SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 1999
BAUSCH & LOMB INCORPORATED
(Exact name of registrant as specified in its charter)
New York 1-4105 16-0345235
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number Identification No.)
One Bausch & Lomb Place, Rochester NY 14604-2701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 338-6000
Inapplicable
(Former name or address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Disposal of Sunglass Business
On June 26, 1999, Bausch & Lomb Incorporated ("the company")
completed the sale of its sunglass business to Luxottica Group
S.p.A. ("Luxottica") for approximately $640 million in cash
pursuant to a Purchase Agreement dated April 28, 1999 (the
"Agreement"). A copy of the Agreement is attached hereto in
Exhibit 2. The transaction includes all of the company's sunglass
lines including the Ray-Ban, Revo, Arnette and Killer Loop
brands.
Formal completion of the sale will be deferred in a few countries
due to country-specific legal requirements.
Under the terms of the Agreement, the company will provide
certain administrative support and warehousing/distribution
services to Luxottica for a transition period of at least one
year.
The sunglass business accounted for over 95% of the company's
eyewear segment, and its disposition constitutes a disposal of a
business segment as defined by Accounting Principles Board
Opinion No. 30. Accordingly, previously issued financial results
will be restated in future filings to exclude historical results
of the eyewear segment from continuing operations. Historically
the eyewear segment included results for the previously divested
thin film technology and sports optics businesses, and the vision
accessories business which will be reported prospectively as part
of the company's vision care segment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of March 27, 1999
Unaudited Pro Forma Condensed Consolidated Statements of
Earnings for the following periods:
Quarter ended March 27, 1999
Quarter ended March 28, 1998
Year ended December 26, 1998
Year ended December 27, 1997
Year ended December 28, 1996
(c) See Exhibit Index for a listing of exhibits.
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited pro forma condensed consolidated balance
sheet and pro forma condensed consolidated statements of earnings
have been prepared to illustrate the effect of the divestiture of
the sunglass business of Bausch & Lomb Incorporated to Luxottica
Group S.p.A. and the classification of historical eyewear segment
results (substantially all of which was comprised of the sunglass
business) as discontinued operations in accordance with
Accounting Principles Board Opinion No. 30.
The pro forma condensed consolidated balance sheet assumes that
the divestiture was consummated on March 27, 1999. The pro forma
condensed consolidated statements of earnings assume that the
divestiture was consummated as of December 31, 1995. The pro
forma adjustments, and the assumptions on which they are based,
are described in the accompanying Notes to the Pro Forma
Condensed Consolidated Financial Statements.
These pro forma financial statements are based upon and should be
read in conjunction with the historical consolidated financial
statements and the related notes of the company, which were
previously reported on the company's 1996, 1997 and 1998 annual
reports to shareholders on Forms 10-K and the company's quarterly
report on Form 10-Q for the quarter ended March 27, 1999, and
which are incorporated herein by reference.
The pro forma information is presented for illustrative purposes
only and is not necessarily indicative of operating results or
financial position that would have occurred if the divestiture
had been consummated on the dates indicated, nor is it
necessarily indicative of future operating results or financial
position.
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 27, 1999
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
Pro Forma
As Filed Adjustments Pro Forma
ASSETS
Current Assets
Cash and cash equivalents $ 185.8 $ 518.0 (a) $ 546.3
(157.5) (b)
Other investments, short term 275.0 275.0
Trade receivables, net 532.1 (107.4) (a) 424.7
Inventories, net 454.0 (164.2) (a) 289.8
Deferred taxes, net 66.1 66.1
Other current assets 156.2 (18.7) (a) 137.5
1,669.2 70.2 1,739.4
Property, plant and equipment 722.8 (73.5) (a) 649.3
Goodwill and other
intangibles, net 753.8 (99.5) (a) 654.3
Other investments 116.8 116.8
Other assets 175.1 (1.3) (a) 173.8
Total Assets $3,437.7 $(104.1) $3,333.6
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Notes payable $ 110.6 $ 110.6
Current portion of long-term
debt 28.1 28.1
Accounts payable 100.2 $ (10.5) (a) 89.7
Accrued compensation 95.2 (9.5) (a) 85.7
Accrued liabilities 364.2 (46.3) (a) 317.9
Income taxes payable 54.3 54.3
752.6 (66.3) 686.3
Long-term debt, less current
portion 1,281.1 (157.5) (b) 1,123.6
Other long-term liabilities 105.0 (1.3) (a) 103.7
Minority interest 448.2 448.2
Total Liabilities 2,586.9 (225.1) 2,361.8
Shareholders' Equity 850.8 121.0 (a) 971.8
Total Liabilities &
Shareholders' Equity $3,437.7 $(104.1) $3,333.6
See accompanying Notes to Condensed Consolidated Pro Forma
Financial Statements.
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE QUARTER ENDED MARCH 27, 1999
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
Pro Forma
As Filed Adjustments Pro Forma
Net customer sales $ 574.8 $(107.3) (c) $ 467.5
Costs and expenses:
Cost of products sold 267.3 (57.2) (c) 210.1
Selling, administrative and
general 228.8 (42.9) (c) 185.9
Research and development 24.0 (2.7) (c) 21.3
520.1 (102.8) 417.3
Operating earnings 54.7 (4.5) 50.2
Other expense (Income):
Interest and investment
income (10.1) (10.1)
Interest expense 24.4 (2.0) (d) 22.4
Foreign currency (2.9) (2.9)
Earnings before minority
interest
& tax 43.3 (2.5) 40.8
Income tax expense 15.6 (1.6) (c) 14.7
0.7 (d)
Minority interest 5.3 (0.5) (c) 4.8
Earnings from continuing
operations $ 22.4 $ (1.1) $ 21.3
Earnings per share from
continuing operations:
Basic $ 0.39 $ 0.38
Diluted $ 0.39 $ 0.37
Average shares outstanding:
Basic 56,724
Diluted 58,062
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE QUARTER ENDED MARCH 28, 1998
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
Pro Forma
As Filed Adjustments Pro Forma
Net customer sales $ 553.1 $(109.5) (c) $ 443.6
Costs and expenses:
Cost of products sold 276.1 (62.7) (c) 213.4
Selling, administrative
and general 228.7 (46.9) (c) 181.8
Research and development 20.6 (3.2) (c) 17.4
Purchased in-process research
& development 41.0 41.0
Restructuring charges 3.7 (1.9) (c) 1.8
570.1 (114.7) 455.4
Operating earnings (17.0) 5.2 (11.8)
Other expense (Income):
Interest and investment
income (10.1) (10.1)
Interest expense 25.4 (2.0) (d) 23.4
Foreign currency (1.7) (1.7)
Earnings before minority
interest
& tax (30.6) 7.2 (23.4)
Income tax expense (12.6) 2.0 (c) (9.9)
0.7 (d)
Minority interest 5.2 (0.6) (c) 4.6
Earnings from continuing
operations $ (23.2) $ 5.1 $ (18.1)
Earnings per share from
continuing operations:
Basic $ (0.42) $ (0.33)
Diluted $ (0.42) $ (0.33)
Average shares outstanding:
Basic 55,333
Diluted 55,333
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 26, 1998
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
Pro Forma
As Filed Adjustments Pro Forma
Net customer sales $2,362.8 $(445.6) (c) $1,917.2
Costs and expenses:
Cost of products sold 1,093.1 (244.7) (c) 848.4
Selling, administrative
and general 917.0 (185.1) (c) 731.9
Research and development 91.7 (11.4) (c) 80.3
Goodwill impairment charge 85.0 85.0
Purchased in-process research
& development 41.0 41.0
Restructuring charges 11.3 (5.9) (c) 5.4
2,239.1 (447.1) 1,792.0
Operating earnings 123.7 1.5 125.2
Other expense (Income):
Interest and investment
income (45.1) (45.1)
Interest expense 100.8 (7.9) (d) 92.9
Foreign currency (6.4) (6.4)
Gain on divestiture (56.0) (56.0)
Earnings before minority
interest & tax 130.4 9.4 139.8
Income tax expense 79.4 0.7 (c) 83.0
2.9 (d)
Minority interest 25.8 (2.5) (c) 23.3
Earnings from continuing
operations $ 25.2 $ 8.3 $ 33.5
Earnings per share from
continuing operations:
Basic $ 0.45 $ 0.60
Diluted $ 0.45 $ 0.59
Average shares outstanding:
Basic 55,824
Diluted 56,367
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements.
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 27, 1997
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
Pro Forma
As Filed Adjustments Pro Forma
Net customer sales $ 1,915.7 $(482.9) (c) $1,432.8
Costs and expenses:
Cost of products sold 884.7 (300.3) (c) 584.4
Selling, administrative and
general 743.8 (196.9) (c) 546.9
Research and development 67.5 (13.7) (c) 53.8
Restructuring charges 71.7 (26.7) (c) 45.0
1,767.7 (537.6) 1,230.1
Operating earnings 148.0 54.7 202.7
Other expense (Income):
Interest and investment
income (40.4) (40.4)
Interest expense 56.0 (7.9) (d) 48.1
Foreign currency (6.6) (6.6)
Litigation provision 21.0 21.0
Earnings before minority
interest & tax 118.0 62.6 180.6
Income tax expense 45.6 19.7 (c) 68.3
3.0 (d)
Minority interest 23.0 (1.1) (c) 21.9
Earnings from continuing
operations $ 49.4 $ 41.0 $ 90.4
Earnings per share from
continuing operations:
Basic $ 0.89 $ 1.63
Diluted $ 0.89 $ 1.63
Average shares outstanding:
Basic 55,383
Diluted 55,654
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements
BAUSCH & LOMB INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 28, 1996
DOLLAR AMOUNTS IN MILLIONS
(UNAUDITED)
Pro Forma
As Filed Adjustments Pro Forma
Net customer sales $1,926.8 $(516.6) (c) $1,410.2
Costs and expenses:
Cost of products sold 872.3 (299.7) (c) 572.6
Selling, administrative and
general 773.1 (201.7) (c) 571.4
Research and development 75.5 (17.5) (c) 58.0
Restructuring charges 15.1 (1.6) (c) 13.5
1,736.0 (520.5) 1,215.5
Operating earnings 190.8 3.9 194.7
Other expense (Income):
Interest and investment
income (42.8) (42.8)
Interest expense 51.7 (7.9) (d) 43.8
Foreign currency (1.6) (1.6)
Gain on divestiture (1.5) (1.5)
Litigation provision 16.1 16.1
Earnings before minority
interest & tax 168.9 11.8 180.7
Income tax expense 63.7 1.4 (c) 68.1
3.0 (d)
Minority interest 22.1 (0.1) (c) 22.0
Earnings from continuing
operations $ 83.1 $7.5 $ 90.6
Earnings per share from
continuing operations:
Basic $ 1.48 $ 1.61
Diluted $ 1.47 $ 1.60
Average shares outstanding:
Basic 56,299
Diluted 56,510
See accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements
BAUSCH & LOMB INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA
(UNAUDITED)
Pro Forma Condensed Consolidated Balance Sheet Adjustments:
The pro forma condensed consolidated balance sheet assumes that
the divestiture of the eyewear segment occurred as of March 27,
1999. Assumptions and adjustments to reflect the eyewear segment
disposal in the condensed consolidated balance sheet include:
(a) To reflect the estimated net cash proceeds and gain on the
sale of sunglass product lines to Luxottica Group S.p.A.:
Sales price $636.0
Estimated cash taxes, assuming an effective income tax rate of
40% (80.0)
Estimated costs resulting directly from the divestiture
including transaction fees, legal and accounting fees,
termination benefits, and pension curtailment charge (38.0)
Estimated net cash proceeds $518.0
Net operating assets of sunglass business as of March 27, 1999 (397.0)
Estimated after-tax gain $121.0
For purposes of these statements, certain employee termination
benefits have been included in the estimated costs resulting
directly from the sunglass product lines sale. These include
costs that may arise in connection with the vesting of certain
stock options and grants as well as severance provisions.
The letter agreement between the two parties dated June 25, 1999
provides for a payment of up to an additional $4.0 in purchase
price within ninety days of the deal closing, subject to certain
conditions. As this additional consideration is of a contingent
nature, it has not been reflected in the pro forma condensed
consolidated financial statements or adjustments.
(b) To reflect the use of the after-tax proceeds from the sale of
the sunglass product lines. Cash received was used first to
retire a portion of domestic commercial paper borrowings (which
were classified as long-term debt for financial reporting
purposes at March 27, 1999) and the remainder was invested in
cash equivalents. The pro forma adjustment assumes that $157.5 of
the $357.5 of outstanding domestic commercial paper at March 27,
1999 was retired. This is consistent with the actual application
of cash at the disposal date. In accordance with SEC rules for
preparing pro forma financial statements, no adjustment has been
made to assume additional interest income would be generated from
the portion of the proceeds not used to retire debt.
Pro Forma Condensed Consolidated Statement of Earnings
Adjustments:
The pro forma condensed consolidated statements of earnings
assume that the divestiture of the eyewear segment occurred as of
December 31, 1995, which was the first day of fiscal 1996. The
statements do not include any impact of the gain on disposal or
costs related to the divestiture. The elimination of eyewear
segment results of operations in adjustment (c) includes all
costs reported historically by the divested businesses.
Assumptions and adjustments to reflect the eyewear segment
disposal in the pro forma condensed consolidated statements of
income include:
(c) To eliminate results of operations of eyewear segment from
historical financial statement amounts. For 1999 and 1998 amounts
relate entirely to the sunglass product line. For periods prior
to 1998 amounts also include results of the previously divested
thin film technology business. In future public filings,
historical results will be restated from those previously filed
to reflect results of the eyewear segment as discontinued
operations in accordance with Accounting Principles Board Opinion
No. 30.
(d) To reflect estimated impact on interest expense from use of
after-tax proceeds on sale to reduce outstanding debt by $157.5
million. For purposes of these statements, interest savings have
been reflected using an average rate of 5% per annum. A one-
eighth of one percentage point change in the interest rate used
for pro forma purposes would have the following impact on pro
forma income from continuing operations:
Per
Amount Share
Quarter ended March 27,1999 $ - $ -
Quarter ended March 28,1998 - -
Year ended December 26,1998 0.1 -
Year ended December 27,1997 0.1 -
Year ended December 26,1996 0.1 -
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.
BAUSCH & LOMB INCORPORATED
/s/ Stephen C. McCluski
Stephen C. McCluski
Senior Vice President and Chief Financial Officer
July 12, 1999
EXHIBIT INDEX
Exhibit No. Description
2(a) Purchase Agreement between Bausch & Lomb Incorporated and
Luxottica Group S.p.A. dated April 28, 1999. Omitted
schedules and exhibits to the Purchase Agreement as
identified within the schedules and exhibit index of the
agreement will be furnished supplementally to the
Commission upon request.
2(b) Letter Agreement between Bausch & Lomb Incorporated and
Luxottica Group S.p.A. dated June 25, 1999