Bausch & Lomb 1999 Annual Report

The costs of employee terminations related to 596 employees
in production, R&D, selling and administration. During 1999
and 1998, 384 and 100 of these employees were terminated,
respectively, leaving 112 to be terminated in 2000. Employees to
be terminated in 2000 include those in a foreign jurisdiction that
involved a lengthy statutory process of notice and approval prior
to termination. Management does not believe such process will
result in severance payments or other costs materially different
from those accrued. The facilities closure costs primarily represented
leasehold termination payments and fixed asset
writedowns relating to duplicate facilities. The closures and
consolidations in the U.S. were substantially completed in
1999. The closures and consolidations outside the U.S. were
commenced in 1999 and are expected to be substantially
complete in 2000. Involuntary termination benefits of $18.1
were accrued in 1998. Amounts paid and charged against the
liability were $8.4 in 1999 and $5.4 in 1998.
3. Discontinued Operations
On June 26, 1999, the company completed the sale of its sunglass
business to Luxottica Group S.p.A. for $636.0 in cash. The company
recorded an after-tax gain of $126.3 or $2.16 per diluted
share, which included the costs associated with exiting the business,
such as severance pay and additional pension costs. The results of
the sunglass business have been reported as discontinued operations
in the accompanying Statements of Income. Revenues of this
business were $252.7, $445.6 and $482.9 for 1999, 1998
and 1997, respectively. At the time of the sale, certain non-U.S.
sunglass businesses were subject to deferred closings due to local
regulatory and legal considerations, all of which should be
resolved to enable closings to occur within a 12-month period
from the original date of sale, with the exception of the company’s
interest in the sunglass business of Bausch & Lomb India
Costs of Exit Activities
Employee
Severance Facilities Contract
and Relocation Closure Costs Terminations Total
Accrued at acquisition date
Less 1998 Activity
$ 21.7 $ 5.5 $ 0.9 $ 28.1
Cash payments (6.3) (0.7) (0.9) (7.9)
Non-cash items .– (0.3) .– (0.3)
Balances at December 26, 1998
Less 1999 Activity
15.4 4.5 .– 19.9
Cash payments (10.7) (0.4) .– (11.1)
Non-cash items .– (2.6) .– (2.6)
Balances at December 25, 1999 $ 4.7 $ 1.5 $ .– $ 6.2
See the future 27 Bausch & Lomb
Limited, which is expected to occur within 24 months from the
original date of sale. Most of the deferred closings were completed
prior to December 25, 1999. Net assets from the remaining units
were classified as net assets held for disposal in the company’s
December 25, 1999 balance sheet. Net assets of the sunglass
business subject to deferred closing totaled $29.3 at December
25, 1999, and consisted primarily of inventory, receivables,
property, plant and equipment, accrued liabilities and payables.
On August 30, 1999 the company completed the sale of its
hearing aid business to Amplifon S.p.A., a privately-held
company in Italy. The company recorded an after-tax gain of
$11.1 or $0.19 per diluted share, including costs associated with
exiting the business. Also during the third quarter, the company
completed the sale of Charles River Laboratories, a biomedical
business, to DLJ Merchant Banking Partners II, L.P., an affiliate
of the investment banking firm of Donaldson, Lufkin and
Jenrette, for approximately $400 in cash and $43 in promissory
notes. The company retained a 12.5% equity interest in the
Charles River Laboratories business. The company recorded an
after-tax gain of $170.7 or $2.91 per diluted share, including costs
associated with exiting the business. The hearing aid, the biomedical
and the skin care business (which was sold in 1998)
collectively, comprised the company’s healthcare segment. The
results of the healthcare segment have been reported as discontinued
operations in the accompanying Statements of Income.
Revenues for this segment were $241.0, $319.7 and $324.1
for 1999, 1998 and 1997, respectively.
Income (loss) from discontinued operations as reported on the
company’s Statements of Income were net of income taxes of $20.6,
$14.2 and $(5.0) for the fiscal years ended 1999, 1998 and 1997.
The balance sheets at December 25, 1999 and December 26, 1998
and the statements of cash flows for the years ended December
25, 1999, December 26, 1998 and December 27, 1997 have not
been restated to reflect the divestitures of these businesses.