ---------- ---------
435.5 383.5 1,253.4 1,167.5
---------- ---------- ---------- ---------
Operating Earnings 31.2 35.9 85.9 56.1
Other (Income) Expense
Interest and
investment
income (2) 0.1 (19.5) (40.4) (43.7)
Interest expense 12.5 13.0 37.9 47.7
Loss (gain) from
foreign
currency 1.9 0.8 2.7 (7.6)
---------- ---------- ---------- ---------
14.5 (5.7) 0.2 (3.6)
---------- ---------- ---------- ---------
Earnings Before Income
Taxes and Minority
Interest 16.7 41.6 85.7 59.7
Provision for income
taxes 5.8 14.6 29.5 19.8
---------- ---------- ---------- ---------
Earnings Before Minority
Interest 10.9 27.0 56.2 39.9
Minority interest in
subsidiaries (3) 1.5 3.7 16.1 11.0
---------- ---------- ---------- ---------
Earnings from Continuing
Operations 9.4 23.3 40.1 28.9
Gain from Change in
Accounting Principle,
net of taxes (4) - - - 0.3
---------- ---------- ---------- ---------
Net Earnings $ 9.4 $ 23.3 $ 40.1 $ 29.2
========== ========== ========== ==========
Per Share:
Earnings from
Continuing
Operations $ 0.17 $ 0.43 $ 0.74 $ 0.54
Gain from
Change in
Accounting
Principle,
net of taxes - - - -
---------- ---------- ---------- ---------
Net Earnings $ 0.17 $ 0.43 $ 0.74 $ 0.54
========== ========== ========== ==========
Average Shares
Outstanding - (000s) 54,030 53,721 53,964 53,710
========== ========== ========== ==========
(1) Restructuring charges reduced third quarter 2002 net earnings
by $16.7 or $0.31 per share and 2002 year to date net income
by $32.1 or $0.59 per share. Such charges reduced 2001 net
earnings by $11.0 or $0.20 per share.
(2) Includes $27.6 income for the first-quarter 2002 ($18.1 after
taxes or $0.33 per diluted share) and $14.1 income for the
third quarter 2001 and $19.4 income 2001 year to date ($9.1
after taxes or $0.16 per share and $12.6 after taxes or $0.23,
respectively) for the sale of Charles River stock.
(3) First-quarter 2002 reflects a one-time minority interest
payment reducing net earnings $7.0 or $0.13 per share.
(4) Income taxes related to the adoption of SFAS 133 were $.1 for
the first-quarter 2001.
(5) Severance accrual for former CEO reduced third quarter
earnings by $2.8 ($1.8 after taxes or $0.03 per diluted
share).
SUPPLEMENTAL REVENUE INFORMATION
Net Sales
Contact Lens $ 137.6 $ 121.7 $ 389.8 $ 343.7
Lens Care 122.1 111.0 344.5 304.3
Pharmaceuticals 103.6 86.8 290.0 250.1
Cataract 73.2 69.8 220.5 222.9
Refractive 30.2 30.1 94.5 102.6
--------- ---------- ---------- ---------
$ 466.7 $ 419.4 $ 1,339.3 $ 1,223.6
========= ========== ========== =========
BALANCE SHEET
Sept. 28, Dec. 29,
Dollar Amounts in Millions 2002 2001
------------------------------ ----------------- -----------------
Assets
Cash and Short-term
Investments $ 342.8 $ 534.4
Trade Receivables, Net 402.0 380.7
Other Investments,
Available for Sale - 41.9
Inventories, Net 228.5 253.4
Other Current Assets 200.3 186.9
------------ ------------
Current Assets 1,173.6 1,397.3
Properties, Net 528.5 543.3
Goodwill and Intangible
Assets 851.5 839.0
Other Assets 245.6 213.9
------------ ------------
Total Assets $ 2,799.2 $ 2,993.5
------------ ------------
Liabilities and Shareholders' Equity
Short-Term Debt $ 247.4 $ 123.3
Other Current Liabilities 649.9 580.3
------------ ------------
Current Liabilities 897.3 703.6
Long-Term Debt 509.0 703.2
Other Long-Term Liabilities 375.8 397.1
Minority Interest 17.9 214.6
------------ ------------
Total Liabilities 1,800.0 2,018.5
Shareholders' Equity 999.2 975.0
------------ ------------
Total Liabilities and
Shareholders' Equity $ 2,799.2 $ 2,993.5
------------ ------------
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