-----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, BUPWnrZjLqPdtK8G8C+uR/k+XA2jxcCzZTuNpHDgyUSnOvYV3yUiMv0mzkupn2Ki U1p8ofdoD6bxq9m3c6Bakg== 0000003327-97-000014.txt : 19970813 0000003327-97-000014.hdr.sgml : 19970813 ACCESSION NUMBER: 0000003327-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05050 FILM NUMBER: 97656380 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 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: June 30, 1997 -OR- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1943 Commission File No. 1-5050 ALBERTO-CULVER COMPANY ---------------------- (Exact name of registrant as specified in its charter) Delaware 36-2257936 -------- ---------- State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing require- ments for the past 90 days. YES X NO At June 30, 1997, there were 22,582,462 shares of Class A common stock outstanding and 33,532,480 shares of Class B common stock outstanding. - 1 - PART I ITEM 1. FINANCIAL STATEMENTS - ------- -------------------- ALBERTO-CULVER COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings Three Months Ended June 30, 1997 and 1996 (dollar amounts in thousands, except per share figures)
(Unaudited) ----------- 1997 1996 ---- ---- Net sales ................................................ $456,210 415,554 Costs and expenses: Cost of products sold ................................ 226,734 208,526 Advertising, promotion, selling and administrative ... 196,797 177,394 Interest expense, net of interest income of $858 in 1997 and $487 in 1996 ........................ 2,066 3,416 ----- ----- Total costs and expenses ............................. 425,597 389,336 ------- ------- Earnings before provision for income taxes ............... 30,613 26,218 Provision for income taxes ............................... 11,403 9,766 ------ ----- Net earnings ............................................. $ 19,210 16,452 ======== ====== Net earnings per share of common stock (Notes 2 and 3) Primary ....................................... $ .33 .29 ======= === Fully-diluted ................................. $ .32 .28 ======= === Cash dividends paid per share (Note 2) ................ $ .05 .045 ======= ==== See notes to consolidated financial statements.
- 2 - ALBERTO-CULVER COMPANY AND SUBSIDIARIES Consolidated Statements of Earnings Nine Months Ended June 30, 1997 and 1996 (dollar amounts in thousands, except per share figures)
(Unaudited) ----------- 1997 1996 ---- ---- Net sales ....................................................... $1,321,892 1,159,338 Costs and expenses: Cost of products sold ....................................... 660,179 587,328 Advertising, promotion, selling and administrative .......... 569,502 494,192 Interest expense, net of interest income of $2,502 in 1997 and $2,901 in 1996 ............................. 6,525 8,024 ----- ----- Total costs and expenses .................................... 1,236,206 1,089,544 --------- --------- Earnings before non-recurring gain and provision for income taxes 85,686 69,794 Non-recurring gain (Note 5 ) ............................... 15,634 -- ------ ------ Earnings before provision for income taxes (Note 5 ) ............ 101,320 69,794 Provision for income taxes (Note 5 ) ............................ 37,741 25,998 ------ ------ Net earnings (Note 5) ........................................... $ 63,579 43,796 ========== ====== Net earnings per share (Notes 2, 3 and 5) Primary ......................... $ 1.11 .77 ========= === Fully-diluted ................... $ 1.05 .74 ========= === Cash dividends paid per share (Note 2) $ .145 .13 ========= === See notes to consolidated financial statements.
- 3 - ALBERTO-CULVER COMPANY AND SUBSIDIARIES Consolidated Balance Sheets June 30, 1997 and September 30, 1996 (dollar amounts in thousands, except per share figures)
(Unaudited) June 30, September 30, ASSETS 1997 1996 - ------ ---- ---- Current assets: Cash and cash equivalents ................................................... $ 69,977 66,211 Short-term investments ...................................................... 8,750 5,346 Receivables, less allowance for doubtful accounts ($9,127 at 6/30/97 and $8,208 at 9/30/96) ....................... 122,614 125,718 Inventories (Note 4) ........................................................ 328,658 288,525 Other current assets ........................................................ 32,158 26,918 ------ ------ Total current assets ..................................................... 562,157 512,718 ------- ------- Property, plant and equipment at cost, less accumulated depreciation ($151,080 at 6/30/97 and $143,946 at 9/30/96) ................. 188,471 175,920 Goodwill, net .................................................................. 113,394 107,603 Trade names and other intangible assets, net ................................... 70,314 76,877 Other assets ................................................................... 43,989 36,148 ------ ------ Total assets ................................................................ $ 978,325 909,266 ========= ======= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Current maturities of long-term debt and short-term borrowings .............. $ 5,223 3,650 Accounts payable ............................................................ 163,641 154,634 Accrued expenses ............................................................ 112,914 115,139 Income taxes ................................................................ 20,488 13,172 ------ ------ Total current liabilities ................................................ 302,266 286,595 ------- ------- Long-term debt ................................................................. 55,587 61,548 Convertible subordinated debentures ............................................ 100,000 100,000 Deferred income taxes .......................................................... 22,585 16,582 Other liabilitiies ............................................................. 17,267 19,445 Stockholders' equity: Common stock, par value $.22 per share: Class A authorized 75,000,000 shares; issued 24,442,931 shares ........... 5,349 2,918 at 6/30/97 and 24,311,224 shares at 9/30/96 Class B authorized 75,000,000 shares; issued 37,710,664 shares ........... 8,296 4,608 Additional paid-in capital .................................................. 92,915 88,955 Retained earnings ........................................................... 439,884 390,526 Foreign currency translation ................................................ (19,662) (13,428) ------- ------- 526,782 473,579 Less treasury stock at cost (Class A common shares: 1,860,469 at 6/30/97 and 2,214,024 at 9/30/96; Class B common shares: 4,178,184 at 6/30/97 and at 9/30/96) ..................................... (46,162) (48,483) ------- ------- Total stockholders' equity ............................................ 480,620 425,096 ------- ------- Total liabilities and stockholders' equity .................................. $ 978,325 909,266 ========= ======= See notes to consolidated financial statements.
- 4 - ALBERTO-CULVER COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months Ended June 30, 1997 and 1996 (dollar amounts in thousands)
(Unaudited) ----------- 1997 1996 ---- ---- Cash Flows from Operating Activities: - ------------------------------------- Net earnings ..................................................... $ 63,579 43,796 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization ............................... 27,005 23,711 Non-recurring gain .......................................... (15,634) -- Other, net .................................................. (802) 2,849 Cash effects of changes in: Receivables, net .......................................... (987) 2,916 Inventories ............................................... (36,529) (3,136) Other current assets ...................................... (978) (1,041) Accounts payable and accrued expenses ..................... 2,193 (7,030) Income taxes .............................................. 8,278 (1,236) ----- ------ Net cash provided by operating activities ................... 46,125 60,829 ------ ------ Cash Flows from Investing Activities: - ------------------------------------- Short-term investments ........................................... (3,404) 400 Capital expenditures ............................................. (43,615) (30,794) Payments for purchased businesses, net of acquired companies' cash (14,187) (127,864) Proceeds from insurance settlement ............................... 28,000 -- Other, net ....................................................... (5,162) (4,161) ------ ------ Net cash provided by investing activities ..................... (38,368) (162,419) ------- -------- Cash Flows from Financing Activities: - ------------------------------------- Short-term borrowings ............................................ 1,734 (791) Proceeds from long-term debt ..................................... 500 6,923 Repayments of long-term debt ..................................... (1,225) (5,126) Sale of trade accounts receivable ................................ -- 30,000 Cash dividends paid .............................................. (8,101) (7,221) Cash proceeds from exercise of stock options ..................... 5,175 1,382 Stock purchased for treasury ..................................... (1,138) (685) ------ ---- Net cash provided by financing activities ..................... (3,055) 24,482 ------ ------ Effect of foreign exchange rate changes on cash .................. (936) (440) ---- ---- Net increase (decrease) in cash and cash equivalents ............. 3,766 (77,548) Cash and cash equivalents at beginning of period ................. 66,211 142,585 ------ ------- Cash and cash equivalents at end of period ....................... $ 69,977 65,037 ======== ====== See notes to consolidated financial statements.
- 5 - ALBERTO-CULVER COMPANY AND SUBSIDIARIES Notes to Consolidated Financial Statements (l) The consolidated financial statements contained in this report have not been examined by independent public accountants, except for balance sheet information presented at September 30, 1996. However, in the opinion of the company, the consolidated financial statements reflect all adjustments, which include only normal adjustments, necessary to present fairly the data contained therein. The results of operations for the periods covered are not necessarily indicative of results for a full year. (2) On January 23, 1997, the company announced a 100% stock dividend on the company's Class A and Class B outstanding shares. The new shares were distributed February 20, 1997 to shareholders of record at the close of business on February 3, 1997. The stock dividend was distributed only on outstanding shares and not on shares held in the treasury. All share and per share information in this report, except for treasury shares, has been restated to reflect the 100% stock dividend. (3) Primary earnings per share are based on the weighted average shares outstanding, including common stock equivalents, of 57,455,000 and 56,604,000 for the three months ended June 30, 1997 and 1996, respectively, and 57,145,000 and 56,372,000 for the nine months ended June 30, 1997 and 1996, respectively, after giving effect to the 100% stock dividend described in Note 2. Fully diluted earnings per share are determined by dividing net earnings before interest expense on the convertible subordinated debentures (net of tax benefit) by the weighted average shares outstanding, including common stock equivalents, after giving effect to common shares to be issued assuming conversion of the convertible subordinated debentures to Class A common stock. Fully-diluted weighted average shares outstanding were 63,632,000 and 63,022,000 for the three months ended June 30, 1997 and 1996, respectively, and 63,447,000 and 62,984,000 for the nine months ended June 30, 1997 and 1996, respectively, after giving effect to the 100% stock dividend described in Note 2. (4) Inventories consist of the following: (in thousands) -------------- June 30, September 30, 1997 1996 ---- ---- Finished goods ................... $279,562 251,617 Work-in-process .................. 7,507 5,622 Raw materials .................... 41,589 31,286 ------ ------ $328,658 288,525 ======== ======= (5) In the first quarter of fiscal year 1997, the company received a $28.0 million insurance settlement from the loss of its corporate airplane. The effect on the company's earnings was a non-recurring pre-tax gain of $15.6 million and an increase in net earnings of $9.8 million. Accordingly, earnings per share increased $0.17 on a primary basis and $0.16 on a fully-diluted basis. The following table provides pro-forma earnings information for the first nine months excluding the non-recurring gain (in thousands, except per share data): 1997 1996 ---- ---- Pre-tax earnings ...... $ 85,686 69,794 ========== ====== Net earnings .......... $ 53,768 43,796 ========== ====== Net earnings per share: Primary ............ $ .94 .77 ============= === Fully-diluted ...... $ .89 .74 ============= === - 6 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS QUARTER AND NINE MONTHS ENDED JUNE 30, 1997 VS. QUARTER AND NINE MONTHS ENDED JUNE 30, 1996 The company achieved record net sales of $456.2 million in the third quarter of fiscal year 1997, up $40.7 million or 9.8% over the comparable quarter of fiscal year 1996. For the nine month period ending June 30, 1997, net sales reached a new high of $1.32 billion, representing a 14.0 % increase compared to last year's nine month period. As described in Note 5, during the first quarter of fiscal year 1997, the company received a $28.0 million insurance settlement from the loss of its corporate airplane. As a result, the company recognized a non-recurring, pre-tax gain of $15.6 million and an increase to net earnings of $9.8 million. Accordingly, earnings per share for the first nine months of fiscal year 1997 increased 17 cents on a primary basis and 16 cents on a fully-diluted basis. Net earnings for the three months ended June 30, 1997 were also a record for the third quarter at $19.2 million or 16.8% higher than the same period of the prior year. Primary earnings per share of 33 cents were 4 cents or 13.8 % higher than the same period last year. Fully-diluted earnings per share were 32 cents, up 4 cents or 14.3 % from the prior year. On a pro-forma basis for the nine months ended June 30, 1997, net earnings before the non-recurring gain were a record at $53.8 million or 22.8 % higher than the same period of the prior year. Pro-forma earnings per share on a primary basis were 94 cents, representing an increase of 17 cents or 22.1 % over last year. Pro-forma fully-diluted earnings per share increased 15 cents or 20.3% to 89 cents. The following table presents net sales information by business segment for the third quarter and first nine months of fiscal years 1997 and 1996 (dollars in millions): THIRD QUARTER Fiscal Year Dollar Percent Net sales: 1997 1996 Change Change - ---------- ---- ---- ------ ------ Consumer products: Alberto-Culver USA $107.6 100.5 7.1 7.1% Alberto-Culver International 123.9 119.0 4.9 4.1 ----- ----- --- Total consumer products 231.5 219.5 12.0 5.5 Specialty distribution - Sally 229.1 199.0 30.1 15.1 Eliminations (4.4) (3.0) (1.4) (45.1) ---- ---- ---- $456.2 415.5 40.7 9.8% ====== ===== ==== NINE MONTHS Fiscal Year Dollar Percent Net sales: 1997 1996 Change Change - ---------- ---- ---- ------ ------ Consumer products: Alberto-Culver USA $332.4 263.1 69.3 26.3% Alberto-Culver International 347.0 332.3 14.7 4.4 ----- ----- ---- Total consumer products 679.4 595.4 84.0 14.1 Specialty distribution - Sally 653.4 572.1 81.2 14.2 Eliminations (10.9) (8.2) 2.7 (33.2) ----- ---- --- $1,321.9 1,159.3 162.6 14.0% ======== ======= ===== Compared to the same periods of the prior year, sales of Alberto-Culver USA consumer products increased 7.1 % and 26.3 % for the current quarter and first nine months of fiscal 1997, respectively. The 1997 increases primarily resulted from higher sales of St. Ives products which accounted for $3.8 million of the sales increase for the quarter and $53.3 million of the sales increase for the first nine months. St. Ives Laboratories, Inc. was acquired in February, 1996. In addition, sales were higher due to increases for TRESemme, TCB, Mrs. Dash, the Alberto VO5 hair care product line and the introduction of new products. - 7 - Sales of Alberto-Culver International consumer products increased 4.1 % in the third quarter and 4.4% for the first nine months compared to last year. Fiscal year 1997 sales increased mainly due to higher sales of St. Ives products, offset in part by the effect of unfavorable foreign exchange rates. Had foreign exchange rates this year been the same as the third quarter and first nine months of fiscal 1996, Alberto-Culver International sales would have increased 10.2% in the third quarter and 8.2% for the first nine months. The "Specialty distribution-Sally" business segment experienced sales increases of $30.1 million or 15.1% for the third quarter of fiscal year 1997 and $81.2 million or 14.2% for the first nine months. The gains were attributable to Sally Beauty Company's sales growth for established stores and the addition of 201 new outlets since June 30, 1996. At June 30, 1997 Sally Beauty Company had 1,798 stores offering a full range of professional beauty supplies. Cost of products sold as a percent of net sales for the third quarter and first nine months decreased to 49.7% and 49.9%, respectively, compared to 50.2% and 50.7%, respectively, for the same periods of the prior year. The decreases were primarily due to cost efficiencies and changes in product mix. Compared to fiscal year 1996, advertising, promotion, selling and administrative expenses rose 10.9% or $19.4 million for the current quarter and 15.2% or $75.3 million for the nine months ended June 30, 1997. The increases resulted from the acquisition of St. Ives in February, 1996 along with higher selling and administrative costs associated with the increase in the number of Sally Beauty Company stores and higher advertising, promotion and market research expenses for Alberto-Culver USA. Advertising, promotion and market research expenditures totaled $69.5 million in the third quarter of 1997, an increase of 21.3% versus the prior year. Advertising, promotion and market research expenditures for the first nine months of fiscal year 1997 were $188.9 million, an increase of 23.8% over last year. The increases were primarily due to the acquisition of St. Ives in February, 1996 and the introduction of new products by Alberto-Culver USA. Interest expense decreased $979,000 or 25.1% for the third quarter and $1.9 million or 17.4% for the first nine months versus the comparable periods of last year. The decreases were primarily attributable to the prepayment of $20.0 million of 9.73% term notes in August, 1996. The increase in interest income of $371,000 for the third quarter of 1997 was attributable to higher investment balances, which were primarily the result of the insurance proceeds described in Note 5. The decrease in interest income of $399,000 for the first nine months of 1997 was primarily attributed to higher investment balances in fiscal 1996 due to the proceeds from the issuance of $100 million of subordinated convertible debentures, which were subsequently used to purchase St. Ives Laboratories, Inc. in February, 1996. The provision for income taxes as a percentage of earnings before income taxes was 37.25% for the third quarter and first nine months of both fiscal years 1997 and 1996. FINANCIAL CONDITION JUNE 30, 1997 VS. SEPTEMBER 30, 1996 Working capital of $259.9 million increased $33.8 million since September 30, 1996. The ratio of current assets to current liabilities was 1.86 to 1.00 at June 30, 1997 compared to 1.79 to 1.00 at September 30, 1996. Both working capital and the current ratio increased primarily as a result of the receipt of the $28.0 million insurance settlement described in Note 5. Total borrowings decreased $4.4 million during the first nine months of fiscal year 1997. At June 30, 1997, the company had unused lines of credit with various banks of approximately $123 million. Cash dividends paid on Class A and Class B common stock totaled $8.1 million or 14.5 cents per share for the first nine months of fiscal 1997 versus $7.2 million or 13 cents per share for the same period of the prior year. - 8 - Impact of New Accounting Standard Effective December 31, 1997, the company will be required to adopt Statement of Financial Accounting Standards No. 128 ("Statement 128"),"Earnings Per Share". The adoption of Statement 128 will require the company to change its method of calculating earnings per share (EPS) by replacing the reporting of primary EPS with the presentation of basic EPS. Statement 128 will continue to require the presentation of diluted EPS on the face of the income statement and will also require a reconciliation of the numerator and denominator used in the basic EPS computation with those used in the diluted EPS computation. Early implementation of Statement 128 is not permitted and the company estimates that its adoption will not have a material effect on earnings per share. PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 27 Financial Data Schedule (b) Reports on Form 8-K: No report on Form 8-K was filed by the registrant during the quarter ended June 30, 1997. - 9 - 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 thereunto duly authorized. ALBERTO-CULVER COMPANY (Registrant) By:/s/ William J. Cernugel ----------------------- William J. Cernugel Senior Vice President, Finance & Controller (Principal Financial Officer) August 11, 1997 -10- EX-27 2 FDS -- NINE MONTHS ENDED JUNE 30, 1997
5 This schedule contains summary financial information extracted from the consolidated balance sheet as of June 30, 1997 and the consolidated statement of earnings for the nine months ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. 0000003327 ALBERTO-CULVER COMPANY AND SUBSIDIARIES 1,000 9-MOS SEP-30-1997 OCT-01-1996 JUN-30-1997 69,977 8,750 131,741 9,127 328,658 562,157 339,551 151,080 978,325 302,266 155,587 0 0 13,645 466,975 978,325 1,321,892 1,321,892 660,179 660,179 576,027 4,554 9,027 101,320 37,741 63,579 0 0 0 63,579 1.11 1.05
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