-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CSvmjulxy9u+Z1OpHJrB32EtdhCSIA+gv8Yh1sz904FTixLOI+De4UEgy5WS7xUa +rXLHte2XEa9DRh3BzS3TQ== 0000003327-96-000011.txt : 19960410 0000003327-96-000011.hdr.sgml : 19960410 ACCESSION NUMBER: 0000003327-96-000011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960206 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19960209 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALBERTO CULVER CO CENTRAL INDEX KEY: 0000003327 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 362257936 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05050 FILM NUMBER: 96514287 BUSINESS ADDRESS: STREET 1: 2525 ARMITAGE AVE CITY: MELROSE PARK STATE: IL ZIP: 60160 BUSINESS PHONE: 7084503039 MAIL ADDRESS: STREET 1: 2525 ARMITAGE AVENUE CITY: MELROSE PARK STATE: IL ZIP: 60160 8-K 1 ALBERTO-CULVER COMPANY FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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) February 6, 1996 ALBERTO-CULVER COMPANY (Exact name of registrant as specified in its charter) Delaware 1-5050 36-2257936 (State or other jurisdiction of (Commission File (I.R.S. Employer incorporation or organization) Number) Identification No.) 2525 Armitage Avenue Melrose Park, Illinois 60160 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (708) 450-3000 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On February 6, 1996, Alberto-Culver Company (Alberto-Culver) completed the acquisition of St. Ives Laboratories, Inc. (St. Ives) pursuant to the Agreement and Plan of Merger, dated as of October 30, 1995, between Alberto-Culver, AC Acquiring Co. (Merger Sub) and St. Ives. The acquisition was consummated by the merger of Merger Sub with and into St. Ives, with St. Ives becoming a wholly owned subsidiary of Alberto-Culver. Except for shares of Common Stock held of record by Alberto-Culver or its subsidiaries and shares of Common Stock held in St. Ives' treasury immediately prior to the consummation of the merger, each share of St. Ives Common Stock outstanding immediately prior to the merger has been converted into the right to receive $15.00 per share in cash without interest. Shares of Common Stock held of record by Alberto-Culver or its subsidiaries and shares of Common Stock held in St. Ives' treasury were canceled and retired. The total consideration of approximately $110 million was funded with the net proceeds available from the issuance of $100 million of 5.5% convertible subordinated debentures in July, 1995 and from the sale of certain trade accounts receivable in January, 1996. St. Ives develops, manufactures and markets personal care products under its SWISS FORMULA(R) brand and manufactures custom label products for sale by other companies. It is Alberto-Culver's current intent to continue using the assets of St. Ives in substantially the same manner as they were used prior to the acquisition. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) St. Ives Laboratories, Inc. and Subsidiaries: (i) Year ended December 31, 1994: Financial Statements: Consolidated Balance Sheet as of December 31, 1994 Consolidated Income Statement for the year ended December 31, 1994 Consolidated Statement of Stockholders' Equity for the year ended December 31, 1994 Consolidated Statement of Cash Flows for the year ended December 31, 1994 Notes to Consolidated Financial Statements Report of Independent Accountants (ii) Nine months ended September 30, 1995 (unaudited): Unaudited Consolidated Balance Sheet as of September 30, 1995 Unaudited Consolidated Income Statement for the nine months ended September 30, 1995 Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 1995 (b) Pro forma consolidated financial information for Alberto-Culver and St. Ives Laboratories, Inc. and Subsidiaries (unaudited): Unaudited Pro-Forma Consolidated Balance Sheet as of September 30, 1995 Unaudited Pro-Forma Consolidated Statement of Earnings for the year ended September, 30, 1995 Notes to Unaudited Pro-Forma Consolidated Financial Statements (c) Exhibits: 2 (a) Agreement and Plan of Merger, dated as of October 30, 1995, between Alberto-Culver Company, AC Acquiring Co., and St. Ives Laboratories, Inc. (filed as Exhibit 2 and incorporated herein by reference from the Alberto-Culver's Schedule 13D filed on November 7, 1995). 2 (b) Stockholders Stock Option Agreement, dated as of October 30,1995, among Alberto-Culver, Gary H. Worth, John R. Worth, the House of Worth Trust dated July 9, 1982 as amended, the Worth Family Trust under an agreement dated November 24, 1990 and the Worth Family Partnership, L.P.(filed as Exhibit 1 and incorporated herein by reference from the Alberto-Culver's Schedule 13D filed on November 7, 1995). 23 Consent of Coopers & Lybrand L.L.P. SIGNATURE 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 hereunto duly authorized. ALBERTO-CULVER COMPANY (Registrant) By:/s/ William J. Cernugel William J. Cernugel Senior Vice President, Finance & Controller (Principal Financial Officer) February 8, 1996
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET December 31, 1994 ASSETS Current assets: Cash and cash equivalents ................................... $ 3,465,709 Short term investments ....... .............................. 1,249,603 Accounts receivable - trade, less allowance for doubtful accounts ($410,000 at December 31, 1994) ......... 20,284,639 Accounts receivable - related party (Note 8) ........ ....... 382,829 Accounts receivable - other ................................. 1,566,553 Inventories (Note 2) ........................................ 30,045,445 Prepaid and other assets .................................... 1,591,065 Deferred income taxes (Note 5) .............................. 1,999,208 ------------ Total current assets .................................... 60,585,051 Plant and equipment, net (Note 3)............................... 8,043,491 Other assets ................................................... 483,426 ------------ Total assets ............................................ $ 69,111,968 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................ $ 11,337,817 Accrued expenses (Note 4) ................................... 9,691,945 Income taxes payable (Note 5). ............................. 610,560 Deferred income taxes (Note 5) .............................. 196,530 Short term debt (Note 6) .................................... 3,500,000 ------------ Total current liabilities ................................ 25,336,852 Commitments (Note 7) Stockholders' equity (Notes 6, 10, 11 and 12): Preferred stock, $.01 par value per share, 5,000,000 shares authorized; no shares issued or outstanding Common stock, $.01 par value per share, 30,000,000 shares authorized; 7,019,399 shares issued and outstanding at December 31, 1994 ................ 70,194 Paid-in capital .............................................. 12,382,018 Retained earnings ............................................ 32,373,433 Cumulative translation adjustments ........................... (1,050,529) ------------ Total stockholders' equity ................................ 43,775,116 ------------ Total liabilities and stockholders' equity ................ $ 69,111,968 The accompanying notes are an integral part of these consolidated financial statements.
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT For the year ended December 31, 1994 Net sales (includes related party sales of $20,069,000 in 1994 - Note 8) (Note 14) ............. $ 157,184,009 ------------- Cost of products sold .................................. 85,594,868 Selling, marketing and administrative expenses (Note 14) 65,851,195 Other general expenses ................................. 1,387,465 ------------- Operating costs and expenses ...................... 152,833,528 ------------- Income from operations ................................. 4,350,481 Interest expense ....................................... 392,130 Other (income), net .................................... (389,119) ------------ Income before income taxes ............................. 4,347,470 Provision for income taxes (Note 5) .................... 2,595,202 ------------- Net income .......................................... $ 1,752,268 Net income per share ................................ $ 0.25 Dividends per share ................................. $ 0.12 Weighted average shares outstanding ................. 7,014,155 The accompanying notes are an integral part of these consolidated financial statements.
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY For the year ended December 31, 1994 Total Common Stock Cumulative Stock- Number of Paid-in Retained Translation holders' Shares Amount Capital Earnings Adjustments Equity Balance, December 31, 1993 6,989,399 $ 69,894 $12,157,318 $31,463,073 ($1,893,576) $41,796,709 Stock options exercised (Note 10) ........... 30,000 300 224,700 225,000 Cash dividends on common stock ($.12 per share) .... (841,908) (841,908) Translation adjustment 843,047 843,047 Net income ............ 1,752,268 1,752,268 ---------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1994 7,019,399 $ 70,194 $12,382,018 $32,373,433 ($1,050,529) $43,775,116 ========== =========== =========== =========== =========== =========== The accompanying notes are an integral part of these consolidated financial statements.
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended December 31, 1994 Cash flow from operating activities: Net income .................................................................. $ 1,752,268 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............................................. 2,449,854 Deferred income taxes ..................................................... (123,764) Loss on disposal of land .................................................. 1,085,465 Provision for losses on accounts receivable ............................... 131,863 Provision for inventory obsolescence ...................................... 346,887 Changes in assets and liabilities: Accounts receivable - trade ............................................. 269,536 Accounts receivable - related party ..................................... (122,810) Accounts receivable - other ............................................. (106,215) Inventories ............................................................. 1,057,352 Prepaid and other assets ................................................ (199,861) Accounts payable ........................................................ 1,549,865 Accrued expenses ........................................................ 672,667 Income taxes payable .................................................... 453,284 ------------ Net cash provided by operating activities ............................... 9,216,391 ------------ Cash flow from investing activities: Proceeds from sale of land .................................................. 847,366 Purchase of plant and equipment ............................................. (2,818,015) Other assets ................................................................ 58,269 Short term investments ...................................................... (1,048) ------------ Net cash used for investing activities .................................. (1,913,428) ------------ Cash flow from financing activities: Common stock options exercised .............................................. 225,000 Cash dividends paid ......................................................... (841,908) Short term debt borrowings .................................................. 35,558,000 Short term debt repayments .................................................. (41,921,000) ------------ Net cash used for financing activities .................................. (6,979,908) ------------ Effect of exchange rate changes on cash ........................................ 118,047 ------------ Net increase in cash and cash equivalents ...................................... 441,102 Cash and cash equivalents at beginning of year ................................. 3,024,607 ------------ Cash and cash equivalents at end of year ....................................... $ 3,465,709 ============ Supplemental Disclosures of Cash Flow Information Cash paid during the year for: Interest .................................................................. $ 256,367 Income taxes .............................................................. $ 1,769,584 The accompanying notes are an integral part of these consolidated financial statements.
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. THE COMPANY AND SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES Nature of Business The principal business of St. Ives Laboratories, Inc. and its subsidiaries (collectively the "Company") is developing, manufacturing and marketing Personal Care Products under its SWISS FORMULA(R) brand and manufacturing Custom Label Products for sale by other companies. Principles of Consolidation The consolidated financial statements include the accounts of St. Ives Laboratories, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Statements of Cash Flows All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. Short Term Investments Short term investments are valued at cost, which approximates market, and consist of United States Treasury Notes. Short term investments are classified as a current asset in the Consolidated Balance Sheets as the Company intends to hold the $1,250,000 of face value government securities until maturity in the second quarter of 1995. At December 31, 1994, the aggregate fair value and weighted average interest rate of the securities was $1,259,000 and 8.45%, respectively. Income from short term investments is included in other income, net. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist of short term investments and trade receivables. The Company invests its excess cash in United States Treasury Notes. Concentration of credit risk with respect to trade receivables is limited due to the large number of customers comprising the Company's customer base and their geographical dispersion. The Company grants uncollateralized credit to domestic and international customers. Domestically, the Company sells its products primarily through food, drug and mass merchandise stores and military exchanges and commissaries. From time to time, the Company experiences write-offs of receivables related to bankruptcy filings of customers. Internationally, the Company conducts business with a few accounts on open terms. Many international customers are required to furnish letters of credit, make advance payments, or provide letters of guarantee in amounts sufficient to limit the Company's credit risk. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. Inventories Inventories are valued at the lower of cost (first-in, first-out) or market. Finished goods inventories include the cost of materials, direct labor and manufacturing overhead. In determining obsolescence related to inventory, the Company, on an ongoing basis, considers factors such as deterioration, spoilage, packaging changes, changes in price level and similar factors which affect the utility of its inventory. ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. THE COMPANY AND SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES (Continued) Plant and Equipment Plant and equipment are stated at cost, less accumulated depreciation and amortization. Machinery and equipment and furniture and fixtures are depreciated using an accelerated method with estimated useful lives which range from three to fifteen years. Tooling is depreciated using a straight-line method over three years. Leasehold improvements are amortized over the shorter of the useful life or lease term. Expenditures for repairs and maintenance are charged to expense as incurred. Replacements and betterments are added to the asset accounts when placed in service. Costs of assets sold or retired and the related amounts of accumulated depreciation and amortization are eliminated from the accounts and the resulting gains or losses on disposal are included in other income, net. Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities. Foreign Currency Foreign exchange gains and losses as a result of translating the Company's foreign subsidiaries' financial statements into U.S. dollars are included as a separate component of stockholders' equity. Actual gains or losses incurred on currency transactions in other than the countries' functional currencies are included in income in the current period. In 1994, foreign currency transaction gains and losses were not significant. Revenue Recognition Revenue from sales is recognized when products are shipped. Advertising Advertising is expensed as incurred and for 1994 amounted to $8,927,000. Product Research and Development Product research and development costs are expensed as incurred and for 1994 amounted to $1,327,000. Net Income per Share Net income per share is computed based on the weighted average number of shares of common stock outstanding. For the periods presented, stock options have an immaterial dilutive effect. 2. INVENTORIES The components of inventories at December 31, 1994 were: Raw and packaging materials $7,027,459 Work in-process 521,744 Finished goods 22,496,242 ------------ $30,045,445 ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. PLANT AND EQUIPMENT Plant and equipment consisted of the following at December 31, 1994: Machinery and equipment $17,627,165 Furniture and fixtures 2,057,786 Leasehold improvements 2,965,876 ------------- 22,650,827 Less accumulated depreciation and amortization (14,607,336) ------------- Net plant and equipment $8,043,491 4. ACCRUED EXPENSES Accrued expenses consisted of the following at December 31, 1994: Sales promotion $3,889,820 Payroll and bonuses 1,320,545 Sales commissions 944,338 Vacation 977,241 Other 2,560,001 ----------- $9,691,945 5. INCOME TAXES Income (loss) before income taxes consisted of the following for the year ended December 31, 1994: United States $4,615,805 Foreign (268,335) ----------- $4,347,470 The provision for income taxes consisted of the following for the year ended December 31, 1994: Currently payable: Federal $1,601,958 Foreign 656,661 State 382,244 ----------- 2,640,863 Deferred: Federal (55,096) State 9,435 ----------- (45,661) ----------- $2,595,202 ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. INCOME TAXES (Continued) The provision for income taxes differs from the amount obtained by applying the federal statutory income tax rate to income before provision for income taxes as follows for the year ended December 31, 1994: Federal statutory rate 34.0% State taxes, net of federal benefit 6.9% Impact of foreign operating losses 15.7% Difference between foreign and U. S. tax rates 1.5% Other 1.6% ----- 59.7% The components of the net deferred tax asset at December 31, 1994 were as follows: Deferred tax assets: Foreign net operating loss carryforwards $1,493,735 Inventory adjustments 959,685 Allowance and accrual adjustments 843,145 Other 196,378 ----------- 3,492,943 Deferred tax liabilities: Plant and equipment (68,011) State taxes (128,519) ----------- (196,530) ----------- Valuation allowance for foreign net operating loss carryforwards (1,493,735) ----------- $1,802,678 The sources of deferred taxes and the tax effect of each were as follows for the year ended December 31, 1994: Inventory adjustments ($42,355) Allowance and accrual adjustments 22,398 State income taxes 169,229 Other (103,611) --------- $45,661 At December 31, 1994, the Company had net operating loss carryforwards in Denmark and Germany totaling $4,393,000. These loss carryforwards will expire at various dates between 1995 and 1999. 6. SHORT TERM DEBT The Company has a Loan Agreement with a bank which provides a $15,000,000 revolving credit commitment and facilities for trade finance and foreign exchange. The Loan Agreement expires July 31, 1995 and may be extended with the mutual consent of the bank and the Company. Borrowings may be obtained, at the Company's option, at the prevailing prime interest rate or based on a choice of formulas as specified in the agreement. The formulas are based on interest rates for either the offshore dollar inter-bank market or bank dealer certificates of deposit. All interest and fees are computed on the basis of a 360-day year and the actual number of days elapsed for the borrowing period. A commitment fee of 0.125% per annum is payable quarterly on the unused amount of credit available. Under the Loan Agreement, the Company has restrictive provisions limiting the amount of dividend payments to 50% of net income and requiring maintenance of net worth, working capital and debt to equity ratios. Further, the Loan Agreement contains other conditions including restrictions on the Company's ability to encumber its assets or engage in certain transactions outside the normal course of business. Borrowings outstanding at December 31, 1994 were $3,500,000 subject to an effective weighted average interest rate of 7.87%. ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. COMMITMENTS The Company leases its office, production and warehouse facilities and certain office and production equipment under operating lease agreements. Lease terms generally range from two to ten years; principal building leases contain options for renewal for additional periods and are subject to periodic increases equal to the change in the Consumer Price Index and payments for utilities, taxes, insurance and maintenance fees. Total rent expense for 1994 was $3,092,000. Minimum annual noncancelable lease commitments at December 31, 1994 are: Year Ended December 31, 1995 $3,450,000 1996 3,186,000 1997 2,311,000 1998 1,144,000 1999 853,000 2000 and thereafter 131,000 --------------- $11,075,000 8. RELATED PARTY TRANSACTIONS AND MAJOR CUSTOMER INFORMATION The Company leases its manufacturing facility from an officer and director pursuant to a lease which began on July 1, 1979 and expires on June 30, 1998 with options to renew for two additional five-year periods. Rental payments for this facility were $524,000 in 1994. Net sales of Custom Label Products for the year ended December 31, 1994 included sales to a customer of $20,069,000. A significant shareholder of this customer owns 27.1% of the Company's outstanding common stock. Accounts receivable from this customer at December 31, 1994 were $382,829. 9. GEOGRAPHICAL INFORMATION The principal business of the Company is developing, manufacturing and marketing Personal Care Products to retail outlets. A second focus of the Company's business is the manufacture of Custom Label Products for distribution by other companies. Year Ended December 31,1994 Net sales: Personal care products $127,769,000 Custom label products 29,415,000 ------------ $157,184,000 ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. GEOGRAPHICAL INFORMATION (Continued) Net sales and income from operations for the year ended December 31, 1994 and identifiable assets at the end of that year, classified by geographical area, are as follows: Net sales: Domestic $115,697,000 Export 15,931,000 Foreign 25,556,000 --------------- $157,184,000 Income from operations: Domestic and export $2,628,000 Foreign 1,722,000 --------------- $4,350,000 Identifiable assets: Domestic and export $48,763,000 Foreign 20,349,000 --------------- $69,112,000 The Company has foreign subsidiaries in Canada, France, Denmark, Germany, Switzerland and the United Kingdom. All intercompany revenues and expenses are eliminated in computing net sales and income from operations. 10. STOCK OPTION AND EMPLOYEE BENEFIT PLANS The Company has Incentive Stock Option and Nonqualified Stock Option Plans (collectively, the "Stock Option Plans"). The Stock Option Plans permit the grant of both "incentive stock options" within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended, and nonqualified stock options. Employees, including officers of the Company and its subsidiaries, may receive incentive stock options and nonqualified stock options. Directors who are not employees may only receive nonqualified stock options. A total of 1,150,000 shares have been reserved for issuance under the Stock Option Plans. Nonqualified options generally are immediately exercisable but are subject to vesting of one-fifth of the total grant in each year for five years. The Stock Option Plans are administered by the Option Plan Committee, composed of two disinterested Directors, which determines the terms of options granted, including the exercise price, the number of shares subject to the option and the exercisability thereof. The exercise price of any option must be at least 100% of the fair market value of such shares on the date of grant. The following table summarizes certain information relative to the Stock Option Plans: Shares Option Price Outstanding at December 31, 1993 504,500 $6.50 to $9.00 Granted 232,000 $7.94 to $8.88 Exercised (30,000) $6.50 Canceled or expired (13,000) $6.50 to $8.50 -------- Outstanding at December 31, 1994 693,500 $6.50 to $9.00 ======= Available for future options at December 31, 1994 360,500 ======= Exercisable at December 31, 1994 340,000 $6.50 to $9.00 ======= ST. IVES LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. STOCK OPTION AND EMPLOYEE BENEFIT PLANS (Continued) The Company has a Section 401(k) Plan and Trust Employee Benefit Plan for qualified employees under Section 401(k) of the Internal Revenue Code and a Nonqualified Deferred Compensation Plan for key employees. Company contributions to these plans are based on a fixed percentage of employee contributions up to the limits as specified in the plans. Total Company contributions to these plans in 1994 were approximately $232,000. 11. PREFERRED STOCK The Company is authorized to issue 5,000,000 shares of preferred stock, $.01 par value. The Board of Directors is empowered to issue one or more series of preferred stock and to determine the rights, preferences, privileges and restrictions to be granted to, or imposed on, any such series. No shares of preferred stock of the Company are issued or outstanding. 12. COMMON STOCK REPURCHASE PLAN On February 6, 1995, the Board of Directors of the Company authorized the repurchase of up to 250,000 shares of the Company's common stock. The stock can be purchased periodically through February 5, 1996 in accordance with Regulation 10b-18 of the Securities and Exchange Act of 1934 at per share prices the Company deems desirable. At March 15, 1995, no shares of common stock had been repurchased.
13. QUARTERLY FINANCIAL DATA (UNAUDITED) The following table summarizes financial information by quarter for calendar year 1994: First Second Third Fourth Quarter Quarter Quarter Quarter Total Net sales $38,348,903 $42,732,868 $41,002,442 $35,099,796 $157,184,009 =========== =========== =========== =========== ============ Gross profit $17,195,437 $19,078,490 $19,003,823 $16,311,391 $71,589,141 =========== =========== =========== =========== ============= Net income $488,068 $279,686 $811,623 $172,891 $1,752,268 ============= ============= ============= ============= ============== Net income per share $0.07 $0.04 $0.12 $0.02 $0.25 ============= ============= ============= ============= ==============
14. RECLASSIFICATIONS Historically, the Company has recorded expenses for certain promotional and marketing allowances that were shown on the face of a customer invoice as deductions from the list price (herein referred to as the "off-invoice allowances"). Following a recent industrywide trend, the Company changed its invoicing methodology in 1995 by substantially eliminating off-invoice allowances in North America. Simultaneously, the Company reduced its list prices which are used to record net sales when products are shipped. In order to provide consistency and improve the comparison of results between periods, $18,514,064 of costs relating to off-invoice allowances that were previously included as selling expenses (Selling, marketing and administrative expenses) were reclassified to reduce net sales for the year ended December 31, 1994. Accordingly, a summary of these reclassifications is as follows for the year ended December 31, 1994: Net sales as originally reported $175,698,073 as reclassified $157,184,009 Selling, marketing and administrative expenses as originally reported $85,752,724 as reclassified $65,851,195 Other general expenses as originally reported - as reclassified $1,387,465 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors St. Ives Laboratories, Inc. We have audited the consolidated financial statements of St. Ives Laboratories, Inc. and Subsidiaries listed in Item 7(a)(i) of this Form 8-K. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of St. Ives Laboratories, Inc. and Subsidiaries as of December 31, 1994, and the consolidated results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Los Angeles, California March 9, 1995
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEET September 30, 1995 ASSETS Current assets: Cash and cash equivalents ................................................. $ 732,721 Accounts receivable - trade, less allowance for doubtful accounts ($823,000 at September 30, 1995) ...................... 27,689,356 Accounts receivable - related party ....................................... 867,166 Accounts receivable - other ............................................... 1,876,039 Inventories ............................................................... 28,937,387 Prepaid and other assets .................................................. 1,564,960 Income taxes refundable and deferred taxes ................................ 3,134,874 ------------ Total current assets .................................................. 64,802,503 Plant and equipment, net ..................................................... 6,609,160 Other assets ................................................................. 331,991 ------------ Total assets .......................................................... $ 71,743,654 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable .......................................................... $ 11,246,074 Accrued expenses .......................................................... 11,307,250 Deferred income taxes ..................................................... 196,530 Short term debt ........................................................... 2,168,000 ------------ Total current liabilities ............................................. 24,917,854 ------------ Stockholders' equity: Preferred stock, $.01 par value per share, 5,000,000 shares authorized; no shares issued or outstanding Common stock, $.01 par value per share, 30,000,000 shares authorized; 7,025,399 shares issued and outstanding at September 30, 1995 ............................ 70,254 Paid-in capital ........................................................... 12,423,958 Retained earnings ......................................................... 34,549,833 Cumulative translation adjustments ........................................ (218,245) ------------ Total stockholders' equity ............................................ 46,825,800 ------------ Total liabilities and stockholders' equity ............................ $ 71,743,654
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED INCOME STATEMENT For the nine months ended September 30, 1995 Net sales (includes related party sales of $13,981,766) $ 125,168,578 ------------- Cost of products sold ................................. 69,280,759 Selling, marketing and administrative expenses ........ 53,476,908 ------------- Operating costs and expenses ..................... 122,757,667 ------------- Income from operations ................................ 2,410,911 Interest expense ...................................... 350,651 Other (income), net ................................... (367,694) ------------- Income before income taxes ............................ 2,427,954 Provision for income taxes ............................ (380,372) ------------- Net income ......................................... $ 2,808,326 ============= Net income per share ............................... $ 0.40 Dividends per share ................................ $ 0.09 Weighted average shares outstanding ................ 7,021,487
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS For the nine months ended September 30, 1995 Cash flow from operating activities: Net income $2,808,326 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization 2,131,231 Deferred income taxes (402) Changes in assets and liabilities: Accounts receivable - trade (7,157,717) Accounts receivable - related party (484,337) Accounts receivable - other (282,486) Inventories 1,532,058 Prepaid and other assets 79,105 Accounts payable (166,743) Accrued expenses 1,521,305 Income taxes payable (1,754,824) ---------------- Net cash used for operating activities (1,774,484) ---------------- Cash flow from investing activities: Purchase of plant and equipment (646,900) Other assets 138,435 Short term investments 1,249,603 --------------- Net cash provided by investing activities 741,138 --------------- Cash flow from financing activities: Common stock options exercised 42,000 Cash dividends paid (631,926) Short term debt borrowings 26,145,000 Short term debt repayments (27,477,000) --------------- Net cash used for financing activities (1,921,926) --------------- Effect of exchange rate changes on cash 222,284 --------------- Net decrease in cash and cash equivalents (2,732,988) Cash and cash equivalents at beginning of period 3,465,709 --------------- Cash and cash equivalents at end of period $ 732,721 ===============
ALBERTO-CULVER COMPANY UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEET September 30, 1995 (Dollars in thousands) Alberto- Culver St. Ives Pro-Forma Pro-Forma Company Laboratories, Inc. Adjustments* Consolidated Current assets: Cash and cash equivalents $142,585 733 (79,280) (a) 64,038 Short-term investments 4,400 -- 4,400 Net accounts receivable 128,482 30,433 (30,000) (a) 128,915 Inventories 248,529 28,937 277,466 Other current assets 12,549 4,700 17,249 ---------- --------- ------------ --------- Total current assets 536,545 64,803 (109,280) 492,068 Property, plant and equipment, net 157,791 6,609 164,400 Goodwill, trade names and other intangibles 89,423 -- 89,861 (d) 179,284 Other assets 31,327 332 (2,107) (a) 29,552 ---------- ---------- ----------- --------- $815,086 71,744 (21,526) 865,304 ======== ========= ========== ========= Current liabilities: Short-term borrowings $103 2,168 2,271 Current maturities of long-term debt 1,286 -- 1,286 Accounts payable 144,253 11,246 155,499 Accrued expenses 76,141 11,307 25,300 (b) 112,748 Income taxes 13,056 197 13,253 ---------- ---------- ------------- --------- Total current liabilities 234,839 24,918 25,300 285,057 --------- --------- ---------- --------- Long-term debt 83,094 -- 83,094 Convertible subordinated debentures 100,000 -- 100,000 Other liabilities 26,250 -- 26,250 Stockholders' equity Common stock 7,526 70 (70) (c) 7,526 Additional paid-in capital 87,896 12,424 (12,424) (c) 87,896 Retained earnings 337,506 34,550 (34,550) (c) 337,506 Foreign currency translation gain (loss) (12,966) (218) 218 (c) (12,966) ---------- ---------- ----------- ---------- 419,962 46,826 (46,826) 419,962 Less treasury stock 49,059 -- 49,059 --------- ----------- ------------- --------- Total stockholders' equity 370,903 46,826 (46,826) 370,903 --------- -------- ---------- -------- $815,086 71,744 (21,526) 865,304 ======== ======= ========== =======
* The references in the Pro-Forma Adjustments column are described in the Notes to Unaudited Pro-Forma Consolidated Financial Statements.
ALBERTO-CULVER COMPANY UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF EARNINGS Year ended September 30, 1995 (Dollars in thousands, except per share data) Alberto- Culver St. Ives Pro-Forma Pro-Forma Company Laboratories, Inc. Adjustments* Consolidated Net sales $1,358,219 160,268 1,518,487 Costs and expenses: Cost of products sold 682,589 88,069 770,658 Advertising, promotion, selling and administrative 584,856 68,480 2,898 (b) 656,234 Net interest expense 6,532 533 6,070 (a) 13,135 ----------- --------- -------- ---------- Total costs and expenses 1,273,977 157,082 8,968 1,440,027 --------- ------- -------- --------- Earnings before provision for income taxes 84,242 3,186 (8,968) 78,460 Provision for income taxes 31,591 205 (2,520) (c) 29,276 ----------- --------- -------- ----------- Net earnings $52,651 2,981 (6,448) 49,184 ========== ========= ========= =========== Net earnings per share: Primary $1.89 1.77 ============ ============ Fully-diluted $1.87 1.75 ============ ============
* The references in the Pro-Forma Adjustments column are described in the Notes to Unaudited Pro-Forma Consolidated Financial Statements. ALBERTO-CULVER COMPANY NOTES TO UNAUDITED PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited pro-forma consolidated financial statements include the accounts of Alberto-Culver Company and Subsidiaries (the Company) and St. Ives Laboratories, Inc. and Subsidiaries (St. Ives) as of and for the year ended September 30, 1995. The acquisition of St. Ives has been accounted for under the purchase method of accounting. 2. The pro-forma adjustments required to present the unaudited pro-forma consolidated balance sheet as if the acquisition had occurred on September 30, 1995 are described as follows: a. Cash disbursed in connection with the acquisition, net of proceeds from the sale of certain trade accounts receivable, and the reclassification of the investment in common shares of St. Ives owned by the Company which was included in other assets as of September 30, 1995. b. Provision for additional liabilities incurred in connection with the acquisition. c. Elimination of St. Ives stockholders' equity. d. Recognition of trade names and goodwill resulting from the excess of the purchase price over the preliminary estimate of fair value of the net assets acquired. 3. The pro-forma adjustments required to present the unaudited pro-forma consolidated statement of earnings as if the acquisition had occurred on October 1, 1994 are described as follows: a. Interest expense on the funds used to purchase St. Ives. b. Goodwill amortization on a straight-line basis over 40 years and payments due a former shareholder of St. Ives under a consulting and non-competition agreement. c. Incremental change in the pro-forma consolidated entity's provision for income taxes as a result of applying the Company's effective tax rate to the pro-forma adjustments described above and reflecting the non-deductibility of the goodwill amortization. EX-23 2 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Alberto-Culver Company on Form S-3 (File No. 333-00619) and five Form S-8's (File Nos. 33-36051, 33-47748, 33-62693, 33-62699 and 33-62701) of our report dated March 9, 1995, on our audit of the consolidated financial statements of St. Ives Laboratories, Inc. and Subsidiaries as of December 31, 1994 and for the year then ended, which report is included in this Form 8-K. /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Los Angeles, California February 8, 1996 -----END PRIVACY-ENHANCED MESSAGE-----