-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, aBgp2D8K4AN8tkc56O21BmDFyIiV7hd4C+zMB+qmBWTUgfOGzoAzMaiUlWdkw1Bl /w8nAt6me/0PpC2G1xUjNw== 0000745142-94-000002.txt : 19940118 0000745142-94-000002.hdr.sgml : 19940118 ACCESSION NUMBER: 0000745142-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940114 FILED AS OF DATE: 19940114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CURTIS HELENE INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000745142 STANDARD INDUSTRIAL CLASSIFICATION: 2844 IRS NUMBER: 363398349 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-08797 FILM NUMBER: 94501547 BUSINESS ADDRESS: STREET 1: 325 N WELLS ST CITY: CHICAGO STATE: IL ZIP: 60610 BUSINESS PHONE: 3126610222 10-Q 1 10-Q DOCUMENT FILING FOR Q394 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended November 30, 1993 Commission File Number 1-8797 Helene Curtis Industries, Inc. (Exact name of registrant as specified in its charter) Delaware 36-3398349 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 325 North Wells Street, Chicago, Illinois 60610 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (312) 661-0222 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 Outstanding common stock at November 30, 1993 - $.50 par value Common 6,806,775 shares Class B Common 3,072,669 shares Total number of pages: 12 Exhibit index is located at sequential page: 11 HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands) (Unaudited) November 30, February 28, 1993 1993 ASSETS: Cash and equivalents $ 5,721 $ 7,564 Receivables, net 188,077 245,769 Inventories 119,033 102,095 Other current assets 48,358 22,406 Total current assets 361,189 377,834 Property, plant and equipment 280,085 253,388 Less accumulated depreciation (72,647) (60,986) Net property, plant and equipment 207,438 192,402 Other assets 34,023 29,849 TOTAL ASSETS $ 602,650 $ 600,085 ========= ========= LIABILITIES: Short-term debt $ 3,740 $ 9,252 Accounts payable 105,885 106,759 Income taxes 5,261 9,425 Advertising and promotion 59,094 55,029 Other accrued expenses 44,553 45,885 Total current liabilities 218,533 226,350 Long-term debt 152,314 154,438 Deferred income taxes 15,713 15,720 Accrued retirement and other benefits 20,474 17,377 Total liabilities 407,034 413,885 STOCKHOLDERS' EQUITY: Common Stock, issued 7,921,471 shares (Nov.) and 7,913,771 shares (Feb.) 3,961 3,957 Class B Common Stock, issued 3,072,669 shares (Nov.) and 3,080,369 shares (Feb.) 1,536 1,540 Capital in excess of par value 40,525 39,032 Retained earnings 155,193 150,318 Currency translation adjustment 3,242 543 Treasury shares (Common), 1,114,696 (Nov.) and 1,168,673 (Feb.), at cost (8,841) (9,190) Total stockholders' equity 195,616 186,200 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 602,650 $ 600,085 ========= ========= The accompanying notes are an integral part of the consolidated financial statements. -2- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (Dollar amounts in thousands, except per-share data) For the Three Months For the Nine Months Ended November 30, Ended November 30, 1993 1992 1993 1992 Net Sales $266,918 $266,450 $848,425 $833,662 Costs and Expenses: Cost of goods sold 120,761 118,031 384,287 373,311 Advertising, promotion, selling and administrative 138,987 139,346 443,522 427,318 Interest 1,830 1,465 5,526 5,989 261,578 258,842 833,335 806,618 Earnings before Income Taxes and Cumulative Effect of Accounting Change 5,340 7,608 15,090 27,044 Provision for Income Taxes 2,563 3,424 7,243 12,170 Earnings before Cumulative Effect of Accounting Change 2,777 4,184 7,847 14,874 Cumulative Effect of Accounting Change, Net of Income Taxes -- -- (1,351) -- Net Earnings $ 2,777 $ 4,184 $ 6,496 $ 14,874 ======== ======== ======== ======== Net Earnings per Share: Earnings before Cumulative Effect of Accounting Change $ .30 $ .44 $ .83 $ 1.57 Cumulative Effect of Accounting Change -- -- (.14) -- Net Earnings per Share $ .30 $ .44 $ .69 $ 1.57 ======== ======== ======== ======== Weighted Average Number of Shares Outstanding 9,459,415 9,500,927 9,481,501 9,481,331 ========= ========= ========= ========= Cash Dividends Per Share: Common Stock $ .06 $ .06 $ .18 $ .18 Class B Common Stock $ .06 $ .06 $ .13 $ .13 The accompanying notes are an integral part of the consolidated financial statements. -3- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollar amounts in thousands) For the Nine Months Ended November 30, 1993 1992 Operating Activities: Net earnings $ 6,496 $ 14,874 Adjustments to net earnings: Depreciation and amortization 18,664 15,891 Cumulative effect of accounting change 1,351 -- Other 267 1,012 Changes in operating assets and liabilities: Receivables, net 70,419 42,375 Inventories (14,234) (13,809) Other current assets (25,406) (31,702) Payables and accrued expenses (15,077) 8,413 Other (7,974) (5,683) Net cash provided from operations 34,506 31,371 Investing Activities: Capital expenditures (30,498) (26,777) Other 195 (78) Net cash used by investing (30,303) (26,855) Financing Activities: Proceeds from borrowings 6,455 40,192 Repayment of borrowings (14,050) (49,667) Dividends paid (1,621) (1,606) Other 1,842 113 Net cash used by financing (7,374) (10,968) Effect of Exchange Rate Changes on Cash 1,328 (288) Decrease in cash and equivalents (1,843) (6,740) Cash and Equivalents at Beginning of Period 7,564 9,541 Cash and Equivalents at End of Period $ 5,721 $ 2,801 ======== ======== Supplemental Cash Flow Data: Cash paid during the period for: Interest $ 5,227 $ 6,479 Income taxes $ 12,012 $ 13,375 The accompanying notes are an integral part of the consolidated financial statements. -4- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) November 30, 1993 (Dollar amounts in thousands) This interim financial information should be read in conjunction with the Company's consolidated financial statements and accompanying notes as reported in the Company's latest Annual Report on Form 10-K. 1. Basis of Presentation The consolidated financial information presented herein is unaudited, other than the consolidated balance sheet at February 28, 1993, which is derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. In management's opinion, all adjustments of a normal recurring nature necessary for a fair presentation are reflected in the interim periods presented. The interim results of operations and cash flows are not necessarily indicative of the results for an entire fiscal year. Advertising and promotion costs are generally expensed in the fiscal year incurred. For interim reporting purposes, such costs are charged to operations as a percentage of sales based on estimated sales and estimated advertising and promotion costs for the full year. 2. Supplemental Information The consolidated statements of earnings include research and development costs of $5,313 and $16,952 for the three and nine months ended November 30, 1993, respectively, and $5,443 and $15,973 for the three and nine months ended November 30, 1992, respectively. -5- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) November 30, 1993 (Dollar amounts in thousands) 3. Receivables Receivables, principally trade, consist of the following amounts: November 30, February 28, 1993 1993 Accounts receivable $136,915 $198,968 Notes receivable 56,465 51,247 193,380 250,215 Less allowance for doubtful accounts 5,303 4,446 $188,077 $245,769 ======== ======== 4. Inventories Inventories consist of the following components: November 30, February 28, 1993 1993 Raw materials $ 23,529 $ 20,705 Work in process 2,036 1,912 Finished goods 93,468 79,478 $119,033 $102,095 ======== ======== -6- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) November 30, 1993 (Dollar amounts in thousands) 5. Postretirement Benefits Effective March 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." This new standard requires that the expected cost of retiree health benefits, such as the Company's payment of Medicare Part B premiums for retirees, be charged to expense during the years the employees render service rather than the Company's past practice of recognizing this cost on a cash basis. As part of adopting the new standard, the Company recorded in the first quarter, a one-time, non-cash charge against earnings of $2,178 before taxes and $1,351 after taxes or $.14 per share. In addition to the cumulative effect, the Company recorded $81 and $242 in additional postretirement benefit cost for the three and nine months ended November 30, 1993, respectively, as a result of adopting the new standard. The following table sets forth the postretirement benefits' combined status reconciled with the amount included in the consolidated balance sheet at November 30, 1993: Accumulated postretirement benefit obligation: Retirees $ 732 Active employees fully eligible 513 Active employees not fully eligible 1,117 Total accumulated postretirement benefit obligation $2,362 ====== For measurement purposes, a 12% annual rate of increase in the per-capita cost of covered health benefits was assumed for fiscal years 1994 and 1995 based on the actual Medicare Part B premiums set by legislation. The rate was assumed to decrease to 4% through fiscal year 1997 and remain at that level thereafter. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 8%. -7- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollar amounts in thousands) RESULTS OF OPERATIONS Third Quarter Ended November 30, 1993 vs. Third Quarter Ended November 30, 1992 Consolidated net sales for the three months ended November 30, 1993 were relatively flat as compared to the corresponding period last year. The higher sales in international markets and the lower sales in the U.S. hair care markets were the major factors impacting sales for the quarter. Domestic net sales decreased approximately 10% as compared to the corresponding period last year due to declines in sales of Salon Selectives, Finesse and Suave brands in the hair care category. Sales of the Company's two antiperspirant/deodorant brands, Degree and Suave, were relatively flat as compared to the corresponding period last year. International net sales increased approximately 22%, as compared to the corresponding period last year, due to increased sales in Japan resulting from the favorable impact of exchange rate changes. Conversely, increased sales in Canada and the United Kingdom were mostly offset by the unfavorable impact of exchange rate changes. Sales from the Company's two newest wholly- owned subsidiaries in Scandinavia and Italy also contributed to the increase in international net sales. Cost of goods sold increased $2,730, or 2%. As a percentage of net sales, cost of goods sold increased to 45% in 1993 from 44% in 1992, primarily due to changes in product mix. Advertising, promotion, selling and administrative expenses were relatively flat. As a percent of net sales, these expenses remained constant at 52% in the current period as compared to the prior year. The effective tax rate was 48% in the current period, as compared to 45% in the prior year, principally due to a greater proportion of total profitability for international operations which have a higher tax rate and the increase in U.S. federal tax rate of 1%. Earnings decreased to $2,777 from $4,184 in the prior year. The decrease was primarily due to increases in cost of goods sold while net sales were flat. -8- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollar amounts in thousands) RESULTS OF OPERATIONS Nine Months Ended November 30, 1993 vs. Nine Months Ended November 30, 1992 Consolidated net sales for the nine months ended November 30, 1993 increased $14,763, or 2%, as compared to the corresponding period last year. The higher sales in international markets and the U.S. antiperspirant/deodorant markets and the lower sales in the U.S. hair care markets were the major factors impacting sales. Domestic net sales decreased approximately 5%, as compared to the corresponding period last year. This decrease is largely due to the decline in sales of the Company's hair care brands, particularly Salon Selectives and Vibrance. Sales of the Company's professional hair care products were also lower as compared to the prior year. These unfavorable results were partially offset by increases in sales in the antiperspirant/deodorant category where the Company's two brands, Degree and Suave, recorded sales increases of more than 15 percent. International net sales increased approximately 18%, as compared to the corresponding period last year, due to increased sales in Japan resulting primarily from the favorable impact of exchange rate changes as the yen continued to strengthen relative to the dollar. Conversely, increased sales in the United Kingdom and Canada were mostly offset by the unfavorable impact of exchange rate changes as local currencies continued to weaken relative to the dollar. Sales from the Company's two newest wholly-owned subsidiaries in Scandinavia and Italy also contributed to the increase in international net sales. Cost of goods sold increased $10,976, or 3%, mainly due to higher sales volume. As a percentage of net sales, cost of goods sold remained constant at 45% in the current period as compared to the prior year. Advertising, promotion, selling and administrative expenses increased $16,204, or 4%. As a percent of net sales, these expenses increased to 52% in the current period from 51% last year. The increase as a percent of net sales was principally due to higher selling expenses and increased advertising and promotion activities including support of a new product launch in Japan. The effective tax rate was 48% in the current period, as compared to 45% in the prior year, principally due to a greater proportion of total profitability for international operations which have a higher tax rate and the increase in U.S. federal tax rate of 1%. Earnings before the cumulative effect of the accounting change decreased to $7,847 from $14,874 in the prior year. The decrease was primarily due to higher advertising, promotion, and selling expenses as a percentage of net sales. -9- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollar amounts in thousands) As part of adopting Statement of Financial Accounting Standards (SFAS) No. 106 "Employers Accounting for Postretirement Benefits Other Than Pensions", there was a one-time, non-cash charge against earnings of $1,351 after taxes. This statement requires the accrual of postretirement benefits during the years an employee provides service to the Company. These expenses were previously recognized on a cash basis. FINANCIAL CONDITION AT NOVEMBER 30, 1993 Cash and equivalents decreased to $5,721, compared with $7,564 at year end. The Company continues to fund capital expenditures through cash provided from operations. Net cash provided from operations increased 10% to $34,506 from $31,371 in the prior year as the lower earnings for the current year compared to last year were more than offset by the favorable cash flow impact of changes in operating assets and liabilities. The decrease in receivables of $70,419 was largely due to lower sales in the current quarter compared to the fourth quarter of the prior year. The decrease in receivables was partially offset by the $15,077 decrease in payables and accrued expenses, the $14,234 increase in inventories and the $25,406 increase in other current assets as a result of the deferral of advertising and promotion costs during interim quarters. Working capital decreased to $142,656 at November 30, 1993, compared with $151,484 at February 28, 1993, while the current ratio remained constant at 1.7. Capital spending increased to $30,498 from $26,777 in the prior year. Capital expenditures in both years included a large number of moderate investments primarily to maintain capacity and to increase the Company's manufacturing and distribution output and efficiencies. One of the larger capital expenditures in both years was for the investment in a multi-year project which will allow the Company to manufacture antiperspirant/deodorant sticks in-house. The total debt to capitalization ratio decreased to 43%, compared with 46% at year end as total debt decreased to $156,054 at November 30, 1993 from $163,690 at February 28, 1993. The excess cash provided from operations was used to reduce both short-term and long-term borrowings by $5,512 and $2,124, respectively. On October 12, 1993, the Company's Board of Directors declared a quarterly cash dividend of six cents per share to Common and Class B Common stockholders, payable November 24 to holders of record on November 9, 1993. Management believes that funds provided from operations and from present credit facilities are sufficient to meet the Company's anticipated working capital needs and capital expenditure requirements. -10- HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit A - Computations of Earnings per Share (b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter ended November 30, 1993. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Helene Curtis Industries, Inc. (Registrant) January 14, 1994 (Date) /S/ MARY J. OYER (Signature) MARY J. OYER Vice President, Corporate Controller and Principal Accounting Officer -11- EX-1 2 EXHIBIT A FOR 10-Q FILING FOR Q394 HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES Exhibit A: COMPUTATIONS OF EARNINGS PER SHARE (Dollar amounts in thousands, except per-share data) For the Three Months For the Nine Months Ended November 30, Ended November 30, 1993 1992 1993 1992 Primary Earnings Per Share: Net Earnings $ 2,777 $ 4,184 $ 6,496 $ 14,874 Weighted Average Number of Shares Outstanding: Common and Class B Common Shares 9,443,445 9,339,710 9,417,164 9,331,418 Common Stock Equivalents 15,970 161,217 64,337 149,913 TOTAL 9,459,415 9,500,927 9,481,501 9,481,331 Primary Earnings Per Share $ 0.30 $ 0.44 $ 0.69 $ 1.57 ========== ========== ========== ========== Fully Diluted Earnings Per Share: Net Earnings $ 2,777 $ 4,184 $ 6,496 $ 14,874 Weighted Average Number of Shares Outstanding: Common and Class B Common Shares 9,443,445 9,339,710 9,417,164 9,331,418 Common Stock Equivalents 14,490 204,195 36,257 211,474 TOTAL 9,457,935 9,543,905 9,453,421 9,542,892 Fully Diluted Earnings Per Share $ 0.30 $ 0.44 $ 0.69 $ 1.56 ========== ========== ========== ========== Note: Fully diluted amounts are not included on the face of the consolidated statements of earnings because they differ from primary earnings per share by less than 3%. -----END PRIVACY-ENHANCED MESSAGE-----