Exhibit 99.1
NEWS [BAUSCH & LOMB LOGO]
Bausch & Lomb Earnings Per Share Up 32 Percent on Eight Percent Higher Sales
- Worldwide revenues grow four percent excluding currency effects
- - Third-quarter earnings per share were $0.79, compared to $0.60 in 2003
- - Company expects full-year 2004 earnings per share between $2.85 and $2.90, growing to between $3.30 and $3.40 in 2005
FOR RELEASE WEDNESDAY, OCTOBER 20, 2004
ROCHESTER, N.Y. - Bausch & Lomb (NYSE:BOL) today reported worldwide sales of $548.9 million for the quarter ended September 25, 2004, an eight percent increase (or growth of four percent on a constant-currency basis) over the prior-year period. Sales gains were reported in each of the company's geographic business segments, and in all product categories except lens care.
Earnings per share of $0.79 grew 32 percent as compared to the $0.60 per share reported a year ago. Operating margins were 14 percent of sales in the third quarter, compared to 12 percent in the prior year. Lower-than-planned research and development expenditures combined with operating expense management more than offset a decline in the company's gross margin ratio. Gross margins were 57.8 percent of sales in the third quarter compared to 58.8 percent in 2003, due to unfavorable sales mix shifts as compared to the prior-year period, as well as charges taken in the current quarter for manufacturing asset and inventory obsolescence write-downs that will not recur.
Year-to-date 2004 net sales of $1.6 billion increased 11 percent versus 2003, or six percent excluding the effect of currency. Earnings per share of $2.00 grew 39 percent compared to the $1.44 earnings per share before the cumulative effect of a change in accounting principle in the prior year. Including that item, net earnings per share were $1.42 for the first nine months of 2003.
The company indicated that it now expects full-year 2004 constant-currency revenue growth of approximately six percent, translating to reported growth of between nine and ten percent, should exchange rates remain where they are today. Earnings per share are now forecast at between $2.85 and $2.90 per share, up from previous expectations of between $2.80 and $2.85 per share. For 2005, the company projects constant-currency revenue growth of between six and seven percent, yielding earnings per share between $3.30 and $3.40. It should be noted that these projections do not include the impact of new accounting guidance contained in Emerging Issues Task Force Issue 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings per Share". At this time, the company has not reached any conclusion regarding the economic and financial advantages of restructuring its outstanding convertible notes so that they would not fall under the provisions of the new standard. Bausch & Lomb estimates that its 2004 full-year results and 2005 guidance would each be reduced between eight and 10 cents per share should the company decide not to restructure its convertible debt.
Revenues by Geography
Third-quarter U.S. revenues were $216.9 million, up two percent from the prior year, and represented 40 percent of total company sales. Revenues derived in markets outside the U.S. increased 12 percent over the same period in 2003 and were up five percent on a constant-currency basis. Revenue increases in each of the company's geographic operating segments were as follows:
| Constant | ||
Americas | + 2% | + 2% |
These operating segment revenue trends were largely the result of the factors discussed below which influence each of the company's product categories.
Revenues by Product Category
Revenue increases for each of the company's product categories were as follows:
| Constant | ||
Contact Lenses | + 10% | + 5% |
Contact lens revenues grew in each geographic region, led bytheSofLens66® Toric,SofLens® One Day,SofLens® Multi-Focal,SofLens®59 andPureVision™ brands, which posted solid double-digit growth in the quarter, benefiting from continued market expansion and share gains. This performance more than offset overall declines in the remainder of the company's contact lens portfolio.
Constant-currency lens care sales declined in both the Americas and Europe regions, more than offsetting growth in Asia. As expected, Americas region revenue declines reflected the timing of customer orders around the company's annual plant shutdown that essentially shifted sales from the third quarter into the second. Additionally, throughout the third quarter several large customers systematically reduced orders for earlier generation multi-purpose solution products in anticipation of the launch ofReNu® withMoistureLoc™,which beganlate in September and continued into October.
Constant-currency pharmaceuticals revenues increased in the Americas and Asia regions, and were flat to the prior year in Europe. The company's lines of ophthalmic nutritional products, including thePreserVision™ brand of ocular vitamins, posted strong sales growth in each geographic segment. Double-digit sales gains were also posted in the Americas region byLotemax® andAlrex®, the company's lines of proprietary ophthalmic drops. Year-over-year European growth rates continued to be negatively impacted by market disruption in Germany due to recent pharmaceuticals pricing legislation.
Constant-currency cataract and vitreoretinal surgery revenues increased in all geographic segments, reflecting higher sales of intraocular lenses, disposables andMillennium™ microsurgical systems.
Growth in revenues from products used in refractive surgery was primarily driven by higher sales of per-procedure cards, upgrades to theZyoptix™ platform for customized LASIK surgery and diagnostic equipment. Constant-currency revenue growth of more than 30 percent in the Americas region, combined with strong double-digit gains in Europe, more than offset moderate declines in Asia.
Liquidity Highlights
Cash and investments at the end of September totaled $662.9 million. Cash flows from operations were $183.4 million in the first nine months of 2004 versus $128.7 million in the prior year, primarily reflecting higher reported earnings and lower payments associated with foreign currency hedging contracts, partially offset by higher tax payments and pension plan funding. Year-to-date capital expenditures were $73.5 million compared to $57.6 million in the prior year.
The company generated free cash flow (defined as cash generated before the payment of dividends, the borrowing or repayment of debt, stock repurchases, the acquisition of businesses and intangible assets, and divestitures) of $107.1 million in the first nine months of 2004, compared to $79.8 million in the year-ago period. A reconciliation between cash flow and free cash flow follows:
Year-to-Date | Year-to- | |
Net change in cash and cash equivalents | $100.3 | $ (6.9) |
Net cash used in financing activities | 6.1 | 80.3 |
Net cash paid for acquisitions of businesses and other intangible assets | 0.7 | 6.4 |
Free Cash Flow | $107.1 | $79.8 |
The company increased its guidance for full-year 2004 free cash flow to approximately $120 million, up from its previous guidance of approximately $110 million. This reflects expectations for continued improved operating performance offset by higher capital expenditures and tax payments as compared to the prior year.
Bausch & Lomb | ||||||||
Quarter Ended | Nine Months Ended | |||||||
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Dollar Amounts in Millions - | September 25, | September 27, | September 25, | September 27, | ||||
-------------------------------------------------------- | ------------------ | ------------------ | ------------------ | ------------------- | ||||
Net Sales | ||||||||
Americas | $ | 240.2 | $ | 234.7 | $ | 702.7 | 661.6 | |
Europe | 191.9 | 171.2 | 594.9 | 526.9 | ||||
Asia-Pacific | 116.8 | 102.9 | 328.1 | 280.9 | ||||
-------------- | -------------- | -------------- | -------------- | |||||
548.9 | 508.8 | 1,625.7 | 1,469.4 | |||||
Cost and Expenses | ||||||||
Cost of products sold | 231.4 | 209.5 | 679.4 | 621.5 | ||||
Selling, administrative and general | 203.3 | 199.7 | 637.1 | 584.2 | ||||
Research and development | 37.4 | 38.3 | 113.7 | 106.4 | ||||
-------------- | ------------------ | ------------------ | ------------------ | |||||
472.1 | 447.5 | 1,430.2 | 1,312.1 | |||||
------------------ | -------------- | -------------- | -------------- | |||||
Operating Earnings | 76.8 | 61.3 | 195.5 | 157.3 | ||||
Other (Income) Expense | ||||||||
Interest and investment income | (2.3) | (5.2) | (8.5) | (10.6) | ||||
Interest expense | 12.5 | 13.8 | 36.1 | 41.9 | ||||
(Gain) / loss from foreign currency | (0.4) | 1.8 | 0.2 | 5.1 | ||||
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9.8 | 10.4 | 27.8 | 36.4 | |||||
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Earnings Before Income Taxes and |
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Provision for income taxes | 22.4 | 17.3 | 56.2 | 41.1 | ||||
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Earnings Before Minority Interest | 44.6 | 33.6 | 111.5 | 79.8 | ||||
Minority interest in subsidiaries | 1.3 | 1.3 | 3.4 | 2.7 | ||||
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Earnings Before Cumulative Effect of |
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Cumulative Effect of Change in |
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Net Earnings | $ | 43.3 | $ | 32.3 | $ | 108.1 | $ | 76.2 |
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Per Share: |
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Cumulative Effect of Change in |
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Net Earnings | $ | 0.79 | $ | 0.60 | $ | 2.00 | $ | 1.42 |
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Average Shares Outstanding - (000s) | 54,460 | 53,379 | 54,167 | 53,486 | ||||
======== | ======== | ======== | ======== |
(1) Income taxes related to the adoption of SFAS No. 143 in Q1 2003 were $0.5.
SUPPLEMENTAL REVENUE INFORMATION | ||||||||
Net Sales | ||||||||
Contact Lens | $ | 171.1 | $ | 154.9 | $ | 495.3 | $ | 436.9 |
--------------- | -------------- | -------------- | --------------- | |||||
$ | 548.9 | $ | 508.8 | $ | 1,625.7 | $ | 1,469.4 | |
======== | ======== | ======== | ======== |
Bausch & Lomb | ||||
| September 25, | December 27, | ||
-------------------------------------------------------------------------------- | --------------------- | -------------------- | ||
Assets | ||||
Cash and Short-term Investments | $ | 662.9 | $ | 562.6 |
Trade Receivables, Net | 484.0 | 476.3 | ||
Inventories, Net | 204.2 | 207.3 | ||
Other Current Assets | 150.5 | 175.2 | ||
--------------- | -------------------- | |||
Current Assets | 1,501.6 | 1,421.4 | ||
Properties, Net | 549.9 | 548.1 | ||
Goodwill and Intangible Assets | 903.2 | 929.6 | ||
Other Assets | 114.4 | 107.3 | ||
--------------- | -------------------- | |||
Total Assets | $ | 3,069.1 | $ | 3,006.4 |
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Liabilities and Shareholders' Equity | ||||
Short-Term Debt | $ | 296.9 | $ | 195.0 |
Other Current Liabilities | 676.8 | 681.4 | ||
--------------- | -------------------- | |||
Current Liabilities | 973.7 | 876.4 | ||
Long-Term Debt | 543.7 | 652.0 | ||
Other Long-Term Liabilities | 228.7 | 259.1 | ||
Minority Interest | 14.3 | 15.5 | ||
--------------- | -------------------- | |||
Total Liabilities | 1,760.4 | 1,803.0 | ||
Shareholders' Equity | 1,308.7 | 1,203.4 | ||
--------------- | -------------------- | |||
Total Liabilities and Shareholders' Equity | $ | 3,069.1 | $ | 3,006.4 |
======== | =========== |
Note: All per share amounts in this release are calculated on the diluted basis, as defined by Statement of Financial Accounting Standards (SFAS) No. 128.
News Media Contact:
Margaret Graham
585.338.5469
Margaret.Graham@bausch.com
Investor Relations Contact:
Daniel L. Ritz
585.338.5802
Daniel.L.Ritz@bausch.com
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 # 272227
The rebroadcast of the conference call will be available starting at
1:30 p.m. ET October 20, 2004 through midnight on October 22, 2004.
Additionally, the investor call will be broadcast live over the
Internet. It can be accessed from the Investor Relations page of the
Company's Web site, www.bausch.com, or at www.vcall.com.
Bausch & Lomb is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Celebrating its 150th anniversary, the Company is headquartered in Rochester, New York. Bausch & Lomb's 2003 revenues were $2.0 billion; it employs approximately 11,500 people worldwide and its products are available in more than 100 countries. More information about the Company can be found on the Bausch & Lomb Web site at www.bausch.com. Copyright Bausch & Lomb.
® and ™ denote trademarks of Bausch & Lomb Incorporated and its affiliates.