Bausch & Lomb 1999 Annual Report

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10. Debt Short-term debt at December 25, 1999 and December 26, 1998 consisted of $20.9 and $101.9 in U.S. borrowings and $25.0 and $58.5 in non-U.S. borrowings, respectively. To support its liquidity requirements, the company maintains U.S. revolving credit agreements. During the second quarter of 1999, the company restructured its revolving credit agreements and now maintains 364-day bilateral revolving credit agreements totaling $500.0. The interest rate under these agreements is based on LIBOR, or at the company’s option, such other rate as may be agreed upon by the company and the bank. No debt was outstanding under these agreements at December 25, 1999. In addition, the company maintains other lines of credit on which it may draw to meet its financing requirements. The company believes its existing credit facilities provide adequate liquidity to meet obligations, fund capital expenditures and invest in potential growth opportunities. Commitment fees on the revolving credit agreements fluctuate according to the long-term debt ratings of the company and were See the future 36 Bausch & Lomb 0.1% as of December 25, 1999. The company also maintains unused U.S. bank lines of credit amounting to approximately $27.0. Compensating balance arrangements for these lines are not material. During 1999, the company terminated two seven-year interest rate swap agreements. Each swap agreement had a notional amount of $100.0 and was used to convert $200.0 of U.S. commercial paper into fixed-rate obligations with effective interest rates, prior to termination, of 6.48%. Average short-term interest rates, which include the effect of the interest rate swap agreements in 1998, were 5.4% and 5.7% for the years ended 1999 and 1998, respectively. The maximum amount of short-term debt at the end of any month was $261.4 in 1999 and $893.3 in 1998. Average short-term, month-end borrowings were $171.9 in 1999 and $550.1 in 1998. The components of long-term debt were: Interest Rate Percentage December 25, 1999 December 26, 1998 Fixed-rate notes payable Notes due in 1999 2.21-2.28 $ .– $ 25.8 Notes due in 2001 or 20111 6.15 100.0 100.0 Notes due in 2001 or 20262 6.56 100.0 100.0 Notes due in 20033 5.95 85.0 85.0 Notes due in 2003 or 20131 6.38 100.0 100.0 Notes due in 20044 6.75 200.0 200.0 Notes due in 2005 or 20251 6.50 100.0 100.0 Notes due in 20284 7.13 200.0 200.0 All other fixed-rate notes Variable rate and other borrowings Various .– 7.0 Promissory notes5 – .– 300.0 Securitized trade receivables expiring in 2002 5.446 75.0 75.0 Industrial Development Bonds due in 2015 5.156 8.5 8.5 Other Various 9.5 11.1 978.0 1,312.4 Less current portion (1.0) (31.1) $977.0 $1,281.3 1 Notes contain put/call options exercisable at 100% of par in 2001, 2003 and 2005 for the 6.15%, 6.38% and 6.50% notes, respectively. The company has also entered into remarketing agreements with respect to each of these issues, which allow the agent to call the debt from the holders on the option exercisable dates, and then remarket them. If this right is exercised the coupon rate paid by the company will reset to a rate higher than the then current market rate. 2 Notes contain an option allowing the holder to put these notes back to the company in 2001; otherwise the notes mature in 2026. 3 An interest rate swap agreement effectively converts this note to a floating-rate liability. At December 25, 1999, the effective rate on these notes was 5.88%. 4 The company, at its option, may call these notes at any time pursuant to a make-whole redemption provision, which would compensate holders for any changes in market value of the notes upon early extinguishment. 5 At December 26, 1998, a long-term revolving credit agreement supported $300.0 short-term unsecured promissory notes which were classified as long-term debt. 6 Represents rate at December 25, 1999.
Interest rate swap agreements on long-term debt issues resulted in an increase in the long-term effective interest rate from 6.31% to 6.33% in 1999 and a reduction in 1998 longterm rates from 6.20% to 6.16%. Long-term borrowing maturities during the next five years are $1.0 in 2000; $9.0 in 2001; $75.8 in 2002; $85.8 in 2003 and $199.8 in 2004. If all options on debt are exercised in future years, then $208.9 and $185.8 of long-term debt will be payable by the company in 2001 and 2003, respectively. 11. Operating Leases The company leases land, buildings, machinery and equipment under noncancelable operating leases. Total annual rental expense for 1999, 1998 and 1997 amounted to $34.2, $34.5 and $26.2, respectively. Minimum future rental commitments having noncancelable lease terms in excess of one year aggregated $134.3 as of December See the future 37 Bausch & Lomb 25, 1999 and are payable as follows: 2000, $24.8; 2001, $21.8; 2002, $67.7; 2003, $6.7; 2004, $4.1 and beyond, $9.1. The company leases an office facility under a seven-year operating lease, expiring in 2002, with an associated residual value guarantee in an amount not to exceed $54.6. During 1999, net rental payments on the lease, included above, approximated $3.1. 12. Employee Benefits The company’s benefit plans which in the aggregate cover substantially all U.S. employees and employees in certain other countries, consist of defined benefit pension plans, defined contribution plans and a participatory defined benefit postretirement plan. The information provided below pertains to the company’s defined benefit pension and postretirement plans. The following table provides reconciliations of the changes in benefit obligations, fair value of plan assets and funded status for the two-year period ending December 25, 1999. Pension Benefit Plans Postretirement Benefit Plan 1999 1998 1999 1998 Reconciliation of benefit obligation Obligation at beginning of year $257.1 $214.0 $ 68.1 $ 75.5 Service cost 9.8 9.2 1.2 1.3 Interest cost 16.9 16.2 4.3 4.8 Participant contributions (1.7) (1.6) .– .– Plan amendments .– 0.4 .– .– Divestitures/acquisitions (30.3) 0.8 .– .– Currency translation adjustments (2.8) 1.8 .– .– Curtailment gains (1.9) .– (1.4) .– Benefit payments (18.0) (14.6) (6.5) (6.3) Actuarial loss (gain) 5.2 30.9 (3.4) (7.2) Obligation at end of year $234.3 $257.1 $ 62.3 $ 68.1 Reconciliation of fair value of plan assets Fair value of plan assets at beginning of year $236.5 $201.6 $ 39.3 $ 33.9 Actual return on plan assets 46.5 38.4 10.4 11.7 Divestitures/acquisitions (30.3) 0.1 .– .– Employer contributions 7.5 8.2 .– .– Participant contributions 1.7 1.6 .– .– Benefit payments (18.0) (14.6) (6.5) (6.3) Currency translation adjustments (2.9) 1.2 .– .– Fair value of plan assets at end of year $241.0 $236.5 $ 43.2 $ 39.3 Reconciliation of funded status to net amount recognized on the balance sheet Funded status at end of year $ 6.7 $ (20.6) $(19.1) $(28.8) Unrecognized transition (asset) obligation (7.6) 3.5 .– .– Unrecognized prior-service cost 10.0 11.6 (1.2) (1.3) Unrecognized actuarial gain (10.9) (0.9) (46.5) (45.8) Net amount recognized $ (1.8) $ (6.4) $(66.8) $(75.9)
Page 1 and 2: “See the future” Bausch & Lomb
Page 3 and 4: At a Glance Key Products Vision Car
Page 5 and 6: Dear Fellow Shareholders: We entere
Page 7 and 8: Increased R&D Driving Revenue Growt
Page 9 and 10: 20/10 vision can be realized sooner
Page 11 and 12: The tiny Vitrasert implant pictured
Page 13 and 14: Financial Review Dollar Amounts In
Page 15 and 16: costs by streamlining functions and
Page 17 and 18: 1999 Versus 1998 Sales in markets o
Page 19 and 20: Working Capital Working capital and
Page 21 and 22: Information Concerning Forward-Look
Page 23 and 24: Statements Of Income For The Years
Page 25 and 26: Statements Of Cash Flows For The Ye
Page 27 and 28: Notes To Financial Statements Dolla
Page 29 and 30: accepted accounting principles to r
Page 31 and 32: The costs of employee terminations
Page 33 and 34: 5. Restructuring Charges And Asset
Page 35 and 36: Business Segment The following tabl
Page 37 and 38: 8. Other Short- And Long-Term Inves
Page 39: Reconciliations of the statutory U.
Page 43 and 44: For amounts pertaining to postretir
Page 45 and 46: See the future 41 Bausch & Lomb 199
Page 47 and 48: Quarterly Stock Prices (unaudited)
Page 49 and 50: Report Of Independent Accountants T
Page 51: Corporate Information Internet Addr

Bausch & Lomb 1999 Annual Report

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