-----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, EL32GP3CBOnZAr70g1/0NGnNLyon3CfWsBFMW6qv9wC3TRSVmTVhaKfBqhiLmt5Q t9/BR9+PYIGh1uaB6DmB1A== 0000950131-01-504506.txt : 20020413 0000950131-01-504506.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950131-01-504506 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALBERTO CULVER CO CENTRAL INDEX KEY: 0000003327 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 362257936 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-05050 FILM NUMBER: 1813567 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-K405 1 d10k405.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 2001 -OR- [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered - ---------------------------------------------- --------------------------- Class A Common Stock, par value $.22 per share New York Stock Exchange Class B Common Stock, par value $.22 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 requirements for the past 90 days. YES X NO ___ --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of common stock held by non-affiliates (assuming for this purpose only that all directors and executive officers are affiliates) on November 16, 2001 was $841.0 million for Class A Common Stock and $750.0 million for Class B Common Stock. At November 16, 2001, there were 24,840,026 shares of Class A Common Stock outstanding and 32,525,619 shares of Class B Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Parts I and II ....... Portions of annual report to stockholders for the year ended September 30, 2001, as specifically described herein. Part III ............. Portions of proxy statement and notice of annual meeting of stockholders on January 24, 2002, as specifically described herein. FORWARD-LOOKING STATEMENTS -------------------------- This Annual Report on Form 10-K and the documents incorporated by reference herein may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on management's current expectations and assessments of risks and uncertainties and reflect various assumptions concerning anticipated results, which may or may not prove to be correct. Some of the factors that could cause actual results to differ materially from estimates or projections contained in such forward-looking statements include the pattern of brand sales, including variations in sales volume within periods; competition within the relevant product markets, including pricing, promotional activities, continuing customer acceptance of existing products, loss of distributorship rights and the ability to develop and successfully introduce new products; risks inherent in acquisitions and strategic alliances; the effects of a prolonged United States or global economic downturn or recession; changes in labor costs, raw material prices or promotional expenses; the costs and effects of unanticipated legal or administrative proceedings; variations in political, economic or other factors such as currency exchange rates, inflation rates, expansive trends, tax changes, legal and regulatory changes or other external factors over which Alberto-Culver Company has no control. Alberto-Culver Company has no obligation to update any forward-looking statement in this Annual Report on Form 10-K or any incorporated document. PART I ITEM 1. BUSINESS - ----------------- BUSINESS SEGMENTS AND GEOGRAPHIC AREA INFORMATION - ------------------------------------------------- Alberto-Culver Company and its consolidated subsidiaries (herein referred to collectively as the "company," unless indicated otherwise) have three principal business segments. The company's consumer products business includes two segments, "Alberto-Culver North America" and "Alberto-Culver International," and includes developing, manufacturing, distributing and marketing branded consumer products worldwide. Alberto-Culver North America includes the company's consumer products operations in the United States and Canada while Alberto-Culver International sells consumer products in more than 120 other countries. The classes of products in the Alberto-Culver North America and the Alberto-Culver International business segments include health and beauty care products as well as food and household products. Health and beauty care products accounted for approximately 37%, 39% and 39% of the company's consolidated net sales for the years ended September 30, 2001, 2000 and 1999, respectively. Food and household products accounted for approximately 5%, 5% and 6% of the company's consolidated net sales for the years ended September 30, 2001, 2000 and 1999, respectively. The company's third segment, "Specialty distribution - Sally", consists of Sally Beauty Company ("Sally Beauty"), a distributor of professional beauty supplies through its Sally Beauty Supply stores and its Beauty Systems Group full-service operations. Sales of the Specialty distribution - Sally business segment accounted for approximately 58%, 56% and 55% of the company's consolidated net sales for the years ended September 30, 2001, 2000 and 1999, respectively. Financial information about business segments and geographic area information is incorporated herein by reference to the "Business Segments and Geographic Area Information" note of "Notes to Consolidated Financial Statements" in the company's annual report to stockholders for the year ended September 30, 2001. ALBERTO-CULVER NORTH AMERICA - ---------------------------- The company's major health and beauty care products marketed in the United States include the ALBERTO VO5, TRESemme and CONSORT lines of hair care products, the ST. IVES SWISS FORMULA line of hair and skin care products, FDS feminine deodorant sprays and the SOFT AND BEAUTIFUL, JUST FOR ME, -2- COMB-THRU, TCB and MOTIONS lines of hair care products for the ethnic market. Food and household products sold in the United States include MRS. DASH salt-free seasoning blends, MOLLY MCBUTTER butter flavor sprinkles, SUGARTWIN sugar substitute and STATIC GUARD anti-static spray. In Canada, the company sells most of the products marketed in the United States along with the ALBERTO EUROPEAN and ALBERTO BALSAM lines of hair care products. The Alberto-Culver North America segment also includes the manufacturing of custom label products in the United States for other companies. ALBERTO-CULVER INTERNATIONAL - ---------------------------- The company manufactures, markets and distributes health and beauty products throughout Scandinavia and Europe through its Cederroth International subsidiary headquartered in Sweden. Major products include SALVE adhesive bandages, ALBERTO VO5 hair care products, SAMARIN antacids, SELTIN salt substitute, JORDAN toothbrushes, TOPZ cotton buds, SAVETTE wet wipes, BLIW liquid soaps, DATE anti-perspirants and cologne for women, FAMILY FRESH shampoo and shower products, SUKETTER artificial sweetener, the ST. IVES SWISS FORMULA line of hair and skin care products, HTH and L300 skin care products, GRUMME TVATTSAPA detergents and PHARBIO natural pharmaceuticals. SORAYA skin care products are sold in Poland and Eastern Europe. In the United Kingdom, the company manufactures and markets products such as the ALBERTO VO5, Advanced ALBERTO VO5, ALBERTO BALSAM and TRESemme lines of hair care products and the ST. IVES SWISS FORMULA line of hair and skin care products. INDOLA professional hair colors, shampoos, conditioners and styling products are marketed throughout Europe and other international markets. In Latin America, the significant products sold by the company include the ALBERTO VO5, GET SET and ANTIALL lines of hair care products, the ST. IVES SWISS FORMULA line of hair and skin care products, VERITAS soap and deodorant body powder products and FARMACO soap products. Other major international markets for the company include Australia, Italy and New Zealand. SPECIALTY DISTRIBUTION - SALLY - ------------------------------ Sally Beauty Company operates a network of Sally Beauty Supply cash-and-carry professional beauty supply stores and also sells professional beauty products to hairdressers, beauticians and cosmetologists through its Beauty Systems Group full-service distribution business. Sally Beauty Supply stores provide salon owners, hairdressers and consumers with an extensive selection of hair care and skin care products, cosmetics, styling appliances and other beauty items. Sally's Beauty Systems Group distributes products in exclusive, licensed territories in the Northeast, Midwest, Midsouth, East and Southeast United States and portions of Canada. Beauty Systems Group sells only to the professional market through its stores and approximately 550 professional distributor sales consultants. As of September 30, 2001, Sally Beauty, including its Beauty Systems Group, had 2,428 stores in the United States, Puerto Rico, the United Kingdom, Canada, Japan and Germany. PRODUCT DEVELOPMENT AND MARKETING - --------------------------------- Many of the company's consumer products are developed in the company's laboratories. New products introduced by the company are assigned product managers who guide the products from development to the consumer. The product managers are responsible for the overall marketing plans for the products and coordinate advertising, promotion and market research activities. The company allocates a large portion of its revenues to the advertising, promotion and market research of consumer products. Net earnings are materially affected by these expenditures, which are charged to income in the period incurred. Advertising, promotion and market research expenditures were $305.1 million in 2001, $286.4 million in 2000 and $259.7 million in 1999. -3- Advertising, promotion and market research expenditures relating to a new product will ordinarily constitute a higher percentage of sales than in the case of a well-established product. There can be no assurance that such expenditures will result in consumer acceptance and profitability for a product. The company regards television as the best medium for its advertising and uses it to conduct extensive network, spot and cable television advertising campaigns. The company also advertises through other media such as newspapers, magazines and radio as well as through Sally Beauty Company's direct mailings to professional customers. Extensive advertising and promotion are required to build and protect a product's market position. The company believes there is significant consumer awareness of its major brands and that such awareness is an important factor in the company's operating results. COMPETITION - ----------- The domestic and international markets for the company's branded consumer products are highly competitive and sensitive to changes in consumer preferences and demands. The company's competitors range in size from large, highly diversified companies (some of which have substantially greater financial resources than the company) to small, specialized producers. The company competes on the basis of product quality and price and believes that brand loyalty and consumer acceptance are important factors. The company's markets are characterized by frequent introductions of competitive products and by the entry of other manufacturers as new competitors, both of which are typically accompanied by extensive advertising and promotional campaigns. Such campaigns are often very costly and can significantly affect the sales and earnings of the company and its competitors. Sally Beauty Company experiences domestic and international competition from a wide range of retail outlets, including mass merchandisers, drug stores and supermarkets, carrying a full line of health and beauty products. In addition, Sally Beauty competes with local and regional beauty supply stores and full-service dealers selling directly to salons through both professional distributor sales consultants and cash and carry outlets open only to salon professionals. Sally also faces competition from certain manufacturers which use their own sales forces to distribute their professional beauty products directly to salons. DISTRIBUTION IN THE UNITED STATES - --------------------------------- Retail health and beauty care products and food and household products are sold through the company's sales force and independent brokers calling upon wholesale drug establishments and retail outlets such as supermarkets, drug stores, mass merchandisers and variety stores. Professional hair care products in the United States (primarily for the ethnic market) are sold by company sales representatives and brokers to beauty supply outlets and to beauty distributors who in turn sell to beauty salons, barber shops and beauty schools. SALLY BEAUTY COMPANY DISTRIBUTION - --------------------------------- Sally Beauty Company, including its Beauty Systems Group, sells professional beauty supplies through its 2,428 stores located in 47 states, Puerto Rico, the United Kingdom, Canada, Japan and Germany. Sally Beauty Supply stores are self-service, cash-and-carry and are primarily located in strip shopping centers. Sally operates the world's largest chain of professional beauty supply stores and as such is a major customer of some of the company's competitors in the personal care products industry. In addition, Sally's Beauty Systems Group distributes products in exclusive, licensed territories in the Northeast, Midwest, Midsouth, East and Southeast United States and portions of Canada and sells only to the professional market through its stores and approximately 550 professional distributor sales consultants. Sally sells Alberto-Culver North America's professional hair care products, but these products represent only a small portion of Sally's selection of salon brands. -4- FOREIGN OPERATIONS - ------------------ Products of the company are sold in more than 120 countries or geographic regions, primarily through direct sales by subsidiaries, independent distributors and licensees. The company's foreign operations are subject to risks inherent in transactions involving foreign currencies and political uncertainties. EMPLOYEES - --------- In its domestic and foreign operations, the company had approximately 16,100 full-time equivalent employees as of September 30, 2001, consisting of approximately 9,600 hourly personnel and 6,500 salaried employees. At September 30, 2000, the company had approximately 15,300 full-time equivalent employees. The increase in employees during fiscal year 2001 is principally due to the expansion of Sally's Beauty Systems Group full-service operations and the growth in the number of Sally Beauty Supply stores. Certain subsidiaries of the company have union contracts covering production, warehouse, shipping and maintenance personnel. The company considers relations with its employees to be satisfactory. REGULATION - ---------- The company is subject to the regulations of a number of federal and state agencies, including the Food and Drug Administration and the Federal Trade Commission. TRADEMARKS AND PATENTS - ---------------------- The company's trademarks, certain of which are material to its business, are registered or legally protected in the United States, Canada and other countries throughout the world in which products of the company are sold. Although the company owns patents and has other patent applications pending, its business is not materially dependent upon patents or patent protection. -5- ITEM 2. PROPERTIES - -------------------- The company's properties, plants and equipment are maintained in good condition and are suitable and adequate to support the business. The company's principal properties and their general characteristics are described below:
Business Location Type of Facility Segment - -------- ---------------- ------- Company-Owned Properties: - ------------------------- Melrose Park, Illinois . 2525 Armitage Avenue Corporate Office, Manufacturing, Warehouse (1) . 2020 and 2040 Indian Boundary Drive Office, Warehouse (1) . 2150 N. 15th Avenue Manufacturing, Warehouse (1) . 2100 N. 15th Avenue Warehouse (1) . 1930 George Street Office, Warehouse (1) Basingstoke, Hampshire, England Office (2) Buenos Aires, Argentina Office, Manufacturing, Warehouse (2) Columbus, Ohio Warehouse (3) Dallas, Texas Office, Manufacturing, Warehouse (1) Denton, Texas Office, Warehouse (3) Falun, Sweden Office, Manufacturing, Warehouse (2) Jacksonville, Florida Warehouse (3) Madrid, Spain Office, Manufacturing, Warehouse (2) Naguabo, Puerto Rico Manufacturing, Warehouse (1) (2) Naucalpan de Juarez, Mexico Office, Manufacturing, Warehouse (2) North Rocks, New South Wales, Australia Office, Manufacturing, Warehouse (2) Radzymin, Poland Office, Manufacturing, Warehouse (2) Reno, Nevada Warehouse (3) Swansea, Wales, England Office, Manufacturing, Warehouse (2) Toronto, Ontario, Canada Office, Manufacturing, Warehouse (1) Leased Properties: - ------------------ Albertslund, Denmark Office, Warehouse (2) Atlanta, Georgia Warehouse (1) Auckland, New Zealand Office, Warehouse (2) Blackburn, Lancashire, England Warehouse (3) Chatsworth, California Office, Manufacturing, Warehouse (1) Espoo, Finland Office, Warehouse (2) Geneva, Switzerland Office (2) Greenville, Ohio Office, Warehouse (3) Kitchener, Ontario, Canada Office, Warehouse (3) Laurel, Maryland Office, Warehouse (3) Macedonia, Ohio Office, Warehouse (3) Macon, Georgia Office, Warehouse (3) Mocksville, North Carolina Office, Warehouse (3) Monroe, Connecticut Office, Warehouse (3) Ontario, California Warehouse (1) Paducah, Kentucky Office, Warehouse (3) Rakkestad, Norway Office, Warehouse (2) Reading, Berkshire, England Office (3) Stockholm, Sweden Office, Manufacturing, Warehouse (2) Surrey, British Columbia, Canada Office, Warehouse (3) Toronto, Ontario, Canada Office, Warehouse (3) Various (2,428 locations in 47 states, Puerto Rico, the United Kingdom, Canada, Japan and Germany) Sally Beauty Company Stores (3)
(1) Alberto-Culver North America (2) Alberto-Culver International (3) Specialty Distribution - Sally -6- ITEM 3. LEGAL PROCEEDINGS - ------------------------- There are no material legal proceedings pending. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the year ended September 30, 2001. EXECUTIVE OFFICERS - ------------------ The following table sets forth the names and current positions of the registrant's executive officers, including their five-year business history and ages. Executive officers of the company and its subsidiaries are elected annually.
Name Current Position and Five-Year Business History Age - ---- ----------------------------------------------- --- Leonard H. Lavin (1) Chairman 82 Howard B. Bernick (1) President and Chief Executive Officer 49 Bernice E. Lavin (1) Vice Chairman, Secretary and Treasurer 76 Carol L. Bernick (1) Since January, 1999 - Vice Chairman and Assistant Secretary, 49 Alberto-Culver Company, President, Alberto-Culver North America, a division of the registrant and President, Alberto-Culver USA, Inc., a subsidiary of registrant; April, 1998 to January, 1999 - Vice Chairman and Assistant Secretary, Alberto-Culver Company and President, Alberto- Culver North America; October, 1994 to April, 1998 - Executive Vice President and Assistant Secretary, Alberto-Culver Company and President, Alberto-Culver USA, Inc. William J. Cernugel Since May, 2000 - Senior Vice President and Chief Financial 59 Officer; previously Senior Vice President, Finance for more than five years. John R. Berschied, Jr. Since May, 2000 - Group Vice President, Worldwide Research 58 and Development; January, 2000 to May, 2000 - Director Technology and Innovation Management, Arthur D. Little, Inc.; February, 1993 - December, 1999 - Senior Vice President, Global Research, Development and Engineering, S.C. Johnson and Son, Inc. Michael H. Renzulli President, Sally Beauty Company, Inc., a subsidiary of 61 registrant.
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Name Current Position and Five-Year Business History Age - ---- ----------------------------------------------- --- Gary P. Schmidt Since June, 1997 - Vice President, General Counsel and 50 Assistant Secretary; April, 1990 to June, 1997 - Vice-President, General Counsel and Secretary, Fujisawa USA, Inc.
(1) Leonard H. Lavin and Bernice E. Lavin are husband and wife. Carol L. Bernick is the wife of Howard B. Bernick and the daughter of Mr. and Mrs. Lavin. -8- PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - ------------------------------------------------------------------------------ Information required for this Item is incorporated herein by reference to the section entitled "Market Price of Common Stock and Cash Dividends Per Share" and note 4 of "Notes to Consolidated Financial Statements" in the registrant's annual report to stockholders for the year ended September 30, 2001. ITEM 6. SELECTED FINANCIAL DATA - -------------------------------- Information required for this Item is incorporated herein by reference to the section entitled "Selected Financial Data" in the registrant's annual report to stockholders for the year ended September 30, 2001. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------------------------------------------------------------------------ RESULTS OF OPERATIONS - --------------------- Information required for this Item is incorporated herein by reference to the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the registrant's annual report to stockholders for the year ended September 30, 2001. ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - -------------------------------------------------------------------- Information required for this Item is incorporated herein by reference to the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the registrant's annual report to stockholders for the year ended September 30, 2001. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ---------------------------------------------------- Information required for this Item is incorporated herein by reference to the consolidated financial statements and notes and "Independent Auditors' Report" of KPMG LLP in the registrant's annual report to stockholders for the year ended September 30, 2001. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND - ------------------------------------------------------------------------ FINANCIAL DISCLOSURE - -------------------- None. -9- PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------ Information required for this Item regarding the directors of the company and regarding delinquent filers pursuant to Item 405 of Regulation S-K is incorporated herein by reference to the sections entitled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance", respectively, in the registrant's proxy statement for its annual meeting of stockholders on January 24, 2002. Information concerning Executive Officers of the registrant is included in Part I of this report. ITEM 11. EXECUTIVE COMPENSATION - -------------------------------- Information required for this Item is incorporated herein by reference to the section entitled "Executive Compensation" in the registrant's proxy statement for its annual meeting of stockholders on January 24, 2002. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------------------------------------------------------------------------ Information required for this Item is incorporated herein by reference to the sections entitled "Share Ownership of Directors and Executive Officers" and "Principal Stockholders" in the registrant's proxy statement for its annual meeting of stockholders on January 24, 2002. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - ------------------------------------------------------- Information required for this Item is incorporated herein by reference to the section entitled "Certain Business Relationships" in the registrant's proxy statement for its annual meeting of stockholders on January 24, 2002. -10- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------- (a) Documents filed as part of this report: 1. Financial statements: The consolidated financial statements and notes to be included in Part II, Item 8 are incorporated by reference to the registrant's annual report to stockholders for the year ended September 30, 2001, which is filed as an exhibit to this report. 2. Financial statement schedules: Description Schedule ----------- -------- Valuation and Qualifying Accounts II Schedules I, III, IV, and V are omitted as the information required by these schedules is not applicable. 3. Exhibits: Exhibit Number Description ------ ----------- 3(i)(a) Copy of Restated Certificate of Incorporation of Alberto-Culver Company (filed as Exhibit 3(a) and incorporated herein by reference from the company's Form 10-K Annual Report for the year ended September 30, 1988). 3(i)(b) Copy of the amendment to the Restated Certificate of Incorporation of Alberto-Culver Company (filed as Exhibit 3(i)(c) and incorporated herein by reference from the company's Form 10-Q Quarterly Report for the quarter ended March 31, 1997). 3(ii) Copy of the By-Laws of Alberto-Culver Company, as amended and in effect as of October 26, 2000. 4 Certain instruments defining the rights of holders of long-term obligations of the registrant and certain of its subsidiaries (the total amount of securities authorized under each of which does not exceed ten percent of the registrant's consolidated assets) are omitted pursuant to part 4 (iii) (A) of Item 601 (b) of Regulation S-K. The registrant agrees to furnish copies of any such instruments to the Securities and Exchange Commission upon request. 4 (a) Copy of Indenture dated June 10, 1998 between Alberto-Culver Company and The First National Bank of Chicago, as Trustee (filed as Exhibit 4(a) and incorporated herein by reference from the company's Form 10-Q Quarterly Report for the quarter ended June 30, 1998). -11- 3. Exhibits: (continued) Exhibit Number Description 4 (b) Copy of 6.375% Debentures due June 15, 2028 (filed as Exhibit 4(b) and incorporated herein by reference from the company's Form 10-Q Quarterly Report for the quarter ended June 30, 1998). 4 (c) Copy of 8.25% Notes due November 1, 2005 (filed as Exhibit 4 and incorporated herein by reference from the company's Form 8-K dated March 28, 2000). 10 (a) Copy of Alberto-Culver Company Management Incentive Plan, as amended* (filed as Exhibit 10(a) and incorporated herein by reference from the company's Form 10-Q Quarterly Report for the quarter ended March 31, 2001). 10 (b) Copy of Alberto-Culver Company Employee Stock Option Plan of 1988, as amended.* 10 (c) Copy of Alberto-Culver Company 1994 Shareholder Value Incentive Plan, as amended* (filed as Exhibit 10(c) and incorporated herein by reference from the company's proxy statement for its annual meeting of stockholders on January 24, 2002). 10 (d) Copy of Alberto-Culver Company 1994 Restricted Stock Plan, as amended.* 10 (e) Copy of Alberto-Culver Company 1994 Stock Option Plan for Non-Employee Directors, as amended* (filed as Exhibit 10(e) and incorporated herein by reference from the company's proxy statement for its annual meeting of stockholders on January 24, 2002). 10 (f) Copy of Split Dollar Life Insurance Agreement dated September 30, 1993 between Alberto-Culver Company and the trustee of the Lavin Survivorship Insurance Trust * (filed as Exhibit 10(e) and incorporated herein by reference from the company's Form 10-K Annual Report for the year ended September 30, 1993). 10 (g) Form of Severance Agreement between Alberto-Culver Company and named executive officers * (filed as Exhibit 10(f) and incorporated herein by reference from the company's Form 10-Q Quarterly Report for the quarter ended December 31, 1996). 10 (h) Copy of Multicurrency Credit Agreement dated as of September 11, 1997 among Alberto-Culver Company, Bank of America National Trust and Savings Association as U.S. agent and the other financial institutions being parties thereto (filed as Exhibit 10(h) and incorporated herein by reference from the company's Form 10-K Annual Report for the year ended September 30, 1997). -12- 3. Exhibits: (continued) Exhibit Number Description ------ ----------- 10 (i) Copy of Supplement for Commitment Increase among Alberto-Culver Company, Bank of America N.A. and LaSalle Bank National Association, dated June 30, 2000, to the Multicurrency Credit Agreement dated as of September 11, 1997, filed as Exhibit 10 (i) and incorporated herein by reference from the company's Form 10-K Annual Report for the year ended September 30, 2000). 10 (j) Copy of Supplement for Commitment Increase among Alberto-Culver Company, Bank of America N.A. and ABN AMRO Bank N.V., dated June 30, 2000, to the Multicurrency Credit Agreement dated as of September 11, 1997, filed as Exhibit 10 (j) and incorporated herein by reference from the company's Form 10-K Annual Report for the year ended September 30, 2000. 10 (k) Copy of the Alberto-Culver Company Executive Deferred Compensation Plan, as amended* (filed as Exhibit 10(i) and incorporated herein by reference from the company's Form 10-Q Quarterly Report for the quarter ended December 31, 1999). 10 (l) Form of Amendment of Severance Agreement between Alberto-Culver Company and named executive officers* (filed as Exhibit 10(j) and incorporated herein by reference from the Company's Form 10-K Annual Report for the year ended September 30, 1999). 10 (m) Form of Key Executive Deferred Compensation Agreement between Alberto-Culver Company and certain of its officers, and schedule setting forth the registrant's named executive officers (as defined in Item 402 of Regulation S-K) who are parties to such an agreement and the material terms of each such named executive officer's agreement* (filed as Exhibit 10(k) and incorporated herein by reference from the company's Form 8-K dated March 23, 2000). 10 (n) Copy of the Alberto-Culver Company Deferred Compensation Plan for Non-Employee Directors.* 13 Portions of annual report to stockholders for the year ended September 30, 2001 incorporated herein by reference. 21 Subsidiaries of the Registrant 23 Consent of KPMG LLP * This exhibit is a management contract or compensatory plan or arrangement of the registrant. (b) Reports on Form 8-K: No report on Form 8-K was filed by the registrant during the quarter ended September 30, 2001. -13- SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) 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, on the 14th day of December, 2001. ALBERTO-CULVER COMPANY By /s/ Howard B. Bernick ------------------------------------ Howard B. Bernick President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Leonard H. Lavin Chairman of the Board December 14, 2001 - ----------------------------------- Leonard H. Lavin and Director /s/ Howard B. Bernick President, Chief Executive December 14, 2001 - ----------------------------------- Howard B. Bernick Officer and Director (Principal Executive Officer) /s/ Bernice E. Lavin Vice Chairman, Secretary, December 14, 2001 - ----------------------------------- Bernice E. Lavin Treasurer and Director /s/ Carol L. Bernick Vice Chairman, President, Alberto- December 14, 2001 - ----------------------------------- Carol L. Bernick Culver North America, Assistant Secretary and Director /s/ William J. Cernugel Senior Vice President and Chief December 14, 2001 - ----------------------------------- William J. Cernugel Financial Officer (Principal Financial & Accounting Officer) /s/ A. Robert Abboud Director December 14, 2001 - ----------------------------------- A. Robert Abboud /s/ A.G. Atwater, Jr. Director December 14, 2001 - ----------------------------------- A. G. Atwater, Jr. /s/ Allan B. Muchin Director December 14, 2001 - ----------------------------------- Allan B. Muchin /s/ Robert H. Rock Director December 14, 2001 - ----------------------------------- Robert H. Rock /s/ Sam J. Susser Director December 14, 2001 - ----------------------------------- Sam J. Susser /s/ Dr. Harold M. Visotsky Director December 14, 2001 - ----------------------------------- Dr. Harold M. Visotsky /s/ William W. Wirtz Director December 14, 2001 - ----------------------------------- William W. Wirtz
-14- Independent Auditors' Report ---------------------------- The Board of Directors and Stockholders Alberto-Culver Company: On October 23, 2001, we reported on the consolidated balance sheets of Alberto-Culver Company and Subsidiaries as of September 30, 2001 and 2000 and the related consolidated statements of earnings, cash flows and stockholders' equity for each of the years in the three-year period ended September 30, 2001, as contained in the 2001 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for fiscal year 2001. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in Item 14(a)2 of the annual report on Form 10-K. That financial statement schedule is the responsibility of the company's management. Our responsibility is to express an opinion on that financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG LLP KPMG LLP Chicago, Illinois October 23, 2001 -15- Schedule II ----------- ALBERTO-CULVER COMPANY AND SUBSIDIARIES Valuation and Qualifying Accounts (In thousands)
Year Ended September 30, ------------------------------------------- 2001 2000 1999 ----- ----- ---- Allowance for doubtful accounts: Balance at beginning of period $10,135 8,441 10,868 Additions (deductions): Charged to costs and expenses 7,331 4,910 3,166 Uncollectible accounts written off, net of recoveries (6,327) (4,112) (5,585) Allowance for doubtful accounts of acquired companies 2 1,207 104 Other 246 (311) (112) ------- --------- --------- Balance at end of period $11,387 10,135 8,441 ======= ========= =========
-16- EX-10.(B) 3 dex10b.txt EMPLOYEE STOCK OPTION PLAN Exhibit 10 (b) ALBERTO-CULVER COMPANY EMPLOYEE STOCK OPTION PLAN OF 1988 (as amended through July 26, 2001) 1. Purpose of ACSOP The Alberto-Culver Company Employee Stock Option Plan of 1988 (hereinafter called the "ACSOP") is intended to encourage ownership of the Class A common stock of Alberto-Culver Company (the "Company") by eligible key employees of the Company and its subsidiaries and to provide incentives for them to make maximum efforts for the success of the business. Options granted under the ACSOP will be non-qualified options (not incentive options as defined in Section 422 of the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder (the "Code")). 2. Eligibility Key employees of the Company and its subsidiaries who perform services which contribute materially to the management, operation and development of the business ("Optionees") will be eligible to receive options under the ACSOP. At their request, Mr. Leonard H. Lavin and Mrs. Bernice E. Lavin are ineligible to receive options under the ACSOP. 3. Administration The Compensation Committee of the Board of Directors of the Company (the "Committee") shall have full power and authority, subject to the express provisions of the ACSOP, to determine the purchase price of the stock covered by each option, the Optionees to whom and the time or times at which options shall be granted, the terms and conditions of the options, including the terms of payment therefor, and the number of shares of stock to be covered by each option. The Committee shall have full power to construe, administer and interpret the ACSOP, and full power to adopt such rules and regulations as the Committee may deem desirable to administer the ACSOP. No member of the Committee shall be liable for any action or determination made in good faith with respect to the ACSOP or any option thereunder. The determination of the Committee as to any disputed question arising under the ACSOP, including questions of construction and interpretation, shall be final, conclusive and binding. The Committee may, in its discretion, delegate to a committee of member(s) of the Committee its authority with respect to such matters under the ACSOP and options granted under the ACSOP as the Committee may specify. The Committee shall be comprised solely of members each of whom shall be an "outside director" within the meaning of Section 162(m) of the Code, and a "non-employee director" within the meaning of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder ("Section 16"), provided, however, that if any member of the Committee is not (i) an "outside director" within the meaning of Section 162(m) of the Code or (ii) a "non-employee director" within the meaning of Section 16, the Committee shall set up a subcommittee comprised solely of outside directors and non-employee directors for purposes of all matters arising under this ACSOP involving "officers" within the meaning of Rule 16a-1(f) under Section 16, and "covered employees" within the meaning of Section 162(m) of the Code for the plan year at issue. 4. Number of Shares of Stock to be Offered The Committee may authorize from time to time the issuance pursuant to the ACSOP of shares not to exceed 15,400,000 of the Company's Class A common stock in the aggregate, subject to adjustment under paragraph 10 hereof. Such shares of Class A common stock which may be issued pursuant to options granted under the ACSOP may be authorized and unissued shares or issued and reacquired shares as the Committee from time to time may determine. If any option granted under the ACSOP shall terminate or be surrendered or expire unexercised in whole or in part, the shares of stock so released from such option may be made the subject of additional options granted under the ACSOP. In addition, any shares of Class A common stock withheld to pay, in whole or in part, the amount required to be withheld under applicable tax laws in accordance with paragraph 7(d) hereof, may be made the subject of additional options granted under the ACSOP. 5. Option Price The purchase price under each option granted pursuant to the ACSOP shall be determined by the Committee but shall not be less than the Fair Market Value (as defined below) of the Company's Class A common stock at the time the option is granted. For purposes of the ACSOP, "Fair Market Value" shall mean the average of the high and low transaction prices of a share of Class A common stock or Class B common stock of the Company (the "Class B common stock"), as the case may be, as reported in the New York Stock Exchange Composite Transactions on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported. 6. Grant of Options The Committee may not grant to any individual Optionee in any fiscal year an option or options with respect to more than 400,000 shares of Class A common stock. 7. Term and Exercise of Options (a) Each option granted shall provide that it is not exercisable after the expiration of ten (10) years from the date the option is granted, or such shorter period as the Committee determines, and each option shall be subject to the following limitations upon its exercise: (i) Except as otherwise provided in paragraph 11(a) hereof, no option may be exercised until the day preceding the anniversary date of the grant of the option. (ii) Except as otherwise provided in paragraph 11(a) hereof, on the day preceding the anniversary date of the grant of the option in each of the four calendar years immediately following the year of the grant of the option, the right to purchase 2 twenty-five percent (25%) of the total number of shares of stock specified in the option shall accrue to the Optionee. Subject to paragraph 8 hereof, each such right to purchase such twenty-five percent (25%) may be exercised, in whole or in part, at any time after such right accrues and prior to the expiration of the term of the option. (b) Notwithstanding the foregoing or paragraph 8 hereof, the Committee may in its discretion (i) specifically provide at the date of grant for another time or times of exercise; (ii) accelerate the exercisability of any option subject to such terms and conditions as the Committee deems necessary or appropriate to effectuate the purpose of the ACSOP including, without limitation, a requirement that the Optionee grant to the Company an option to repurchase all or a portion of the number of shares acquired upon exercise of the accelerated option for their Fair Market Value on the date of grant; or (iii) at any time prior to the expiration or termination of any option previously granted, extend the term of any option (including such options held by officers or directors) for such additional period as the Committee, in its discretion, shall determine. In no event, however, shall the aggregate option period with respect to any option, including the original term of the option and any extensions thereof, exceed ten years. (c) An option may be exercised (subject to the receipt of payment) by giving written notice to the Secretary of the Company specifying the number of shares to be purchased. The full purchase price for such shares may be paid (i) in cash, (ii) by check, (iii) by delivery of previously owned shares of Class A common stock, (iv) by delivery of previously owned shares of Class B common stock, or (v) by a combination of these methods of payment. However, under no circumstances may any Optionee deliver previously owned shares of Class A common stock obtained from the exercise of stock options or the vesting of shares restricted under the Company's Restricted Stock Plan or Management Bonus Plan during the six months immediately preceding the exercise date. Payment must be received by the Secretary of the Company before any exercise is consummated. For purposes of the delivery of previously owned shares of Class A common stock and/or Class B common stock, the per share value of such shares shall be the Fair Market Value on the date of exercise. (d) At any time when an Optionee is required to pay to the Company an amount required to be withheld under applicable tax laws in connection with the exercise of an option (calculated by taking the minimum statutory withholding rates for federal and state tax purposes including payroll taxes, applicable to the income generated by the Optionee by such exercise), the Optionee may satisfy this obligation (i) in cash, (ii) by check, (iii) by delivery of previously owned shares of Class A common stock, (iv) by delivery of previously owned shares of Class B common stock, (v) by making an election to have the Company withhold shares of Class A common stock, or (vi) by a combination of these methods of payment, in each case having a value equal to the amount required to be withheld. The Optionee must specify the method of satisfying this obligation on or before the date of exercise. The value of the shares to be withheld or delivered shall be based on the Fair Market Value of the Class A common stock and/or Class B common stock on the date of exercise. 8. Continuity of Employment (a) Each option shall be subject to the following in addition to the restrictions set forth in 3 paragraphs 6 and 7 hereof: (i) If an Optionee dies without having fully exercised his or her option, the executors or administrators of his or her estate or legatees or distributees shall have the right during the one (1) year period following his or her death (but not after the expiration of the term of such option) to exercise such option in whole or in part but only to the extent that the Optionee could have exercised it at the date of his or her death. (ii) If an Optionee's termination of employment is due to retirement or disability, the Optionee's option shall terminate three (3) months after his or her termination of employment (but not after the expiration of the term of such option) and may be exercised only to the extent that such Optionee could have exercised it at the date of his or her termination of employment. For purposes of the ACSOP, (i) "retirement" shall have the meaning provided in the Company's Employees' Profit Sharing Plan or, in the absence of such a definition, termination of employment that occurs on or after the first day of the month following the month in which the Optionee attains his or her 65th birthday and (ii) "disability" shall have the meaning provided in the Company's applicable long-term disability plan and such disability continues for more than three months or, in the absence of such a definition, when an Optionee becomes totally disabled as determined by a physician mutually acceptable to the Optionee and the Committee before attaining his or her 65th birthday and if such total disability continues for more than three months. Disability does not include any condition which is intentionally self-inflicted or caused by illegal acts of the Optionee. (iii) If an Optionee's termination of employment is for any reason other than death, retirement or physical disability, the Optionee's option shall terminate upon said termination of employment and the Company shall have the right within a period of one year after said termination of employment to reacquire at the option price any stock acquired by the Optionee by exercise of an option within ninety (90) days prior to said termination of employment; provided, however, that if such termination of employment occurs following a Change in Control (as such term is defined in paragraph 11(b) hereof), the Optionee's option shall terminate three (3) months after his or her termination of employment (but not after the expiration of the term of such option) and may be exercised to the extent that such Optionee could have exercised it at the date of his or her termination of employment and the Company shall have no right to reacquire any stock acquired by the Optionee by exercise of an option. (b) Nothing contained in the ACSOP or any option granted pursuant to the ACSOP shall confer upon any Optionee any right to be continued in the employment of the Company or any subsidiary or shall prevent the Company or any subsidiary from terminating an Optionee's employment at any time, with or without cause. The determination by the Committee of whether an authorized leave of absence constitutes a termination of employment shall be final, conclusive and binding. 4 9. Non-Transferability of Options An option granted under the ACSOP shall not be assignable or transferable by an Optionee otherwise than by will or the laws of descent and distribution, and an option shall be exercisable during the lifetime of the Optionee only by him or her. An option transferred by will or the laws of descent and distribution may only be exercised by the legatee or distributee during the one year period following the Optionee's death and may only be exercised to the extent it was exercisable by the Optionee prior to his or her death. 10. Adjustment upon Change in Stock Each option and the number and kind of shares subject to future options under the ACSOP may be adjusted, as may be determined to be equitable in the sole and absolute discretion of the Committee, in the event there is any change in the outstanding Class A common stock, or any event that could cause a change in the outstanding Class A common stock, including, without limitation, by reason of a stock dividend, recapitalization, reclassification, issuance of Class A common stock, issuance of rights to purchase Class A common stock, issuance of securities convertible into or exchangeable for Class A common stock, merger, consolidation, stock split, reverse stock split, spin-off, combination, exchange or conversion of shares, or any other similar type of event. The Committee's determination of any adjustment pursuant to this paragraph10 shall be final, conclusive and binding. 11. Change in Control (a) (1) Notwithstanding any provision of the ACSOP, in the event of a Change in Control, all outstanding options shall immediately be exercisable in full and shall be subject to the provisions of paragraph 11(a)(2) or 11(a)(3), to the extent that either such paragraph is applicable. (2) Notwithstanding any provision of the ACSOP, in the event of a Change in Control in connection with which the holders of shares of the Company's Class A common stock receive shares of common stock that are registered under Section 12 of the Exchange Act, all outstanding options shall immediately be exercisable in full and there shall be substituted for each share of the Company's Class A common stock available under the ACSOP, whether or not then subject to an outstanding option, the number and class of shares into which each outstanding share of the Company's Class A common stock shall be converted pursuant to such Change in Control. In the event of any such substitution, the purchase price per share of each option shall be appropriately adjusted by the Committee or the committee to which authority has been delegated pursuant to paragraph 3 hereof, such adjustments to be made without an increase in the aggregate purchase price. (3) Notwithstanding any provision in the ACSOP, in the event of a Change in Control in connection with which the holders of the Company's Class A common stock receive consideration other than shares of common stock that are registered under Section 12 of the Exchange Act, each outstanding option shall be surrendered 5 to the Company by the holder thereof, and each such option shall immediately be cancelled by the Company, and the holder shall receive, within ten (10) days of the occurrence of such Change in Control, a cash payment from the Company in an amount equal to the number of shares of the Company's Class A common stock then subject to such option, multiplied by the excess, if any, of (i) the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of the Company's Class A common stock on the date of occurrence of the Change in Control over (ii) the purchase price per share of the Company's Class A common stock subject to the option. The Company may, but is not required to, cooperate with any person who is subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the foregoing to such person is made in compliance with Section 16 of the Exchange Act and the rules and regulations thereunder. (b) "Change in Control" means: (1) The occurrence of any one or more of the following events: (A) The acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act of both (x) 20% or more of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities") and (y) combined voting power of Outstanding Company Voting Securities in excess of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons (as such term is defined in paragraph 11(c)); provided, however, that a Change in Control shall not result -------- ------- from an acquisition of Company Voting Securities: (i) directly from the Company, except as otherwise provided in paragraph 11(b)(2)(A); (ii) by the Company, except as otherwise provided in paragraph 11(b)(2)(B); (iii) by an Exempt Person; (iv) by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (v) by any corporation pursuant to a reorganization, merger or consolidation involving the Company, if, immediately after such reorganization, merger or consolidation, each of the conditions described in 6 clauses (i) and (ii) of paragraph 11(b)(1)(C) shall be satisfied. (B) The cessation for any reason of the members of the Incumbent Board (as such term is defined in paragraph 11(d)) to constitute at least a majority of the Board of Directors of the Company (hereinafter called the "Board"). (C) Approval by the stockholders of the Company of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation: (i) more than 60% of the combined voting power of the then outstanding securities of the corporation resulting from such reorganization, merger or consolidation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners of the combined voting power of all of the Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation; and (ii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation. (D) Approval by the stockholders of the Company of the sale or other disposition of all or substantially all of the assets of the Company other than (x) pursuant to a tax-free spin-off of a subsidiary or other business unit of the Company or (y) to a corporation with respect to which, immediately after such sale or other disposition: (i) more than 60% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the Individuals and identities who were the beneficial owners of the combined voting power of all of the Outstanding Company Voting Securities immediately prior to such sale or other disposition; and (ii) at least a majority of the members of the board of directors thereof were members of the Incumbent Board at the 7 time of the execution of the initial agreement or action of the Board providing for such sale or other disposition. (E) Approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. (2) Notwithstanding the provisions of paragraph 11(b)(1): (A) no acquisition of Company Voting Securities shall be subject to the exception from the definition of Change in Control contained in clause (i) of paragraph 11(b)(1)(A) if such acquisition results from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company; and (B) for purposes of clause (ii) of paragraph 11(b)(1)(A), if any Person (other than the Company, an Exempt Person or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall, by reason of an acquisition of Company Voting Securities by the Company, become the beneficial owner of (x) 20% or more of the combined voting power of the Outstanding Company Voting Securities and (y) combined voting power of Outstanding Company Voting Securities in excess of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons, and such Person shall, after such acquisition of Company Voting Securities by the Company, become the beneficial owner of any additional Outstanding Company Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control. (c) "Exempt Person" (and collectively, the "Exempt Persons") means: (1) Leonard H. Lavin or Bernice E. Lavin; (2) any descendant of Leonard H. Lavin and Bernice E. Lavin or the spouse of any such descendant; (3) the estate of any of the persons described in paragraph 11(c)(1) or (2); (4) any trust or similar arrangement for the benefit of any person described in paragraph 11(c)(1) or (2); or (5) the Lavin Family Foundation or any other charitable organization established by any person described in paragraph 11(c)(1) or (2). 8 (d) "Incumbent Board" means those individuals who, as of October 24, 1996, constitute the Board, provided that: -------- (1) any individual who becomes a director of the Company subsequent to such date whose election, or nomination for election by the Company's stockholders, was approved either by the vote of at least a majority of the directors then comprising the Incumbent Board or by the vote of at least a majority of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons shall be deemed to have been a member of the Incumbent Board; and (2) no individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board or the Exempt Persons shall be deemed to have been a member of the Incumbent Board. 12. Amendment and Discontinuance The Committee or the Board, without further approval of the stockholders, may, at any time and from time to time, suspend or discontinue the ACSOP in whole or in part or amend the ACSOP in such respects as the Committee or the Board may deem proper and in the best interests of the Company or as may be advisable, provided, however, that no suspension or amendment shall be made which would: (i) Adversely affect or impair any option previously granted under the ACSOP without the consent of the Optionee, or (ii) Except as specified in paragraph 10, increase the total number of shares for which options may be granted under the ACSOP or decrease the minimum price at which options may be granted under the ACSOP. 9 EX-10.(D) 4 dex10d.txt 1994 RESTRICTED STOCK PLAN Exhibit 10 (d) ALBERTO-CULVER COMPANY 1994 RESTRICTED STOCK PLAN (as amended through July 26, 2001) SECTION 1. ESTABLISHMENT AND PURPOSE 1.1 Establishment The Alberto-Culver Company (the "Company") hereby establishes a restricted stock plan for Key Employees, as defined herein, which shall be known as the Alberto-Culver Company 1994 Restricted Stock Plan (the "RSP"). 1.2 Purpose The purpose of the RSP is to enable the Company to attract, retain, motivate, and reward Key Employees by providing them with a means to acquire an equity interest or to increase such interest in the Company in return for high levels of individual contribution and continued service. 1.3 Definitions Whenever used herein, the following terms shall have the meanings set forth below: (a) "Board" means the Board of Directors of the Company. (b) "Change in Control" shall have the meaning set forth in Section 7.2(a). (c) "Committee" means the Compensation Committee of the Board or, if any member of the Compensation Committee is not (i) an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986 and the rules and regulations thereunder (the "Code") or (ii) a "non-employee director" within the meaning of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder ("Section 16"), the Committee shall set up a subcommittee comprised solely of outside directors and non-employee directors for purposes of all matters arising under this RSP involving "officers" within the meaning of Rule 16a-1(f) under Section 16, and "covered employees" within the meaning of Section 162(m) of the Code for the plan year at issue. (d) "Disability" shall have the meaning provided in the Company's applicable long-term disability plan and such disability continues for more than three months or, in the absence of such a definition, when a Participant becomes totally disabled as determined by a physician mutually acceptable to the Participant and the Company before attaining his or her 65th birthday and if such total disability continues for more than three months. Disability does not include any condition which is intentionally self-inflicted or caused by illegal acts of the Participant. (e) "Exempt Person" and "Exempt Persons" shall have the meaning set forth in Section 7.2(b). (f) "Fair Market Value" shall mean the average of the high and low transaction prices of a share of Class A common stock as reported in the New York Stock Exchange Composite Transactions on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported. (g) "Key Employee" means an active, salaried employee (including officers and directors who also are employees) of the Company or its subsidiaries with direct impact on the performance of the Company. (h) "Incumbent Board" shall have the meaning set forth in Section 7.2(c). (i) "Participant" means a Key Employee designated by the Committee who is awarded and holds Restricted Stock pursuant to the RSP. (j) "Restricted Stock" shall mean the Class A common stock of the Company, $.22 par value, with restrictions as described in Section 6. (k) "Restricted Stock Agreement" shall have the meaning set forth in Section 6.1. (l) "Retirement" shall have the meaning provided in the Company's Employees' Profit Sharing Plan or, in the absence of such a definition, termination of employment that occurs on or after the first day of the month following the month in which the Participant attains his or her 65th birthday. SECTION 2. ADMINISTRATION 2.1 Administration The RSP shall be administered by the Committee. The Committee shall have full power to construe, administer and interpret the RSP, and full power to adopt such rules and regulations as the Committee may deem desirable to administer the RSP. No member of the Committee shall be liable for any action or determination made in good faith with respect to the RSP or any Restricted Stock thereunder. 2.2 Finality of Determination The determination of the Committee as to any disputed questions arising under this RSP, including questions of construction and interpretation, shall be final, conclusive and binding. SECTION 3. ELIGIBILITY AND PARTICIPATION 3.1 Eligibility Key Employees of the Company and its subsidiaries are eligible to receive Restricted Stock under the RSP, in such amounts and on as many occasions as the Committee in its sole discretion may determine. 3.2 Participation The Committee shall designate the Key Employees to receive Restricted Stock, the time or times and the size and terms of each individual grant of Restricted 2 Stock under the RSP. SECTION 4. STOCK SUBJECT TO THE RSP 4.1 Number The total number of shares of Restricted Stock that may be granted under the RSP shall not exceed 1,000,000. These shares may consist, in whole or in part, of authorized but unissued shares of stock or shares of stock reacquired by the Company and not reserved for any other purpose. 4.2 Reacquired and Withheld Shares If, at any time, shares of Restricted Stock issued pursuant to the RSP shall have been reacquired by the Company in connection with the restrictions herein imposed on such shares, such reacquired shares again shall become available for issuance under the RSP at any time prior to its termination. In addition, any shares of Restricted Stock withheld to pay, in whole or in part, the amount required to be withheld under applicable tax laws in accordance with Section 6.12 hereof, shall become available for issuance under the RSP at any time prior to its termination. 4.3 Adjustment upon Change in Stock The Committee may take such action with regard to adjustment of the number of shares of Restricted Stock that may be granted hereunder as it considers to be equitable in its sole and absolute discretion in the event there is any change in the outstanding Class A common stock, or any event that could cause a change in the outstanding Class A common stock, including, without limitation, by reason of a stock dividend, stock split, reverse stock split, spin-off, recapitalization, reclassification, merger, consolidation, combination, exchange or conversion of shares, or any other similar type of event. The Committee's determination of any adjustment pursuant to this Section 4.3 shall be final, conclusive and binding. SECTION 5. DURATION OF THE RSP The RSP shall continue until all Restricted Stock subject to it shall have been granted and vested under the RSP, subject to the provisions of the RSP regarding amendments thereto and termination thereof. SECTION 6. SHARES OF RESTRICTED STOCK 6.1 Grant of Shares of Restricted Stock Awards of Restricted Stock to Participants shall be granted under a Restricted Stock Agreement between the Company and the Participant which shall provide that the shares subject to any such award shall be subject to such forfeiture and other conditions, including the provisions of Section 6.7 hereof, as the Committee shall designate. 6.2 Vesting Except as otherwise provided in Section 7.1 hereof, Restricted Stock 3 granted to Participants before July 26, 2001 will vest on a cumulative basis in equal annual increments of one-fourth of the shares granted, commencing on the day preceding the fourth anniversary of the grant of the Restricted Stock. Those shares will be fully vested after a period of seven (7) years from the day preceding the date of grant. Except as otherwise provided in Section 7.1 hereof, Restricted Stock granted to Participants on or after July 26, 2001 will vest on a cumulative basis in equal annual increments of one-fourth of the shares granted, commencing on the day preceding the second anniversary of the grant of the Restricted Stock. Those shares will be fully vested after a period of five (5) years from the day preceding the date of grant. The Committee, however, may accelerate the vesting of any Restricted Stock granted hereunder subject to such terms and conditions as the Committee deems necessary and appropriate to effectuate the purpose of the RSP. 6.3 Transferability Subject to Section 6.8 hereof, a Participant's rights under the RSP may not be assigned and any Restricted Stock granted to a Participant may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated as long as the shares are subject to forfeiture or other conditions as provided in this RSP, and as set forth in the Restricted Stock Agreement pursuant to which such shares were granted. 6.4 Removal of Restrictions Except as otherwise provided herein, or as may be required by applicable law, shares of Restricted Stock covered by each Restricted Stock Agreement made under this RSP will become freely transferable by the Participant upon vesting in accordance with Section 6.2 or Section 7.1. 6.5 Other Restrictions The Committee may impose such other restrictions on any shares granted pursuant to this RSP as it may deem advisable, including, without limitation, restrictions required by (1) federal securities laws, (2) requirements of any stock exchange upon which such shares of the same class are listed and (3) any state securities laws applicable to such shares. 6.6 Certificates In addition to any legends placed on certificates pursuant to Section 6.5, the Company reserves the right to place on each certificate representing shares of Restricted Stock a restrictive legend, which legend may be in the following form: "The sale or other transfer of shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to the restrictions on transfer and forfeiture conditions (which include the satisfaction of certain employment service requirements) set forth in the Alberto-Culver Company 1994 Restricted Stock Plan and Restricted Stock Agreement. A copy of such agreement may be inspected at the offices of the Secretary of the Company. All certificates representing shares of Restricted Stock shall be held by the Secretary of the Company in escrow on behalf of the Participant awarded such shares, together with a Power of Attorney (if any) executed by the Participant, in the form satisfactory to the Committee and authorizing the Company to transfer such shares as provided in the Restricted Stock Agreement, until such time as all restrictions imposed on such shares pursuant to the RSP and the Restricted 4 Stock Agreement have expired or been earlier terminated. 6.7 Termination of Employment In the event that, prior to the removal of restrictions on shares of Restricted Stock as contemplated by Section 6.4, a Participant's employment with the Company terminates for any reason other than death, Retirement, Disability, or a Change in Control, any shares subject to time period restrictions or other forfeiture conditions at the date of such termination shall automatically be forfeited to the Company. A Participant shall not forfeit any rights to Restricted Stock previously granted to him, solely because he ceases to qualify as a Key Employee. 6.8 Death, Retirement or Disability (a) In the event that, prior to the removal of restrictions on shares of Restricted Stock as contemplated by Section 6.4, a Participant's employment with the Company terminates because of death, Retirement or Disability, any uncompleted portion of a time period restriction or other forfeiture conditions, as set forth in the terms of the Restricted Stock Agreement, may be waived by the Committee. The shares released from such restrictions pursuant to this Section 6.8 thereafter shall be freely transferable by the Participant, subject to any applicable legal requirements. (b) A Participant may from time to time name in writing any person or persons to whom his or her Restricted Stock should be given if the Participant dies, subject to the waiver of any applicable forfeiture conditions by the Committee pursuant to Section 6.8(a) hereof. Each such beneficiary designation will revoke all prior designations by the Participant with respect to the RSP, shall not require the consent of any previously named beneficiary, shall be in a form prescribed by the Committee (if the Committee so prescribes), and will be effective only when filed with the Committee in care of the Secretary of the Company during the Participant's lifetime. (c) If a Participant fails to designate a beneficiary before his or her death, as provided above, or if the beneficiary designated by the Participant dies prior to receiving the Restricted Stock hereunder, the Company may transfer the Restricted Stock to the legal representative or representatives of the estate of the Participant. 6.9 Voting Rights Participants shall have full voting rights with respect to shares of Restricted Stock. 6.10 Dividend Rights Except as the Committee may otherwise determine, Participants shall have full dividend rights with any such dividends being paid currently. Dividends paid on shares of Restricted Stock prior to the shares vesting will be treated as wages for federal income tax purposes and will be subject to withholding taxes by the Company. If all or part of a dividend is paid in shares of stock, the dividend shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock that are the basis for the dividend. 6.11 Security Interest in Shares In connection with the execution of any Restricted Stock Agreement, the Committee may require that a Participant grant to the Company a security interest in the shares of Restricted Stock issued or granted pursuant to this RSP to secure the 5 payment of any sums (e.g.: income withholding taxes due when restrictions lapse) then owing or thereafter coming due to the Company by such Participant. This security interest shall continue for such period of time as the certificates representing shares of Restricted Stock are held by the Secretary of the Company in escrow on behalf of the Participant pursuant to Section 6.6. 6.12 Withholding Taxes Due At any time when a Participant is required to pay to the Company an amount required to be withheld under applicable tax laws in connection with the vesting of Restricted Stock (calculated by taking the minimum statutory withholding rates for federal and state tax purposes including payroll taxes, applicable to the income generated by the vesting of such Restricted Stock), the Participant may satisfy this obligation in whole or in part by making an election to have the Company withhold shares of Restricted Stock having a value equal to the amount required to be withheld. The value of shares to be withheld shall be based on the Fair Market Value of the Restricted Stock on the date the Participant vests in such shares. SECTION 7. CHANGE IN CONTROL 7.1 Vesting Upon Change in Control Notwithstanding any provision of the RSP, all outstanding shares of Restricted Stock shall immediately become fully vested upon the occurrence of a Change in Control. 7.2 Definitions (a) The term "Change in Control" means: (1) the occurrence of any one or more of the following events: (A) The acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act of both (x) 20% or more of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities") and (y) combined voting power of Outstanding Company Voting Securities in excess of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons (as such term is defined in Section 7.2(b)); provided, however, that a ----------------- Change in Control shall not result from an acquisition of Company Voting Securities: (i) directly from the Company, except as otherwise provided in Section 7.2(a)(2)(A); (ii) by the Company, except as otherwise provided in Section 7.2(a)(2)(B); 6 (iii) by an Exempt Person; (iv) by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (v) by any corporation pursuant to a reorganization, merger or consolidation involving the Company, if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (i) and (ii) of Section 7.2(a)(1)(C) shall be satisfied. (B) The cessation for any reason of the members of the Incumbent Board (as such term is defined below) to constitute at least a majority of the Board. (C) Approval by the stockholders of the Company of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation: (i) more than 60% of the combined voting power of the then outstanding securities of the corporation resulting from such reorganization, merger or consolidation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners of the combined voting power of all of the Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation; and (ii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation. (D) Approval by the stockholders of the Company of the sale or other disposition of all or substantially all of the assets of the Company other than (x) pursuant to a tax-free spin-off of a subsidiary or other business unit of the Company or (y) to a corporation with respect to which, immediately after such sale or other disposition: (i) more than 60% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors is then beneficially 7 owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the combined voting power of all of the Outstanding Company Voting Securities immediately prior to such sale or other disposition; and (ii) at least a majority of the members of the board of directors thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition. (E) Approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. (2) Notwithstanding the provisions of Section 7.2(a)(1): (A) no acquisition of Company Voting Securities shall be subject to the exception from the definition of Change in Control contained in clause (i) of Section 7.2(a)(1)(A) if such acquisition results from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company; and (B) for purposes of clause (ii) of Section 7.2(a)(1)(A), if any Person (other than the Company, an Exempt Person or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall, by reason of an acquisition of Company Voting Securities by the Company, become the beneficial owner of (x) 20% or more of the combined voting power of the Outstanding Company Voting Securities and (y) combined voting power of Outstanding Company Voting Securities in excess of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons, and such Person shall, after such acquisition of Company Voting Securities by the Company, become the beneficial owner of any additional Outstanding Company Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control. (b) The term "Exempt Person" (and collectively, the "Exempt Persons") means: (1) Leonard H. Lavin or Bernice E. Lavin; (2) any descendant of Leonard H. Lavin and Bernice E. Lavin or the spouse of any such descendant; 8 (3) the estate of any of the persons described in Section 7.2(b)(1) or (2); (4) any trust or similar arrangement for the benefit of any person described in Section 7.2(b)(1) or (2); or (5) the Lavin Family Foundation or any other charitable organization established by any person described in Section 7.2(b)(1) or (2). (c) The term "Incumbent Board" means those individuals who, as of October 24, 1996, constitute the Board, provided that: (1) any individual who becomes a director of the Company subsequent to such date whose election, or nomination for election by the Company's stockholders, was approved either by the vote of at least a majority of the directors then comprising the Incumbent Board or by the vote of at least a majority of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons shall be deemed to have been a member of the Incumbent Board; and (2) no individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board or the Exempt Persons shall be deemed to have been a member of the Incumbent Board. SECTION 8. EMPLOYMENT RIGHTS OF EMPLOYEES Nothing in this RSP or in any grant of Restricted Stock shall interfere with or limit in any way the right of the Company to terminate any Key Employee's or Participant's employment at any time, or confer upon any Key Employee or Participant any right to continue in the employ of the Company or its subsidiaries. SECTION 9. STOCKHOLDER APPROVAL, AMENDMENT AND TERMINATION 9.1 Amendment This RSP may be amended at any time by the Committee or the Board; provided that no such amendment shall permit the granting of Restricted Stock to anyone other than as provided in Section 3 hereof, or increase the maximum number of shares of stock that may be granted pursuant to this RSP except pursuant to Section 4.3 hereof, without the further approval of the Company's stockholders. 9.2 Termination The Company reserves the right to terminate the RSP at any time by action of the Committee or the Board. 9.3 Existing Restrictions Neither amendment nor termination of this RSP shall 9 adversely affect any shares previously granted or issued pursuant to this RSP. 10 EX-10.(N) 5 dex10n.txt DEFFERED COMPENSATION PLAN Exhibit 10 (n) ALBERTO-CULVER COMPANY DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (July 26, 2001) 1. Purpose. The principal purposes of the Deferred Compensation Plan for ------- Non-Employee Directors ("Plan") are to (i) benefit Alberto-Culver Company ("Company") and its subsidiaries by offering its non-employee directors an opportunity to become holders of Class B common stock, par value $.22 per share ("Common Stock"), in order to enable them to represent the viewpoint of other stockholders of the Company more effectively and (ii) permit non-employee directors to defer all or a portion of the fees that they receive as directors of the Company. 2. Plan Participants. Each director who is not an officer or employee of the ----------------- Company or any of its subsidiaries shall be participant under the Plan ("Participant"). 3. Administration. The Plan shall be administered by the Board of Directors of -------------- the Company ("Board"). The Board shall have full power to construe, administer and interpret the Plan. The Board's decisions are final and binding on all parties. All fees and expenses incurred by the Plan in connection with its administration shall be paid by the Company. 4. Deferral Elections. ------------------ (a) Each Participant shall make one of the following elections in accordance with Section 4(b) and/or 4(c) with respect to his or her annual retainer and meeting fees (collectively, "Director Fees"): (i) The Participant may elect to have the Director Fees paid to him or her in cash. Director Fees payable with respect to meetings will be paid as soon as reasonably practicable on or after the date of each such meeting and the annual retainer shall be paid in equal installments on a quarterly basis; or (ii) The Participant may elect to defer receipt of the Director Fees until (a) one month after the date on which his or her service on the Board terminates for any reason or (b) any specific date selected by the Participant, and have the cash value of each such Director Fee credited to an interest bearing account established for the Participant under the Plan ("Cash Account") pursuant to the provisions of Section 5. Participants may also elect to receive one lump sum payment or equal annual installments, not to exceed five installments, of all amounts deferred pursuant to such election. In the absence of an election to the contrary, in whole or in part, deferred amounts will be paid in a single lump sum one month after the date on which the Participant's service on the Board terminates for any reason; or (iii) The Participant may elect to receive a distribution of the number of shares of Common Stock equal to the cash value of all Director Fees payable during the quarterly periods ending on the last day of March, June, September, and December, divided by the Fair Market Value of a share of Common Stock on the last day of each such quarterly period. Each distribution shall be evidenced by a certificate representing the applicable number of shares of Common Stock, registered in the name of the Participant, and distributed to the Participant on or as soon as reasonably practicable after each quarterly date noted in the preceding sentence. Such quarterly distributions of Common Stock will be made only in whole-share increments. The cash value of any fractional share, based upon the Fair Market Value for the applicable quarterly period as calculated above, shall be paid to the Participant in cash at the time of the Common Stock distribution; or (iv) The Participant may elect to defer receipt of the distribution of the number of shares of Common Stock calculated at the same times and in the same manner set forth in Section 4(a)(iii), as stock units on a one-share-for-one-stock-unit basis ("Stock Units"), and such number of units, including any fractional unit, shall be credited to a stock unit account established pursuant to the provisions of Section 5, for each Participant so electing ("Stock Unit Account"). Additional Stock Units equal to the cash dividends (or fair market value of any dividend paid in property other than capital stock of the Company) that the Participant would have received had he or she been the owner on each such dividend record date of a number of shares of Common Stock equal to the number of Stock Units in his or her Stock Unit Account, divided by the Fair Market Value of the Common Stock on the applicable dividend payment date, shall be credited to the Participant's Stock Unit Account as of each such dividend payment date. In the case of a stock dividend, stock split, reverse stock split, reclassification, recapitalization, exchange or conversion of shares, or any other similar event, additional credits or equitable adjustments shall be made (unless the Board determines no adjustment would be appropriate under the circumstances) to each Participant's Stock Unit Account of a number of Stock Units equal to the number of shares of Common Stock or other capital stock of the Company that the Participant would have received had he or she been the owner on each record date of a number of shares of Common Stock equal to the number of Stock Units in his or her Stock Unit Account on such date. The Participant may defer receipt of the shares of Common Stock underlying the Stock Units in his or her Stock Unit Account until (a) one month after the date his or her service on the Board terminates for any reason or (b) a specific date selected by the Participant. All deferred amounts shall be distributed on or as soon as reasonably practicable after the date selected in accordance with the preceding sentence, in shares of Common Stock equal to the number of Stock Units contained in the Participant's Stock Unit Account, rounded up to the next whole Stock Unit in the case of any fractional units. In the absence of an election to the contrary, all deferred amounts shall be distributed one month after the date on which the Participant's service on the Board terminates for any reason. (b) Except as provided in the next sentence, on or before the beginning of each calendar year, each Participant shall complete a form specifying the elections described above with respect to Director Fees ("Election Form") and deliver the Election Form to the General Counsel of the Company ("General Counsel"). An Election Form shall remain in effect for subsequent years until a subsequent Election Form is delivered to the General Counsel before the first day of the year in which 2 the new Election Form is to become effective. Except as provided in Section 4(c), an initial Election Form or a subsequent Election Form shall only apply to those Director Fees payable to a Participant with respect to services rendered after the end of the year in which such initial or subsequent Election Form is delivered to the General Counsel. Any Election Form delivered by a Participant shall be irrevocable with respect to any Director Fee covered by the elections set forth therein (but may be amended by a subsequent Election Form applicable to those Director Fees payable to a Participant with respect to services rendered after the end of the year in which such form was delivered to the General Counsel). If an Election Form is not in effect for a Participant for a year (e.g., the Participant has not completed an initial Election Form), he or she shall be deemed to have elected the option specified in this Section 4(a)(i) until a completed Election Form has been delivered to the General Counsel and has become effective. (c) Notwithstanding the preceding provisions of this Section 4, an election made by a Participant in the year in which he or she first becomes eligible to participate in the Plan may be made pursuant to an Election Form delivered to the General Counsel within 60 days after the date on which he or she initially becomes eligible to participate, and such Election Form shall be effective on the first day of the first quarterly period commencing January 1, April 1, July 1, or October 1, as applicable, following the date such Election Form is delivered to the General Counsel. 5. Participant Accounts. -------------------- (a) Director Fees deferred pursuant to (i) Section 4(a)(ii) shall be credited to the Participant's Cash Account as of the date it would otherwise have been paid and (ii) Section 4(a)(iv) shall be credited to the Stock Unit Account as of the last day of March, June, September, and December. Until the entire balance of the Cash Account and Stock Unit Account has been paid to the Participant (or his or her beneficiaries) such balance shall be increased (i) quarterly to reflect accrued interest on such balance in the Cash Account based on the interest rate set from time to time on the Company's Executive Deferred Compensation Plan (the "Executive Plan") and (ii) by any dividends paid on the Common Stock represented by Stock Units in each Stock Unit Account. In the event the Company no longer maintains the Executive Plan or a successor plan, the Board shall, from time to time, set the interest rate with respect to the entire balance of Participants' Cash Accounts. (b) Each Cash Account and Stock Unit Account shall be maintained on the books of the Company until full payment of the balance thereof has been made to the applicable Participant (or his or her beneficiaries). No funds, assets or capital stock may be set aside or earmarked for any Cash Account or Stock Unit Account, which shall be purely a general unsecured obligation of the Company. 6. Distributions. ------------- (a) Subject to Sections 6(b), 6(c) and 6(d), the entire balance of a Participant's Cash Account (payable in cash) and Stock Unit Account (payable in Common Stock) shall be paid in accordance with such Participant's deferral election(s) made pursuant to Section 3 4. (b) If a Participant's service on the Board shall terminate by reason of his or her death, or if he or she shall die after becoming entitled to a distribution hereunder, but prior to receipt of his or her entire distribution, (i) all cash then distributable hereunder with respect to such Participant's Cash Account and (ii) the number of shares of Common Stock equal to the number of Stock Units in such Participant's Stock Unit Account (rounded up to the next whole Stock Unit in the case of any fractional units) shall in each case be distributed as soon as reasonably practicable to such beneficiary or beneficiaries as such Participant shall have designated by an instrument in writing last filed with the General Counsel prior to his or her death, or in the absence of such designation of any living beneficiary, to his or her spouse, or if not then living, to his or her estate. (c) The Participant may request an early distribution of all or a portion of the balance of the Cash Account owed to the Participant. A single-sum payment will be paid to Participants who request such distribution. An early distribution paid to a Participant shall result in a penalty equal to 10% of such early distribution. The Participant will forfeit all right, title and interest to an amount equal to such penalty. The early distribution shall be paid to the Participant net of the 10% penalty and any withholding or other applicable taxes. (d) Notwithstanding any other provisions of the Plan, (i) the entire balance of each Participant's Cash Account shall be distributed to such Participant as soon as reasonably practicable after the date of the occurrence of a Change in Control in the form of a single lump sum cash payment and (ii) shares of Common Stock equal to the entire number of Stock Units contained in each Participant's Stock Unit Account (rounded up to the next whole Stock Unit in the case of any fractional units) shall be converted to Common Stock as of the date of the Change in Control and distributed as soon as reasonably practicable after the occurrence of the Change in Control. The cash value of any fees earned but not yet distributed as Common Stock or credited to the Stock Unit Account pursuant to Section 4(a)(iii) and 4(a)(iv), respectively, as of the date of a Change in Control, shall be paid to the Participant in the form of a single lump sum payment as soon as reasonably practicable after the occurrence of a Change in Control. For purposes of this Section 6(d), the definition of a Change in Control shall be the same as that definition of Change in Control found in the Alberto-Culver Company 1994 Stock Option Plan For Non-Employee Directors, as amended from time to time. 7. Amendment, Suspension or Termination. The Board may, at any time and from ------------------------------------ time to time, suspend or terminate the Plan, in whole or in part, or amend the Plan in such respects as the Board may deem proper and in the best interest of the Company or as may be advisable, provided, however, that no suspension, termination or amendment shall be made which would (i) directly or indirectly deprive any current or former Participant or his or her beneficiaries of all or any portion of his or her Cash Account or Stock Unit Account as determined as of the effective date of such amendment, suspension or termination, or (ii) directly or indirectly reduce the balance of any Cash Account or Stock Unit Account held hereunder as of the effective date of such amendment, suspension or termination. Notwithstanding anything to the contrary contained herein, upon termination of the Plan, (i) distribution of balances in all Cash Accounts and (ii) the number of shares of Common Stock represented by Stock Units in all Stock Unit Accounts (rounded up to the next whole 4 Stock Unit in the case of any fractional units) shall be made to Participants or their beneficiaries in a single lump sum cash payment or Common Stock distribution, as the case may be, on or as soon as reasonably practicable following such termination. No additional deferred Director Fees shall be credited to the Cash Accounts or Stock Unit Accounts of Participants after termination of the Plan, but the Company shall continue to credit interest to Cash Accounts and dividends to Stock Unit Accounts, pursuant to Section 5, until the balances of such Cash Accounts and Stock Unit Accounts have been fully distributed to Participants or their beneficiaries. 8. General Provisions. ------------------ (a) All amounts paid under the Plan shall be paid from the general assets of the Company. Such amounts shall be reflected on the accounting records of the Company, but shall not be construed to create or require the creation of a trust, custodial account or escrow account. No Participant shall have any right, title, or interest in any assets, accounts or funds that the Company may establish to aid in providing benefits under the Plan or otherwise. The Plan does not create a trust or establish any fiduciary relationships between the Company and the Participant or his or her beneficiary under the Plan, nor will any interest other than that of an unsecured creditor exist. (b) For all purposes of the Plan, the Fair Market Value of a share of Common Stock as of a given date shall be the average of the high and low transaction prices of a share of Common Stock as reported in the New York Stock Exchange Composite Transactions on such date, or if there shall be no reported transaction for such date, then on the next preceding date for which trades were reported. (c) Shares of Common Stock distributed under the Plan shall be treasury shares of the Company. (d) Nothing contained in the Plan shall constitute a guaranty by the Company or any other person or entity, that the assets of the Company will be sufficient to pay any benefit hereunder. No Participant or beneficiary shall have any right to receive a distribution under the Plan, except in accordance with the terms of the Plan. (e) Establishment of the Plan shall not be construed to give any Participant the right to be retained as a member of the Board. (f) Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to garnishment, seizure or sequestration for the payment of any debts owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. (g) The Board, General Counsel, employees, officers and directors of the Company shall not be held liable for, and shall be indemnified and held harmless by the Company 5 against, any loss, expense or liability relating to the Plan which arises from any action or determination made in good faith. (h) The Company shall withhold from any deferred or nondeferred Director Fee, or any distributions made pursuant to the Plan, any amounts required by applicable federal, state and local tax laws and regulations thereunder to be withheld. (i) If any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein. (j) Any notice under the Plan shall be in writing and shall be personally delivered, mailed postage paid as first class U.S. Mail or sent by reliable overnight courier. Notices shall be deemed given when actually received by the recipient. Notices shall be directed to the Company at its offices at 2525 Armitage Avenue, Melrose Park, Illinois 60160-1163, Attention: General Counsel; to a Participant at the address stated in his or her Election Form; and to a beneficiary entitled to benefits at the address stated in the Participant's beneficiary designation, or to such other addresses any party may specify by notice to the other parties. (k) This Plan shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to its conflict of laws principles. 6 EX-13 6 dex13.txt PORTIONS OF THE ANNUAL REPORT FINANCIAL HIGHLIGHTS - -------------------- Alberto-Culver Company and Subsidiaries - --------------------------------------------------------------------------------
Year ended September 30, ------------------------ (In thousands, except per share data) 2001 2000 % Change - ----------------------------------------------------------------------------------------------------------- Net sales $2,494,180 2,247,163 11.0% - ----------------------------------------------------------------------------------------------------------- Earnings before provision for income taxes $ 167,236 154,281* 8.4% - ----------------------------------------------------------------------------------------------------------- Net earnings $ 110,376 103,184* 7.0% - ----------------------------------------------------------------------------------------------------------- Net earnings per share: Basic $ 1.96 1.85* 5.9% Diluted $ 1.91 1.83* 4.4% - ----------------------------------------------------------------------------------------------------------- Cash dividends per share for Class A and Class B common stock $ .3225 .290 11.2% - ----------------------------------------------------------------------------------------------------------- Weighted average shares outstanding: Basic 56,176 55,790 0.7% Diluted 57,838 56,410 2.5% - --------------------------------------------------------------------------------------------------------------
* Fiscal year 2000 includes a non-recurring gain from the sale of a trademark. The non-recurring gain increased earnings before provision for income taxes by $9.3 million, net earnings by $6.0 million and basic and diluted earnings per share by 11 cents. Consolidated Statements of Earnings Alberto-Culver Company and Subsidiaries
====================================================================================================================== Year ended September 30, ------------------------------------- (In thousands, except per share data) 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- Net sales $2,494,180 2,247,163 1,975,928 Cost of products sold 1,217,429 1,105,750 973,702 - ---------------------------------------------------------------------------------------------------------------------- Gross profit 1,276,751 1,141,413 1,002,226 Advertising, promotion, selling and administrative 1,087,685 977,180 855,724 Non-recurring gain (note 9) -- (9,257) -- - ---------------------------------------------------------------------------------------------------------------------- Operating earnings 189,066 173,490 146,502 Interest expense, net of interest income of $5,479 in 2001, $4,538 in 2000 and $2,130 in 1999 21,830 19,209 12,719 - ---------------------------------------------------------------------------------------------------------------------- Earnings before provision for income taxes 167,236 154,281 133,783 Provision for income taxes 56,860 51,097 47,493 - ---------------------------------------------------------------------------------------------------------------------- Net earnings $ 110,376 103,184 86,290 ====================================================================================================================== Net earnings per share: Basic $ 1.96 1.85 1.53 Diluted $ 1.91 1.83 1.51 ======================================================================================================================
See accompanying notes to consolidated financial statements. Consolidated Balance Sheets Alberto-Culver Company and Subsidiaries
============================================================================================================================== (In thousands, except share data) September 30, ----------------------- Assets 2001 2000 ============================================================================================================================== Current assets: Cash and cash equivalents $ 201,970 114,637 Short-term investments 869 314 Receivables, less allowance for doubtful accounts of $11,387 in 2001 and $10,135 in 2000 169,657 154,207 Inventories: Raw materials 41,521 45,197 Work-in-process 4,782 4,819 Finished goods 432,008 395,241 - ----------------------------------------------------------------------------------------------------------------------------- Total inventories 478,311 445,257 Other current assets 26,142 26,122 - ----------------------------------------------------------------------------------------------------------------------------- Total current assets 876,949 740,537 Property, plant and equipment: Land 13,593 13,640 Buildings and leasehold improvements 151,306 148,911 Machinery and equipment 306,958 288,877 - ----------------------------------------------------------------------------------------------------------------------------- Total property, plant and equipment 471,857 451,428 Accumulated depreciation 236,035 211,337 - ----------------------------------------------------------------------------------------------------------------------------- Property, plant and equipment, net 235,822 240,091 Goodwill, net 264,339 263,847 Trade names, net 79,532 83,788 Other assets 59,859 57,335 - ----------------------------------------------------------------------------------------------------------------------------- $1,516,501 1,385,598 ============================================================================================================================== Liabilities and Stockholders' Equity ============================================================================================================================== Current liabilities: Short-term borrowings $ 2,482 3,401 Current maturities of long-term debt 404 587 Accounts payable 191,410 183,770 Accrued expenses 165,525 135,115 Income taxes 30,482 17,916 - ----------------------------------------------------------------------------------------------------------------------------- Total current liabilities 390,303 340,789 Long-term debt 321,183 340,948 Deferred income taxes 39,086 38,349 Other liabilities 29,920 33,252 Stockholders' equity: Common stock, par value $.22 per share: Class A authorized 75,000,000 shares; 30,612,798 shares issued at September 30, 2001 and 2000 6,735 6,735 Class B authorized 75,000,000 shares; 37,710,655 shares issued at September 30, 2001 and 2000 8,296 8,296 Additional paid-in capital 190,368 190,137 Retained earnings 779,792 687,631 Deferred compensation (4,826) (4,221) Accumulated other comprehensive income - foreign currency translation (61,284) (54,400) - ----------------------------------------------------------------------------------------------------------------------------- 919,081 834,178 Less treasury stock, at cost (Class A common stock: 2001 -6,741,946 shares and 2000 - 7,630,930 shares; Class B common stock: 2001 and 2000 - 4,753,184 shares) (183,072) (201,918) - ----------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 736,009 632,260 - ----------------------------------------------------------------------------------------------------------------------------- $1,516,501 1,385,598 ==============================================================================================================================
See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows Alberto-Culver Company and Subsidiaries
=================================================================================================================================== Year ended September 30, ------------------------------------ (In thousands) 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities: Net earnings $110,376 103,184 86,290 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 37,315 36,575 32,336 Amortization of goodwill, trade names and other assets 14,090 13,063 9,838 Non-recurring gain -- (9,257) -- Deferred income taxes 738 73 2,082 Cash effects of changes in (exclusive of acquisitions): Receivables, net (14,582) (9,612) (15,868) Inventories (28,246) (5,056) (42,656) Other current assets 43 (3,236) (1,034) Accounts payable and accrued expenses 37,771 (3,085) 18,031 Income taxes 14,541 1,655 305 Other assets (6,713) (4,644) (5,383) Other liabilities (128) (530) (382) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 165,205 119,130 83,559 - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Investing Activities: Short-term investments (538) 1,538 (398) Capital expenditures (36,752) (37,527) (47,822) Payments for purchased businesses, net of acquired companies' cash (18,791) (144,832) (62,304) Proceeds from sale of trademark -- 10,000 -- Proceeds from disposals of assets 1,340 3,172 2,891 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (54,741) (167,649) (107,633) - ------------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Financing Activities: Short-term borrowings (1,073) 464 1,156 Proceeds from issuance of long-term debt 42 308,508 65,276 Debt issuance costs -- (1,544) -- Repayments of long-term debt (20,512) (189,028) (11,988) Proceeds from sale of receivables -- 5,000 5,000 Proceeds from exercise of stock options 15,490 2,712 3,264 Cash dividends paid (18,215) (16,182) (14,394) Stock purchased for treasury (1,348) (3,460) (39,049) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided (used) by financing activities (25,616) 106,470 9,265 - ------------------------------------------------------------------------------------------------------------------------------------ Effect of foreign exchange rate changes on cash 2,485 755 (1,655) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 87,333 58,706 (16,464) Cash and cash equivalents at beginning of year 114,637 55,931 72,395 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of year $201,970 114,637 55,931 ==================================================================================================================================== Supplemental Cash Flow Information: Cash paid for: Interest $ 27,673 16,687 13,870 Income taxes $ 40,659 48,711 45,755 Non-cash investing and financing activities: Issuance of Class A common shares for acquisition $ -- 1,959 -- ====================================================================================================================================
See accompanying notes to consolidated financial statements. Consolidated Statements of Stockholders' Equity Alberto-Culver Company and Subsidiaries - --------------------------------------------------------------------------------
Number of Shares Dollars ----------------------------------------- ------------------------------------------ Common Stock Issued Treasury Stock Common Stock Issued Additional -------------------------------------------------------------- Paid-in Retained (In thousands) Class A Class B Class A Class B Class A Class B Capital Earnings - ------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1998 30,613 37,711 (6,550) (4,563) $6,735 $8,296 $192,610 $528,733 - ------------------------------------------------------------------------------------------------------------------------- Comprehensive income (loss): Net earnings 86,290 Foreign currency translation - ------------------------------------------------------------------------------------------------------------------------- Total comprehensive income (loss) 86,290 Cash dividends (14,394) Stock options exercised 244 (1,560) Stock issued pursuant to employee incentive plans 21 9 Restricted stock issued, net 37 4 Restricted stock amortization Stock purchased for treasury (1,597) (190) - ------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1999 30,613 37,711 (7,845) (4,753) 6,735 8,296 191,063 600,629 - ------------------------------------------------------------------------------------------------------------------------- Comprehensive income (loss): Net earnings 103,184 Foreign currency translation - ------------------------------------------------------------------------------------------------------------------------- Total comprehensive income (loss) 103,184 Cash dividends (16,182) Stock options exercised 193 (1,048) Stock issued pursuant to employee incentive plans 15 (19) Stock issued for acquisition 75 343 Restricted stock issued, net 101 (202) Restricted stock amortization Stock purchased for treasury (170) - ------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 2000 30,613 37,711 (7,631) (4,753) 6,735 8,296 190,137 687,631 - ------------------------------------------------------------------------------------------------------------------------- Comprehensive income (loss): Net earnings 110,376 Foreign currency translation - ------------------------------------------------------------------------------------------------------------------------- Total comprehensive income (loss) 110,376 Cash dividends (18,215) Stock options exercised 850 (117) Stock issued pursuant to employee incentive plans 17 65 Restricted stock issued, net 67 283 Restricted stock amortization Stock purchased for treasury (45) - ------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 2001 30,613 37,711 (6,742) (4,753) $6,735 $8,296 $190,368 $779,792 - ------------------------------------------------------------------------------------------------------------------------- Dollars -------------------------------------------------------- Accumulated Other Total Deferred Comprehensive Treasury Stockholders' (In thousands) Compensation Income (Loss) Stock Equity - ------------------------------------------------------------------------------------------------- Balance at September 30, 1998 $(2,841) $(28,131) $(174,252) $531,150 - ------------------------------------------------------------------------------------------------- Comprehensive income (loss): Net earnings 86,290 Foreign currency translation (3,029) (3,029) - ------------------------------------------------------------------------------------------------- Total comprehensive income (loss) (3,029) 83,261 Cash dividends (14,394) Stock options exercised 5,296 3,736 Stock issued pursuant to employee incentive plans 454 463 Restricted stock issued, net (875) 808 (63) Restricted stock amortization 676 676 Stock purchased for treasury (39,049) (39,049) - ------------------------------------------------------------------------------------------------- Balance at September 30, 1999 (3,040) (31,160) (206,743) 565,780 - ------------------------------------------------------------------------------------------------- Comprehensive income (loss): Net earnings 103,184 Foreign currency translation (23,240) (23,240) - ------------------------------------------------------------------------------------------------- Total comprehensive income (loss) (23,240) 79,944 Cash dividends (16,182) Stock options exercised 4,169 3,121 Stock issued pursuant to employee incentive plans 317 298 Stock issued for acquisition 1,616 1,959 Restricted stock issued, net (2,104) 2,183 (123) Restricted stock amortization 923 923 Stock purchased for treasury (3,460) (3,460) - ------------------------------------------------------------------------------------------------- Balance at September 30, 2000 (4,221) (54,400) (201,918) 632,260 - ------------------------------------------------------------------------------------------------- Comprehensive income (loss): Net earnings 110,376 Foreign currency translation (6,884) (6,884) - ------------------------------------------------------------------------------------------------- Total comprehensive income (loss) (6,884) 103,492 Cash dividends (18,215) Stock options exercised 18,382 18,265 Stock issued pursuant to employee incentive plans 371 436 Restricted stock issued, net (1,819) 1,441 (95) Restricted stock amortization 1,214 1,214 Stock purchased for treasury (1,348) (1,348) - ------------------------------------------------------------------------------------------------- Balance at September 30, 2001 $(4,826) $(61,284) $(183,072) $736,009 - -------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements - ------------------------------------------ (1) Summary of Significant Policies - ---------------------------------------- PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Alberto-Culver Company and its subsidiaries ("company"). All significant intercompany accounts and transactions have been eliminated. Certain amounts for prior periods have been reclassified to conform to the current year's presentation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements. Actual results may differ from these estimates. Management believes these estimates and assumptions are reasonable. Financial Instruments All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. These investments are stated at cost which approximates market value. Short-term investments are stated at cost which approximates market value at September 30, 2001 and 2000. The carrying amounts of accounts receivable, accounts payable and short-term borrowings approximate fair value due to the short maturities of these financial instruments. The fair value of long-term debt was approximately $336.1 million at September 30, 2001. Fair value estimates are calculated using the present value of the projected debt cash flows based on the current market interest rates of comparable debt instruments. Inventories Inventories are stated at the lower of cost (first-in, first out method) or market (net realizable value). Property, Plant and Equipment Property, plant and equipment are carried at cost. Depreciation is recorded primarily on the straight-line method over the estimated useful lives of the respective classes of assets. Buildings and building improvements are depreciated over periods of 20-40 years. Leasehold improvements are depreciated over the lives of the related leases. The depreciation of machinery and equipment is over periods of 5-15 years. Expenditures for maintenance and repairs are expensed as incurred. Goodwill and Trade Names The cost of goodwill and trade names is amortized on a straight-line basis over periods ranging from ten to forty years. Management periodically considers whether there has been a permanent impairment to the value of goodwill and trade names by evaluating various factors including current operating results, market and economic conditions and anticipated future results and cash flows. When these factors indicate that a specific intangible asset should be evaluated for impairment, the company compares the estimated future cash flows associated with the asset to the carrying value of the asset to determine if any impairment exists. Accumulated amortization at September 30, 2001 and 2000 was $57.8 million and $46.9 million, respectively. Foreign Currency Translation Foreign currency balance sheet accounts are translated at rates of exchange in effect at the balance sheet date. Results of operations are translated using the average exchange rates during the period. Revenue Recognition The company's consumer products segments and specialty distribution segment recognize revenue when title passes, which is at the time products are shipped to customers. The company's specialty distribution segment also recognizes revenue when a customer consummates a point-of-sale transaction in a store. Appropriate provisions for sales returns, cash discounts and bad debt are made at the time sales are recorded. Shipping and Handling Amounts invoiced to customers for shipping and handling are included in net sales with the related expense reported on the advertising, promotion, selling and administrative line of the consolidated statement of earnings. Costs of Products Sold The company's consumer products segments include direct material costs and direct and indirect expenses incurred to manufacture products in cost of products sold. The company's specialty distribution segment includes the direct cost of merchandise in the cost of products sold. Advertising, Promotion and Market Research Advertising, promotion and market research costs are expensed as incurred and amounted to $305.1 million, $286.4 million and $259.7 million in 2001, 2000 and 1999, respectively. Research and Development Research and development costs are expensed as incurred and amounted to $9.1 million in 2001, $8.3 million in 2000 and $8.7 million in 1999. Income Taxes Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are estimated to be recovered or settled. Weighted Average Shares Outstanding The following table provides information about basic and diluted weighted average shares outstanding:
(In thousands) 2001 2000 1999 - ----------------------------------------------------------------------------------------------- Basic weighted average shares outstanding 56,176 55,790 56,378 Assumed exercise of stock options 1,299 564 709 Assumed vesting of restricted stock 363 -- -- Other -- 56 75 - ----------------------------------------------------------------------------------------------- Diluted weighted average shares outstanding 57,838 56,410 57,162 ===============================================================================================
Stock options for 722,200 and 781,200 shares were excluded from the computation of diluted earnings per share in 2000 and 1999, respectively, as the options' exercise prices were greater than the average market price and, therefore, were anti-dilutive. No stock options were anti-dilutive in 2001. Stock-Based Compensation The company uses the intrinsic method of accounting for its stock-based compensation arrangements. New Accounting Standards In May, 2000, the Financial Accounting Standards Board's (FASB) Emerging Issues Task Force (EITF) reached a consensus on Issue No. 00-14, "Accounting for Certain Sales Incentives." EITF Issue No. 00-14 addresses the recognition, measurement and income statement classification for various types of sales incentives including coupons, rebates and free products. The company is required to comply with EITF Issue No. 00-14 in the second quarter of fiscal year 2002. In April, 2001, the EITF reached a consensus on Issue No. 00-25, "Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's Products." EITF Issue No. 00-25 addresses the income statement classification for various types of consideration paid by a vendor to a retailer. The company is required to comply with EITF Issue No. 00-25 in the second quarter of fiscal year 2002. The company expects to implement EITF Issue Nos. 00-14 and 00-25 in the first quarter of fiscal year 2002 and estimates the effect will be a reduction of consolidated net sales of approximately 4%-5%, but will not change consolidated net earnings. In June, 2001, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 addresses financial accounting and reporting for business combinations. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets, requires companies to discontinue the amortization of goodwill and certain other intangible assets and requires an impairment test of existing goodwill and certain other intangible assets based on a fair value method. The company adopted SFAS No. 141 in the fourth quarter of fiscal year 2001. The company also adopted SFAS No. 142 in the fourth quarter of fiscal year 2001 for new acquisitions and is required to comply no later than the first quarter of fiscal year 2003 as to previously acquired intangibles. The company expects to implement the requirements of SFAS No. 142 for previously acquired intangibles in the first quarter of fiscal year 2002. The company estimates discontinuation of the amortization of goodwill and certain other intangibles in accordance with SFAS No. 142 will result in an increase in consolidated net earnings of approximately 7%-8% and does not expect any impairment of goodwill or other intangible assets upon implementation. (2) Accrued Expenses - -------------------- Accrued expenses consist of the following:
(In thousands) 2001 2000 - -------------------------------------------------------------------------------------------------- Compensation and benefits $ 83,403 60,723 Advertising and promotions 35,125 35,750 Other 46,997 38,642 - -------------------------------------------------------------------------------------------------- $165,525 135,115 ==================================================================================================
(3) Long-Term Debt and Other Financing Arrangements - --------------------------------------------------- Long-term debt, exclusive of current maturities, consists of the following:
(In thousands) 2001 2000 - ----------------------------------------------------------------------------------------------- 8.25% notes due November, 2005 200,000 200,000 6.375% debentures due June, 2028 120,000 120,000 Variable rate revolving Swedish krona credit agreement due April, 2003 -- 19,053 Other 1,183 1,895 - ----------------------------------------------------------------------------------------------- $321,183 340,948 ===============================================================================================
Maturities of long-term debt for the next five fiscal years are as follows (in thousands): 2002 - $404; 2003 - $1,129; 2004 - $44; 2005 - $10; 2006 - $200,000; 2007 and later - $120,000. In June, 1998, the company issued $120 million of 6.375% debentures due June 15, 2028. The debentures are subject to repayment, in whole or in part, on June 15, 2008 at the option of the holders. In addition, the company has the option to redeem the debentures at any time, in whole or in part, at a price equal to 100% of the principal amount plus accrued interest and, if applicable, a make-whole premium. In April, 2000, the company issued $200 million of 8.25% senior notes due November 1, 2005. The company has the option to redeem the notes at any time, in whole or in part, at a price equal to 100% of the principal amount plus accrued interest and, if applicable, a make-whole premium. The company has a $250 million revolving credit facility which expires in September, 2002. The facility, which had no borrowings outstanding at September 30, 2001 or 2000, may be drawn in U.S. dollars or certain foreign currencies. The interest rate for the revolving credit facility is based on a fixed spread over LIBOR. The $250 million revolving credit facility imposes restrictions on such items as total debt, liens and interest expense. At September 30, 2001, the company was in compliance with these arrangements. The company has an agreement to sell, without recourse, up to $40 million of designated trade receivables on an ongoing basis. The agreement involves the sale of accounts receivable to a wholly-owned special purpose entity (SPE), which in turn sells an undivided interest in a revolving pool of eligible receivables to a financial institution. The SPE is a separate corporate entity with its own creditors that are entitled to be satisfied out of the SPE's assets prior to those assets becoming available to its parent. The agreement expires in one year and is renewable annually upon the mutual consent of all parties. At September 30, 2001 and 2000, the facility was fully utilized. Costs related to this arrangement are included in administrative expenses. (4) Stockholders' Equity - ------------------------ The company has two classes of common stock, both of which are listed on the New York Stock Exchange. Except for voting, dividend and conversion rights, the Class A and Class B common stock are identical. Class A has one-tenth vote per share and Class B has one vote per share. No dividend may be paid on the Class B unless an equal or greater dividend is paid on the Class A, and dividends may be paid on the Class A in excess of dividends paid, or without paying dividends, on the Class B. All, and not less than all, of the Class A may at any time be converted into Class B on a share-for-share basis at the option of the company. The Class B is convertible into Class A on a share-for-share basis at the option of the holders. Cash dividends for Class B common stock in 2001, 2000 and 1999 were $10.6 million or $.3225 per share, $9.6 million or $.29 per share and $8.4 million or $.255 per share, respectively. Cash dividends for Class A common stock in 2001, 2000 and 1999 were $7.6 million or $.3225 per share, $6.6 million or $.29 per share and $6.0 million or $.255 per share, respectively. Class A common stock dividends per share have been equal to those of Class B common stock since the Class A shares were issued in April, 1986. During fiscal year 1998, the Board of Directors authorized the company to purchase up to 6.0 million shares of its Class A common stock. This authorization was increased to 9.0 million shares in fiscal year 1999. As of September 30, 2001, the company had purchased 7.3 million Class A common shares under this program at a total cost of $162.9 million. In addition, the Board of Directors in fiscal year 1999 authorized the purchase of 190,000 Class B common shares from a related party at a total cost of $5.0 million, which was equal to the fair market value of the shares on the date of purchase. The related party was a trust of which a Vice Chairman of the company was a trustee with sole voting power and whose assets are held for the benefit of a family member of the company's Chairman and Vice Chairmen. (5) Stock Option and Restricted Stock Plans - ------------------------------------------- Pursuant to its stock option plans, the company is authorized to issue non-qualified options to employees and non-employee directors to purchase a limited number of shares of the company's Class A common stock at a price not less than the fair market value of the stock on the date of grant. Options under the plans expire ten years from the date of grant and are exercisable on a cumulative basis in four equal annual increments commencing one year after the date of grant. A total of 15.6 million shares have been authorized to be issued under the plans. SFAS No. 123, "Accounting for Stock-Based Compensation," requires either the adoption of a fair value based method of accounting for stock-based compensation or the continuance of the intrinsic value method with pro-forma disclosures as if the fair value method was adopted. The company has elected to continue measuring compensation expense for its stock-based plans using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" and, accordingly, no compensation cost has been recognized in the consolidated statements of earnings. Had compensation expense for these plans been determined based upon the fair value of stock options on the dates of grant and recognized over the vesting period consistent with SFAS No. 123, the company's pro-forma net earnings and earnings per share for the years ended September 30, 2001, 2000 and 1999 would have been as follows (in thousands, except per share amounts):
2001 2000 1999 - ---------------------------------------------------------------------------------------- Net earnings: As reported $110,376 103,184 86,290 Pro-forma $104,591 98,633 82,779 Basic earnings per share: As reported $ 1.96 1.85 1.53 Pro-forma $ 1.86 1.77 1.47 Diluted earnings per share: As reported $ 1.91 1.83 1.51 Pro-forma $ 1.81 1.75 1.45 ========================================================================================
The weighted average fair value of options at the date of grant in 2001, 2000 and 1999 was $7.49, $5.77 and $4.96 per option, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
2001 2000 1999 - ---------------------------------------------------------------------------------------- Expected life 5 years 5 years 5 years Volatility 25.4% 24.8% 20.5% Risk-free interest rate 4.6%-5.9% 5.8%-6.5% 4.2%-5.2% Dividend yield 1.0%-1.2% 1.1%-1.4% 1.0%-1.2% ========================================================================================
Summarized information on the company's outstanding stock options at September 30, 2001 is as follows (options in thousands):
Options Outstanding Options Exercisable -------------------------------------------- ------------------------- Average Weighted Weighted Range of Number Remaining Average Number Average Exercise of Contractual Option of Option Prices Options Life Price Options Price - --------------------------------------------------------------------------------------------------------- $9.75-$13.38 791 3.2 years $12.21 791 $12.21 $16.34-$23.19 2,542 7.2 years $20.40 1,576 $20.43 $24.94-$32.15 2,197 8.2 years $25.33 990 $25.69 =========================================================================================================
Stock option activity under the plans is summarized as follows (options in thousands):
Number Weighted of Average Options Option Price - ---------------------------------------------------------------------------------------- Outstanding At September 30, 1998 3,055 $17.92 - ------------------------------------------------------------ Granted 1,187 $21.41 Exercised (244) $13.37 Canceled (288) $22.16 --------------------------------------------------------- Outstanding at September 30, 1999 3,710 $19.01 - ------------------------------------------------------------ Granted 1,590 $19.93 Exercised (193) $14.05 Canceled (153) $21.42 --------------------------------------------------------- Outstanding at September 30, 2000 4,954 $19.42 - ------------------------------------------------------------ Granted 1,716 $24.98 Exercised (851) $18.22 Canceled (289) $22.29 --------------------------------------------------------- Outstanding at September 30, 2001 5,530 $21.18 ====================================================================================== Exercisable at September 30: 1999 1,985 $16.99 2000 2,912 $18.40 2001 3,357 $20.04 ======================================================================================
The company is also authorized to grant up to 1,000,000 shares of Class A common stock to employees under its restricted stock plan. The restricted shares vest on a cumulative basis in four equal annual installments commencing four years after the date of grant. The total value of restricted shares is recorded as deferred compensation at the time of grant based on the fair market value of the shares on the date of grant. The deferred compensation balance is amortized into expense over the seven year vesting period. During fiscal year 2001, employees were granted 80,000 restricted shares at a weighted average fair value of $24.94 per share on the date of grant. At September 30, 2001 there were 344,450 restricted shares outstanding, and the deferred compensation balance included as a separate component of stockholders' equity was $4.8 million. (6) Income Taxes - ---------------- The provisions for income taxes consist of the following: (In thousands) 2001 2000 1999 ------------------------------------------------------------------------------ Current: Federal $45,989 35,739 30,965 Foreign 7,624 12,000 9,966 State 2,509 3,285 4,480 ---------------------------------------------------------------------------- 56,122 51,024 45,411 ============================================================================ Deferred: Federal 808 (874) 2,189 Foreign 134 1,327 (402) State (204) (380) 295 ---------------------------------------------------------------------------- 738 73 2,082 ---------------------------------------------------------------------------- $56,860 51,097 47,493 ============================================================================ The difference between the United States statutory federal income tax rate and the effective income tax rate is summarized below: 2001 2000 1999 - ------------------------------------------------------------------------------- Statutory tax rate 35.0% 35.0% 35.0% Effect of foreign income tax rates (.5) (2.6) (2.5) State income taxes, net of federal tax benefit .9 1.2 2.3 Tax exempt interest income (.6) (.3) (.1) Other, net (.8) (.2) .8 - ------------------------------------------------------------------------------- Effective tax rate 34.0% 33.1% 35.5% =============================================================================== Significant components of the company's deferred tax assets and liabilities at September 30, 2001 and 2000 are as follows: (In thousands) 2001 2000 - ------------------------------------------------------------------------------- Deferred tax assets attributable to: Accrued expenses $15,052 17,195 Other 3,045 1,946 - ------------------------------------------------------------------------------- Total deferred tax assets 18,097 19,141 - ------------------------------------------------------------------------------- Deferred tax liabilities attributable to: Depreciation and amortization 41,802 39,761 Inventory adjustments 1,617 4,269 State income taxes 329 534 - ------------------------------------------------------------------------------- Total deferred tax liabilities 43,748 44,564 - ------------------------------------------------------------------------------- Net deferred tax liabilities $25,651 25,423 =============================================================================== Other current assets at September 30, 2001 and 2000 include $13.4 million and $12.9 million, respectively, of net deferred tax assets. Management believes that it is more likely than not that results of future operations will generate sufficient taxable income to realize the deferred tax assets. Accordingly, there is no valuation allowance recorded at September 30, 2001 and 2000. Domestic earnings before income taxes were $140.7 million, $124.4 million and $107.2 million in 2001, 2000 and 1999, respectively. Foreign operations had earnings before income taxes of $26.5 million, $29.9 million (including the non-recurring gain) and $26.6 million in 2001, 2000 and 1999, respectively. Undistributed earnings of the company's foreign operations amounting to $202.8 million are intended to remain permanently invested to finance future growth and expansion. Accordingly, no U.S. income taxes have been provided on those earnings at September 30, 2001. Should such earnings be distributed, the credits for foreign income taxes paid would substantially offset applicable U.S. income taxes. (7) Lease Commitments - --------------------- The major portion of the company's leases are for Sally Beauty Company stores. Other leases cover certain manufacturing and warehousing properties, office facilities and data processing equipment. September 30, 2001, future minimum payments under non-cancelable leases are as follows: Operating Capital (In thousands) Leases Leases - ----------------------------------------------------------------------------- 2002 $ 61,194 125 2003 50,682 70 2004 36,973 27 2005 24,752 9 2006 14,535 -- 2007 and later 13,700 -- - --------------------------------------------------------------------------- Total minimum lease payments $201,836 231 =========================================================================== Total rental expense for operating leases amounted to $82.7 million in 2001, $74.9 million in 2000 and $69.8 million in 1999. Certain leases require the company to pay real estate taxes, insurance, maintenance and special assessments. (8) Business Segments and Geographic Area Information - ----------------------------------------------------- The presentation of segment information reflects the manner in which management organizes segments for making operating decisions and assessing performance. The company's consumer products business includes two segments, "Alberto-Culver North America" and "Alberto-Culver International," and includes developing, manufacturing, distributing and marketing branded consumer products worldwide. The Alberto-Culver North America segment also includes the manufacturing of custom label products for other companies. The "Specialty distribution - Sally" business segment consists of Sally Beauty Company, a distributor of professional beauty supplies through its Sally Beauty Supply stores and its Beauty Systems Group full-service operations. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The company accounts for sales between segments as if the sales were to a third party, however, sales between segments are eliminated in consolidation. Notes Continued - -------------------------------------------------------------------------------- (8) Business Segments and Geographic Area Information (continued) Segment data for the years ended September 30, 2001, 2000 and 1999 is as follows:
Business Segments Information (In thousands) 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Net sales: Consumer products: Alberto-Culver North America $ 616,909 551,595 466,014 Alberto-Culver International 445,778 437,861 430,952 - ------------------------------------------------------------------------------------------------------------------------------------ Total consumer products 1,062,687 989,456 896,966 Specialty distribution - Sally 1,460,137 1,281,065 1,096,867 Eliminations (28,644) (23,358) (17,905) - ------------------------------------------------------------------------------------------------------------------------------------ $2,494,180 2,247,163 1,975,928 ==================================================================================================================================== Earnings before provision for income taxes: Consumer products: Alberto-Culver North America $ 52,511 37,284 30,229 Alberto-Culver International 15,945 15,874 20,273 --------------------------------------------------------------------------------------------------------------------------------- Total consumer products 68,456 53,158 50,502 Specialty distribution - Sally 144,688 125,640 111,252 --------------------------------------------------------------------------------------------------------------------------------- Segment operating profit 213,144 178,798 161,754 Non-recurring gain (note 9) -- 9,257 -- Unallocated expenses, net* (24,078) (14,565) (15,252) Interest expense, net of interest income (21,830) (19,209) (12,719) --------------------------------------------------------------------------------------------------------------------------------- $ 167,236 154,281 133,783 ==================================================================================================================================== Identifiable assets: Consumer products: Alberto-Culver North America $ 324,495 316,656 256,334 Alberto-Culver International 361,144 374,206 382,345 --------------------------------------------------------------------------------------------------------------------------------- Total consumer products 685,639 690,862 638,679 Specialty distribution - Sally 655,825 589,955 497,570 Corporate** 175,037 104,781 45,245 --------------------------------------------------------------------------------------------------------------------------------- $1,516,501 1,385,598 1,181,494 ==================================================================================================================================== Depreciation and amortization expense: Consumer products: Alberto-Culver North America $ 14,849 14,587 12,358 Alberto-Culver International 12,197 12,471 10,713 --------------------------------------------------------------------------------------------------------------------------------- Total consumer products 27,046 27,058 23,071 Specialty distribution - Sally 22,132 20,527 17,931 Corporate 2,227 2,053 1,172 --------------------------------------------------------------------------------------------------------------------------------- $ 51,405 49,638 42,174 ==================================================================================================================================== Capital expenditures: Consumer products: Alberto-Culver North America $ 13,237 10,259 17,488 Alberto-Culver International 5,785 10,337 12,002 --------------------------------------------------------------------------------------------------------------------------------- Total consumer products 19,022 20,596 29,490 Specialty distribution - Sally 17,730 16,931 18,601 --------------------------------------------------------------------------------------------------------------------------------- $ 36,752 37,527 48,091 ====================================================================================================================================
* "Unallocated expenses, net" principally consists of general corporate expenses. ** Corporate identifiable assets are primarily cash, cash equivalents, short-term investments and equipment. Geographic data for the years ended September 30, 2001, 2000 and 1999 is as follows:
Geographic Area Information (In thousands) 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales: United States $1,941,499 1,703,438 1,448,701 Foreign 571,041 565,970 549,688 Eliminations (18,360) (22,245) (22,461) --------------------------------------------------------------------------------------------------------------------------------- $2,494,180 2,247,163 1,975,928 ==================================================================================================================================== Segment Operating profit: United States $ 178,177 147,021 129,773 Foreign 34,967 31,777 31,981 --------------------------------------------------------------------------------------------------------------------------------- $ 213,144 178,798 161,754 ==================================================================================================================================== Identifiable assets: United States $ 935,874 871,727 708,524 Foreign 405,590 409,090 427,725 Corporate* 175,037 104,781 45,245 --------------------------------------------------------------------------------------------------------------------------------- $1,516,501 1,385,598 1,181,494 ====================================================================================================================================
* Corporate identifiable assets are primarily cash, cash equivalents, short-term investments and equipment. (9) Non-Recurring Gain - ---------------------- In the first quarter of fiscal year 2000, the company sold a European trademark with a nominal carrying value for $10.0 million. The transaction resulted in a non-recurring pre-tax gain of $9.3 million and an increase in net earnings of $6.0 million. The non-recurring gain added 11 cents to the company's basic and diluted earnings per share in fiscal year 2000. (10) Quarterly Financial Data - ----------------------------- Unaudited quarterly consolidated statement of earnings information for the years ended September 30, 2001 and 2000 is summarized below (in thousands, except per share amounts):
1/st/ 2/nd/ 3/rd/ 4/th/ Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------------- 2001: Net sales $ 593,560 622,558 634,416 643,646 Gross profit $ 301,377 323,288 324,810 327,276 Net earnings $ 23,626 25,892 29,071 31,787 Earnings per share: Basic $ .42 .46 .52 .56 Diluted $ .41 .45 .50 .55 - --------------------------------------------------------------------------------- 2000: Net sales $ 525,799 553,813 573,095 594,456 Gross profit $ 268,429 282,293 292,718 297,973 Net earnings $ 26,833* 22,757 25,466 28,128 Earnings per share: Basic $ .48* .41 .46 .50 Diluted $ .48* .40 .45 .50 - ---------------------------------------------------------------------------------
*The first quarter of fiscal year 2000 includes a non-recurring gain from the sale of a trademark. The non-recurring gain increased net earnings by $6.0 million and basic and diluted earnings per share by 11 cents. (11) Acquisitions - ----------------- The company made acquisitions during fiscal years 2001, 2000 and 1999 which individually were insignificant to the consolidated financial statements. The total amount paid for the acquisitions in fiscal years 2001, 2000 and 1999 were $18.8 million, $144.8 million and $62.3 million, respectively. The acquisitions were accounted for using the purchase method, and accordingly, the results of operations of the acquired businesses have been included in the consolidated financial statements from the dates of acquisition. Total goodwill of $11.6 million, $101.9 million and $39.3 million was recorded in fiscal years 2001, 2000 and 1999, respectively, as a result of the acquisitions. Independent Auditors' Report - ---------------------------- Alberto-Culver Company and Subsidiaries The Board of Directors and Stockholders Alberto-Culver Company: We have audited the accompanying consolidated balance sheets of Alberto-Culver Company and Subsidiaries as of September 30, 2001 and 2000 and the related consolidated statements of earnings, cash flows and stockholders' equity for each of the years in the three-year period ended September 30, 2001. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alberto-Culver Company and Subsidiaries as of September 30, 2001 and 2000 and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 2001, in conformity with accounting principles generally accepted in the United States of America. /s/KPMG LLP KPMG LLP Chicago, Illinois October 23, 2001 Management's Discussion and Analysis of Results of Operations and Financial - --------------------------------------------------------------------------- Condition - --------- Alberto-Culver Company and Subsidiaries - --------------------------------------- Results of Operations Fiscal year 2001 marked the company's tenth consecutive year of record sales and record operating earnings. Net sales for the year ended September 30, 2001 were $2.49 billion, an increase of 11.0% over prior year sales of $2.25 billion. Net sales in 1999 were $1.98 billion. Record net earnings of $110.4 million in 2001 increased 13.6% from the prior year's net earnings of $97.2 million before the non-recurring gain described below. Excluding the fiscal year 2000 non-recurring gain, basic earnings per share of $1.96 in fiscal year 2001 were 22 cents or 12.6% higher than 2000. Diluted earnings per share before the non-recurring gain increased 11.0% to $1.91 in fiscal year 2001 from $1.72 in fiscal year 2000. As described in "note 9" to the consolidated financial statements, in fiscal year 2000, the company sold a European trademark with a nominal carrying value for $10.0 million. As a result, the company recognized a non-recurring pre-tax gain of $9.3 million and an increase in net earnings of $6.0 million. Accordingly, basic and diluted earnings per share increased 11 cents as a result of the gain. Fiscal year 2001 net earnings increased $7.2 million or 7.0% compared to fiscal year 2000 net earnings including the non-recurring gain. Sales of Alberto-Culver North America consumer products in fiscal year 2001 increased to $616.9 million from $551.6 million in 2000. The current year sales increase primarily resulted from the Pro-Line business acquired in March, 2000, the introduction of TRESemme Hydrology and higher sales for St. Ives Swiss Formula facial products and body washes, the Motions line of hair care products and the Alberto VO5 Herbals line of shampoos and conditioners. In fiscal year 2000, sales increased 18.4% compared to 1999 sales of $466.0 million primarily due to higher sales of the Alberto VO5 Herbals line of shampoos and conditioners, St. Ives Swiss Formula facial and body wash product lines, the Motions line of hair care products, TRESemme hair care products and higher sales for custom label filling operations, along with the inclusion of sales related to the Pro-Line acquisition. Alberto-Culver International consumer products sales increased 1.8% to $445.8 million in 2001 compared to $437.9 million in 2000. The fiscal year 2001 results were negatively impacted by the effect of foreign exchange rates. Had foreign exchange rates in fiscal year 2001 been the same as 2000, Alberto-Culver International sales would have increased 10.0%, primarily due to sales increases for the company's European and Latin American businesses. In fiscal year 2000, International sales increased 1.6% to $437.9 million from $431.0 million in fiscal year 1999. Sales of the "Specialty distribution - Sally" business segment increased to $1.46 billion in fiscal year 2001, compared to $1.28 billion and $1.10 billion in 2000 and 1999, respectively. The sales increases of 14.0% in 2001 and 16.8% in 2000 were attributable to the expansion of Sally's full service operations, higher sales for established Sally Beauty Company outlets and the addition of stores during the year. The number of Sally stores increased 21.5% during the last three fiscal years to a total of 2,428 at September 30, 2001 compared to 2,325 and 2,157 at the end of fiscal years 2000 and 1999, respectively. Cost of products sold as a percentage of sales was 48.8% in fiscal year 2001 compared to 49.2% in 2000 and 49.3% in 1999. The lower cost of products sold percentage in fiscal year 2001 compared to the prior year was primarily due to the introduction of higher margin new products and lower costs. Advertising, promotion, selling and administrative expenses increased 11.3% in fiscal year 2001 and 14.2% in 2000. The increases in fiscal years 2001 and 2000 primarily resulted from the higher selling and administration costs associated with the growth of the Sally Beauty Company business and higher expenditures for advertising, promotion and market research. Advertising, promotion and market research expenditures were $305.1 million, $286.4 million and $259.7 million in fiscal years 2001, 2000 and 1999, respectively. The higher expenses in fiscal year 2001 were mainly attributable to increased advertising and promotion expenditures for North America primarily related to the launch of TRESemme Hydrology and the acquisition of Pro-Line, and higher expenses for International primarily related to Advanced Alberto VO5, the introduction of a new product line in Mexico and the fiscal year 2000 acquisition of a skin care business in Poland. Management's Discussion and Analysis of Results of Operations and Financial - --------------------------------------------------------------------------- Condition (Cont.) - ----------------- Alberto-Culver Company and Subsidiaries Interest expense, net of interest income, was $21.8 million, $19.2 million and $12.7 million in fiscal years 2001, 2000 and 1999, respectively. Interest expense was $27.3 million in fiscal year 2001 versus $23.7 million in 2000 and $14.8 million in 1999. The increase in interest expense in fiscal year 2001 was primarily attributable to an additional $8.4 million of interest expense related to the $200 million of 8.25% senior notes issued in April, 2000. The higher interest expense was partially offset by lower interest expense related to the repayment of borrowings under the revolving credit facility, the payoff of the $20.0 million of notes payable which matured in September, 2000, and the repayment of borrowings under the Swedish Krona revolving credit facility. Interest income in fiscal year 2001 was $5.5 million, compared to $4.5 million in 2000 and $2.1 million in 1999. The increase in fiscal year 2001 was principally due to higher interest income resulting from investing the net proceeds of the senior notes for a full year and interest income earned on cash generated by operations during the year. The provision for income taxes as a percentage of earnings before income taxes was 34.0% in 2001, 33.1% in 2000 and 35.5% in 1999. The higher tax rate in fiscal year 2001 was primarily due to the mix of foreign taxable earnings. Other factors which influenced the effective tax rates for those years are described in "note 6" to the consolidated financial statements. Financial Condition Working capital at September 30, 2001 was $486.6 million, an increase of $86.9 million from the prior year's working capital of $399.7 million. The resulting current ratio was 2.25 to 1.00 at September 30, 2001 compared to 2.17 to 1.00 last year. The increase in working capital and the current ratio was primarily due to higher cash, cash equivalents and short-term investments principally resulting from cash generated from operating activities during the year. Accounts receivable increased 10.0% to $169.7 million from $154.2 million last year. The increase was principally due to increased sales. Inventories were $478.3 million at September 30, 2001, up 7.4% compared to $445.3 million last year. The increase primarily resulted from acquisitions and the growth of the Sally Beauty Company and North America businesses. Net property, plant and equipment decreased $4.3 million to $235.8 million at September 30, 2001. The decrease resulted primarily from depreciation during fiscal year 2001 and the effects of foreign exchange rates, substantially offset by expenditures for additional Sally stores, acquisitions, office facilities, machinery and equipment and information systems. Accounts payable of $191.4 million at September 30, 2001 increased $7.6 million compared to 2000, primarily due to the timing of inventory purchases and vendor payments, partially offset by the effects of foreign exchange rates. Long-term debt decreased $19.8 million to $321.2 million at September 30, 2001 principally due to the elimination of borrowings under the company's Swedish Krona revolving credit facility. Total stockholders' equity increased $103.7 million to $736.0 million at September 30, 2001. The increase was primarily due to net earnings for the fiscal year and proceeds from the exercise of employee stock options, partially offset by dividend payments and the weakening of certain foreign currencies against the U.S. dollar. Liquidity and Capital Resources The company's primary sources of cash over the past three years have been from funds provided by operating activities and the issuance of $200 million of 8.25% senior notes in April, 2000. Operating activities provided cash of $165.2 million, $119.1 million and $83.6 million in 2001, 2000 and 1999, respectively. The company has obtained long-term financing as needed to fund acquisitions and other growth opportunities. Funds also may be obtained prior to their actual need in order to take advantage of opportunities in the debt markets. In April, 2000, the company issued $200 million of 8.25% senior notes due November, 2005. In June, 1998, the company issued $120 million of 6.375% debentures due June, 2028. In September, 1997, the company obtained a five-year, $200 million revolving credit facility, which was increased to $250 million in fiscal year 2000. The facility, which had no borrowings outstanding at September 30, 2001 or 2000, may be drawn in U.S. dollars or in certain foreign currencies. Under debt covenants, the company has the ability to incur up to $780 million of additional borrowings. The primary uses of cash during the three-year period ending September 30, 2001 were $225.9 million for acquisitions, $221.5 million for repayments of long-term debt, $122.1 million for capital expenditures, $48.8 million for cash dividends and $43.9 million for purchases of treasury stock. Compared to 1998, cash dividends per share increased 40.2% over the three-year period ended September 30, 2001. Cash dividends paid on Class A and Class B common stock were $.3225 per share in 2001, $.290 per share in 2000 and $.255 per share in 1999. The company anticipates that cash flows from operations and available credit will be sufficient to fund operating requirements in future years. During fiscal year 2002, the company expects that cash will continue to be used for acquisitions, capital expenditures, new product development, market expansion and dividend payments. The company may also purchase shares of its common stock depending on market conditions. During fiscal years 1998 and 1999, the Board of Directors authorized the company to purchase up to 9.0 million shares of its Class A common stock. As of September 30, 2001, 1.7 million Class A shares remained available for purchase under the authorizations. No Class A shares have been purchased under this program since October, 1999. Inflation The company was not significantly affected by inflation during the past three years. Management continuously attempts to resist cost increases and counteract the effects of inflation through productivity improvements, cost reduction programs and price increases within the constraints of the highly competitive markets in which the company operates. Market Risk As a multinational corporation that manufactures and markets products in countries throughout the world, the company is subject to certain market risks including foreign currency, interest rates and government actions. The company considers a variety of practices to manage these market risks, including, when deemed appropriate, the occasional use of derivative financial instruments. The company uses derivative financial instruments only for risk management and does not use them for trading or speculative purposes. As of September 30, 2001, the company had no material derivative financial instruments outstanding. The company is exposed to potential gains or losses from foreign currency fluctuations affecting net investments and earnings denominated in foreign currencies. The company's primary exposures are to changes in exchange rates for the U.S. dollar versus the Swedish krona, the British pound sterling, the Canadian dollar, the Euro, the Australian dollar, the Mexican peso and the Argentine peso. The company's various currency exposures often offset each other, providing a natural hedge against currency risk. Periodically, specific foreign currency transactions (e.g. inventory purchases, intercompany transactions, etc.) are hedged with forward contracts to reduce the foreign currency risk. Gains and losses on these foreign currency hedges are included in the basis of the underlying hedged transactions. As of September 30, 2001, the company had no material outstanding foreign currency contracts. The company considers combinations of fixed rate and variable rate debt, along with varying maturities, in its management of interest rate risk. At September 30, 2001, the company had no variable rate long-term debt outstanding. Management's Discussion and Analysis of Results of Operations and Financial - --------------------------------------------------------------------------- Condition (Cont.) - ----------------- Alberto-Culver Company and Subsidiaries The company has periodically used interest rate swaps to manage interest rate risk on debt securities. These instruments allow the company to exchange variable rate debt into fixed rate or fixed rate debt into variable rate. Interest rate differentials paid or received on these arrangements are recognized as adjustments to interest expense over the life of the agreement. At September 30, 2001, the company had no interest rate swaps outstanding. The company's quantitative information on market risk as of September 30, 2001 is as follows (in millions):
Debt ---------------------------------------------------------------------------- Expected Maturities Short-Term Fixed Rate Long-Term Fixed Rate Total ------------------------------------------------------------------------------------------------------------------- 2002 (3.3% average rate) $ 2.9 -- 2.9 2003 (8.9% average rate) -- 1.1 1.1 2004 (7.8% average rate) -- 0.1 0.1 2006 (8.3% average rate) -- 200.0 200.0 Thereafter (6.4% average rate) -- 120.0 120.0 ------------------------------------------------------------------------------------------------------------------ Total $ 2.9 321.2 324.1 ------------------------------------------------------------------------------------------------------------------ Fair Value $ 2.9 336.1 339.0 ------------------------------------------------------------------------------------------------------------------
The company is exposed to credit risk on certain assets, primarily cash equivalents, short-term investments and accounts receivable. The credit risk associated with cash equivalents and short-term investments is mitigated by the company's policy of investing in securities with high credit ratings. The company provides credit to customers in the ordinary course of business and performs ongoing credit evaluations. Concentrations of credit risk with respect to trade receivables are limited due to the number of customers comprising the company's customer base. The company believes its allowance for doubtful accounts is sufficient to cover customer credit risks. New Accounting Standards In June, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS Nos. 137 and 138, requiring companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. The accounting treatment of gains or losses resulting from changes in the values of those derivatives is dependent on the use of the derivative and whether it qualifies for hedge accounting. The company was required to comply with SFAS No. 133, as amended, in the first quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements. In December, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition". SAB No. 101 provides guidance in applying generally accepted accounting principles to revenue recognition. The company implemented SAB No. 101 in the first quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements. In September, 2000, the FASB's Emerging Issues Task Force (EITF) reached a consensus on Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF Issue No. 00-10 addresses the income statement classification of shipping and handling fees and costs. The company implemented EITF Issue No. 00-10 in the first quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements. In September, 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 140 replaces SFAS No. 125 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral. The company implemented SFAS No. 140 in the third quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements. Management's Discussion and Analysis of Results of Operations and Financial - --------------------------------------------------------------------------- Condition (Cont.) - ----------------- Alberto-Culver Company and Subsidiaries In May, 2000, the EITF reached a consensus on Issue No. 00-14, "Accounting for Certain Sales Incentives." EITF Issue No. 00-14 addresses the recognition, measurement and income statement classification of various types of sales incentives including coupons, rebates and free products. The company is required to comply with EITF Issue No. 00-14 in the second quarter of fiscal year 2002. In April, 2001, the EITF reached a consensus on Issue No. 00-25, "Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's Products." EITF Issue No. 00-25 addresses the income statement classification for various types of consideration paid by a vendor to a retailer. The company is required to comply with EITF Issue No. 00-25 in the second quarter of fiscal year 2002. The company expects to implement EITF Issue Nos. 00-14 and 00-25 in the first quarter of fiscal year 2002 and estimates the effect will be a reduction of consolidated net sales of approximately 5%-6%, but will not change consolidated net earnings. In June, 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 addresses financial accounting and reporting for business combinations. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets, requires companies to discontinue the amortization of goodwill and certain other intangible assets and requires an impairment of existing goodwill and certain other intangible assets based on a fair value method. The company adopted SFAS No. 141 in the fourth quarter of fiscal year 2001. The company also adopted SFAS No. 142 in the fourth quarter of fiscal year 2001 for new acquisitions and is required to comply no later than the first quarter of fiscal year 2003 as to previously acquired intangibles. The company expects to implement the requirements of SFAS No. 142 for previously acquired intangibles in the first quarter of fiscal year 2002. The company estimates discontinuation of the amortization of goodwill and certain other intangibles in accordance with SFAS No. 142 will increase consolidated net earnings by approximately 7%-8% and does not expect any impairment of goodwill or other intangible assets upon implementation. In August, 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets, including the presentation of discontinued operations in the statement of earnings. The company is required to adopt the provisions of SFAS No.144 no later than the first quarter of fiscal year 2003 and does not expect its implementation to have a material effect on the consolidated financial statements.
Selected Financial Data Alberto-Culver Company and Subsidiaries ============================================================================================================================= Year ended September 30, - ----------------------------------------------------------------------------------------------------------------------------- (In thousands, except per share data) 2001 2000 1999 1998 1997 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------------------------- Operating Results: Net sales $2,494,180 2,247,163 1,975,928 1,834,711 1,775,258 1,590,409 1,358,219 1,216,119 Cost of products sold 1,217,429 1,105,750 973,702 902,095 880,416 805,080 682,589 602,749 Interest expense 27,309 23,747 14,849 12,170 11,826 15,905 9,946 8,630 Earnings before income taxes 167,236 154,281(1) 133,783 132,378 136,121(2) 100,014 84,242 71,078 Provision for income taxes 56,860 51,097(1) 47,493 49,311 50,704(2) 37,270 31,591 27,010 Net earnings 110,376 103,184(1) 86,290 83,067 85,417(2) 62,744 52,651 44,068 Net earnings per share (3): Basic 1.96 1.85(1) 1.53 1.46 1.53(2) 1.13 0.95 0.79 Diluted 1.91 1.83(1) 1.51 1.37 1.41(2) 1.06 0.94 0.79 - ----------------------------------------------------------------------------------------------------------------------------- Weighted average shares outstanding (3): Basic 56,176 55,790 56,378 56,845 55,967 55,571 55,430 56,063 Diluted 57,838 56,410 57,162 62,420 63,377 62,776 57,053 56,083 Shares outstanding at year end (3): Class A 23,871 22,982 22,768 24,063 22,610 22,097 21,926 21,826 Class B 32,957 32,957 32,957 33,148 33,533 33,533 33,533 33,534 - ----------------------------------------------------------------------------------------------------------------------------- Financial Condition: Current ratio 2.25 to 1 2.17 to 1 1.92 to 1 1.89 to 1 1.86 to 1 1.79 to 1 2.28 to 1 1.86 to 1 Working capital $ 486,646 399,748 309,153 277,940 269,007 226,123 301,706 185,747 Cash, cash equivalents and short- term investments 202,839 114,951 57,816 73,305 87,600 71,557 146,985 50,362 Property, plant and equipment, net 235,822 240,091 238,753 223,476 190,998 175,920 157,791 132,881 Total assets 1,516,501 1,385,598 1,181,494 1,065,343 998,056 908,412 814,757 610,208 Long-term debt 321,183 340,948 225,173 171,760 149,441 161,548 183,094 42,976 Stockholders' equity 736,009 632,260 565,780 531,150 495,001 424,242 370,574 326,970 Cash dividends 18,215 16,182 14,394 13,220 10,909 9,724 8,590 7,708 Cash dividends per share (3)(4) 0.3225 0.290 0.255 0.230 0.195 0.175 0.155 0.1375 ============================================================================================================================= ============================================================================================== Year ended September 30, - ---------------------------------------------------------------------------------------------- (In thousands, except per share data) 1993 1992 1991 - ---------------------------------------------------------------------------------------------- Operating Results: Net sales 1,147,990 1,091,286 873,719 Cost of products sold 564,260 534,979 424,566 Interest expense 9,661 11,665 6,822 Earnings before income taxes 65,129 61,356 47,928 Provision for income taxes 23,857 22,740 17,812 Net earnings 41,272 38,616 30,116 Net earnings per share (3): Basic 0.72 0.68 0.53 Diluted 0.72 0.68 0.53 - --------------------------------------------------------------------------------------------- Weighted average shares outstanding (3): Basic 57,361 56,726 56,606 Diluted 57,434 56,726 56,606 Shares outstanding at year end (3): Class A 23,126 23,491 22,875 Class B 33,604 33,604 33,604 - ---------------------------------------------------------------------------------------------- Financial Condition: Current ratio 2.05 to 1 1.88 to 1 2.11 to 1 Working capital 205,050 193,080 212,268 Cash, cash equivalents and short- term investments 73,947 80,158 84,595 Property, plant and equipment, net 124,449 121,703 114,910 Total assets 593,046 610,400 574,413 Long-term debt 80,184 84,549 97,820 Stockholders' equity 298,857 286,222 249,431 Cash dividends 7,893 6,665 6,093 Cash dividends per share (3)(4) 0.1375(4) 0.1175 0.1075 ==============================================================================================
(1) Fiscal year 2000 includes a non-recurring gain from the sale of a trademark (note 9). The non-recurring gain increased earnings before income taxes by $9.3 million, net earnings by $6.0 million and basic and diluted earnings per share by $0.11. (2) Fiscal year 1997 includes a non-recurring gain from an insurance settlement for the loss of the company's corporate airplane. The non-recurring gain increased earnings before income taxes by $15.6 million, net earnings by $9.8 million and basic and diluted earnings per share by $0.18 and $0.16, respectively. (3) Net earnings per share, shares outstanding and cash dividends per share have been restated to reflect the 100% stock dividend on the company's Class A and Class B outstanding shares in February, 1997. (4) Cash dividends per share on Class A common stock and Class B common stock have been equal since the Class A shares were issued in April, 1986. Cash dividends paid in fiscal 1993 included a one-time extraordinary dividend of one cent per share in recognition of the company surpassing one billion dollars in sales for the fiscal year ended September 30, 1992. Market Price of Common Stock and Cash Dividends Per Share Alberto-Culver Company and Subsidiaries =============================================================================== The high and low sales prices of both classes of the company's common stock on the New York Stock Exchange and cash dividends per share in each quarter of fiscal years 2001 and 2000 are as follows:
Cash Market Price Range Dividends 2001 2000 Per Share ------------------------ ----------------------- ------------ High Low High Low 2001 2000 - -------------------------------------------------------------------------------------------------------------------------- Class A (NYSE Symbol ACVA): First Quarter $36.50 24.00 23.63 19.44 $ .0750 .065 Second Quarter $36.00 30.63 23.50 18.25 .0825 .075 Third Quarter $37.40 30.90 26.63 21.38 .0825 .075 Fourth Quarter $39.50 31.70 26.50 23.50 .0825 .075 --------------------------------------------------------------------------------------------------------------------- $ .3225 .290 - -------------------------------------------------------------------------------------------------------------------------- Class B (NYSE Symbol ACV): First Quarter $43.50 28.44 27.63 22.31 $ .0750 .065 Second Quarter $42.75 36.88 27.13 19.38 .0825 .075 Third Quarter $44.45 37.15 31.81 23.19 .0825 .075 Fourth Quarter $46.26 37.35 31.50 27.38 .0825 .075 --------------------------------------------------------------------------------------------------------------------- $ .3225 .290 - --------------------------------------------------------------------------------------------------------------------------
Stockholders of record, which excludes a large number of stockholders with shares held in "street name", totaled 898 for Class A shares and 898 for Class B shares as of November 16, 2001. The following trademarks and servicemarks owned by Alberto-Culver Company and its subsidiaries appear in this report: ALBERTO, ALBERTO VO5, BEAUTY SYSTEMS GROUP, BSG, CEDERROTH INTERNATIONAL, COMB-THRU, CONSORT, HYDRATEIN, HYDROLOGY, JUST FOR ME, MEND & DEFEND, MOTIONS, MRS. DASH, PRO-LINE, SALLY, SHEER HAIRDRESSING, SOFT & BEAUTIFUL, SORAYA, ST. IVES, ST. IVES SWISS FORMULA, STRAIGHT HAIR, TCB, TRESemme, VICTORY BEAUTY SYSTEMS and VO5. The following are trademarks and servicemarks of other companies which appear in this report: CLAIROL (Clairol, Inc.), GRAHAM WEBB (Graham Webb International Limited Partnership), L'OREAL (L'Oreal S.A.), MATRIX (Matrix Essentials, Inc.) PAUL MITCHELL (John Paul Mitchell Systems), NEXXUS (Nexxus Products Company), REDKEN (Redken Laboratories, Inc.), REVLON (Revlon Consumer Products Corporation), SEBASTIAN (Sebastian International, Inc.), TIGI (Mascolo Brothers Limited) and WELLA (The Wella Corporation). EX-21 7 dex21.txt LIST OF SUBSIDIARIES Exhibit 21 ---------- ALBERTO-CULVER COMPANY AND SUBSIDIARIES Subsidiaries of the Registrant State or Other Jurisdiction of Subsidiary Incorporation ---------- ------------- Alberto-Culver (Australia) Pty. Ltd. Australia Alberto-Culver Canada, Inc. Canada Alberto-Culver Company (U.K.), Limited United Kingdom Alberto-Culver International, Inc. Delaware Alberto-Culver de Mexico, S.A. de C.V. Mexico Alberto-Culver (P.R.), Inc. Delaware Alberto-Culver USA, Inc. Delaware Beauty Systems Group, Inc. Delaware Beauty Systems Group (Canada), Inc. Canada BDM Grange, Ltd. New Zealand Cederroth International AB Sweden CIFCO, Inc. Delaware Indola Cosmetics, B.V. The Netherlands IHB SpA Italy La Farmaco Argentina I. y C.S.A. Argentina Pro-Line International, Inc. Delaware Sally Beauty Company, Inc. Delaware Soraya, S.A. Poland St. Ives Laboratories, Inc. Delaware Subsidiaries of the company omitted from the above table, considered in the aggregate, would not be considered significant. EX-23 8 dex23.txt CONSENT OF KPMG LLP Exhibit 23 ---------- Consent of KPMG LLP ------------------- The Board of Directors and Stockholders Alberto-Culver Company: We consent to incorporation by reference in the Registration Statements on Form S-8 (Numbers 33-36051, 33-47748, 33-62693, 33-62699, 33-62701, 333-35795, 333-51527, 333-51529, 333-60059, 333-70067, 333-72388 and 333-72262) and Form S-3 (Numbers 333-49649, 333-44390 and 333-54302) of Alberto-Culver Company of our reports dated October 23, 2001, relating to the consolidated balance sheets of Alberto-Culver Company and subsidiaries as of September 30, 2001 and 2000 and the related consolidated statements of earnings, cash flows, and stockholders' equity and related schedule for each of the years in the three-year period ended September 30, 2001, which reports appear or are incorporated by reference in the September 30, 2001 annual report on Form 10-K of Alberto-Culver Company. /s/ KPMG LLP KPMG LLP Chicago, Illinois December 14, 2001 -----END PRIVACY-ENHANCED MESSAGE-----