NEW
YORK
|
16-0345235
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
ONE
BAUSCH & LOMB PLACE, ROCHESTER, NEW YORK
|
14604-2701
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(Unaudited)
Third
Quarter Ended
|
(Unaudited)
Nine
Months Ended
|
|||||||||||||||
Dollar
Amounts in Millions - Except Per Share Data
|
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
||||||||||||
Net
Sales
|
$ |
577.3
|
$ |
567.3
|
$ |
1,694.8
|
$ |
1,727.4
|
||||||||
Costs
and Expenses
|
||||||||||||||||
Cost
of products
sold
|
251.5
|
248.7
|
740.1
|
726.5
|
||||||||||||
Selling,
administrative and
general
|
246.9
|
219.6
|
733.8
|
686.4
|
||||||||||||
Research
and
development
|
48.8
|
42.6
|
142.3
|
127.2
|
||||||||||||
547.2
|
510.9
|
1,616.2
|
1,540.1
|
|||||||||||||
Operating
Income
|
30.1
|
56.4
|
78.6
|
187.3
|
||||||||||||
Other
(Income) Expense
|
||||||||||||||||
Interest
and investment
income
|
(6.3 | ) | (7.0 | ) | (21.8 | ) | (13.6 | ) | ||||||||
Interest
expense
|
19.1
|
11.5
|
53.4
|
37.6
|
||||||||||||
Foreign
currency,
net
|
1.4
|
1.1
|
4.6
|
1.2
|
||||||||||||
14.2
|
5.6
|
36.2
|
25.2
|
|||||||||||||
Income
before Income Taxes and Minority Interest
|
15.9
|
50.8
|
42.4
|
162.1
|
||||||||||||
Provision
for income
taxes
|
14.1
|
155.7
|
44.2
|
194.3
|
||||||||||||
Minority
interest in
subsidiaries
|
(1.0 | ) |
0.3
|
(1.3 | ) |
2.4
|
||||||||||
Net
Income (Loss)
|
$ |
2.8
|
$ | (105.2 | ) | $ | (0.5 | ) | $ | (34.6 | ) | |||||
Basic
Earnings (Loss) Per Share
|
$ |
0.05
|
$ | (1.97 | ) | $ | (0.01 | ) | $ | (0.65 | ) | |||||
Average
Shares Outstanding - Basic (000s)
|
53,932
|
53,289
|
53,792
|
53,014
|
||||||||||||
Diluted
Earnings (Loss) Per Share
|
$ |
0.05
|
$ | (1.97 | ) | $ | (0.01 | ) | $ | (0.65 | ) | |||||
Average
Shares Outstanding - Diluted (000s)
|
54,826
|
53,289
|
53,792
|
53,014
|
Dollar
Amounts in Millions - Except Per Share Data
|
(Unaudited)
September 30,
2006
|
December
31,
2005
|
||||||
Assets
|
||||||||
Cash
and cash
equivalents
|
$ |
522.9
|
$ |
720.6
|
||||
Trade
receivables, less
allowances of $16.8 and $16.2, respectively
|
441.9
|
491.7
|
||||||
Inventories,
net
|
266.6
|
219.8
|
||||||
Other
current
assets
|
129.9
|
124.6
|
||||||
Deferred
income
taxes
|
66.3
|
71.2
|
||||||
Total
Current Assets
|
1,427.6
|
1,627.9
|
||||||
Property,
Plant and Equipment, net
|
634.4
|
604.4
|
||||||
Goodwill
|
831.7
|
799.0
|
||||||
Other
Intangibles, net
|
268.1
|
273.8
|
||||||
Other
Long-Term Assets
|
96.5
|
100.3
|
||||||
Deferred
Income Taxes
|
14.2
|
11.0
|
||||||
Total
Assets
|
$ |
3,272.5
|
$ |
3,416.4
|
||||
Liabilities
and Shareholders' Equity
|
||||||||
Notes
payable
|
$ |
2.7
|
$ |
0.2
|
||||
Current
portion of long-term
debt
|
18.8
|
161.2
|
||||||
Accounts
payable
|
82.1
|
88.1
|
||||||
Accrued
compensation
|
126.4
|
126.0
|
||||||
Accrued
liabilities
|
420.0
|
495.5
|
||||||
Federal,
state and foreign
income taxes payable
|
122.8
|
137.7
|
||||||
Deferred
income
taxes
|
2.1
|
1.5
|
||||||
Total
Current Liabilities
|
774.9
|
1,010.2
|
||||||
Long-Term
Debt, less current portion
|
831.0
|
831.2
|
||||||
Pension
and Other Benefit Liabilities
|
145.6
|
137.9
|
||||||
Other
Long-Term Liabilities
|
10.5
|
8.0
|
||||||
Deferred
Income Taxes
|
123.4
|
120.7
|
||||||
Total
Liabilities
|
1,885.4
|
2,108.0
|
||||||
Minority
Interest
|
22.7
|
24.5
|
||||||
Commitments
and Contingencies (Note 9)
|
||||||||
Common
Stock, par value $0.40 per share, 200 million shares authorized,
60,434,358 shares issued (60,427,172 shares in 2005)
|
24.1
|
24.1
|
||||||
Class
B Stock, par value $0.08 per share, 15 million shares authorized,
253,255
shares issued (253,699 shares in 2005)
|
-
|
-
|
||||||
Capital
in Excess of Par Value
|
117.1
|
102.4
|
||||||
Common
and Class B Stock in Treasury, at cost, 6,715,838 shares (6,741,731
shares
in 2005)
|
(356.7 | ) | (356.3 | ) | ||||
Retained
Earnings
|
1,450.1
|
1,471.6
|
||||||
Accumulated
Other Comprehensive Income
|
129.8
|
50.9
|
||||||
Other
Shareholders' Equity
|
-
|
(8.8 | ) | |||||
Total
Shareholders' Equity
|
1,364.4
|
1,283.9
|
||||||
Total
Liabilities and Shareholders' Equity
|
$ |
3,272.5
|
$ |
3,416.4
|
(Unaudited)
Nine
Months Ended
|
||||||||
Dollar
Amounts in Millions
|
Sept.
30,
2006
|
Sept.
24,
2005
|
||||||
Cash
Flows from Operating Activities
|
||||||||
Net
Loss
|
$ | (0.5 | ) | $ | (34.6 | ) | ||
Adjustments
to Reconcile Net Loss to Net Cash Provided by Operating
Activities
|
||||||||
Depreciation
|
75.7
|
72.9
|
||||||
Amortization
|
22.7
|
19.5
|
||||||
Deferred
income
taxes
|
1.1
|
93.9
|
||||||
Stock-based
compensation
expense
|
5.0
|
7.9
|
||||||
Tax
benefits associated with
exercise of stock options
|
-
|
14.4
|
||||||
Gain
from sale of investments
available-for-sale
|
(0.4 | ) |
-
|
|||||
Loss
on divestiture of German
Woehlk contact lens business
|
-
|
2.3
|
||||||
Loss
on retirement of fixed
assets
|
(0.4 | ) |
2.0
|
|||||
Changes
in Assets and Liabilities
|
||||||||
Trade
receivables
|
64.3
|
(15.9 | ) | |||||
Inventories
|
(40.6 | ) | (30.7 | ) | ||||
Other
current
assets
|
(3.2 | ) | (14.0 | ) | ||||
Other
long-term assets, including
equipment on operating lease
|
0.1
|
(4.8 | ) | |||||
Accounts
payable and accrued
liabilities
|
(23.9 | ) |
8.2
|
|||||
Income
taxes
payable
|
(16.7 | ) |
39.7
|
|||||
Other
long-term
liabilities
|
6.5
|
(11.5 | ) | |||||
Net
Cash Provided by Operating Activities
|
89.7
|
149.3
|
||||||
Cash
Flows from Investing Activities
|
||||||||
Capital
expenditures
|
(90.1 | ) | (66.4 | ) | ||||
Net
cash paid for acquisition of
businesses and other intangibles
|
(36.8 | ) | (14.3 | ) | ||||
Cash
received from sale of
investments available-for-sale
|
0.6
|
-
|
||||||
Other
|
1.5
|
(0.7 | ) | |||||
Net
Cash Used in Investing Activities
|
(124.8 | ) | (81.4 | ) | ||||
Cash
Flows from Financing Activities
|
||||||||
Repurchase
of Common and Class B
shares
|
(2.6 | ) | (43.6 | ) | ||||
Exercise
of stock
options
|
0.3
|
61.0
|
||||||
Net
proceeds from issuance of
notes payable
|
-
|
(0.3 | ) | |||||
Repayment
of long-term
debt
|
(143.6 | ) | (0.6 | ) | ||||
Net
distributions to minority
interests
|
(0.6 | ) | (2.9 | ) | ||||
Payment
of
dividends
|
(21.6 | ) | (21.0 | ) | ||||
Net
Cash Used in Financing Activities
|
(168.1 | ) | (7.4 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
5.5
|
(6.3 | ) | |||||
Net
Change in Cash and Cash Equivalents
|
(197.7 | ) |
54.2
|
|||||
Cash
and Cash Equivalents - Beginning of Period
|
720.6
|
501.8
|
||||||
Cash
and Cash Equivalents - End of Period
|
$ |
522.9
|
$ |
556.0
|
||||
Supplemental
Cash Flow Disclosures
|
||||||||
Cash
paid for interest (net of
portion capitalized)
|
$ |
37.9
|
$ |
32.8
|
||||
Net
cash payments for income
taxes
|
$ |
67.8
|
$ |
57.3
|
||||
Supplemental
Schedule of Non-Cash Financing Activities
|
||||||||
Dividends
declared but not
paid
|
$ |
7.0
|
$ |
7.1
|
Third
Quarter Ended
|
Nine
Months Ended
|
|||||||||||||||
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
|||||||||||||
Foreign
currency translation adjustments
|
$ |
22.3
|
$ |
6.1
|
$ |
76.2
|
$ | (79.9 | ) | |||||||
Realized
losses from hedging activity
|
0.4
|
1.6
|
0.6
|
2.6
|
||||||||||||
Market
value adjustments for available-for-sale securities
|
-
|
-
|
2.1
|
-
|
||||||||||||
Change
in minimum pension liability 1
|
-
|
(5.9 | ) |
-
|
(5.9 | ) | ||||||||||
Other
comprehensive income (loss)
|
22.7
|
1.8
|
78.9
|
(83.2 | ) | |||||||||||
Net
income (loss)
|
2.8
|
(105.2 | ) | (0.5 | ) | (34.6 | ) | |||||||||
Total
comprehensive income (loss)
|
$ |
25.5
|
$ | (103.4 | ) | $ |
78.4
|
$ | (117.8 | ) |
1
|
The
change in minimum pension liability in 2005 represented the impact
of
recording a valuation allowance against the tax benefits on the
minimum
pension liability for the U.S. pension plans. The valuation allowance
is
further described in Item 8. Financial Statements and Supplementary
Data under Note 10 — Provision for Income Taxes in the
Company’s 2005 and 2006 Forms 10-K.
|
Third
Quarter Ended
|
Nine
Months Ended
|
|||||||||||||||
Dollar
Amounts in Millions - Except Per Share Data, Number of Shares in
Thousands
|
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
||||||||||||
Net
Income (Loss)
|
$ |
2.8
|
$ | (105.2 | ) | $ | (0.5 | ) | $ | (34.6 | ) | |||||
Weighted
Average Basic Shares Outstanding
|
53,932
|
53,289
|
53,792
|
53,014
|
||||||||||||
Effect
of Dilutive
Shares
|
827
|
2,163
|
1,299
|
2,191
|
||||||||||||
Effect
of Convertible Senior
Notes Shares
|
67
|
67
|
67
|
67
|
||||||||||||
Effect
of 2004 Senior
Convertible Securities Shares
|
-
|
603
|
-
|
471
|
||||||||||||
Weighted
Average Diluted Shares Outstanding 1
|
54,826
|
56,122
|
55,158
|
55,743
|
||||||||||||
Basic
Earnings (Loss) Per Share
|
$ |
0.05
|
$ | (1.97 | ) | $ | (0.01 | ) | $ | (0.65 | ) | |||||
Diluted
Earnings (Loss) Per Share
|
$ |
0.05
|
$ | (1.97 | ) | $ | (0.01 | ) | $ | (0.65 | ) |
1
|
As
a result of the net loss presented for the nine months ended September
30,
2006 and for the third quarter and nine months ended September
24, 2005,
the Company calculates diluted earnings per share using weighted
average
basic shares outstanding for each period, as utilizing diluted
shares
would be anti-dilutive to loss per
share.
|
Amounts
in millions, except per share data
|
For
the Third
Quarter
Ended
Sept.
30,
2006
|
For
the Nine
Months
Ended
Sept.
30,
2006
|
||||||
Operating
income
|
$ |
3.0
|
$ |
5.0
|
||||
Net
income
|
3.0
|
5.0
|
||||||
Basic
earnings per share
|
0.06
|
0.09
|
||||||
Diluted
earnings per share
|
0.05
|
0.09
|
Amounts
in millions, except per share data
|
For
the Third
Quarter
Ended
Sept.
24,
2005
|
For
the Nine
Months
Ended
Sept.
24,
2005
|
||||||
Net
loss, as reported
|
$ | (105.2 | ) | $ | (34.6 | ) | ||
Add:
Share-based compensation expense included in reported net loss, net
of tax
1,2
|
0.2
|
4.9
|
||||||
Deduct:
Total share-based
compensation expense determined under the fair value based method
for all
awards, net of tax 1,
2
|
(3.4 | ) | (14.9 | ) | ||||
Pro
forma net loss
|
$ | (108.4 | ) | $ | (44.6 | ) | ||
Basic
loss per share
|
||||||||
As
reported
|
$ | (1.97 | ) | $ | (0.65 | ) | ||
Pro
forma
|
$ | (2.03 | ) | $ | (0.84 | ) | ||
Diluted
loss per share
|
||||||||
As
reported
|
$ | (1.97 | ) | $ | (0.65 | ) | ||
Pro
forma
|
$ | (2.03 | ) | $ | (0.84 | ) |
1
|
Amounts
reflect mark-to-market adjustments associated with the Company's
Restricted Stock Deferred Compensation
Plan.
|
2
|
Net
of tax amounts were calculated using the combined U.S. Federal and
State
statutory rate of 38.3 percent.
|
Number
of
Options
(000s)
|
Weighted
Average
Exercise
Price
Per Share
|
Weighted
Average
Remaining
Contractual
Term
in Years
|
Aggregate
Intrinsic
Value 1
|
|||||||||||||
Outstanding
as of December 31, 2005
|
5,824
|
$ |
49.96
|
|||||||||||||
Granted
|
31
|
52.87
|
||||||||||||||
Exercised
|
(17 | ) |
32.50
|
|||||||||||||
Forfeited
and canceled
|
(151 | ) |
52.66
|
|||||||||||||
Outstanding
at September 30, 2006
|
5,687
|
49.96
|
5.5
|
$ |
40.7
|
|||||||||||
Options
exercisable at September 30, 2006
|
4,764
|
$ |
46.91
|
5.3
|
$ |
40.7
|
1
|
Calculated
using in-the-money stock options multiplied by the difference between
the
average of the Company’s high and low stock price on September 29, 2006
and the option exercise price. The total number of in-the-money options
exercisable on September 30, 2006 was approximately 2.8
million.
|
For
the Nine
Months
Ended
Sept.
30,
2006
|
For
the Nine
Months
Ended
Sept.
24,
2005
|
|||||||
Weighted
average grant-date fair value of stock options granted per
share
|
$ |
16.96
|
$ |
24.48
|
||||
Total
fair value of options vested
|
$ |
19.1
|
$ |
18.9
|
||||
Total
intrinsic value of options exercised
|
$ |
0.3
|
$ |
45.1
|
For
the Third
Quarter
Ended
Sept.
30,
2006
|
For
the Nine
Months
Ended
Sept.
30,
2006
|
|||||||
Expected
life
|
5
|
5
|
||||||
Expected
volatility
|
30.84 | % | 30.27 | % | ||||
Risk-free
interest rate
|
4.97 | % | 4.86 | % | ||||
Expected
dividend yield
|
1.09 | % | 1.01 | % |
Nonvested
Options
|
Number
of
Options
(000s)
|
Weighted
Average
Grant-
Date
Fair Value
|
||||||
Nonvested
options at December 31, 2005
|
2,024
|
$ |
19.84
|
|||||
Granted
|
31
|
16.96
|
||||||
Vested
|
(1,082 | ) |
17.50
|
|||||
Forfeited
and canceled
|
(50 | ) |
21.89
|
|||||
Nonvested
options at September 30, 2006
|
923
|
$ |
22.44
|
Nonvested
Restricted Shares
|
Numbers
of
Shares
(000s)
|
Weighted
Average
Grant-Date
Fair
Value
|
||||||
Nonvested
restricted shares at December 31, 2005
|
288
|
$ |
52.37
|
|||||
Granted
|
37
|
54.24
|
||||||
Vested
|
(31 | ) |
40.53
|
|||||
Forfeited
and canceled
|
(2 | ) |
83.55
|
|||||
Nonvested
restricted shares at September 30, 2006
|
292
|
$ |
53.64
|
For
the Nine
Months
Ended
Sept.
30,
2006
|
For
the Nine
Months
Ended
Sept.
24,
2005
|
|||||||
Weighted
average grant-date fair value of restricted stock awards granted
per
share
|
$ |
54.24
|
$ |
74.58
|
||||
Total
fair value of restricted stock awards vested
|
$ |
1.5
|
$ |
6.9
|
Third
Quarter Ended
|
Nine
Months Ended
|
|||||||||||||||
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
|||||||||||||
Income
before income taxes and minority interest
|
$ |
15.9
|
$ |
50.8
|
$ |
42.4
|
$ |
162.1
|
||||||||
Provision
for income taxes
|
14.1
|
155.7
|
44.2
|
194.3
|
||||||||||||
Effective
tax rate
|
88.7 | % | 306.5 | % | 104.2 | % | 119.9 | % |
Third
Quarter Ended
|
||||||||||||||||
September
30, 2006
|
September
24, 2005
|
|||||||||||||||
Net
Sales
|
Operating
Income
|
Net
Sales
|
Operating
Income
|
|||||||||||||
Americas
|
$ |
258.6
|
$ |
90.1
|
$ |
246.3
|
$ |
67.1
|
||||||||
Europe
|
205.8
|
58.1
|
202.2
|
60.8
|
||||||||||||
Asia
|
112.9
|
9.2
|
118.8
|
25.6
|
||||||||||||
Research
& Development
|
-
|
(56.6 | ) |
-
|
(48.1 | ) | ||||||||||
Global
Operations & Engineering
|
-
|
(41.3 | ) |
-
|
(31.8 | ) | ||||||||||
577.3
|
59.5
|
567.3
|
73.6
|
|||||||||||||
Corporate
administration
|
-
|
(29.4 | ) |
-
|
(17.2 | ) | ||||||||||
$ |
577.3
|
$ |
30.1
|
$ |
567.3
|
$ |
56.4
|
Nine
Months Ended
|
||||||||||||||||
September
30, 2006
|
September
24, 2005
|
|||||||||||||||
Net
Sales
|
Operating
Income
|
Net
Sales
|
Operating
Income
|
|||||||||||||
Americas
|
$ |
756.4
|
$ |
235.7
|
$ |
738.7
|
$ |
234.5
|
||||||||
Europe
|
609.1
|
149.4
|
643.7
|
188.0
|
||||||||||||
Asia
|
329.3
|
37.5
|
345.0
|
81.2
|
||||||||||||
Research
& Development
|
-
|
(161.3 | ) |
-
|
(143.2 | ) | ||||||||||
Global
Operations & Engineering
|
-
|
(112.7 | ) |
-
|
(103.5 | ) | ||||||||||
1,694.8
|
148.6
|
1,727.4
|
257.0
|
|||||||||||||
Corporate
administration
|
-
|
(70.0 | ) |
-
|
(69.7 | ) | ||||||||||
$ |
1,694.8
|
$ |
78.6
|
$ |
1,727.4
|
$ |
187.3
|
September
30, 2006
|
December
31, 2005
|
|||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||||||
Tradenames
|
$ |
120.1
|
$ |
52.2
|
$ |
117.7
|
$ |
44.3
|
||||||||
Technology
and patents
|
101.5
|
78.7
|
96.1
|
74.5
|
||||||||||||
Developed
technology
|
81.6
|
24.8
|
77.6
|
20.7
|
||||||||||||
Distributor
relationships
|
59.0
|
3.6
|
57.9
|
0.9
|
||||||||||||
Intellectual
property
|
39.1
|
13.3
|
38.2
|
10.6
|
||||||||||||
License
agreements
|
41.9
|
22.0
|
36.2
|
18.4
|
||||||||||||
Physician
information & customer database
|
23.5
|
4.9
|
21.8
|
3.9
|
||||||||||||
Non-Compete
agreements
|
1.9
|
1.0
|
1.8
|
0.2
|
||||||||||||
$ |
468.6
|
$ |
200.5
|
$ |
447.3
|
$ |
173.5
|
Pension
Benefit Plans
|
Postretirement
Benefit Plan
|
|||||||||||||||
Third
Quarter Ended
|
Third
Quarter Ended
|
|||||||||||||||
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
|||||||||||||
Service
cost
|
$ |
2.4
|
$ |
1.9
|
$ |
0.3
|
$ |
0.3
|
||||||||
Interest
cost
|
5.1
|
4.9
|
1.5
|
1.4
|
||||||||||||
Expected
return on plan assets
|
(5.7 | ) | (5.5 | ) | (0.8 | ) | (0.8 | ) | ||||||||
Amortization
of transition obligation
|
-
|
0.1
|
-
|
-
|
||||||||||||
Amortization
of prior-service cost
|
0.1
|
-
|
(0.1 | ) | (0.1 | ) | ||||||||||
Amortization
of net loss
|
2.0
|
2.1
|
0.5
|
0.2
|
||||||||||||
Special
termination benefits
|
0.2
|
-
|
-
|
-
|
||||||||||||
Settlement
gain 1
|
-
|
(6.6 | ) |
-
|
-
|
|||||||||||
Net
periodic benefit cost
|
$ |
4.1
|
$ | (3.1 | ) | $ |
1.4
|
$ |
1.0
|
Pension
Benefit Plans
|
Postretirement
Benefit Plan
|
|||||||||||||||
Nine
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
|||||||||||||
Service
cost
|
$ |
7.0
|
$ |
6.0
|
$ |
0.9
|
$ |
1.0
|
||||||||
Interest
cost
|
15.2
|
15.0
|
4.3
|
4.1
|
||||||||||||
Expected
return on plan assets
|
(17.0 | ) | (16.6 | ) | (2.4 | ) | (2.4 | ) | ||||||||
Amortization
of transition obligation
|
-
|
0.1
|
-
|
-
|
||||||||||||
Amortization
of prior-service cost
|
0.2
|
-
|
(0.2 | ) | (0.3 | ) | ||||||||||
Amortization
of net loss
|
6.0
|
6.5
|
1.5
|
0.6
|
||||||||||||
Special
termination benefits
|
0.6
|
0.2
|
-
|
-
|
||||||||||||
Settlement
gain 1
|
-
|
(6.6 | ) |
-
|
-
|
|||||||||||
Net
periodic benefit cost
|
$ |
12.0
|
$ |
4.6
|
$ |
4.1
|
$ |
3.0
|
1
|
The
2005 settlement gain in the pension benefit plans was related to
the
divesture of the Company’s Woehlk subsidiary, which was sold to a local
management group in July 2005.
|
Balance
at December 25, 2004
|
$ |
7.8
|
||
Accruals
for warranties issued
|
6.9
|
|||
Changes
in accruals related to pre-existing warranties
|
(2.1 | ) | ||
Settlements
made
|
(6.7 | ) | ||
Balance
at December 31, 2005 1
|
$ |
5.9
|
||
Accruals
for warranties issued
|
5.1
|
|||
Changes
in accruals related to pre-existing warranties
|
(0.2 | ) | ||
Settlements
made
|
(4.8 | ) | ||
Balance
at September 30, 2006 1
|
$ |
6.0
|
1
|
Warranty
reserve changes and balances do not include amounts in connection
with the
MoistureLoc recall.
|
Balance
at December 25, 2004
|
$ |
7.7
|
||
Accruals
for service contracts
|
11.8
|
|||
Revenue
recognized
|
(12.6 | ) | ||
Balance
at December 31, 2005
|
$ |
6.9
|
||
Accruals
for service contracts
|
9.7
|
|||
Changes
in accruals related to pre-existing service contracts
|
(1.7 | ) | ||
Revenue
recognized
|
(9.2 | ) | ||
Balance
at September 30, 2006
|
$ |
5.7
|
September
30,
2006
|
December
31,
2005
|
|||||||
Inventories,
net
|
||||||||
Raw
materials and supplies
|
$ |
61.7
|
$ |
51.4
|
||||
Work
in process
|
23.5
|
19.5
|
||||||
Finished
products
|
181.4
|
148.9
|
||||||
$ |
266.6
|
$ |
219.8
|
September
30,
2006
|
December
31,
2005
|
|||||||
Property,
Plant and Equipment, net
|
||||||||
Land
|
$ |
20.2
|
$ |
20.0
|
||||
Buildings
|
363.9
|
344.8
|
||||||
Machinery
and equipment
|
1,078.7
|
998.2
|
||||||
Leasehold
improvements
|
26.4
|
25.5
|
||||||
Equipment
on operating lease
|
17.0
|
14.4
|
||||||
1,506.2
|
1,402.9
|
|||||||
Less
accumulated depreciation
|
(871.8 | ) | (798.5 | ) | ||||
$ |
634.4
|
$ |
604.4
|
·
|
A
valuation allowance against deferred income tax assets which reduced
reported results of operations by $149, or $2.79 per share in the
third
quarter ($2.81 year-to-date). The need for the allowance resulted
from
anticipated losses in early future periods attributed to the U.S.
entities
to which the deferred tax assets relate and uncertainties surrounding
when
we will return to U.S. profitability. The expected losses resulted
from,
among other things, the costs associated with the MoistureLoc
recall and its impact on 2006 financial results;
and
|
·
|
Incremental
income tax expense of $9, or $0.18 per share associated with our
repatriating foreign earnings under the American Jobs Creation Act
of 2004
(AJCA).
|
Net
Sales2
|
Percent
(Decrease) IncreaseActual
Dollars
|
Percent
(Decrease) IncreaseConstant
Currency
|
Percent
of
Total
Company
Net
Sales
|
|||||||||||||
Quarter
Ended September 30, 2006
|
||||||||||||||||
Non-U.S.
|
$ |
347.8
|
(1 | %) | (2 | %) | 60 | % | ||||||||
U.S.
1
|
229.5
|
5 | % | 5 | % | 40 | % | |||||||||
Total
Company
|
$ |
577.3
|
2 | % | 1 | % | ||||||||||
Quarter
Ended September 24, 2005
|
||||||||||||||||
Non-U.S.
|
$ |
349.5
|
6 | % | 5 | % | 62 | % | ||||||||
U.S.
1
|
217.8
|
- | % | - | % | 38 | % | |||||||||
Total
Company
|
$ |
567.3
|
3 | % | 3 | % | ||||||||||
Nine
Months Ended September 30, 2006
|
||||||||||||||||
Non-U.S.
|
$ |
1,022.8
|
(4 | %) | (3 | %) | 60 | % | ||||||||
U.S.
1
|
672.0
|
2 | % | 2 | % | 40 | % | |||||||||
Total
Company
|
$ |
1,694.8
|
(2 | %) | (1 | %) | ||||||||||
Nine
Months Ended September 24, 2005
|
||||||||||||||||
Non-U.S.
|
$ |
1,069.4
|
8 | % | 5 | % | 62 | % | ||||||||
U.S.
1
|
658.0
|
3 | % | 3 | % | 38 | % | |||||||||
Total
Company
|
$ |
1,727.4
|
6 | % | 4 | % |
2
|
Amounts
reflect the impact of the voluntary recall of MoistureLoc
discussed in Recent Developments above and in Part I, Item 1.
Financial Statements of this Quarterly Report on Form 10-Q under
Note 14 — Market Withdrawal of MoistureLoc Lens Care Solution.
Charges associated with the recall reduced year-to-date 2006 non-U.S.
net
sales by $19.1. Charges associated with the recall reduced third-quarter
and year-to-date 2005 U.S. net sales by $12.0 and non-U.S. net sales
by
$5.1, respectively.
|
Net
Sales1
|
Percent
Increase
(Decrease)
Actual
Dollars
|
Percent
Increase
(Decrease)
Constant
Currency
|
||||||||||
Quarter
Ended September 30, 2006
|
||||||||||||
Americas
|
$ |
258.6
|
5 | % | 5 | % | ||||||
Europe
|
205.8
|
2 | % | (2 | %) | |||||||
Asia
|
112.9
|
(5 | %) | (3 | %) | |||||||
Total
Company
|
$ |
577.3
|
2 | % | 1 | % | ||||||
Quarter
Ended September 24, 2005
|
||||||||||||
Americas
|
$ |
246.3
|
2 | % | 1 | % | ||||||
Europe
|
202.2
|
5 | % | 6 | % | |||||||
Asia
|
118.8
|
3 | % | 1 | % | |||||||
Total
Company
|
$ |
567.3
|
3 | % | 3 | % | ||||||
Nine
Months Ended September 30, 2006
|
||||||||||||
Americas
|
$ |
756.4
|
2 | % | 2 | % | ||||||
Europe
|
609.1
|
(5 | %) | (4 | %) | |||||||
Asia
|
329.3
|
(5 | %) | (1 | %) | |||||||
Total
Company
|
$ |
1,694.8
|
(2 | %) | (1 | %) | ||||||
Nine
Months Ended September 24, 2005
|
||||||||||||
Americas
|
$ |
738.7
|
5 | % | 4 | % | ||||||
Europe
|
643.7
|
8 | % | 6 | % | |||||||
Asia
|
345.0
|
6 | % | 3 | % | |||||||
Total
Company
|
$ |
1,727.4
|
6 | % | 4 | % |
1
|
Amounts
reflect the impact of the voluntary recall of MoistureLoc
discussed in Recent Developments above. Provisions for sales
returns and consumer rebates associated with the recall reduced
year-to-date 2006 Americas region net sales by $0.6, Europe region
net
sales by $18.0 and Asia region net sales by $0.5. Provisions for
sales
returns and consumer rebates associated with the recall reduced third
quarter and year-to-date 2005 Americas region net sales by $12.4
and Asia
region net sales by $4.7.
|
·
|
Third-quarter
Americas segment net sales increased 5 percent from 2005. Prior-year
figures reflect sales return and consumer rebate provisions ($12)
associated with the MoistureLoc recall. Excluding those charges,
third-quarter 2006 Americas net sales were essentially flat with
2005. For
the first nine months of 2006, Americas segment net sales increased
2
percent from the same period in 2005. Charges related to the
MoistureLoc recall totaled $1 in the first nine months of 2006
and $12 in the first nine months of 2005. Excluding those charges
from
both periods, Americas segment net sales grew 1 percent, and were
flat in
constant currency. For both the quarter and year-to-date periods,
gains in
contact lenses, pharmaceuticals and cataract surgery products offset
by
declines in lens care and refractive
surgery.
|
·
|
Third-quarter
Europe segment net sales increased 2 percent on a reported basis
but
declined 2 percent in constant currency. Higher constant-currency
sales of
pharmaceuticals and refractive surgery products were somewhat offset
by
lower sales of vision care and cataract surgery products. On a
year-to-date basis, Europe segment net sales declined 5 percent,
or 4
percent in constant currency, mainly reflecting $18 in sales return
and
consumer rebate provisions associated with the MoistureLoc
recall. Excluding those provisions and $7 sales from Woehlk in the
prior-year period, Europe region sales declined 1 percent, and were
flat
in constant currency, due mainly to lower sales of vision care and
refractive surgery products.
|
·
|
Third-quarter
Asia segment net sales declined 5 percent from 2005, or 3 percent
in
constant currency. The 2006 figures include $17 incremental sales
from
Freda, and prior-year figures reflect $5 in sales return and consumer
rebate provisions associated with the MoistureLoc recall.
Excluding those items, third-quarter 2006 Asia net sales were down
22
percent on a reported basis (21 percent in constant currency). For
the
year-to-date period, sales declined 5 percent and were down 1 percent
on a
constant-currency basis. The 2006 figures include $44 incremental
sales
from Freda, and both years include sales return and consumer rebate
provisions associated with the MoistureLoc recall ($1 in 2006 and
$5 in 2005). Excluding those items, year-to-date Asia segment sales
declined 18 percent (16 percent in constant currency). Quarterly
and
year-to-date trends were mainly due to lower sales of vision care
products. The Asia region, particularly China, has experienced the
most
significant negative impact on our non-lens care product lines as
a result
of the MoistureLoc recall. We have initiated brand rebuilding
programs to specifically address this situation in order to recoup
as much
lost market share and distribution as possible and rebuild the reputation
of the Bausch & Lomb
brand.
|
Quarter
Ended
September
30, 2006
|
Nine
Months Ended September 30, 2006
|
|||||||||||||||
2006
vs. 2005
Percent
Increase (Decrease)
|
2006
vs. 2005
Percent
Increase (Decrease)
|
|||||||||||||||
Actual
Dollars
|
Constant
Currency
|
Actual
Dollars
|
Constant
Currency
|
|||||||||||||
Contact
Lens
|
5 | % | 4 | % | 12 | % | 11 | % | ||||||||
Lens
Care 1
|
10 | % | 9 | % | (8 | %) | (9 | %) | ||||||||
Pharmaceuticals
|
5 | % | 5 | % | 6 | % | 6 | % | ||||||||
Cataract
and Vitreoretinal
|
3 | % | 3 | % | 4 | % | 4 | % | ||||||||
Refractive
|
(5 | %) | (6 | %) | (5 | %) | (6 | %) | ||||||||
Total
Americas
|
5 | % | 5 | % | 2 | % | 2 | % |
|
1
|
Amounts
reflect the impact of the voluntary recall of MoistureLoc
discussed in Recent Developments above and in Part I, Item 1.
Financial Statements of this Quarterly Report on Form 10-Q under
Note 14 — Market Withdrawal of MoistureLoc Lens Care Solution.
Provisions for sales returns and consumer rebates associated with
the
recall reduced 2006 year-to-date Americas region net sales by $0.6
and
2005 third-quarter and year-to-date Americas region net sales by
$12.4.
|
·
|
Contact
lens category growth in 2006 was mainly due to the
PureVision line of silicone hydrogel contact lenses, reflecting
the recent introduction of PureVision Toric lenses for people
with astigmatism and PureVision Multi-Focal for people with
presbyopia, as well as higher shipments of PureVision spherical
contact lenses. Somewhat offsetting those gains in the quarter were
lower
sales of the SofLens Toric and SofLens Multi-Focal
lines, reflecting market shifts to silicone hydrogel offerings. Combined,
third-quarter and year-to-date sales of disposable toric contact
lenses in
the Americas region increased close to 20 percent compared to 2005,
with
sales of multifocal contact lenses up more than 20
percent.
|
·
|
Third-quarter
lens care sales comparisons benefited from the impact of $12 provisions
associated with the MoistureLoc recall in the prior-year period.
Excluding those charges, third-quarter lens care net sales declined
10
percent from 2005, reflecting the lack of MoistureLoc sales in
2006, and market share losses for our lines of multipurpose solutions
following the product recall. Promotional program activities (recorded
as
an offset to revenues) were also higher in 2006, as we executed brand
rebuilding programs in an effort to regain market share and convert
former
MoistureLoc users to our ReNu MultiPlus and
ReNu Multipurpose lines. Year-to-date sales declines were driven
by these same factors.
|
·
|
Pharmaceuticals
sales gains for the third quarter were mainly due to higher sales
of our
lines of steroid drops containing loteprednol etabonate and ocular
vitamins, combined with gains in our U.S. multisource (or generic)
portfolio and incremental revenues from Retisert drug delivery
implants. According to syndicated market data, prescriptions written
for
each of the products in our loteprednol franchise increased over
the same
period in the prior year by at least 10 percent. Similar trends were
drivers of year-to-date Americas pharmaceuticals category performance,
except for sales of Zylet combination steroid drops, where
year-over-year declines reflected the impact of initial pipeline
shipments
that occurred in the first quarter of
2005.
|
·
|
Sales
gains for cataract and vitreoretinal products were led by our lines
of
IOLs, mainly reflecting higher shipments of premium-priced aspheric
silicone IOL offerings. In total, IOL sales grew more than 10 percent
in
both the quarter and year-to-date periods, with silicone IOL sales
up
about 15 percent. Sales gains were also reported for our lines of
handheld
surgical instruments and phacoemulsification products in the third
quarter, with those gains partially offset by lower sales of
viscoelastics. For the first nine months of 2006, growth for IOLs
and
viscoelastics was partially offset by lower sales of phacoemulsification
products, reflecting lower sales of disposable items used in cataract
surgery.
|
·
|
In
the refractive category, sales of per-procedure cards increased more
than
5 percent on a constant-currency basis in the third quarter and more
than
10 percent in the first nine months of 2006. These gains were more
than
offset by lower sales of microkeratomes and blades, reflecting overall
market declines in procedures combined with inroads by competitive
femtosecond technologies, and by lower sales of lasers and diagnostic
equipment.
|
Quarter
Ended
September
30, 2006
|
Nine
Months Ended September 30, 2006
|
|||||||||||||||
2006
vs. 2005
Percent
(Decrease)Increase
|
2006
vs. 2005
Percent
(Decrease)Increase
|
|||||||||||||||
Actual
Dollars
|
Constant
Currency
|
Actual
Dollars
|
Constant
Currency
|
|||||||||||||
Contact
Lens
|
- | % | (4 | %) | (8 | %) | (6 | %) | ||||||||
Lens
Care 1
|
(2 | %) | (5 | %) | (24 | %) | (23 | %) | ||||||||
Pharmaceuticals
|
7 | % | 3 | % | 3 | % | 4 | % | ||||||||
Cataract
and Vitreoretinal
|
(3 | %) | (7 | %) | (1 | %) | 1 | % | ||||||||
Refractive
|
10 | % | 7 | % | (9 | %) | (7 | %) | ||||||||
Total
Europe
|
2 | % | (2 | %) | (5 | %) | (4 | %) |
1
|
2006
amounts reflect the impact of the voluntary recall of MoistureLoc
discussed in Recent Developments above and in Part I, Item 1.
Financial Statements of this Quarterly Report on Form 10-Q under
Note 14 — Market Withdrawal of MoistureLoc Lens Care Solution.
Provisions for sales returns and consumer rebates associated with
the
recall reduced year-to-date Europe region net sales by
$18.0.
|
·
|
Third-quarter
constant-currency declines in sales of contact lenses were mainly
driven
by lower sales of SofLens One Day and certain older lines of
contact lenses that we are in the process of discontinuing as the
market
transitions to silicone hydrogel platforms. The decline in one-day
contact
lenses reflects the impact of several recent competitive entries
in this
segment. Late in 2006 we launched in Europe our new aspheric daily
disposable offering, SofLens Daily Disposable contact lenses.
Based on very enthusiastic reaction to this lens by both eye care
practitioners and consumers, we believe the SofLens Daily
Disposable brand will contribute to growth in our contact lens business
in
the region in 2007. These factors more than offset sales growth of
about
25 percent for our PureVision line of silicone hydrogel contact
lenses. That growth was due to incremental sales from PureVision
Multi-Focal lenses combined with double-digit gains for both
PureVision SVS and PureVision Toric lenses. Year-to-date
2005 contact lens sales figures include results from our Woehlk business
in Germany, which we divested in the third quarter of that year.
Excluding
Woehlk results from the prior year, Europe region contact lens sales
were
down 4 percent on a reported basis and 3 percent in constant currency
for
the year-to-date period, reflecting the same factors that drove
quarter-to-date results.
|
·
|
Third-quarter
lens care sales declines reflect the impact of the MoistureLoc
recall. We have replaced former MoistureLoc trade inventory with
either ReNuMultiPlus or ReNu Multipurpose
solution in most of our customer accounts and are now implementing
marketing programs targeted at rebuilding distribution and consumer
purchases. Overall, sales of multipurpose solutions declined more
than 10
percent on a constant-currency basis, and more than offset gains
for our
lines of rigid gas permeable solutions and other lines of soft contact
lens solutions. For the year-to-date period, reported declines include
$18
of sales returns and consumer coupon provisions associated with the
MoistureLoc recall. Excluding these items, year-to-date European
lens care sales were down 3 percent from the prior year, and were
down 1
percent in constant-currency. As discussed above, lens care category
net
sales declined in the second half of 2006 in all regions, due to
lost
MoistureLoc revenues following the recall and market share losses
resulting from customer and trade concerns during our investigation
into
increased fungal infections among contact lens wearers. We have initiated
brand rebuilding programs to specifically address this situation
in order
to regain distribution and market
share.
|
·
|
Constant-currency
European pharmaceuticals sales growth in the third quarter of 2006
was
mainly attributable to our lines of ocular vitamins, dry eye and
anti-infective products, partially offset by declines in our lines
of
glaucoma products. For the first nine months of 2006 gains were also
attributable to higher sales of allergy
medications.
|
·
|
Third-quarter
constant-currency cataract and vitreoretinal sales declines mainly
reflected lower sales of phacoemulsification product and viscoelastics
as
compared to the prior-year period. Sales of IOLs were also down slightly.
For the year-to-date period, higher sales of IOLs were nearly offset
by
declines in viscoelastics and phacoemulsification products. Our lines
of
acrylic IOLs, including the Akreos brand, grew close to 10
percent on a constant-currency
basis.
|
·
|
Third-quarter
refractive surgery sales growth in Europe was mainly due to higher
laser
placements, upgrades and per-procedure fees, somewhat offset by lower
sales of microkeratome blades. For the year-to-date period, higher
sales
of microkeratomes were more than offset by lower sales of other types
of
capital equipment, microkeratome blades and lower service
revenue.
|
Quarter
Ended
September
30, 2006
|
Nine
Months Ended September 30, 2006
|
|||||||||||||||
2006
vs. 2005
Percent
(Decrease) Increase
|
2006
vs. 2005
Percent
(Decrease) Increase
|
|||||||||||||||
Actual
Dollars
|
Constant
Currency
|
Actual
Dollars
|
Constant
Currency
|
|||||||||||||
Contact
Lens
|
(14 | %) | (12 | %) | (10 | %) | (7 | %) | ||||||||
Lens
Care 1
|
(39 | %) | (37 | %) | (40 | %) | (38 | %) | ||||||||
Pharmaceuticals
2
|
NM
|
NM
|
NM
|
NM
|
||||||||||||
Cataract
and Vitreoretinal
|
2 | % | 3 | % | - | % | 2 | % | ||||||||
Refractive
|
(30 | %) | (30 | %) | (20 | %) | (20 | %) | ||||||||
Total
Asia
|
(5 | %) | (3 | %) | (5 | %) | (1 | %) |
1
|
Amounts
reflect the impact of the voluntary recall of MoistureLoc
discussed in Recent Developments above and in Part I, Item 1.
Financial Statements of this Quarterly Report on Form 10-Q under
Note 14 — Market Withdrawal of MoistureLoc Lens Care Solution.
Provisions for sales returns and consumer rebates associated with
the
recall reduced year-to-date 2006 Asia region net sales by $0.5
and reduced
2005 quarter- and year-to-date net sales by
$4.7.
|
2
|
NM
denotes “not meaningful.” 2006 pharmaceuticals category sales include
incremental revenues from the acquisition of Freda ($16.7 in the
third
quarter and $44.1 for the first nine months), resulting in a calculated
growth rate of more than 100
percent.
|
·
|
Third-quarter
Asian contact lens revenues declines were primarily due to the negative
collateral impact to our contact lens franchise resulting from the
MoistureLoc situation; combined with lower sales of two-week
disposable contact lenses in Japan (reflecting market trends that
favor
daily disposable products). Negative publicity surrounding
MoistureLoc continued to affect our lens business in markets
outside Japan, particularly China, were we are executing specific
initiatives to rebuild consumer confidence in our vision care products.
Year-to-date contact lens trends are consistent with those noted
above.
|
·
|
Third-quarter
and year-to-date lens care sales declined in most markets in the
Asia
region. In markets other than Japan, sales declines were due to negative
publicity and consumer concern as a result of the MoistureLoc
situation. The most significant negative impact from the
MoistureLoc situation has been seen in China, despite there
having been no confirmed reported infections in that market. As discussed
above, lens care category net sales declined in the second half of
2006 in
all regions, due to lost MoistureLoc revenues following the
recall and market share losses resulting from customer and trade
concerns
during our investigation into increased fungal infections among contact
lens wearers. We have initiated brand rebuilding programs to specifically
address this situation in order to regain distribution and market
share.
In Japan, constant-currency lens care revenues also declined, mainly
reflecting significant pricing activity by a local competitor and
overall
market shifts to one-day contact lenses (which do not require the
use of
lens care solutions).
|
·
|
Asia
region pharmaceuticals sales reflect the fourth-quarter 2005 acquisition
of Freda, which contributed approximately $17 and $44 in the quarter
and
year-to-date periods, respectively. Excluding Freda, our Asian
pharmaceuticals revenues grew about 10 percent on a constant-currency
basis for both the quarter- and year-to-date periods, largely due
to gains
from ocular vitamins.
|
·
|
Third-quarter
and year-to-date growth in the cataract and vitreoretinal category
was
mainly driven by our lines of IOLs, which increased more than 10
percent
on a constant-currency basis. IOL sales performance was mainly due
to
continued distribution and market share gains for the Akreos line
of acrylic IOLs.
|
·
|
Refractive
category sales declines were primarily due to lower laser placements,
partially offset by increased service fees and sales of per-procedure
cards.
|
Net
Sales
|
Percent
(Decrease) IncreaseActual
Dollars
|
Percent
(Decrease)Increase
Constant
Currency
|
||||||||||
Quarter
Ended September 30, 2006
|
||||||||||||
Contact
Lens
|
$ |
179.3
|
(4 | %) | (4 | %) | ||||||
Lens
Care
|
108.8
|
(6 | %) | (6 | %) | |||||||
Pharmaceuticals
|
170.0
|
17 | % | 15 | % | |||||||
Cataract
and Vitreoretinal
|
89.3
|
- | % | (1 | %) | |||||||
Refractive
|
29.9
|
(7 | %) | (8 | %) | |||||||
Total
|
$ |
577.3
|
2 | % | 1 | % | ||||||
Quarter
Ended September 24, 2005
|
||||||||||||
Contact
Lens
|
$ |
186.2
|
10 | % | 9 | % | ||||||
Lens
Care 1
|
115.2
|
(11 | %) | (12 | %) | |||||||
Pharmaceuticals
|
144.8
|
11 | % | 11 | % | |||||||
Cataract
and Vitreoretinal
|
88.9
|
4 | % | 4 | % | |||||||
Refractive
|
32.2
|
(7 | %) | (9 | %) | |||||||
Total
|
$ |
567.3
|
3 | % | 3 | % | ||||||
Nine
Months Ended September 30, 2006
|
||||||||||||
Contact
Lens
|
$ |
528.3
|
(3 | %) | (1 | %) | ||||||
Lens
Care 1
|
307.3
|
(20 | %) | (19 | %) | |||||||
Pharmaceuticals
|
486.6
|
15 | % | 16 | % | |||||||
Cataract
and Vitreoretinal
|
278.2
|
2 | % | 2 | % | |||||||
Refractive
|
94.4
|
(9 | %) | (9 | %) | |||||||
Total
|
$ |
1,694.8
|
(2 | %) | (1 | %) | ||||||
Nine
Months Ended September 24, 2005
|
||||||||||||
Contact
Lens
|
$ |
543.7
|
11 | % | 9 | % | ||||||
Lens
Care 1
|
381.7
|
1 | % | (1 | %) | |||||||
Pharmaceuticals
|
424.1
|
10 | % | 8 | % | |||||||
Cataract
and Vitreoretinal
|
273.7
|
6 | % | 4 | % | |||||||
Refractive
|
104.2
|
(6 | %) | (8 | %) | |||||||
Total
|
$ |
1,727.4
|
6 | % | 4 | % |
1
|
Amounts
reflect the impact of the voluntary recall of MoistureLoc
discussed in Recent Developments above and in Part I, Item 1.
Financial Statements of this Quarterly Report on Form 10-Q under
Note 14 — Market Withdrawal of MoistureLoc Lens Care Solution.
Provisions for sales returns and consumer rebates associated with
the
recall reduced 2006 year-to-date lens care net sales by $19.1 and
reduced
third-quarter and year-to-date 2005 lens care sales by
$17.1.
|
·
|
Overall
growth in our PureVision lines of silicone hydrogel contact
lenses was more than offset by lower sales of two-week spherical
contact
lenses in Japan (reflecting overall market trends), SofLens Toric
disposable contact lenses (resulting from the continued roll-out
of
PureVision Toric in the U.S. market), collateral negative impact
on our Asian contact lens business resulting from the MoistureLoc
situation, and lower sales of older technology products (reflecting
ongoing product rationalization
initiatives).
|
·
|
Excluding
the provisions related to the MoistureLoc recall from
current-year and 2005 results, lens care sales declined 18 percent
for
both the third quarter and first nine months of 2006. Those declines
reflect lost market share resulting from the lack of MoistureLoc
sales following the recall, combined with increased promotional programs
(recorded as an offset to revenues) designed to regain
distribution.
|
·
|
Pharmaceutical
net sales growth includes the impact of the Freda acquisition, as
well as
higher sales of ocular vitamins, and dry eye, allergy and anti-infective
products. Results also reflect incremental sales of Retisert drug
delivery implants, and, for the quarter, Zylet combination
steroid drops, partially offset by lower sales of certain non-ophthalmic
generic drugs. Excluding revenues from Freda, third-quarter
pharmaceuticals category growth was approximately 6 percent (4 percent
in
constant currency) and year-to-date growth was approximately 4 percent
(5
percent in constant currency).
|
·
|
Cataract
and vitreoretinal product category growth was led by higher sales
of IOLs,
which were up approximately 5 percent in the quarter and close to
10
percent for the year-to-date period. Overall, revenues from
phacoemulsification products declined slightly, as higher sales of
disposable products were offset by lower equipment sales, as customers
await the launch of our next generation microsurgical platform,
Stellaris, in 2007.
|
·
|
Net
sales declines in the refractive category reflected lower equipment
and
microkeratome blade sales, partially offset by higher per-procedure
card
fees, which increased more than 10 percent compared to the prior
year.
|
Quarter
Ended
|
Nine
Months Ended
|
|||||||||||||||
Sept.
30,
2006
|
Sept.
24,
2005
|
Sept.
30,
2006
|
Sept.
24,
2005
|
|||||||||||||
Cost
of Products Sold
|
43.6 | % | 43.8 | % | 43.7 | % | 42.1 | % | ||||||||
Selling,
Administrative and General
|
42.8 | % | 38.7 | % | 43.3 | % | 39.7 | % | ||||||||
Research
and Development
|
8.4 | % | 7.5 | % | 8.4 | % | 7.4 | % |
Period
|
Total
Number
of
Shares
Purchased
1
|
Average
Price
Paid
Per
Share
|
Total
Number of
Shares
Purchased
as
Part of
Publicly
Announced
Programs
2,
3
|
Maximum
Number
of
Shares
that May
Yet
Be
Purchased
Under
the
Programs
2,
3
|
||||||||||||
July
2, 2006 – July 29, 2006
|
3,380
|
$ |
48.77
|
256
|
2,193,444
|
|||||||||||
July
30, 2006 – August 26, 2006
|
13,693
|
$ |
46.16
|
298
|
2,193,146
|
|||||||||||
August
27, 2006 – September 30, 2006
|
4,966
|
$ |
51.04
|
4,966
|
2,188,180
|
|||||||||||
Total
|
22,039
|
$ |
47.66
|
5,520
|
2,188,180
|
1
|
Shares
purchased during the third quarter ended September 30, 2006 include
purchases pursuant to a publicly announced repurchase program (see
footnote 2 below), stock compensation plans and deferred compensation
plans.
|
2
|
On
January 27, 2004, the Board of Directors authorized a program to
repurchase up to two million shares of the Company's outstanding
Common
stock. There is no expiration date for this program. During the third
quarter ended September 30, 2006, 5,520 shares were repurchased at
an
average price of $50.69. Shares repurchased after November 2005 were
primarily through private transactions with the rabbi trust for the
Company's Deferred Compensation
Plan.
|
3
|
On
July 26, 2005, the Board of Directors approved the purchase of up
to an
additional two million shares of the Company's outstanding Common
stock.
There is no expiration date for this program, and since its approval
no
shares have been repurchased.
|
BAUSCH
& LOMB INCORPORATED
|
||
June
19, 2007
|
/s/
Ronald L. Zarrella
|
|
Date
|
Ronald
L. Zarrella
Chairman
and
Chief
Executive Officer
|
|
June 19, 2007
|
/s/
Efrain Rivera
|
|
Date
|
Efrain
Rivera
Senior
Vice President and
Chief
Financial Officer
|
S-K
Item
601
No.
|
Document
|
(3)-a
|
Restated
Certificate of Incorporation of Bausch & Lomb Incorporated (filed as
Exhibit (3)-a to the Company's Form 10-K for the fiscal year ended
December 31, 2005, File No. 1-4105, and incorporated herein by
reference).
|
(3)-b
|
Amended
and Restated By-Laws of Bausch & Lomb Incorporated, effective April
26, 2005 (filed as Exhibit (3)-e to the Company's Form 10-Q for the
quarter ended June 25, 2005, File No. 1-4105, and incorporated herein
by
reference).
|
(4)-a
|
See
Exhibit (3)-a.
|
(4)-b
|
Form
of Indenture, dated as of September 1, 1991, between the Company
and
Citibank, N.A., as Trustee, with respect to the Company's Medium-Term
Notes (filed as Exhibit (4)-a to the Company's Registration Statement
on
Form S-3, File No. 33-42858 and incorporated herein by
reference).
|
(4)-c
|
Supplemental
Indenture No. 1, dated May 13, 1998, between the Company and Citibank,
N.A. (filed as Exhibit 3.1 to the Company's Current Report on Form
8-K,
dated July 24, 1998, File No. 1-4105 and incorporated herein by
reference).
|
(4)-d
|
Supplemental
Indenture No. 2, dated as of July 29, 1998, between the Company and
Citibank, N.A. (filed as Exhibit 3.2 to the Company's Current Report
on
Form 8-K, dated July 24, 1998, File No. 1-4105 and incorporated herein
by
reference).
|
(4)-e
|
Supplemental
Indenture No. 3, dated November 21, 2002, between the Company and
Citibank, N.A. (filed as Exhibit 4.8 to the Company's Current Report
on
Form 8-K, dated November 18, 2002, File No. 1-4105 and incorporated
herein
by reference).
|
(4)-f
|
Supplemental
Indenture No. 4, dated August 1, 2003, between the Company and Citibank,
N.A. (filed as Exhibit 4.1 to the Company's Current Report on Form
8-K,
dated August 6, 2003, File No. 1-4105 and incorporated herein by
reference).
|
(4)-g
|
Fifth
Supplemental Indenture, dated August 4, 2003, between the Company
and
Citibank, N.A. (filed as Exhibit 4.2 to the Company's Current Report
on
Form 8-K, filed August 6, 2003, File No. 1-4105, and incorporated
herein
by reference).
|
(4)-h
|
Sixth
Supplemental Indenture, dated December 20, 2004, between the Company
and
Citibank, N.A. (filed as Exhibit (4)-j to the Company's Annual Report
on
Form 10-K for the fiscal year ended December 25, 2004, File No. 1-4105
and
incorporated herein by reference).
|
(4)-i
|
Supplemental
Indenture No. 7, dated as of June 6, 2006 (filed as Exhibit (4) to
the
Company's Current Report on Form 8-K, filed June 12, 2006 and incorporated
herein by reference).
|
(4)-j
|
Supplemental
Indenture No. 8, dated as of November 8, 2006 (filed as Exhibit (4)-j
to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2005, File No. 1-4105 and incorporated herein by
reference).
|
(4)-k
|
Amended
and Restated Supplemental Indenture No. 8, effective as of November
8,
2006 (filed as Exhibit (4)-k to the Company's Annual Report on Form
10-K
for the fiscal year ended December 31, 2005, File No. 1-4105 and
incorporated herein by reference).
|
(4)-l
|
Supplemental
Indenture No. 9, effective as of January 31, 2007 (filed as Exhibit
(4)-k
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 30, 2006, File No. 1-4105 and incorporated herein by
reference).
|
(10)-a
|
Bausch
& Lomb Incorporated Annual Incentive Compensation Plan, as amended
and
restated on July 25, 2006 (filed as Exhibit (10)-q to the Company's
Annual
Report on Form 10-K for the year ended December 31, 2005, File
No. 1-4105
and incorporated herein by reference).
|
(10)-b
|
Amendment
No. 2 to the Amended and Restated Supplemental Retirement Income
Plan III
(filed as Exhibit (10)-w to the Company's Annual Report on Form
10-K for
the year ended December 31, 2005, File No. 1-4105 and incorporated
herein
by reference).
|
(10)-c
|
Letter
Waiver (U.S. Credit Agreement), dated August 28, 2006 (filed as
Exhibit
(10)-ee to the Company's Annual Report on Form 10-K for the year
ended
December 31, 2005, File No. 1-4105 and incorporated herein by
reference).
|
(10)-d
|
Letter
Waiver (B.V. Term Loan), dated August 30, 2006 (filed as Exhibit
(10)-ff
to the Company's Annual Report on Form 10-K for the year ended
December
31, 2005, File No. 1-4105 and incorporated herein by
reference).
|
(23)
|
Consent
of Independent Registered Public Accounting Firm (filed
herewith).
|
(31)-a
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
(31)-b
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
(32)-a
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (furnished herewith).
|
(32)-b
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (furnished herewith).
|