SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED:
June 30, 1995
-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
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 June 30, 1995, there were 10,961,306 shares of Class
A common stock outstanding and 16,766,240 shares of
Class B common stock outstanding.
PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
Three Months Ended June 30, 1995 and 1994
(dollar amounts in thousands, except per share figures)
<CAPTION>
(Unaudited)
1995 1994
<S> <C> <C>
Net sales $357,678 315,016
Costs and expenses:
Cost of products sold 180,590 154,963
Advertising, promotion,
selling and administrative 152,880 138,269
Interest expense, net of interest income
of $686 in 1995 and $307 in 1994 2,393 1,988
Total costs and expenses 335,863 295,220
Earnings before provision for income taxes 21,815 19,796
Provision for income taxes 8,181 7,519
Net earnings $ 13,634 12,277
Net earnings per share $ .49 .44
Cash dividends paid per share $ .08 .07
</TABLE>
See notes to consolidated financial statements.
<TABLE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
Nine Months Ended June 30, 1995 and 1994
(dollar amounts in thousands, except per share figures)
<CAPTION>
(Unaudited)
1995 1994
<S> <C> <C>
Net sales $993,360 902,410
Costs and expenses:
Cost of products sold 497,735 443,818
Advertising, promotion,
selling and administrative 431,733 404,955
Interest expense, net of interest income
of $1,717 in 1995 and $1,687 in 1994 4,597 5,056
Total costs and expenses 934,065 853,829
Earnings before provision for income taxes 59,295 48,581
Provision for income taxes 22,236 18,461
Net earnings $ 37,059 30,120
Net earnings per share $ 1.33 1.07
Cash dividends paid per share $ .23 .205
</TABLE>
See notes to consolidated financial statements.
<TABLE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1995 and September 30, 1994
(dollar amounts in thousands, except per share figures)
<CAPTION>
(Unaudited)
June 30, September 30,
ASSETS 1995 1994
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 54,997 41,833
Short-term investments 10,185 8,529
Receivables, less allowance for doubtful
accounts ($5,295 at 6/30/95 and $5,497
at 9/30/94) 121,995 108,877
Inventories (Note 3) 263,761 231,119
Other current assets 13,847 11,399
Total current assets 464,785 401,757
Property, plant and equipment at cost, less
accumulated depreciation ($123,720 at 6/30/95
and $110,351 at 9/30/94) 150,599 132,881
Goodwill, net 54,304 44,307
Trade names and other intangible assets, net 33,221 9,960
Other assets 27,995 21,303
Total assets $730,904 610,208
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 2,319 2,152
Current maturities of long-term debt 30,808 30,667
Accounts payable 130,026 110,122
Accrued expenses 84,209 64,754
Income taxes 12,340 8,315
Total current liabilities 259,702 216,010
Long-term debt 87,683 42,976
Deferred income taxes 15,139 14,780
Other liabilities and minority interest 9,978 9,472
Stockholders' equity:
Common stock, par value $.22 per share:
Class A authorized 25,000,000 shares;
issued 13,262,624 at 6/30/95 and
13,261,624 shares at 9/30/94 2,918 2,918
Class B authorized 25,000,000 shares;
issued 20,944,424 at 6/30/95 and
20,945,424 shares at 9/30/94 4,608 4,608
Additional paid-in capital 87,881 87,452
Retained earnings 324,134 293,445
Foreign currency translation (12,059) (11,793)
407,482 376,630
Less treasury stock at cost (Class A
common shares: 2,301,318 at 6/30/95 and
2,348,426 at 9/30/94; Class B common
shares: 4,178,184 at 6/30/95 and 9/30/94) 49,080 49,660
Total stockholders' equity 358,402 326,970
Total liabilities and stockholders'equity $730,904 610,208
</TABLE>
See notes to consolidated financial statements.
<TABLE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Nine Months Ended June 30, 1995 and 1994
(dollar amounts in thousands)
<CAPTION>
(Unaudited)
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $37,059 30,120
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 17,828 15,216
Receivables, net (13,597) 2,375
Inventories (22,357) (27,669
Other current assets (3,239) (899)
Accounts payable and accrued expenses 23,183 18,244
Income taxes 2,776 (1,267)
Other, net 2,181 504
Net cash provided by operating activities 43,834 36,624
Cash Flows from Investing Activities:
Capital expenditures (17,939) (19,641)
Short-term investments (1,656) (2,633)
Payments for purchased businesses, net of
acquired company's cash (41,859) (7,618)
Proceeds from sale of businesses, net of
sold company's cash -- 1,592
Life insurance premiums paid (5,046) (5,021)
Other, net (463) 746
Net cash used by investing activities (66,963) (32,575)
Cash Flows from Financing Activities:
Short-term borrowings 40 (1,920)
Proceeds from long-term debt 43,552 6,324
Repayments of long-term debt (625) (8,855)
Cash proceeds from exercise of stock options 611 672
Cash dividends paid (6,372) (5,769)
Stock purchased for treasury -- (13,730)
Net cash used by financing activities 37,206 (23,278)
Effect of foreign exchange rate changes on cash (913) 118
Net decrease in cash and cash equivalents 13,164 (19,111)
Cash and cash equivalents at beginning of period 41,833 65,747
Cash and cash equivalents at end of period $54,997 46,636
</TABLE>
See notes to consolidated financial statements.
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(l) The consolidated financial statements contained in this report
have not been examined by independent public accountants, except
for balance sheet information presented at September 30, 1994.
However, in the opinion of the company, the consolidated financial
statements reflect all adjustments, which include only normal
adjustments, necessary to present fairly the data contained therein.
The results of operations for the periods covered are not necessarily
indicative of results for a full year.
(2) For the three and nine month periods ended June 30, 1995 and 1994,
earnings per share figures were calculated using the weighted average
number of common shares outstanding, including common stock equivalents,
of 27,915,000 and 27,839,000, respectively for 1995, and 27,865,000 and
28,150,000, respectively for 1994.
(3) Inventories consist of the following:
(in thousands)
June 30, September 30,
1995 1994
Finished goods $225,584 195,633
Work-in-process 5,460 5,868
Raw materials 32,717 29,618
$263,761 231,119
(4) On April 3, 1995, the company's Swedish-based subsidiary,
Cederroth International, completed the purchase of the Toiletries
Division of Molnlycke AB. The acquired division manufactures and
markets body and skin care, hair care, oral care and household
products in Scandinavia. The acquisition, valued at approximately
$50 million, was accounted for as a purchase and was funded with
bank borrowings.
(5) On July 13, 1995, the company completed the issuance of $100
million of 5.5% convertible subordinated debentures. The debentures
are convertible into Class A common shares at a conversion rate of
30.888 shares per $1,000 principal amount of debentures (equivalent
to a conversion price of $32 3/8) and mature on June 30, 2005. The
Company also retired $30 million of term loans that were due in
July, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
QUARTER AND NINE MONTHS ENDED JUNE 30, 1995 VS. QUARTER AND NINE
MONTHS ENDED JUNE 30, 1994
The company achieved record net sales of $357.7 million in the third
quarter of fiscal year 1995, up $42.7 million or 13.5% over the comparable
quarter of fiscal year 1994. For the nine month period ended June 30, 1995,
net sales also reached a new high of $993.4 million representing a 10.1%
increase compared to the same period last year.
Third quarter net earnings increased 11.1% to a record $13.6 million or
49 cents per share compared to 44 cents per share in the prior year's quarter.
For the nine months ended June 30, 1995, net earnings increased 23.0% to
$37.1 million or $1.33 per share versus $30.1 million or $1.07 per share
in the prior year period.
The following table presents net sales information by business segment
for the third quarter and nine months of fiscal years 1995 and 1994:
THIRD QUARTER
(dollars in millions)
Percent
Net sales: 1995 1994 Change Change
Mass marketed personal
use products $153.0 129.6 23.4 18.1%
Institutional products 28.4 25.4 3.0 11.8
Other products - Sally 178.5 161.9 16.6 10.3
Eliminations (2.2) (1.9) (0.3) -15.8
Total $357.7 315.0 42.7 13.5
NINE MONTHS
(dollars in millions)
Percent
Net sales: 1995 1994 Change Change
Mass marketed personal
use products $402.4 366.9 35.5 9.7%
Institutional products 80.7 75.8 4.9 6.5
Other products - Sally 517.2 467.4 49.8 10.7
Eliminations (6.9) (7.7) 0.8 10.4
Total $993.4 902.4 91.0 10.1
Compared to the same periods of the prior year, sales of the "mass marketed
personal use products" business segment increased 18.1% and 9.7% for the
current quarter and the nine month period ended June 30, 1995, respectively.
The sales increase for the third quarter resulted primarily from the
acquisition of Molnlycke Toiletries.in April, 1995 and the 1995 introduction
of Alberto VO5 Naturals Shampoo and Conditioner, partially offset by lower
sales of Alberto VO5 Shampoo and Instant Conditioner and Village Saucerie
sauce and recipe mix. Sales for the current nine month period benefitted
from the acquisition of Molnlycke Toiletries and higher sales for the
following brands: Alberto VO5 Shampoo and Instant Conditioner, Tresemme
retail hair care products, FDS feminine deodorant spray, Static Guard
anti-static spray, Mrs. Dash seasoning products, Baker's Joy combination flour
and oil spray and the introduction of Alberto VO5 Naturals Shampoo and
Conditioner. These sales increases were partially offset by lower sales
of Village Saucerie sauce and recipe mix, the Alberto VO5 and Bold Hold
hair styling lines and TCB retail hair care products.
Sales of the "institutional products" business segment increased 11.8%
and 6.5% for the third quarter and nine months ended June 30, 1995,
respectively, versus the same periods of the prior year. The increases
were attributable to increased sales of institutional products in Scandinavia,
partially resulting from the acquisition of Molnlycke Toiletries, as well as
favorable foreign exchange rates. These international increases were
partially offset by lower sales in the U.S. of TCB and Tresemme institutional
hair care products.
The "other products - Sally" business segment increased sales $16.6 million
or 10.3% and $49.8 million or 10.7% for the third quarter and first nine
months of fiscal 1995, respectively, compared to the same periods last year.
The increases were attributable to Sally Beauty Company's sales gains for
established stores and the addition of 124 stores since June 30, 1994.
Sally Beauty Company operates 1,450 cash-and-carry beauty supply stores
offering a full range of salon products.
Cost of products sold for the third quarter and nine month period ended
June 30, 1995 increased to 50.5% and 50.1% of net sales, respectively,
compared to 49.2% for the both periods of the prior year. The cost of
goods sold percentages were primarily affected by higher sales of lower
profit margin products.
Compared to the prior year, advertising, promotion, selling and
administrative expenses increased 10.6% or $14.6 million for the current
quarter and 6.6% or $26.8 million for the nine months ended June 30, 1995.
The increases were primarily due to higher advertising and promotion
expenditures for mass marketed personal use products, principally resulting
from the acquisition of Molnlycke Toiletries, and higher selling and
administrative costs associated with the increase in the number of Sally
Beauty Company stores and warehouses. Advertising, promotion and market
research costs were $52.4 million and $140.3 million for the third quarter
and first nine months of fiscal 1995, respectively, versus $45.9 million
and $138.5 million, respectively, in the comparable periods of last year.
Interest expense for the third quarter increased $784,000 to $3.1 million
and decreased $429,000 to $6.3 million for the first nine months of 1995.
Interest income rose $379,000 for the third quarter and increased $30,000
for the first nine months. The increase in interest expense in the third
quarter was primarily due to the debt incurred to acquire Molnlycke
Toiletries.
The provision for income taxes in 1995 and 1994 as a percentage of
earnings before income taxes was 37.5% and 38.0%, respectively, for
both the third quarter and the first nine months.
FINANCIAL CONDITION
JUNE 30, 1995 VS. SEPTEMBER 30, 1994
The ratio of current assets to current liabilities was 1.79 to 1.00 at
June 30, 1995, compared to 1.86 to 1.00 at September 30, 1994.
During the nine month period ended June 30, 1995, working capital
increased by $19.3 million to $205.1 million. The increase is
primarily due to earnings from operations offset in part by capital
expenditures of $17.9 million and cash dividends of $6.4 million.
At June 30, 1995, the company had $76.6 million of available unused
lines of credit with various banks.
Cash dividends paid on Class A and Class B common stock totaled $6.4
million or 23.0 cents per share during the first nine months of fiscal 1995
versus $5.8 million or 20.5 cents per share in the prior year.
PART II
ITEM 5. OTHER INFORMATION
On July 13, 1995, the registrant completed the issuance of $100 million
of convertible subordinated debentures. The debentures are convertible
into Class A common shares at a conversion rate of 30.888 shares per
$1,000 principal amount of debentures (equivalent to a conversion price
of approximately $32 3/8) and mature on June 30, 2005. The debentures
were sold to offshore investors, pursuant to a Regulation S exemption,
and in the U.S. to qualified institutional buyers only, pursuant to a
Rule 144A exemption, and accordingly the debentures have not been registered
under the Securities Act of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description
27 Financial Data Schedule
(b) The following Form 8-K's were filed by the registrant during the
third quarter of its fiscal year ending September 30, 1995.
- Form 8-K dated April 3, 1995
- Form 8-K dated June 15, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
ALBERTO-CULVER COMPANY
(Registrant)
By:/s/ William J. Cernugel
William J. Cernugel
Senior Vice President, Finance & Controller
(Principal Financial Officer)
August 1, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 AND THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> $54,997
<SECURITIES> 10,185
<RECEIVABLES> 127,290
<ALLOWANCES> 5,295
<INVENTORY> 263,761
<CURRENT-ASSETS> 464,785
<PP&E> 274,319
<DEPRECIATION> 123,720
<TOTAL-ASSETS> 730,904
<CURRENT-LIABILITIES> 259,702
<BONDS> 87,683
0
0
<COMMON> 7,526
<OTHER-SE> 350,876
<TOTAL-LIABILITY-AND-EQUITY> 730,904
<SALES> 993,360
<TOTAL-REVENUES> 993,360
<CGS> 497,735
<TOTAL-COSTS> 497,735
<OTHER-EXPENSES> 431,733
<LOSS-PROVISION> 2,631
<INTEREST-EXPENSE> 6,314
<INCOME-PRETAX> 59,295
<INCOME-TAX> 22,236
<INCOME-CONTINUING> 37,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,059
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 0
</TABLE>
