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) February 6, 1996
ALBERTO-CULVER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-5050 36-2257936
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) 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
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 6, 1996, Alberto-Culver Company (Alberto-Culver) completed the
acquisition of St. Ives Laboratories, Inc. (St. Ives) pursuant to the Agreement
and Plan of Merger, dated as of October 30, 1995, between Alberto-Culver, AC
Acquiring Co. (Merger Sub) and St. Ives. The acquisition was consummated by the
merger of Merger Sub with and into St. Ives, with St. Ives becoming a wholly
owned subsidiary of Alberto-Culver.
Except for shares of Common Stock held of record by Alberto-Culver or its
subsidiaries and shares of Common Stock held in St. Ives' treasury immediately
prior to the consummation of the merger, each share of St. Ives Common Stock
outstanding immediately prior to the merger has been converted into the right to
receive $15.00 per share in cash without interest. Shares of Common Stock held
of record by Alberto-Culver or its subsidiaries and shares of Common Stock held
in St. Ives' treasury were canceled and retired. The total consideration of
approximately $110 million was funded with the net proceeds available from the
issuance of $100 million of 5.5% convertible subordinated debentures in July,
1995 and from the sale of certain trade accounts receivable in January, 1996.
St. Ives develops, manufactures and markets personal care products under its
SWISS FORMULA(R) brand and manufactures custom label products for sale by other
companies. It is Alberto-Culver's current intent to continue using the assets of
St. Ives in substantially the same manner as they were used prior to the
acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) St. Ives Laboratories, Inc. and Subsidiaries:
(i) Year ended December 31, 1994:
Financial Statements:
Consolidated Balance Sheet as of December 31, 1994
Consolidated Income Statement for the year ended
December 31, 1994
Consolidated Statement of Stockholders' Equity for the year
ended December 31, 1994
Consolidated Statement of Cash Flows for the year ended
December 31, 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
(ii) Nine months ended September 30, 1995 (unaudited):
Unaudited Consolidated Balance Sheet as of September 30, 1995
Unaudited Consolidated Income Statement for the nine months
ended September 30, 1995
Unaudited Consolidated Statement of Cash Flows for the nine
months ended September 30, 1995
(b) Pro forma consolidated financial information for Alberto-Culver and St.
Ives Laboratories, Inc. and Subsidiaries (unaudited):
Unaudited Pro-Forma Consolidated Balance Sheet as of
September 30, 1995
Unaudited Pro-Forma Consolidated Statement of Earnings for the
year ended September, 30, 1995
Notes to Unaudited Pro-Forma Consolidated Financial Statements
(c) Exhibits:
2 (a) Agreement and Plan of Merger, dated as of October 30, 1995,
between Alberto-Culver Company, AC Acquiring Co., and St. Ives
Laboratories, Inc. (filed as Exhibit 2 and incorporated
herein by reference from the Alberto-Culver's Schedule 13D
filed on November 7, 1995).
2 (b) Stockholders Stock Option Agreement, dated as of October 30,1995,
among Alberto-Culver, Gary H. Worth, John R. Worth, the House
of Worth Trust dated July 9, 1982 as amended, the Worth Family
Trust under an agreement dated November 24, 1990 and the Worth
Family Partnership, L.P.(filed as Exhibit 1 and incorporated
herein by reference from the Alberto-Culver's Schedule 13D
filed on November 7, 1995).
23 Consent of Coopers & Lybrand L.L.P.
<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 hereunto duly authorized.
ALBERTO-CULVER COMPANY
(Registrant)
By:/s/ William J. Cernugel
William J. Cernugel
Senior Vice President, Finance & Controller
(Principal Financial Officer)
February 8, 1996
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1994
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents ................................... $ 3,465,709
Short term investments ....... .............................. 1,249,603
Accounts receivable - trade, less allowance for
doubtful accounts ($410,000 at December 31, 1994) ......... 20,284,639
Accounts receivable - related party (Note 8) ........ ....... 382,829
Accounts receivable - other ................................. 1,566,553
Inventories (Note 2) ........................................ 30,045,445
Prepaid and other assets .................................... 1,591,065
Deferred income taxes (Note 5) .............................. 1,999,208
------------
Total current assets .................................... 60,585,051
Plant and equipment, net (Note 3)............................... 8,043,491
Other assets ................................................... 483,426
------------
Total assets ............................................ $ 69,111,968
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................ $ 11,337,817
Accrued expenses (Note 4) ................................... 9,691,945
Income taxes payable (Note 5). ............................. 610,560
Deferred income taxes (Note 5) .............................. 196,530
Short term debt (Note 6) .................................... 3,500,000
------------
Total current liabilities ................................ 25,336,852
Commitments (Note 7)
Stockholders' equity (Notes 6, 10, 11 and 12):
Preferred stock, $.01 par value per share, 5,000,000
shares authorized; no shares issued or
outstanding
Common stock, $.01 par value per share,
30,000,000 shares authorized; 7,019,399 shares
issued and outstanding at December 31, 1994 ................ 70,194
Paid-in capital .............................................. 12,382,018
Retained earnings ............................................ 32,373,433
Cumulative translation adjustments ........................... (1,050,529)
------------
Total stockholders' equity ................................ 43,775,116
------------
Total liabilities and stockholders' equity ................ $ 69,111,968
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
For the year ended December 31, 1994
<S> <C>
Net sales (includes related party sales of
$20,069,000 in 1994 - Note 8) (Note 14) ............. $ 157,184,009
-------------
Cost of products sold .................................. 85,594,868
Selling, marketing and administrative expenses (Note 14) 65,851,195
Other general expenses ................................. 1,387,465
-------------
Operating costs and expenses ...................... 152,833,528
-------------
Income from operations ................................. 4,350,481
Interest expense ....................................... 392,130
Other (income), net .................................... (389,119)
------------
Income before income taxes ............................. 4,347,470
Provision for income taxes (Note 5) .................... 2,595,202
-------------
Net income .......................................... $ 1,752,268
Net income per share ................................ $ 0.25
Dividends per share ................................. $ 0.12
Weighted average shares outstanding ................. 7,014,155
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the year ended December 31, 1994
<S> <C> <C> <C> <C> <C> <C>
Total
Common Stock Cumulative Stock-
Number of Paid-in Retained Translation holders'
Shares Amount Capital Earnings Adjustments Equity
Balance, December 31, 1993 6,989,399 $ 69,894 $12,157,318 $31,463,073 ($1,893,576) $41,796,709
Stock options exercised
(Note 10) ........... 30,000 300 224,700 225,000
Cash dividends on
common stock
($.12 per share) .... (841,908) (841,908)
Translation adjustment 843,047 843,047
Net income ............ 1,752,268 1,752,268
---------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1994 7,019,399 $ 70,194 $12,382,018 $32,373,433 ($1,050,529) $43,775,116
========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended December 31, 1994
<S> <C>
Cash flow from operating activities:
Net income .................................................................. $ 1,752,268
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization ............................................. 2,449,854
Deferred income taxes ..................................................... (123,764)
Loss on disposal of land .................................................. 1,085,465
Provision for losses on accounts receivable ............................... 131,863
Provision for inventory obsolescence ...................................... 346,887
Changes in assets and liabilities:
Accounts receivable - trade ............................................. 269,536
Accounts receivable - related party ..................................... (122,810)
Accounts receivable - other ............................................. (106,215)
Inventories ............................................................. 1,057,352
Prepaid and other assets ................................................ (199,861)
Accounts payable ........................................................ 1,549,865
Accrued expenses ........................................................ 672,667
Income taxes payable .................................................... 453,284
------------
Net cash provided by operating activities ............................... 9,216,391
------------
Cash flow from investing activities:
Proceeds from sale of land .................................................. 847,366
Purchase of plant and equipment ............................................. (2,818,015)
Other assets ................................................................ 58,269
Short term investments ...................................................... (1,048)
------------
Net cash used for investing activities .................................. (1,913,428)
------------
Cash flow from financing activities:
Common stock options exercised .............................................. 225,000
Cash dividends paid ......................................................... (841,908)
Short term debt borrowings .................................................. 35,558,000
Short term debt repayments .................................................. (41,921,000)
------------
Net cash used for financing activities .................................. (6,979,908)
------------
Effect of exchange rate changes on cash ........................................ 118,047
------------
Net increase in cash and cash equivalents ...................................... 441,102
Cash and cash equivalents at beginning of year ................................. 3,024,607
------------
Cash and cash equivalents at end of year ....................................... $ 3,465,709
============
Supplemental Disclosures of Cash Flow Information Cash paid during the year for:
Interest .................................................................. $ 256,367
Income taxes .............................................................. $ 1,769,584
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The principal business of St. Ives Laboratories, Inc. and its subsidiaries
(collectively the "Company") is developing, manufacturing and marketing Personal
Care Products under its SWISS FORMULA(R) brand and manufacturing Custom Label
Products for sale by other companies.
Principles of Consolidation
The consolidated financial statements include the accounts of St. Ives
Laboratories, Inc. and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
Statements of Cash Flows
All highly liquid investments purchased with a maturity of three months or less
are considered to be cash equivalents.
Short Term Investments
Short term investments are valued at cost, which approximates market, and
consist of United States Treasury Notes. Short term investments are classified
as a current asset in the Consolidated Balance Sheets as the Company intends to
hold the $1,250,000 of face value government securities until maturity in the
second quarter of 1995. At December 31, 1994, the aggregate fair value and
weighted average interest rate of the securities was $1,259,000 and 8.45%,
respectively. Income from short term investments is included in other income,
net.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk consist of short term investments and trade receivables.
The Company invests its excess cash in United States Treasury Notes.
Concentration of credit risk with respect to trade receivables is limited due to
the large number of customers comprising the Company's customer base and their
geographical dispersion. The Company grants uncollateralized credit to domestic
and international customers. Domestically, the Company sells its products
primarily through food, drug and mass merchandise stores and military exchanges
and commissaries. From time to time, the Company experiences write-offs of
receivables related to bankruptcy filings of customers. Internationally, the
Company conducts business with a few accounts on open terms. Many international
customers are required to furnish letters of credit, make advance payments, or
provide letters of guarantee in amounts sufficient to limit the Company's credit
risk. The Company establishes an allowance for doubtful accounts based upon
factors surrounding the credit risk of specific customers, historical trends and
other information.
Inventories
Inventories are valued at the lower of cost (first-in, first-out) or market.
Finished goods inventories include the cost of materials, direct labor and
manufacturing overhead. In determining obsolescence related to inventory, the
Company, on an ongoing basis, considers factors such as deterioration, spoilage,
packaging changes, changes in price level and similar factors which affect the
utility of its inventory.
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. THE COMPANY AND SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES (Continued)
Plant and Equipment
Plant and equipment are stated at cost, less accumulated depreciation and
amortization. Machinery and equipment and furniture and fixtures are depreciated
using an accelerated method with estimated useful lives which range from three
to fifteen years. Tooling is depreciated using a straight-line method over three
years. Leasehold improvements are amortized over the shorter of the useful life
or lease term.
Expenditures for repairs and maintenance are charged to expense as incurred.
Replacements and betterments are added to the asset accounts when placed in
service. Costs of assets sold or retired and the related amounts of accumulated
depreciation and amortization are eliminated from the accounts and the resulting
gains or losses on disposal are included in other income, net.
Income Taxes
Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts at each year end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized. Income tax expense is
the tax payable for the period and the change during the period in deferred tax
assets and liabilities.
Foreign Currency
Foreign exchange gains and losses as a result of translating the Company's
foreign subsidiaries' financial statements into U.S. dollars are included as a
separate component of stockholders' equity. Actual gains or losses incurred on
currency transactions in other than the countries' functional currencies are
included in income in the current period. In 1994, foreign currency transaction
gains and losses were not significant.
Revenue Recognition
Revenue from sales is recognized when products are shipped.
Advertising
Advertising is expensed as incurred and for 1994 amounted to $8,927,000.
Product Research and Development
Product research and development costs are expensed as incurred and for 1994
amounted to $1,327,000.
Net Income per Share
Net income per share is computed based on the weighted average number of shares
of common stock outstanding. For the periods presented, stock options have an
immaterial dilutive effect.
2. INVENTORIES
The components of inventories at December 31, 1994 were:
Raw and packaging materials $7,027,459
Work in-process 521,744
Finished goods 22,496,242
------------
$30,045,445
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. PLANT AND EQUIPMENT
Plant and equipment consisted of the following at December 31, 1994:
Machinery and equipment $17,627,165
Furniture and fixtures 2,057,786
Leasehold improvements 2,965,876
-------------
22,650,827
Less accumulated depreciation and amortization (14,607,336)
-------------
Net plant and equipment $8,043,491
4. ACCRUED EXPENSES
Accrued expenses consisted of the following at December 31, 1994:
Sales promotion $3,889,820
Payroll and bonuses 1,320,545
Sales commissions 944,338
Vacation 977,241
Other 2,560,001
-----------
$9,691,945
5. INCOME TAXES
Income (loss) before income taxes consisted of the following for the year ended
December 31, 1994:
United States $4,615,805
Foreign (268,335)
-----------
$4,347,470
The provision for income taxes consisted of the following for the year ended
December 31, 1994:
Currently payable:
Federal $1,601,958
Foreign 656,661
State 382,244
-----------
2,640,863
Deferred:
Federal (55,096)
State 9,435
-----------
(45,661)
-----------
$2,595,202
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. INCOME TAXES (Continued)
The provision for income taxes differs from the amount obtained by applying the
federal statutory income tax rate to income before provision for income taxes as
follows for the year ended December 31, 1994:
Federal statutory rate 34.0%
State taxes, net of federal benefit 6.9%
Impact of foreign operating losses 15.7%
Difference between foreign and U. S. tax rates 1.5%
Other 1.6%
-----
59.7%
The components of the net deferred tax asset at December 31, 1994 were as
follows:
Deferred tax assets:
Foreign net operating loss carryforwards $1,493,735
Inventory adjustments 959,685
Allowance and accrual adjustments 843,145
Other 196,378
-----------
3,492,943
Deferred tax liabilities:
Plant and equipment (68,011)
State taxes (128,519)
-----------
(196,530)
-----------
Valuation allowance for foreign net operating
loss carryforwards (1,493,735)
-----------
$1,802,678
The sources of deferred taxes and the tax effect of each were as follows for the
year ended December 31, 1994:
Inventory adjustments ($42,355)
Allowance and accrual adjustments 22,398
State income taxes 169,229
Other (103,611)
---------
$45,661
At December 31, 1994, the Company had net operating loss carryforwards in
Denmark and Germany totaling $4,393,000. These loss carryforwards will expire at
various dates between 1995 and 1999.
6. SHORT TERM DEBT
The Company has a Loan Agreement with a bank which provides a $15,000,000
revolving credit commitment and facilities for trade finance and foreign
exchange. The Loan Agreement expires July 31, 1995 and may be extended with the
mutual consent of the bank and the Company. Borrowings may be obtained, at the
Company's option, at the prevailing prime interest rate or based on a choice of
formulas as specified in the agreement. The formulas are based on interest rates
for either the offshore dollar inter-bank market or bank dealer certificates of
deposit. All interest and fees are computed on the basis of a 360-day year and
the actual number of days elapsed for the borrowing period. A commitment fee of
0.125% per annum is payable quarterly on the unused amount of credit available.
Under the Loan Agreement, the Company has restrictive provisions limiting the
amount of dividend payments to 50% of net income and requiring maintenance of
net worth, working capital and debt to equity ratios. Further, the Loan
Agreement contains other conditions including restrictions on the Company's
ability to encumber its assets or engage in certain transactions outside the
normal course of business.
Borrowings outstanding at December 31, 1994 were $3,500,000 subject to an
effective weighted average interest rate of 7.87%.
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. COMMITMENTS
The Company leases its office, production and warehouse facilities and certain
office and production equipment under operating lease agreements. Lease terms
generally range from two to ten years; principal building leases contain options
for renewal for additional periods and are subject to periodic increases equal
to the change in the Consumer Price Index and payments for utilities, taxes,
insurance and maintenance fees.
Total rent expense for 1994 was $3,092,000. Minimum annual noncancelable
lease commitments at December 31, 1994 are:
Year Ended December 31,
1995 $3,450,000
1996 3,186,000
1997 2,311,000
1998 1,144,000
1999 853,000
2000 and thereafter 131,000
---------------
$11,075,000
8. RELATED PARTY TRANSACTIONS AND MAJOR CUSTOMER INFORMATION
The Company leases its manufacturing facility from an officer and director
pursuant to a lease which began on July 1, 1979 and expires on June 30, 1998
with options to renew for two additional five-year periods. Rental payments for
this facility were $524,000 in 1994.
Net sales of Custom Label Products for the year ended December 31, 1994 included
sales to a customer of $20,069,000. A significant shareholder of this customer
owns 27.1% of the Company's outstanding common stock. Accounts receivable from
this customer at December 31, 1994 were $382,829.
9. GEOGRAPHICAL INFORMATION
The principal business of the Company is developing, manufacturing and marketing
Personal Care Products to retail outlets. A second focus of the Company's
business is the manufacture of Custom Label Products for distribution by other
companies.
Year Ended December 31,1994
Net sales:
Personal care products $127,769,000
Custom label products 29,415,000
------------
$157,184,000
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. GEOGRAPHICAL INFORMATION (Continued)
Net sales and income from operations for the year ended December 31, 1994 and
identifiable assets at the end of that year, classified by geographical area,
are as follows:
Net sales:
Domestic $115,697,000
Export 15,931,000
Foreign 25,556,000
---------------
$157,184,000
Income from operations:
Domestic and export $2,628,000
Foreign 1,722,000
---------------
$4,350,000
Identifiable assets:
Domestic and export $48,763,000
Foreign 20,349,000
---------------
$69,112,000
The Company has foreign subsidiaries in Canada, France, Denmark, Germany,
Switzerland and the United Kingdom. All intercompany revenues and expenses are
eliminated in computing net sales and income from operations.
10. STOCK OPTION AND EMPLOYEE BENEFIT PLANS
The Company has Incentive Stock Option and Nonqualified Stock Option Plans
(collectively, the "Stock Option Plans"). The Stock Option Plans permit the
grant of both "incentive stock options" within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended, and nonqualified stock options.
Employees, including officers of the Company and its subsidiaries, may receive
incentive stock options and nonqualified stock options. Directors who are not
employees may only receive nonqualified stock options. A total of 1,150,000
shares have been reserved for issuance under the Stock Option Plans.
Nonqualified options generally are immediately exercisable but are subject to
vesting of one-fifth of the total grant in each year for five years.
The Stock Option Plans are administered by the Option Plan Committee, composed
of two disinterested Directors, which determines the terms of options granted,
including the exercise price, the number of shares subject to the option and the
exercisability thereof. The exercise price of any option must be at least 100%
of the fair market value of such shares on the date of grant.
The following table summarizes certain information relative to the Stock Option
Plans:
Shares Option Price
Outstanding at December 31, 1993 504,500 $6.50 to $9.00
Granted 232,000 $7.94 to $8.88
Exercised (30,000) $6.50
Canceled or expired (13,000) $6.50 to $8.50
--------
Outstanding at December 31, 1994 693,500 $6.50 to $9.00
=======
Available for future options at
December 31, 1994 360,500
=======
Exercisable at December 31, 1994 340,000 $6.50 to $9.00
=======
<PAGE>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. STOCK OPTION AND EMPLOYEE BENEFIT PLANS (Continued)
The Company has a Section 401(k) Plan and Trust Employee Benefit Plan for
qualified employees under Section 401(k) of the Internal Revenue Code and a
Nonqualified Deferred Compensation Plan for key employees. Company contributions
to these plans are based on a fixed percentage of employee contributions up to
the limits as specified in the plans. Total Company contributions to these plans
in 1994 were approximately $232,000.
11. PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of preferred stock, $.01 par
value. The Board of Directors is empowered to issue one or more series of
preferred stock and to determine the rights, preferences, privileges and
restrictions to be granted to, or imposed on, any such series. No shares of
preferred stock of the Company are issued or outstanding.
12. COMMON STOCK REPURCHASE PLAN
On February 6, 1995, the Board of Directors of the Company authorized the
repurchase of up to 250,000 shares of the Company's common stock. The stock can
be purchased periodically through February 5, 1996 in accordance with Regulation
10b-18 of the Securities and Exchange Act of 1934 at per share prices the
Company deems desirable. At March 15, 1995, no shares of common stock had been
repurchased.
<TABLE>
<CAPTION>
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table summarizes financial information by quarter for calendar
year 1994:
<S> <C> <C> <C> <C> <C>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
Net sales $38,348,903 $42,732,868 $41,002,442 $35,099,796 $157,184,009
=========== =========== =========== =========== ============
Gross profit $17,195,437 $19,078,490 $19,003,823 $16,311,391 $71,589,141
=========== =========== =========== =========== =============
Net income $488,068 $279,686 $811,623 $172,891 $1,752,268
============= ============= ============= ============= ==============
Net income per share $0.07 $0.04 $0.12 $0.02 $0.25
============= ============= ============= ============= ==============
</TABLE>
14. RECLASSIFICATIONS
Historically, the Company has recorded expenses for certain promotional and
marketing allowances that were shown on the face of a customer invoice as
deductions from the list price (herein referred to as the "off-invoice
allowances"). Following a recent industrywide trend, the Company changed its
invoicing methodology in 1995 by substantially eliminating off-invoice
allowances in North America. Simultaneously, the Company reduced its list prices
which are used to record net sales when products are shipped. In order to
provide consistency and improve the comparison of results between periods,
$18,514,064 of costs relating to off-invoice allowances that were previously
included as selling expenses (Selling, marketing and administrative expenses)
were reclassified to reduce net sales for the year ended December 31, 1994.
Accordingly, a summary of these reclassifications is as follows for the year
ended December 31, 1994:
Net sales
as originally reported $175,698,073
as reclassified $157,184,009
Selling, marketing and administrative expenses
as originally reported $85,752,724
as reclassified $65,851,195
Other general expenses
as originally reported -
as reclassified $1,387,465
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
St. Ives Laboratories, Inc.
We have audited the consolidated financial statements of St. Ives
Laboratories, Inc. and Subsidiaries listed in Item 7(a)(i) of this Form 8-K.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of St. Ives
Laboratories, Inc. and Subsidiaries as of December 31, 1994, and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 9, 1995
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
September 30, 1995
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents ................................................. $ 732,721
Accounts receivable - trade, less allowance for
doubtful accounts ($823,000 at September 30, 1995) ...................... 27,689,356
Accounts receivable - related party ....................................... 867,166
Accounts receivable - other ............................................... 1,876,039
Inventories ............................................................... 28,937,387
Prepaid and other assets .................................................. 1,564,960
Income taxes refundable and deferred taxes ................................ 3,134,874
------------
Total current assets .................................................. 64,802,503
Plant and equipment, net ..................................................... 6,609,160
Other assets ................................................................. 331,991
------------
Total assets .......................................................... $ 71,743,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................................................... $ 11,246,074
Accrued expenses .......................................................... 11,307,250
Deferred income taxes ..................................................... 196,530
Short term debt ........................................................... 2,168,000
------------
Total current liabilities ............................................. 24,917,854
------------
Stockholders' equity:
Preferred stock, $.01 par value per share, 5,000,000
shares authorized; no shares issued or
outstanding
Common stock, $.01 par value per share,
30,000,000 shares authorized; 7,025,399 shares
issued and outstanding at September 30, 1995 ............................ 70,254
Paid-in capital ........................................................... 12,423,958
Retained earnings ......................................................... 34,549,833
Cumulative translation adjustments ........................................ (218,245)
------------
Total stockholders' equity ............................................ 46,825,800
------------
Total liabilities and stockholders' equity ............................ $ 71,743,654
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the nine months ended September 30, 1995
<S> <C>
Net sales (includes related party sales of $13,981,766) $ 125,168,578
-------------
Cost of products sold ................................. 69,280,759
Selling, marketing and administrative expenses ........ 53,476,908
-------------
Operating costs and expenses ..................... 122,757,667
-------------
Income from operations ................................ 2,410,911
Interest expense ...................................... 350,651
Other (income), net ................................... (367,694)
-------------
Income before income taxes ............................ 2,427,954
Provision for income taxes ............................ (380,372)
-------------
Net income ......................................... $ 2,808,326
=============
Net income per share ............................... $ 0.40
Dividends per share ................................ $ 0.09
Weighted average shares outstanding ................ 7,021,487
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ST. IVES LABORATORIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1995
<S> <C>
Cash flow from operating activities:
Net income $2,808,326
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation and amortization 2,131,231
Deferred income taxes (402)
Changes in assets and liabilities:
Accounts receivable - trade (7,157,717)
Accounts receivable - related party (484,337)
Accounts receivable - other (282,486)
Inventories 1,532,058
Prepaid and other assets 79,105
Accounts payable (166,743)
Accrued expenses 1,521,305
Income taxes payable (1,754,824)
----------------
Net cash used for operating activities (1,774,484)
----------------
Cash flow from investing activities:
Purchase of plant and equipment (646,900)
Other assets 138,435
Short term investments 1,249,603
---------------
Net cash provided by investing activities 741,138
---------------
Cash flow from financing activities:
Common stock options exercised 42,000
Cash dividends paid (631,926)
Short term debt borrowings 26,145,000
Short term debt repayments (27,477,000)
---------------
Net cash used for financing activities (1,921,926)
---------------
Effect of exchange rate changes on cash 222,284
---------------
Net decrease in cash and cash equivalents (2,732,988)
Cash and cash equivalents at beginning of period 3,465,709
---------------
Cash and cash equivalents at end of period $ 732,721
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALBERTO-CULVER COMPANY
UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEET
September 30, 1995
(Dollars in thousands)
Alberto-
Culver St. Ives Pro-Forma Pro-Forma
Company Laboratories, Inc. Adjustments* Consolidated
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $142,585 733 (79,280) (a) 64,038
Short-term investments 4,400 -- 4,400
Net accounts receivable 128,482 30,433 (30,000) (a) 128,915
Inventories 248,529 28,937 277,466
Other current assets 12,549 4,700 17,249
---------- --------- ------------ ---------
Total current assets 536,545 64,803 (109,280) 492,068
Property, plant and equipment, net 157,791 6,609 164,400
Goodwill, trade names
and other intangibles 89,423 -- 89,861 (d) 179,284
Other assets 31,327 332 (2,107) (a) 29,552
---------- ---------- ----------- ---------
$815,086 71,744 (21,526) 865,304
======== ========= ========== =========
Current liabilities:
Short-term borrowings $103 2,168 2,271
Current maturities of long-term debt 1,286 -- 1,286
Accounts payable 144,253 11,246 155,499
Accrued expenses 76,141 11,307 25,300 (b) 112,748
Income taxes 13,056 197 13,253
---------- ---------- ------------- ---------
Total current liabilities 234,839 24,918 25,300 285,057
--------- --------- ---------- ---------
Long-term debt 83,094 -- 83,094
Convertible subordinated debentures 100,000 -- 100,000
Other liabilities 26,250 -- 26,250
Stockholders' equity
Common stock 7,526 70 (70) (c) 7,526
Additional paid-in capital 87,896 12,424 (12,424) (c) 87,896
Retained earnings 337,506 34,550 (34,550) (c) 337,506
Foreign currency translation gain (loss) (12,966) (218) 218 (c) (12,966)
---------- ---------- ----------- ----------
419,962 46,826 (46,826) 419,962
Less treasury stock 49,059 -- 49,059
--------- ----------- ------------- ---------
Total stockholders' equity 370,903 46,826 (46,826) 370,903
--------- -------- ---------- --------
$815,086 71,744 (21,526) 865,304
======== ======= ========== =======
</TABLE>
* The references in the Pro-Forma Adjustments column are described in the Notes
to Unaudited Pro-Forma Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ALBERTO-CULVER COMPANY
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF EARNINGS
Year ended September 30, 1995
(Dollars in thousands, except per share data)
Alberto-
Culver St. Ives Pro-Forma Pro-Forma
Company Laboratories, Inc. Adjustments* Consolidated
<S> <C> <C> <C> <C>
Net sales $1,358,219 160,268 1,518,487
Costs and expenses:
Cost of products sold 682,589 88,069 770,658
Advertising, promotion, selling and
administrative 584,856 68,480 2,898 (b) 656,234
Net interest expense 6,532 533 6,070 (a) 13,135
----------- --------- -------- ----------
Total costs and expenses 1,273,977 157,082 8,968 1,440,027
--------- ------- -------- ---------
Earnings before provision for income taxes 84,242 3,186 (8,968) 78,460
Provision for income taxes 31,591 205 (2,520) (c) 29,276
----------- --------- -------- -----------
Net earnings $52,651 2,981 (6,448) 49,184
========== ========= ========= ===========
Net earnings per share:
Primary $1.89 1.77
============ ============
Fully-diluted $1.87 1.75
============ ============
</TABLE>
* The references in the Pro-Forma Adjustments column are described in the
Notes to Unaudited Pro-Forma Consolidated Financial Statements.
<PAGE>
ALBERTO-CULVER COMPANY
NOTES TO UNAUDITED PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited pro-forma consolidated financial statements
include the accounts of Alberto-Culver Company and Subsidiaries (the
Company) and St. Ives Laboratories, Inc. and Subsidiaries (St. Ives) as of
and for the year ended September 30, 1995. The acquisition of St. Ives has
been accounted for under the purchase method of accounting.
2. The pro-forma adjustments required to present the unaudited pro-forma
consolidated balance sheet as if the acquisition had occurred on September
30, 1995 are described as follows:
a. Cash disbursed in connection with the acquisition, net of proceeds from
the sale of certain trade accounts receivable, and the reclassification
of the investment in common shares of St. Ives owned by the
Company which was included in other assets as of September 30, 1995.
b. Provision for additional liabilities incurred in connection with the
acquisition.
c. Elimination of St. Ives stockholders' equity.
d. Recognition of trade names and goodwill resulting from the excess
of the purchase price over the preliminary estimate of fair value of
the net assets acquired.
3. The pro-forma adjustments required to present the unaudited pro-forma
consolidated statement of earnings as if the acquisition had occurred on
October 1, 1994 are described as follows:
a. Interest expense on the funds used to purchase St. Ives.
b. Goodwill amortization on a straight-line basis over 40 years and
payments due a former shareholder of St. Ives under a consulting and
non-competition agreement.
c. Incremental change in the pro-forma consolidated entity's provision for
income taxes as a result of applying the Company's effective tax rate
to the pro-forma adjustments described above and reflecting the
non-deductibility of the goodwill amortization.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Alberto-Culver Company on Form S-3 (File No. 333-00619) and five Form
S-8's (File Nos. 33-36051, 33-47748, 33-62693, 33-62699 and 33-62701) of our
report dated March 9, 1995, on our audit of the consolidated financial
statements of St. Ives Laboratories, Inc. and Subsidiaries as of December
31, 1994 and for the year then ended, which report is included in this Form
8-K.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
February 8, 1996
