-----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, ruPbPNvq8lRPsJcgS7sI3QzEJeoxlCIJYBMaM9DWAFYWvk5edQ4Vnngn7awP1c3e vX5ZM6HI4yCAtAzf8SPbxw== 0000912057-94-003405.txt : 19941017 0000912057-94-003405.hdr.sgml : 19941017 ACCESSION NUMBER: 0000912057-94-003405 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940831 FILED AS OF DATE: 19941014 SROS: NYSE 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: 1934 Act SEC FILE NUMBER: 001-08797 FILM NUMBER: 94552682 BUSINESS ADDRESS: STREET 1: 325 N WELLS ST CITY: CHICAGO STATE: IL ZIP: 60610 BUSINESS PHONE: 3126610222 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTERLY PERIOD ENDED AUGUST 31, 1994 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) (312) 661-0222 (Registrant's telephone number) 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 ----- ----- At August 31, 1994, there were 6,803,791 shares of Common Stock and 3,072,669 shares of Class B Common Stock outstanding. Helene Curtis Industries, Inc. and Subsidiaries Index Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Earnings for the Three and Six Months Ended August 31, 1994 and 1993 3 Consolidated Balance Sheets as of August 31, 1994 and February 28, 1994 4 Consolidated Statements of Cash Flows for the Six Months Ended August 31, 1994 and 1993 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis 8-10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURE 11 EXHIBIT 11 - Computation of Earnings Per Share 12 EXHIBIT 27 - Financial Data Schedule (submitted with EDGAR filing) -2- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Helene Curtis Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Dollars in thousands, except per-share data)
For the Three Months For the Six Months Ended August 31, Ended August 31, ------------------------- ------------------------- 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Net sales $ 352,539 $ 338,135 $ 618,209 $ 581,507 ---------- ---------- ---------- ---------- Costs and expenses: Cost of sales 159,575 153,314 276,007 259,984 Selling, general and administrative 178,231 174,664 322,680 308,077 Interest 2,285 1,923 4,365 3,696 ---------- ---------- ---------- ---------- 340,091 329,901 603,052 571,757 ---------- ---------- ---------- ---------- Earnings before income taxes and cumulative effect of accounting change 12,448 8,234 15,157 9,750 Provision for income taxes 5,851 3,998 7,124 4,680 ---------- ---------- ---------- ---------- Earnings before cumulative effect of accounting change 6,597 4,236 8,033 5,070 Cumulative effect of accounting change -- -- -- (1,351) ---------- ---------- ---------- ---------- Net earnings $ 6,597 $ 4,236 $ 8,033 $ 3,719 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net earnings per share: Earnings before cumulative effect of accounting change $.70 $.44 $.85 $.53 Cumulative effect of accounting change -- -- -- (.14) ---------- ---------- ---------- ---------- Net earnings $ .70 $ .44 $ .85 $ .39 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Average number of shares outstanding 9,476,716 9,447,809 9,467,156 9,492,545 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Cash dividends per share: Common Stock $ .06 $ .06 $ .12 $ .12 Class B Common Stock $ .06 $ .06 $ .07 $ .07
The accompanying notes are an integral part of the consolidated financial statements. -3- Helene Curtis Industries, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
(Unaudited) August 31, February 28, 1994 1994 ----------- ------------ Assets Current assets: Cash and equivalents $ 15,059 $ 2,802 Receivables-net 246,702 242,514 Inventories 110,879 102,344 Other current assets 21,163 20,059 --------- --------- Total current assets 393,803 367,719 --------- --------- Property, plant and equipment 304,047 292,671 Less accumulated depreciation 88,595 77,402 --------- --------- Net property, plant and equipment 215,452 215,269 --------- --------- Other assets 27,300 29,495 --------- --------- Total assets $ 636,555 $ 612,483 --------- --------- --------- --------- Liabilities and stockholders' equity Current liabilities: Short-term debt $ 5,519 $ 7,361 Accounts payable 115,646 99,566 Income taxes 8,427 8,401 Advertising and promotion 59,801 54,843 Other accrued expenses 53,005 46,353 --------- --------- Total current liabilities 242,398 216,524 Long-term debt 146,570 160,990 Deferred income taxes 15,231 15,230 Accrued retirement and other benefits 22,389 20,295 --------- --------- Total liabilities 426,588 413,039 --------- --------- Stockholders' equity: Common Stock, issued 7,921,471 shares 3,961 3,961 Class B Common Stock, issued 3,072,669 shares 1,536 1,536 Capital in excess of par value 40,628 40,548 Retained earnings 168,047 161,045 Currency translation adjustment 4,771 1,218 Treasury shares (Common), 1,117,680 (Aug.) and 1,114,031 (Feb.), at cost (8,976) (8,864) --------- --------- Total stockholders' equity 209,967 199,444 --------- --------- Total liabilities and stockholders' equity $ 636,555 $ 612,483 --------- --------- --------- ---------
The accompanying notes are an integral part of the consolidated financial statements. -4- Helene Curtis Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
For the Six Months Ended August 31, ------------------------ 1994 1993 -------- -------- Cash flows from operating activities: Net earnings $ 8,033 $ 3,719 Adjustments to net earnings: Depreciation and amortization 13,625 12,287 Cumulative effect of accounting change -- 1,351 Other 2,873 804 Changes in operating assets and liabilities: Receivables-net 3,559 25,637 Inventories (6,775) (3,360) Other current assets (815) (18,808) Payables and accrued expenses 19,683 (3,115) Other 542 (8,189) -------- -------- Net cash provided by operating activities 40,725 10,326 -------- -------- Cash flows from investing activities: Capital expenditures (12,198) (19,863) Other 78 (88) -------- -------- Net cash used by investing activities (12,120) (19,951) -------- -------- Cash flows from financing activities: Proceeds from borrowings 3,317 5,930 Repayment of borrowings (19,948) (2,650) Dividends paid (1,031) (1,027) Other (32) 1,754 -------- -------- Net cash provided (used) by financing activities (17,694) 4,007 -------- -------- Effect of exchange rate changes on cash and equivalents 1,346 1,353 -------- -------- Increase (decrease) in cash and equivalents 12,257 (4,265) Cash and equivalents at beginning of period 2,802 7,564 -------- -------- Cash and equivalents at end of period $ 15,059 $ 3,299 -------- -------- -------- --------
The accompanying notes are an integral part of the consolidated financial statements. -5- Helene Curtis Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands) 1. BASIS OF PRESENTATION The interim consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation are reflected therein. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements do not include all disclosures required by generally accepted accounting principles and should be read in conjunction with the audited financial statements and related notes included in the Company's annual report to stockholders for the year ended February 28, 1994. The consolidated balance sheet as of February 28, 1994 is derived from these audited financial statements. Certain prior year amounts have been reclassified to conform to the current year's presentation. 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 $7,102 and $13,761 for the three and six months ended August 31, 1994, respectively, and $6,326 and $11,639 for the three and six months ended August 31, 1993, respectively. -6- Helene Curtis Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands) 3. RECEIVABLES-NET Receivables-net, principally trade, consist of the following amounts:
August 31, 1994 February 28, 1994 --------------- ----------------- Accounts receivable $194,805 $187,452 Notes receivable 57,480 60,161 -------- -------- Total 252,285 247,613 Less allowance for doubtful accounts 5,583 5,099 -------- -------- Net $246,702 $242,514 -------- -------- -------- --------
4. INVENTORIES Inventories consist of the following components:
August 31, 1994 February 28, 1994 --------------- ----------------- Raw materials $ 26,976 $ 16,252 Work in process 1,387 2,037 Finished goods 82,516 84,055 -------- -------- Total $110,879 $102,344 -------- -------- -------- --------
-7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Helene Curtis Industries, Inc. and Subsidiaries RESULTS OF OPERATIONS - THREE MONTHS ENDED AUGUST 31, 1994 AND 1993 (Dollars in thousands) Consolidated net sales for the three months ended August 31, 1994 increased $14,404, or 4%, compared with the corresponding period last year. The second quarter launch of new Suave Baby Care products and the continued strength of the Company's international business contributed to the sales growth for the quarter. Domestic net sales increased approximately 4%, compared with the corresponding period last year. This increase is attributable to the Suave Baby Care introduction (which appeared in stores nationwide in August) and growth in sales of the Company's professional hair care products. Also contributing to the increase were higher sales in the antiperspirant/deodorant category as well as significant growth in sales of skin care products. These gains were partially offset by a decline in sales for Vibrance hair care products. International net sales increased approximately 6%, compared with the corresponding period last year. This increase was attributable, in part, to higher sales in Canada (in spite of unfavorable currency translation) driven by Salon Selectives hair care products and Degree antiperspirant/deodorant. Sales in the United Kingdom, Italy and Scandinavia also contributed to the increase in international net sales. Cost of sales increased $6,261, or 4%, as a result of higher sales volume. As a percent of net sales, cost of sales remained constant at 45.3% in the current period compared with the prior year. Selling, general and administrative expenses increased $3,567, or 2%. As a percent of net sales, these expenses decreased to 50.6% in the current period from 51.7% last year. The decrease as a percent of net sales was principally attributable to lower advertising costs for Vibrance hair care products and slower growth in administrative expenses which were offset, in part, by higher research and development costs. The effective tax rate was 47% in the current period compared with 49% in the prior year, primarily as a result of a higher proportion of total profitability attributable to domestic operations which has a lower tax rate. Net earnings increased to $6,597 from $4,236 in the prior year. The increase was primarily attributable to the increase in net sales and the lower advertising and administrative expenses as a percent of net sales. -8- Helene Curtis Industries, Inc. and Subsidiaries RESULTS OF OPERATIONS - SIX MONTHS ENDED AUGUST 31, 1994 AND 1993 (Dollars in thousands) Consolidated net sales for the six months ended August 31, 1994 increased $36,702, or 6%, compared with the corresponding period last year. Higher U.S. sales across all product categories and the continued strength of the Company's international business contributed to the sales growth for the first half of the year. Domestic net sales increased approximately 6%, compared to the corresponding period last year. This increase is largely attributable to the Company's sales of Suave Baby Care (launched in the second quarter of the current fiscal year) and increases in the antiperspirant/deodorant category where Degree recorded significant first half sales increases. Higher sales of the Company's skin care and professional hair care products also contributed to the increase in domestic net sales. There was moderate sales growth in the Company's hair care brands where Suave, Finesse and Salon Selectives recorded gains which were offset by a decline in sales for Vibrance. International net sales increased approximately 8%, compared with the corresponding period last year. This increase was attributable to higher sales in Japan as a result of favorable currency translation and Italy where the Company's newest wholly-owned subsidiary was formed in the second quarter of last year. Canada and the United Kingdom also contributed to the increase in international net sales. Cost of sales increased $16,023, or 6%, due to higher sales volume. As a percent of net sales, cost of sales decreased slightly to 44.6% in the current period from 44.7% last year. Selling, general and administrative expenses increased $14,603, or 5%. As a percent of net sales, these expenses decreased to 52.2% in the current period from 53.0% last year. The decrease as a percent of net sales was primarily attributable to reduced administrative expenses coupled with slower growth in advertising and selling costs. These cost improvements were offset, in part, by higher research and development costs. The effective tax rate was 47% in the current period compared with 48% in the prior year, primarily as a result of a higher proportion of total profitability attributable to domestic operations which has a lower tax rate. Earnings before the cumulative effect of an accounting change increased to $8,033 from $5,070 in the prior year. The increase was primarily attributable to the increase in net sales and lower selling, general and administrative expenses as a percent of net sales. -9- Helene Curtis Industries, Inc. and Subsidiaries FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES (Dollars in thousands) Cash and equivalents increased to $15,059, compared with $2,802 at year end. The Company used cash provided from operating activities to fund capital expenditures and temporarily reduce debt levels. Net cash provided from operating activities increased significantly to $40,725 from $10,326 in the first half of the prior year, primarily attributable to the favorable cash flow impact of a reduction in net operating assets and increase in net earnings. The increase in payables and accrued expenses of $19,683 was largely attributable to the timing of payments for raw material purchases and advertising and promotion activities. The decrease in receivables of $3,559 was largely due to lower sales for the current quarter in Japan (excluding the impact of exchange rate changes) compared with the fourth quarter of the prior year and the timing of domestic sales within the quarter. The impact of these changes was partly offset by a $6,775 increase in inventories attributable to the Company's newest product introduction -- Suave Baby Care. Working capital increased slightly to $151,405 at August 31, 1994, compared with $151,195 at February 28, 1994. The current ratio decreased to 1.62:1 from 1.70:1. Capital spending decreased to $12,198 from $19,863 in the first half of the prior year. Capital expenditures in both years included a large number of moderate investments primarily to increase the Company's manufacturing and distribution capabilities and efficiencies. The total debt-to-total capital ratio decreased to 42.0%, compared with 45.8% at year end as total debt decreased to $152,089 from $168,351. The excess cash provided from reduced net operating assets was used for the repayment of borrowings. In March 1994, the Company borrowed $50,000 under a private placement agreement whereby senior unsecured notes were issued. These notes mature in March 2001 and 2004. The funds were used for general corporate purposes and to refinance existing debt. On July 12, 1994, the Company's Board of Directors declared a quarterly dividend of six cents per share to both the Common and Class B Common stockholders, payable August 26 to holders of record on August 12, 1994. Management believes that funds provided from operations and present credit arrangements will be sufficient to meet the Company's anticipated working capital and capital spending needs. -10- PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 11 - Computations of Earnings per Share Exhibit 27 - Financial Data Schedule(submitted with EDGAR filing) (b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter ended August 31, 1994. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Helene Curtis Industries, Inc. October 14, 1994 By: /S/ Mary J. Oyer Mary J. Oyer Vice President, Corporate Controller and Principal Accounting Officer -11- EXHIBIT 11 Helene Curtis Industries, Inc. and Subsidiaries COMPUTATIONS OF EARNINGS PER SHARE (Dollars in thousands, except per-share data)
For the Three Months For the Six Months Ended August 31, Ended August 31, ------------------------- -------------------------- 1994 1993 1994 1993 ---------- ---------- ----------- ---------- Primary earnings per share: Net earnings $ 6,597 $ 4,236 $ 8,033 $ 3,719 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of shares outstanding: Common and Class B Common Shares 9,443,460 9,422,710 9,443,622 9,404,024 Common stock equivalents 33,256 25,099 23,534 88,521 ---------- ---------- ---------- ---------- Total 9,476,716 9,447,809 9,467,156 9,492,545 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Primary earnings per share $ .70 $ .44 $ .85 $ .39 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Fully diluted earnings per share: Net earnings $ 6,597 $ 4,236 $ 8,033 $ 3,719 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of shares outstanding: Common and Class B Common Shares 9,443,460 9,422,710 9,443,622 9,404,024 Common stock equivalents 76,091 23,577 70,065 62,872 ---------- ---------- ---------- ---------- Total 9,519,551 9,446,287 9,513,687 9,466,896 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Fully diluted earnings per share $ .69 $ .44 $ .84 $ .39 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NOTE: Fully diluted amounts are not included on the face of the consolidated statements of earnings because they differfrom primary earnings per share by less than 3%. -12- EX-27 2 EXHIBIT 27
5 This schedule contains summary financial information extracted from the Consolidated Statements of Earnings and Consolidated Balance Sheets on pages 3 and 4 of the Company's Form 10-Q for the quarterly period ending August 31, 1994, and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS FEB-28-1995 AUG-31-1994 15,059 0 252,285 5,583 110,879 393,803 304,047 88,595 636,555 242,398 146,570 5,497 0 0 204,470 636,555 618,209 618,209 276,007 276,007 322,680 0 4,365 15,157 7,124 8,033 0 0 0 8,033 .85 .84 Represents selling, general and administrative expenses.
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