SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 1996
Electronic Hair Styling, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-28174 68-0301547
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
One Lovell Avenue, Mill Valley, CA 94941
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(415) 380-8200
Page 1 of 2 Pages.
423531.1
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Item 5. Other Events.
In a press release, dated October 30, 1996, a copy of which
is attached hereto as Exhibit 20.1 and the full text of which is incorporated
by reference herein, the Registrant announced its financial results for the
third quarter ended September 30, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
20.1 Press Release dated October 30, 1996.
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 hereunto duly authorized.
Electronic Hair Styling, Inc.
(Registrant)
Dated: November 7, 1996 By: /s/ Donald E. Porter
--------------------
Donald E. Porter
Vice President
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Electronic Hair Styling, Inc.
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION:
Corey Cutler Donald E. Porter
Dewe Rogerson, Inc. Electronic Hair Styling, Inc.
(212) 688-6840 (415) 380-8200
EHS CONTINUES TURNAROUND OF LAMAUR
REPORTING ANOTHER QUARTER OF EARNINGS
Mill Valley, CA, October 30, 1996 - Electronic Hair Styling, Inc. (NASDAQ:EHST)
today announced its financial results for the third quarter ended September 30,
1996.
The $120 million Lamaur division of EHS continues its profitable trend under
new management. This accomplishment follows several years of losses for the
division while under DowBrands. EHS acquired Lamaur from DowBrands in November
of 1995. Following the acquisition, in May 1996 the Company raised $20.8
million through an IPO. The net proceeds were used to reduce acquisition debt
and to provide working capital.
A major company focus following the Lamaur acquisition was to implement a
turnaround strategy by cutting operating costs, reversing the decline in sales
of existing brands and developing and delivering new products. The following
financial results are the Company's second quarterly report since going public
in May.
EHS announced third quarter net income increased to $0.6 million as compared
with pro forma net income of $0.3 million in the
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comparable 1995 period under Dow. EHS also announced third quarter net sales
decreased to $29.2 million as compared with pro forma net sales of $29.8
million, under Dow, in the third quarter of 1995. Pro forma data gives effect
to the acquisition of Lamaur from DowBrands as if it had occurred on January 1,
1995. For the third quarter of 1996, earnings per share were $0.08 per share
based upon 6,526,000 weighted average shares outstanding.
Net income for the nine month period was $0.5 million compared to a pro forma
net loss of $9.6 million due primarily from an $11 million write-down of assets
by Dow for the same period in 1995. For the nine months ended September 30,
1996, total net sales were $89.4 million, compared with pro forma net sales of
$91.7 million in the same nine month period in 1995.
Don G. Hoff, Chairman and Chief Executive Officer, said "EHS continues to be on
a path of profitability. The back-to-back earnings of $0.12 and $0.08 per share
for the quarters ended June 30 and September 30, 1996, respectively, are
consistent with security analysts' forecasts and demonstrate the Company's
focus on earnings. The Company has partially offset the decline in sales of
PERMASOFT(R) and SALON STYLE(R) by increases in sales of the STYLE(R) line and
contract manufacturing business. In addition, this performance combined with
improved sales in the salon group, enabled the Company to deliver positive
earnings for the nine month as well as for the third quarter. While there are
still challenges ahead, I am encouraged that the focus of our management team
will continue to yield results."
NEW PRODUCT DEVELOPMENTS
In an August 1996 Press Release, the Company announced the introduction of two
new products, WILLOW LAKE(TM) and APPLE PECTIN(R) NATURALS(TM).
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WILLOW LAKE(TM)
The Company is in the process of launching the new Willow Lake shampoo and
conditioner line into the mass retail trade. The new WILLOW LAKE(TM) product
line will be backed by a $30 million marketing campaign, providing the Company
an opportunity to capture a part of the $200 million natural products business
in mass retail stores which is growing at a 93% rate according to internal
Lamaur estimates. Shipping is scheduled to commence in January 1997; however,
due to high demand, early shipments will begin in the fourth quarter 1996.
APPLE PECTIN(R) NATURALS(TM)
Lamaur's Salon Division reports the favorable acceptance of its new APPLE
PECTIN(R) NATURALS(TM) product line as evidenced by early orders and
promotional commitments from Sally Beauty Supply, the largest distributor in
the professional beauty industry. Sally's recently recognized Lamaur as their
top vendor in 1996 in the hair care product category by inducting Lamaur into
the Sally Beauty Supply Company Vendor Hall of Fame.
Dominic LaRosa, Lamaur's President and CEO, said: "New products are an
essential part of our Company's growth. While developing advanced electronic
technology that will result in new and exciting long term products; for the
near term, we are challenging our R&D staff to create new products to meet the
needs of today's consumers." Mr. LaRosa added: "To accelerate the development
effort without substantial increases in cost, Lamaur is implementing a `Growth
Partner' program which involves selected vendors in our R&D effort." One
company that has agreed to become a Growth Partner is Henkel Chemical Company,
the USA division of a large German chemical and consumer products company that
has substantial research and production capabilities worldwide.
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The Company's EHS Laboratories is developing advanced Electronic Chemistry(TM)
technology to curl, color and condition hair. In addition to WILLOW LAKE(TM)and
APPLE PECTIN(R) NATURALS(TM), Lamaur markets the retail brands PERMASOFT(R),
SALON STYLE(R) AND STYLE(R), and a variety of other products for the salon
industry including LAMAUR(R), NUCLEIC A(R), VITA/E(R), PATIVA(R) and APPLE
PECTIN(R).
- financial tables attached -
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<TABLE>
ELECTRONIC HAIR STYLING, INC.
CONDENSED STATEMENT OF OPERATIONS
(In Thousands, except per share amounts)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1996 1995 1995
HISTORICAL PRO FORMA HISTORICAL
------------------- ----------- --------
<S> <C> <C> <C>
TOTAL NET SALES $ 89,411 $ 91,688 $ ---
COST OF GOODS SOLD 55,275 54,984 ---
------------------- ---------- -------
GROSS MARGIN 34,136 36,704 ---
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 32,949 34,234 461
WRITE-DOWN OF ASSETS --- 11,000 ---
------------------- ----------- -------
OPERATING INCOME (LOSS) 1,187 (8,530) (461)
INTEREST EXPENSE (1,083) (1,187) (57)
OTHER INCOME 469 93 ---
------------------- ----------- -------
INCOME (LOSS) BEFORE TAXES 573 (9,624) (518)
INCOME TAXES 29 --- ---
------------------- ---------- -------
NET INCOME (LOSS) $ 544 $ (9,624) $ (518)
=================== ========== =======
DIVIDENDS ON SERIES B
PREFERRED STOCK (133) --- ---
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS $ 411 $ (9,624) $ (518)
=================== =========== =======
NET INCOME (LOSS) PER
COMMON SHARE $ 0.08 $ (2.36) $ (0.13)
=================== =========== =======
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 5,291 4,086 4,086
</TABLE>
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<TABLE>
ELECTRONIC HAIR STYLING, INC.
CONDENSED STATEMENT OF OPERATIONS
(In Thousands, except per share amounts)
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1996 1995 1995
HISTORICAL PRO FORMA ...HISTORICAL
----------------- ----------------- -------------
<S> <C> <C> <C>
TOTAL NET SALES $29,249 $29,832 $ ---
COST OF GOODS SOLD 17,538 17,462 ---
---------------- ---------------- ----------------
GROSS MARGIN 11,711 12,370 ---
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 11,218 11,679 267
---------------- ---------------- ----------------
OPERATING INCOME (LOSS) 493 691 (267)
INTEREST EXPENSE (251) (399) (20)
OTHER INCOME 397 20 ---
---------------- ---------------- ----------------
INCOME (LOSS) BEFORE TAXES 639 312 (287)
INCOME TAXES 29 --- ---
---------------- ---------------- ----------------
NET INCOME (LOSS) $610 $312 $(287)
================ ================ ================
DIVIDENDS ON SERIES B
PREFERRED STOCK (100) --- ---
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS $510 $312 $(287)
================ ================ ================
NET INCOME (LOSS) PER
COMMON SHARE $0.08 $0.08 $(0.07)
================ ================ ================
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 6,526 4,086 4,086
</TABLE>
