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:
December 31, 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 December 31, 1995, there were 11,012,995 shares of Class A common stock
outstanding and 16,766,240 shares of Class B common stock outstanding.
- 1 -
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
Three Months Ended December 31, 1995 and 1994
(dollar amounts in thousands, except per share figures)
(Unaudited)
1995 1994
<S> <C> <C>
Net sales ................................................ $347,638 311,474
Costs and expenses:
Cost of products sold ............................... 178,343 155,548
Advertising, promotion, selling and administrative .. 146,675 136,840
Interest expense, net of interest income of $1,629
in 1995 and $466 in 1994 ........................ 2,102 1,174
Total costs and expenses ............................ 327,120 293,562
Earnings before provision for income taxes ............... 20,518 17,912
Provision for income taxes ............................... 7,643 6,717
Net earnings ............................................. $ 12,875 11,195
Net earnings per share of common stock:
Primary ............................................. $ .46 .40
Fully-diluted ....................................... $ .44 .40
Cash dividends paid per share ............................ $ .08 .07
See notes to consolidated financial statements.
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and September 30, 1995
(dollar amounts in thousands, except per share figures)
(Unaudited)
December 31, September 30,
ASSETS 1995 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................................... $ 129,748 142,585
Short-term investments .......................................... 6,000 4,400
Receivables, less allowance for doubtful
accounts ($6,055 at 12/31/95 and $5,663 at 9/30/95) .......... 122,270 128,482
Inventories (Note 3) ............................................ 264,344 248,529
Other current assets ............................................ 12,655 12,549
Total current assets ......................................... 535,017 536,545
Property, plant and equipment at cost, less accumulated
depreciation ($134,597 at 12/31/95 and $128,243 at 9/30/95) ..... 164,545 157,791
Goodwill, net ...................................................... 55,303 55,225
Trade names and other intangible assets, net ....................... 34,942 34,198
Other assets ....................................................... 34,834 31,327
Total assets .................................................... $ 824,641 815,086
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and short-term borrowings .. $ 3,186 1,389
Accounts payable ................................................ 138,395 144,253
Accrued expenses ................................................ 73,395 76,141
Income taxes .................................................... 17,933 13,056
Total current liabilities .................................... 232,909 234,839
Long-term debt ..................................................... 84,408 83,094
Convertible subordinated debentures ................................ 100,000 100,000
Deferred income taxes .............................................. 15,198 15,365
Other liabilities .................................................. 11,312 10,885
Stockholders' equity:
Common stock, par value $.22 per share:
Class A authorized 25,000,000 shares; issued 13,262,624 shares 2,918 2,918
Class B authorized 25,000,000 shares; issued 20,944,424 shares 4,608 4,608
Additional paid-in capital ...................................... 88,614 87,896
Retained earnings ............................................... 348,163 337,506
Foreign currency translation .................................... (14,684) (12,966)
429,619 419,962
Less treasury stock at cost (Class A common shares: 2,249,629
at 12/31/95 and 2,299,618 at 9/30/95; Class B common shares:
4,178,184 at 12/31/95 and at 9/30/95) ........................ 48,805 49,059
Total stockholders' equity ................................ 380,814 370,903
Total liabilities and stockholders' equity ................ $ 824,641 815,086
See notes to consolidated financial statements.
</TABLE>
- 3 -
<PAGE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months Ended December 31, 1995 and 1994
(dollar amounts in thousands)
<TABLE>
<CAPTION>
(Unaudited)
1995 1994
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings ..................................................... $ 12,875 11,195
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization ............................... 7,057 5,451
Other, net .................................................. (250) (1,218)
Cash effects of changes in:
Receivables, net .......................................... 5,553 3,805
Inventories ............................................... (16,225) (1,938)
Other current assets ...................................... (290) (1,905)
Accounts payable and accrued expenses ..................... (1,010) (2,463)
Income taxes .............................................. 5,039 5,616
Net cash provided by operating activities ................... 12,749 18,543
Cash Flows from Investing Activities:
Short-term investments ........................................... (1,600) (1,840)
Capital expenditures ............................................. (12,390) (4,925)
Payments for purchased businesses, net of acquired companies' cash (10,576) (283)
Other, net ....................................................... (589) (1,305)
Net cash used by investing activities ......................... (25,155) (8,353)
Cash Flows from Financing Activities:
Short-term borrowings ............................................ 1,799 (910)
Proceeds from long-term debt ..................................... -- 677
Repayments of long-term debt ..................................... (303) (231)
Cash dividends paid .............................................. (2,218) (1,938)
Cash proceeds from exercise of stock options ..................... 860 124
Stock purchased for treasury ..................................... (578) --
Net cash used by financing activities ......................... (440) (2,278)
Effect of foreign exchange rate changes on cash .................. 9 (156)
Net increase (decrease) in cash and cash equivalents ............. (12,837) 7,756
Cash and cash equivalents at beginning of period ................. 142,585 41,833
Cash and cash equivalents at end of period ....................... $ 129,748 $49,589
See notes to consolidated financial statements.
</TABLE>
- 4 -
<PAGE>
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, 1995. 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) Primary earnings per share are based on the weighted average shares
outstanding, including common stock equivalents, of 27,998,000 and
27,772,000 for the three months ended December 31,1995 and 1994,
respectively.
Fully diluted earnings per share are determined by dividing net earnings
before interest expense on the convertible subordinated debentures (net of
tax benefit) by the weighted average shares outstanding after giving
effect to common shares to be issued assuming conversion of the
convertible subordinated debentures to Class A common stock. Fully-
diluted weighted average shares outstanding were 31,191,000 and 27,789,000
for the three months ended December 31, 1995 and 1994, respectively.
(3) Inventories consist of the following:
(in thousands)
December 31, September 30,
1995 1995
Finished goods $231,426 211,224
Work-in-process 5,214 4,897
Raw materials 27,704 32,408
-------- -------
$264,344 248,529
(4) On February 6, 1996, the company completed its acquisition of St. Ives
Laboratories, Inc., a hair and skin care products company, through a cash
merger valued at approximately $120 million. The merger will be accounted
for as a purchase.
(5) In prior years, the Consumer Products Division of Alberto-Culver USA
recorded certain promotional allowances that were shown as a deduction
from the list price reported on customer invoices as promotion expenses.
Beginning with the quarter ended December 31, 1995, the company changed
the method of reporting sales to a net sales basis thereby reducing sales
and promotion expense by $2,843,000. This change had no effect on net
income and prior periods have not been restated due to immateriality. The
change is in conformity with industry practice and also provides
management with financial information that is consistent across other
divisions of Alberto-Culver USA.
- 5 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
FIRST QUARTER ENDED DECEMBER 31, 1995 VS. FIRST QUARTER ENDED DECEMBER 31, 1994
The company achieved record first quarter net sales of $347.6 million in fiscal
year 1996, up $36.1 million or 11.6% over the comparable period of fiscal year
1995. Net earnings for the three months ended December 31, 1995 were also a
record for the first quarter at $12.9 million or 15.0% higher than the same
period of the prior year. Primary earnings per share of 46 cents were 6 cents or
15.0% higher than the same period last year. Fully-diluted earnings per share
were 44 cents, up 4 cents or 10.0% from the prior year.
The following table presents net sales information by business segment for the
first quarter of fiscal years 1996 and 1995:
FIRST QUARTER
(dollars in millions)
Fiscal Year Dollar Percent
Net sales: 1996 1995 Change Change
Consumer products:
Alberto-Culver USA $66.4 71.4 (5.0) (7.0%)
Alberto-Culver International 101.8 74.1 27.7 37.4
----- ----- ----- -----
Total consumer products 168.2 145.5 22.7 15.6
Specialty distribution - Sally 181.4 168.3 13.1 7.8
Eliminations (2.0) (2.3) 0.3 13.0
------ ----- ----- -----
$347.6 311.5 36.1 11.6%
Compared to the same period of the prior year, sales of Alberto-Culver USA
"consumer products" decreased $5.0 million or 7.0% for the first quarter of
1996. Sales in the current quarter were lower by $2.8 million due to the change
in classification of certain off-invoice promotional allowances discussed in
Note 5. Excluding the reclassification, sales were $2.2 million lower for the
current quarter, a decrease of 3.0% compared to last year. Sales were lower this
year for such brands as Static Guard anti-static spray, Molly McButter dairy
sprinkles, Mrs. Dash seasoning products and Consort hair care products. These
decreases were partially offset by higher sales of Alberto VO5 shampoo and
conditioner, TCB hair care products, Alberto VO5 Hot Oil and FDS feminine
deodorant spray.
Sales of Alberto-Culver International "consumer products" were $101.8 million
for the current quarter, an increase of 37.4% compared to last year. The fiscal
1996 increase primarily resulted from the acquisition of the Toiletries Division
of Molnlycke AB in April, 1995.
The "specialty distribution-Sally" business segment experienced a sales increase
of $13.1 million or 7.8%, reaching $181.4 million for the quarter ended December
31, 1995. The gain was attributable to Sally Beauty Company's sales growth for
established stores and the addition of 150 new stores since December 31, 1994.
Sally Beauty Company operates 1,536 beauty supply stores offering a full range
of salon care products.
Cost of products sold as a percent of net sales for the three month period ended
December 31, 1995 increased 1.4% compared to the first quarter of the prior
year. Higher raw material costs, the disposal of inventories related to
discontinued SKUs, and higher sales of close-out merchandise, along with the
reclassification discussed in Note 5, contributed to the increase in the cost of
products sold percentage.
- 6 -
<PAGE>
Advertising, promotion, selling and administrative expenses rose 7.2% or $9.8
million for the December 31, 1995 quarter versus the comparable period of the
prior year. The increase resulted from the acquisition of Molnlycke Toiletries
in April, 1995 along with higher selling and administrative costs associated
with the increase in the number of Sally Beauty Company stores, partially offset
by lower advertising and promotional expenditures for Alberto-Culver USA
"consumer products."
Advertising, promotion and market research expenditures totaled $43.1 million
for the current period versus $41.7 million for the comparable period of the
prior year.
Interest expense was $3.7 million for the first quarter of fiscal year 1996
versus $1.6 million for the comparable prior period. The increase was primarily
attributable to the $100 million of 5.5% convertible subordinated debentures
issued in July, 1995 and borrowings related to the Molnlycke Toiletries
acquisition in April, 1995. Interest income of $1.6 million for the quarter
ended December 31, 1995 was $1.2 million higher than last year mainly due to
investing the net proceeds from the convertible subordinated debentures.
The provision for income taxes as a percentage of earnings before income taxes
was 37.25% and 37.5% for the first quarter of fiscal years 1996 and 1995,
respectively.
FINANCIAL CONDITION
DECEMBER 31, 1995 VS. SEPTEMBER 30, 1995
The ratio of current assets to current liabilities was 2.30 to 1.00 at the end
of the first quarter of fiscal year 1996 compared to 2.28 to 1.00 at September
30, 1995. Working capital of $302.1 million remained relatively unchanged from
the September 30, 1995 balance of $301.7 million.
Total borrowings increased $3.1 million during the first three months of fiscal
year 1996. At December 31, 1995, the company had unused lines of credit with
various banks of approximately $69 million.
For the twelfth consecutive year, the company announced an increase in the
quarterly cash dividend on both Class A and Class B common stock, raising it
12.5% to 9 cents per share or 36 cents annually. The dividend is payable
February 20, 1996 to stockholders of record on February 5, 1996.
- 7 -
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
No report on Form 8-K was filed by the registrant during the quarter
ended December 31, 1995.
- 8 -
<PAGE>
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)
February 12, 1996
- 9 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of December 31, 1995 and the consolidated
statement of earnings for the three months ended December 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000003327
<NAME> ALBERTO-CULVER COMPANY AND SUBSIDIARIES
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<EXCHANGE-RATE> 1.00
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 129,748
<SECURITIES> 6,000
<RECEIVABLES> 128,325
<ALLOWANCES> 6,055
<INVENTORY> 264,344
<CURRENT-ASSETS> 535,017
<PP&E> 299,142
<DEPRECIATION> 134,597
<TOTAL-ASSETS> 824,641
<CURRENT-LIABILITIES> 232,909
<BONDS> 184,408
0
0
<COMMON> 7,526
<OTHER-SE> 373,288
<TOTAL-LIABILITY-AND-EQUITY> 824,641
<SALES> 347,638
<TOTAL-REVENUES> 347,638
<CGS> 178,343
<TOTAL-COSTS> 178,343
<OTHER-EXPENSES> 146,675
<LOSS-PROVISION> 1,357
<INTEREST-EXPENSE> 3,731
<INCOME-PRETAX> 20,518
<INCOME-TAX> 7,643
<INCOME-CONTINUING> 12,875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,875
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.44
</TABLE>
