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, 1997
-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, 1997, there were 23,284,741 shares of Class A common stock
outstanding and 33,532,480 shares of Class B common stock outstanding.
1
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PART I
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ITEM 1. FINANCIAL STATEMENTS
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
Three Months Ended December 31, 1997 and 1996
(dollar amounts in thousands, except per share figures)
(Unaudited)
<CAPTION>
1997 1996
<S> <C> <C>
Net sales $ 445,400 426,105
Costs and expenses:
Cost of products sold 218,040 215,388
Advertising, promotion, selling and administrative 193,897 181,587
Interest expense, net of interest income of $763
in 1997 and $787 in 1996 2,081 2,392
Total costs and expenses 414,018 399,367
Earnings before non-recurring gain and provision for income taxes 31,382 26,738
Non-recurring gain (Note 5) -- 15,634
Earnings before provision for income taxes (Note 5) 31,382 42,372
Provision for income taxes (Note 5) 11,690 15,784
Net earnings (Note 5) $ 19,692 26,588
Net earnings per share (Notes 2, 3 and 5)
Basic $ .35 .48
Diluted $ .32 .44
Cash dividends paid per share (Note 2) $ .05 .045
See notes to consolidated financial statements.
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<TABLE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1997 and September 30, 1997
(dollar amounts in thousands)
(Unaudited)
<CAPTION>
December 31, September 30,
ASSETS 1997 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 56,892 76,040
Short-term investments 6,298 11,560
Receivables, less allowance for doubtful
accounts ($9,485 at 12/31/97 and $9,042 at 9/30/97) 117,106 120,774
Inventories (Note 4) 361,746 343,868
Other current assets 30,116 28,017
Total current assets 572,158 580,259
Property, plant and equipment at cost, less accumulated
depreciation ($165,908 at 12/31/97 and $159,155 at 9/30/97) 199,655 190,998
Goodwill, net 117,145 114,245
Trade names and other intangible assets, net 68,465 70,155
Other assets 46,008 44,402
Total assets $1,003,431 $1,000,059
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and short-term borrowings $ 4,576 4,943
Accounts payable 158,639 174,322
Accrued expenses 107,778 118,447
Income taxes 18,612 13,540
Total current liabilities 289,605 311,252
Long-term debt 48,580 49,441
Convertible subordinated debentures 100,000 100,000
Deferred income taxes 27,961 25,490
Other liabilities 16,308 16,872
Stockholders' equity (Note 2): Common stock, par value $.22 per share:
Class A authorized 75,000,000 shares; issued 24,442,931 shares 5,378 5,378
Class B authorized 75,000,000 shares; issued 37,710,664 shares 8,296 8,296
Additional paid-in capital 96,812 91,222
Retained earnings 475,787 458,886
Foreign currency translation (25,534) (22,555)
560,739 541,227
Lesstreasury stock at cost (Class A common shares: 1,158,190 at 12/31/97
and 1,833,315 at 9/30/97; Class B common shares:
4,178,184 at 12/31/97 and at 9/30/97) (39,762) (44,223)
Total stockholders' equity 520,977 497,004
Total liabilities and stockholders' equity $1,003,431 $1,000,059
See notes to consolidated financial statements.
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<TABLE>
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months Ended December 31, 1997 and 1996
(dollar amounts in thousands)
(Unaudited)
1997 1996
<CAPTION>
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings $19,692 26,588
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization 10,035 8,942
Non-recurring gain -- (15,634)
Other, net 5,316 (2,706)
Cash effects of changes in:
Receivables, net (1,184) 6,268
Inventories (17,286) (8,888)
Other current assets 306 (1,911)
Accounts payable and accrued expenses (22,230) (1,582)
Income taxes 7,562 14,886
Net cash provided by operating activities 2,211 25,963
Cash Flows from Investing Activities:
Short-term investments 5,262 (1,054)
Capital expenditures (16,076) (9,009)
Payments for purchased businesses, net of acquired companies' cash (7,001) (6,215)
Proceeds from insurance settlement -- 28,000
Other, net 604 866
Net cash used by investing activities (17,211) 12,588
Cash Flows from Financing Activities:
Short-term borrowings (106) 1,831
Proceeds from long-term debt 464 927
Repayments of long-term debt (311) (302)
Cash dividends paid (2,808) (2,504)
Cash proceeds from exercise of stock options 8,884 2,850
Stock purchased for treasury (8,015) (994)
Net cash used by financing activities (1,892) 1,808
Effect of foreign exchange rate changes on cash (2,256) 368
Net increase (decrease) in cash and cash equivalents (19,148) 40,727
Cash and cash equivalents at beginning of period 76,040 66,211
Cash and cash equivalents at end of period $ 56,892 106,938
See notes to consolidated financial statements.
</TABLE>
4
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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, 1997. However, in
the opinion of the company, the consolidated financial statements
reflect all adjust- ments, 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) On January 23, 1997, the company announced a 100% stock dividend on
its Class A and Class B outstanding shares. The new shares were
distributed February 20, 1997 to shareholders of record at the close
of business on February 3, 1997. The stock dividend was distributed
only on outstanding shares and not on shares held in the treasury. All
share and per share information in this report, except for treasury
shares, has been restate to reflect the 100% stock dividend. The
company also announced on January 22, 1998 an increase in the cash
dividend on Class A and Class B common stock, raising the quarterly
dividend 20.0% to 6 cents per share or 24 cents annually. The cash
dividend is payable February 20, 1998 to stockholders of record on
February 2, 1998.
(3) The company has adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share" which requires the dual
presentation of basic and diluted earnings per share, replacing the
primary and fully-diluted disclosures previously required. As a
result, all prior period earnings per share amounts have been restated
to conform to the current year's presentation. Basic earnings per
share is calculated using the weighted average of actual shares
outstanding of 56,354,000 and 55,773,000 for the three months ended
December 31, 1997 and 1996, respectively, after giving effect to the
100% stock dividend described in Note 2. Diluted earnings per share
are determined by dividing net earnings before interest expense (net
of tax benefit) on the convertible subordinated debentures by the
weighted average shares outstanding, including common stock
equivalents, after giving effect to common shares to be issued
assuming conversion of the convertible subordinated debentures to
Class A common stock. Diluted weighted average shares outstanding were
63,656,000 and 63,012,000 for the three months ended December 31, 1997
an 1996, respectively, after giving effect to the 100% stock dividend
described in Note 2.
(4) Inventories consist of the following:
(in thousands)
December 31, September 30,
1997 1997
---- ----
Finished goods $311,180 292,441
Work-in-process 8,119 7,252
Raw materials 42,447 44,175
------ ------
$361,746 343,868
======== =======
5
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(5) In the first quarter of fiscal year 1997, the company received a $28.0
million insurance settlement from the loss of its corporate airplane.
The effect on the company's earnings was a non-recurring pre-tax gain
of $15.6 million and an increase in net earnings of $9.8 million.
Accordingly, basic earnings per share increased $0.17 and on a diluted
basis rose $0.16.
The following table provides pro-forma information for the first quarter
of the fiscal year excluding the non-recurring gain (in thousands,
except per share data):
Quarter Ended December 31
1997 1996
Pre-tax earnings $ 31,382 26,738
Net earnings $ 19,692 16,777
Net earnings per share:
Basic $ 0.35 0.30
Diluted $ 0.32 0.28
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
FIRST QUARTER ENDED DECEMBER 31, 1997 V.S. FIRST QUARTER ENDED DECEMBER 31, 1996
The company achieved record first quarter net sales of $445.4 million in fiscal
year 1998, up $19.3 million or 4.5% over the comparable period of fiscal year
1997. Net earnings for the three months ended December 31, 1997 were $19.7
million or 25.9% lower than the same period of the prior year, which included a
non-recurring gain. Basic earnings per share were 35 cents and 32 cents on a
diluted basis.
As described in Note 5, the company received a $28.0 million insurance
settlement from the loss of its corporate airplane in the first quarter of
fiscal year 1997. As a result, the company recognized a non-recurring, pre-tax
gain of $15.6 million and an increase to net earnings of $9.8 million.
Accordingly, last year's first quarter basic earnings per share increased 17
cents while diluted earnings per share increased 16 cents.
On a pro-forma basis, net earnings before the non-recurring gain were a record
for the first quarter at $19.7 million, 17.4% higher than the same period of the
prior year. Pro-forma basic earnings per share were 35 cents, a 5 cents or 16.7%
increase over last year. Pro-forma diluted earnings per share increased 4 cents
or 14.3% to 32 cents.
The following table presents net sales information by business segment for the
first quarter of fiscal years 1998 and 1997:
FIRST QUARTER
(dollars in millions)
Fiscal Year Dollar Percent
Net sales: 1998 1997 Change Change
Consumer products:
Alberto-Culver USA $106.2 107.6 (1.4) (1.4)%
Alberto-Culver International 112.5 112.9 (.4) (.3)
Total consumer products 218.7 220.5 (1.8) (.8)
Specialty distribution - Sally 230.8 208.7 22.1 10.6
Eliminations (4.1) (3.1) (1.0) (32.9)
$445.4 426.1 19.3 4.5%
Compared to the same period of the prior year, sales of Alberto-Culver
USA consumer products decreased $1.4 million or 1.4% for the first
quarter of fiscal year 1998. The decrease was primarily due to lower
sales for custom label filling operations partially offset by higher
sales of the TRESemme, Cortexx and TCB hair care lines and St. Ives
lotions.
Sales of Alberto-Culver International consumer products were $112.5
million for the current quarter, essentially flat when compared to
last year. Sales for the first quarter of fiscal year 1998 were
negatively impacted by the effect of foreign exchange rates. Had
foreign exchange rates this year been the same as the first quarter of
fiscal 1997, Alberto-Culver International sales would have increased
8.1% driven by strong results in Latin America and Europe.
The "Specialty distribution-Sally" business segment achieved a sales
increase of $22.1 million or 10.6%, reaching $230.8 million in sales
for the quarter ended December 31, 1997. The gain was attributable to
higher sales for established Sally Beauty Company outlets, the
addition of stores during the year and the expansion of Sally's full
service and foreign operations. At December 31, 1997, Sally Beauty
Company had 1,888 stores offering a full range of professional beauty
supplies.
Cost of products sold as a percent of net sales for the three month
period ended December 31, 1997 was 49.0% as compared to 50.5% for the
first quarter of the prior year. The decrease was primarily due to
cost savings and a change in product mix favoring higher margin
products for Alberto-Culver USA.
Advertising, promotion, selling and administrative expenses for the
December 31, 1997 quarter rose 6.8% or $12.3 million versus the
comparable period of the prior year. The increase resulted from
additional advertising, promotion and market
7
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research expenditures for Alberto-Culver USA along wited with the
increase in the number of Sally Beauty Company stores.h higher selling
and administrative costs associated with the increase in the number of
Sally Beauty Company stores.
Advertising, promotion and market research expenditures totaled $62.1
million for the current period versus $56.0 million for the comparable
period of the prior year. The increase was primarily due to higher
expenses for Alberto-Culver USA including the introduction of new
products.
Interest expense was $2.8 million for the first quarter of fiscal year
1998 versus $3.2 million for the comparable prior period. The lower
interest expense was primarily attributable to a reduction of
outstanding revolving debt and the effect of foreign exchange rates.
Interest income was $763,000 for the quarter ended December 31, 1997
versus $787,000 in the prior year.
The provision for income taxes as a percentage of earnings before
income taxes was 37.25% for the first quarter of fiscal years 1998 and
1997.
FINANCIAL CONDITION
DECEMBER 31, 1997 V.S. SEPTEMBER 30, 1997
The ratio of current assets to current liabilities was 1.98 to 1.00 at
the end of the first quarter of fiscal year 1998 compared to 1.86 to
1.00 at September 30, 1997. Working capital of $282.6 million was
$13.6 million higher than the September 30, 1997 balance of $269.0
million primarily due to increased inventory levels and lower accounts
payable and accrued expenses.
Total borrowings decreased $1.2 million during the first three months
of fiscal year 1998. At December 31, 1997, the company had $200
million available under its revolving credit facility.
8
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PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10(b) Copy of Alberto-Culver Company Employee Stock Option Plan of
1988, as amended.*
10(e) Copy of Alberto-Culver Company 1994 Stock Option Plan for Non-
Employee Directors, as amended.*
27 Financial Data Schedule
* This exhibit is a management contract or compensatory plan
or arrangement of the registrant.
(b) Reports on Form 8-K:
No report on Form 8-K was filed by the registrant during the quarter
ended December 31, 1997.
9
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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 10, 1998
10
Exhibit 10(b)
ALBERTO-CULVER COMPANY
EMPLOYEE STOCK OPTION PLAN OF 1988
(as amended through January 22, 1998)
1. Purpose of ACSOP
The Alberto-Culver Company Employee Stock Option Plan of 1988
(hereinafter called the "ACSOP") is intended to encourage ownership of
the Class A common stock of Alberto-Culver Company (hereinafter called
the "Company") by eligible key employees of the Company and its
subsidiaries and to provide incentives for them to make maximum
efforts for the success of the business. Options granted under the
ACSOP will be non-qualified options (not incentive options as defined
in Section 422 of the Internal Revenue Code of 1986, as amended).
2. Eligibility
Key employees of the Company and its subsidiaries who perform services
which contribute materially to the management, operation and
development of the business ("Optionees") will be eligible to receive
options under the ACSOP. At their request, Mr. Leonard H. Lavin and
Mrs. Bernice E. Lavin are ineligible to receive options under the
ACSOP.
3. Administration
The Compensation Committee of the Board of Directors of the Company,
each of whom shall be a "Non-Employee Director," as that term is
defined under Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act") and the rules thereunder (hereinafter called the
"Committee") shall have full power and authority, subject to the
express provisions of the ACSOP, to determine the purchase price of
the stock covered by each option, the Optionees to whom and the time
or times at which options shall be granted, the terms and conditions
of the options, including the terms of payment therefor, and the
number of shares of stock to be covered by each option. The Committee
shall have full power to construe, administer and interpret the ACSOP,
and full power to adopt such rules and regulations as the Committee
may deem desirable to administer the ACSOP, and no member of the
Committee shall be liable for any action or determination made in good
faith with respect to the ACSOP or any option thereunder.
The Committee may, in its discretion, delegate to a committee of
members of the Committee its authority with respect to such matters
under the ACSOP and options granted under the ACSOP as the Committee
may specify.
4. Number of Shares of Stock to be Offered
The Committee may authorize from time to time the issuance pursuant to
the ACSOP of shares not to exceed 10,400,000 of the Company's Class A
common stock in the aggregate, subject to adjustment under paragraph
10 hereof. Such shares of Class A common stock which may be issued
pursuant to options granted under the ACSOP may be authorized and
unissued shares or issued and reacquired shares as the Committee from
time to time may determine. If any option granted under the ACSOP
shall terminate or be surrendered or expire unexercised in whole or in
part, the shares of stock so released from such option may be made the
subject of additional options granted under the ACSOP.
5. Option Price
The purchase price under each option granted pursuant to the ACSOP
shall be determined by the Committee but shall not be less than the
Fair Market Value (as defined below) of the Company's Class A common
stock at the time the option is granted. For purposes of the ACSOP,
"Fair Market Value" shall mean the average of the high and low
transaction prices of a share of Class A common stock as reported in
the New York Stock Exchange Composite Transactions on the date as of
which such value is being determined or, if there shall be no reported
transactions for such date, on the next preceding date for which
transactions were reported.
6. Grant of Options
<PAGE>
No option may be granted under the ACSOP after January 20, 2003. In
addition, the Committee may not grant to any individual Optionee in
any fiscal year an option or options with respect to more than 300,000
shares of Class A common stock.
7. Term and Exercise of Options
(a) Each option granted shall provide that it is not exercisable after
the expiration of ten (10) years from the date the option is granted,
and each option shall be subject to the following limitations upon its
exercise:
(i) Except as otherwise provided in paragraph 11(a) hereof, no
option may be exercised until the expiration of one (1) year
following the grant of the option.
(ii) Except as otherwise provided in paragraph 11(a) hereof, on
the anniversary date of the grant of the option in each of
the four calendar years immediately following the year of
the grant of the option, the right to purchase twenty-five
percent (25%) of the total number of shares of stock
specified in the option shall accrue to the Optionee. Each
such right to purchase such twenty-five percent (25%) may be
exercised, in whole or in part, at any time after such right
accrues and prior to the expiration of ten (10) years from
the date of the grant of the option.
(b) Notwithstanding the foregoing, the Committee may in its discretion
(i) specifically provide at the date of grant for another time or
times of exercise; (ii) accelerate the exercisability of any option
subject to such terms and conditions as the Committee deems necessary
and appropriate to effectuate the purpose of the ACSOP including,
without limitation, a requirement that the Optionee grant to the
Company an option to repurchase all or a portion of the number of
shares acquired upon exercise of the accelerated option for their Fair
Market Value on the date of grant; or (iii) at any time prior to the
expiration or termination of any option previously granted, extend the
term of any option (including such options held by officers or
directors) for such additional period as the Committee, in its
discretion, shall determine. In no event, however, shall the aggregate
option period with respect to any option, including the original term
of the option and any extensions thereof, exceed ten years.
(c) An option may be exercised by giving written notice to the
Secretary of the Company specifying the number of shares to be
purchased, accompanied by the full purchase price for the shares to be
purchased either in cash, by check or by delivery of shares of Class A
common stock, or by a combination of these methods of payment. For
this purpose, the per share value of the Class A common stock shall be
the Fair Market Value on the date of exercise, as determined by the
Committee.
(d) At any time when an Optionee is required to pay to the Company an
amount required to be withheld under applicable income tax or other
laws in connection with the exercise of an option, the Optionee may
satisfy this obligation in whole or in part by making an election
("Election") to have the Company withhold shares of Class A common
stock of the Company, or, if the Committee so determines, by
delivering shares of Class A common stock of the Company ("Delivery")
having a value equal to the amount required to be withheld. The value
of the shares to be withheld or delivered shall be based on the Fair
Market Value of the Class A common stock of the Company on the date of
exercise (the "Tax Date"). Each Election or Delivery must be made on
or prior to the Tax Date and shall be irrevocable. The Committee may
disapprove any Election or Delivery or may suspend or terminate the
right to make Elections or Deliveries.
8. Continuity of Employment
(a) Each option shall be subject to the following in addition to the
restrictions set forth in paragraphs 6 and 7 hereof:
(i) If an Optionee dies without having fully exercised his or
her option, the executors or administrators of his or her
estate or legatees or distributees shall have the right
during a one (1) year period following his or her death (but
not after the expiration of the term of such option) to
exercise such option in whole or in part but only to the
extent that the Optionee could have exercised it at the date
of his or her death.
(ii) If an Optionee's termination of employment is due to
retirement or physical disability, the Optionee's option
shall terminate three (3) months after his or her
termination of employment (but not after the expiration of
the term of such option) and may be exercised only to the
extent that such Optionee could have exercised it at the
date of his or her termination of employment.
(iii)If an Optionee's termination of employment is for any reason
other than death, retirement or physical disability, the
Optionee's option shall terminate upon said termination of
employment and the Company shall have the right within a
period of one year after said termination of employment to
reacquire at the option price any stock acquired by the
Optionee by exercise of an option within ninety (90) days
prior to said termination of employment; provided, however,
that if such termination of employment occurs following a
Change in Control (as such term is defined in paragraph
11(b) hereof), the Optionee's option shall terminate three
(3) months after his or her termination of employment (but
not after the expiration of the term of such option) and may
be exercised to the extent that such Optionee could have
<PAGE>
exercised it at the date of his or her termination of
employment and the Company shall have no right to reacquire
any stock acquired by the Optionee by exercise of an option.
(b) Nothing contained in the ACSOP or any option granted pursuant to
the ACSOP shall confer upon any Optionee any right to be continued in
the employment of the Company or any subsidiary or shall prevent the
Company or any subsidiary from terminating an Optionee's employment at
any time, with or without cause. The determination by the Committee of
whether an authorized leave of absence constitutes a termination of
employment shall be final, conclusive and binding.
9. Non-Transferability of Options
An option granted under the ACSOP shall not be assignable or
transferable by such Optionee otherwise than by will or the laws of
descent and distribution, and an option shall be exercisable during
the lifetime of the Optionee only by him or her. An option transferred
by will or the laws of descent and distribution may only be exercised
by the legatee or distributee during the one year period following the
Optionee's death and may only be exercised to the extent it was
exercisable by the Optionee prior to his or her death.
10. Adjustment upon Change in Stock
Each option and the number and kind of shares subject to future
options under the ACSOP will be adjusted, as may be determined to be
equitable by the Committee, in the event there is any change in the
outstanding Class A common stock of the Company by reason of a stock
dividend, recapitalization, merger, consolidation, split-up,
combination or exchange of shares, or the like, and the Committee's
determination of such adjustment provisions shall be final, conclusive
and binding.
11. Change in Control
(a) (1) Notwithstanding any provision of the ACSOP, in the event of a
Change in Control, all outstanding options shall immediately be
exercisable in full and shall be subject to the provisions of
paragraph 11(a)(2) or 11(a)(3), to the extent that either such
paragraph is applicable.
(2) Notwithstanding any provision of the ACSOP, in the event of
a Change in Control in connection with which the holders of
shares of the Company's Class A common stock receive shares
of common stock that are registered under Section 12 of the
Exchange Act, all outstanding options shall immediately be
exercisable in full and there shall be substituted for each
share of the Company's Class A common stock available under
the ACSOP, whether or not then subject to an outstanding
option, the number and class of shares into which each
outstanding share of the Company's Class A common stock
shall be converted pursuant to such Change in Control. In
the event of any such substitution, the purchase price per
share of each option shall be appropriately adjusted by the
Committee or the committee to which authority has been
delegated pursuant to paragraph 3 hereof, such adjustments
to be made without an increase in the aggregate purchase
price.
(3) Notwithstanding any provision in the ACSOP, in the event of
a Change in Control in connection with which the holders of
the Company's Class A common stock receive consideration
other than shares of common stock that are registered under
Section 12 of the Exchange Act, each outstanding option
shall be surrendered to the Company by the holder thereof,
and each such option shall immediately be cancelled by the
Company, and the holder shall receive, within ten (10) days
of the occurrence of such Change in Control, a cash payment
from the Company in an amount equal to the number of shares
of the Company's Class A common stock then subject to such
option, multiplied by the excess, if any, of (i) the greater
of (A) the highest per share price offered to stockholders
of the Company in any transaction whereby the Change in
Control takes place or (B) the Fair Market Value of a share
of the Company's Class A common stock on the date of
occurrence of the Change in Control over (ii) the purchase
price per share of the Company's Class A common stock
subject to the option. The Company may, but is not required
to, cooperate with any person who is subject to Section 16
of the Exchange Act to assure that any cash payment in
accordance with the foregoing to such person is made in
compliance with Section 16 of the Exchange Act and the rules
and regulations thereunder.
(b) "Change in Control" means:
(1) The occurrence of any one or more of the following events:
(A) The acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act of
beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act of both (x) 20% or more
of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities") and (y) combined voting power of Outstanding
Company Voting Securities in excess of the combined voting
power of the Outstanding Company Voting Securities held by
the Exempt Persons (as such term is defined in paragraph
<PAGE>
11(c)); provided, however, that a Change in Control shall not result
from an acquisition of Company Voting Securities:
(i) directly from the Company, except as otherwise provided in
paragraph 11(b)(2)(A);
(ii) by the Company, except as otherwise provided in paragraph
11(b)(2)(B);
(iii) by an Exempt Person;
(iv) by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company; or
(v) by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such
reorganization, merger or consolidation, each of the conditions
described in clauses (i) and (ii) of paragraph 11(b)(1)(C) shall be
satisfied.
(B) The cessation for any reason of the members of the Incumbent
Board (as such term is defined in paragraph 11(d)) to
constitute at least a majority of the Board of Directors of
the Company (hereinafter called the "Board").
(C) Approval by the stockholders of the Company of a
reorganization, merger or consolidation unless, in any such
case, immediately after such reorganization, merger or
consolidation:
(i) more than 60% of the combined voting power of the then outstanding
securities of the corporation resulting from such reorganization,
merger or consolidation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals or entities who were the
beneficial owners of the combined voting power of all of the
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation; and
(ii) at least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing
for such reorganization, merger or consolidation.
(D) Approval by the stockholders of the Company of the sale or other
disposition of all or substantially all of the assets of the Company
other than (x) pursuant to a tax-free spin-off of a subsidiary or
other business unit of the Company or (y) to a corporation with
respect to which, immediately after such sale or other disposition:
(i) more than 60% of the combined voting power of the then
outstanding securities thereof entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of
the combined voting power of all of the Outstanding Company
Voting Securities immediately prior to such sale or other
disposition; and
(ii) at least a majority of the members of the board of directors
thereof were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the
Board providing for such sale or other disposition.
(E) Approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.
(2) Notwithstanding the provisions of paragraph 11(b)(1):
(A) no acquisition of Company Voting Securities shall be subject to
the exception from the definition of Change in Control contained in
clause (i) of paragraph 11(b)(1)(A) if such acquisition results from
the exercise of an exercise, conversion or exchange privilege unless
<PAGE>
the security being so exercised, converted or exchanged was acquired
directly from the Company; and
(B) for purposes of clause (ii) of paragraph 11(b)(1)(A), if any
Person (other than the Company, an Exempt Person or any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company) shall, by reason of an
acquisition of Company Voting Securities by the Company, become the
beneficial owner of (x) 20% or more of the combined voting power of
the Outstanding Company Voting Securities and (y) combined voting
power of Outstanding Company Voting Securities in excess of the
combined voting power of the Outstanding Company Voting Securities
held by the Exempt Persons, and such Person shall, after such
acquisition of Company Voting Securities by the Company, become the
beneficial owner of any additional Outstanding Company Voting
Securities and such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change in Control.
(c) "Exempt Person" (and collectively, the "Exempt Persons") means:
(1) Leonard H. Lavin or Bernice E. Lavin;
(2) any descendant of Leonard H. Lavin and Bernice E. Lavin or
the spouse of any such descendant;
(3) the estate of any of the persons described in paragraph
11(c)(1) or (2);
(4) any trust or similar arrangement for the benefit of any
person described in paragraph 11(c)(1) or (2); or
(5) the Lavin Family Foundation or any other charitable
organization established by any person described in
paragraph 11(c)(1) or (2).
(d) "Incumbent Board" means those individuals who, as of October
24, 1996, constitute the Board, provided that:
(1) any individual who becomes a director of the Company subsequent to
such date whose election, or nomination for election by the Company's
stockholders, was approved either by the vote of at least a majority
of the directors then comprising the Incumbent Board or by the vote of
at least a majority of the combined voting power of the Outstanding
Company Voting Securities held by the Exempt Persons shall be deemed
to have been a member of the Incumbent Board; and
(2) no individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board
or the Exempt Persons shall be deemed to have been a member of the
Incumbent Board.
12. Amendment and Discontinuance
The Board, without further approval of the stockholders, may, at any
time and from time to time, suspend or discontinue the ACSOP in whole
or in part or amend the ACSOP in such respects as the Board may deem
proper and in the best interests of the Company or as may be
advisable, provided, however, that no suspension or amendment shall be
made which would:
(i) Adversely affect or impair any option previously granted
under the ACSOP without the consent of the Optionee, or
(ii) Except as specified in paragraph 10, increase the total
number of shares for which options may be granted under the
ACSOP or decrease the minimum price at which options may be
granted under the ACSOP.
13. Effective Date
<PAGE>
The ACSOP, as amended, has been adopted and authorized by the Board
for submission to the stockholders of the Company. If the ACSOP is
approved by the affirmative vote of a majority of the votes
attributable to the outstanding shares of the Company's common stock,
it shall be deemed to have become effective on October 27, 1994, the
date of adoption by the Board, subject to stockholder approval.
Exhibit 10 (e)
1994 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
(as amended through January 22, 1998)
--------------------
1. Purpose. The principal purpose of the 1994 Stock Option Plan for
Non-Employee Directors (the "Director Plan") is to benefit
Alberto-Culver Company (the "Company") and its subsidiaries by
offering its non- employee directors an opportunity to become holders
of the Company's Class A common stock, par value $.22 per share, in
order to enable them to represent the viewpoint of other stockholders
of the Company more effectively and to encourage them to continue
serving as directors of the Company.
2. Administration. The Director Plan shall be administered by the
Board of Directors, whose interpretation of the terms and provisions
of the Director Plan shall be final and conclusive.
3. Eligibility. Options shall be granted under this Director Plan only
to members of the Board of Directors who are not officers or employees
of the Company or any of its subsidiaries.
4. Granting of Options.
(a) An option to purchase 7,500 shares of Class A common stock
from the Company shall be automatically granted by the Board
of Directors, without further action required, to each
director of the Company upon his or her initial election or
appointment as a director of the Company and to each person
who is an incumbent director on October 27, 1994; provided
such director is eligible at that time under the terms of
Paragraph 3 of this Director Plan, and provided, further,
that no person shall be granted more than one such option
pursuant to this Director Plan. An aggregate of 210,000
shares shall be available under this Director Plan. Such
number of shares, and the number of shares subject to
options outstanding under this Director Plan, shall be
subject in all cases to adjustment as provided in Paragraph
10. No option shall be granted under this Director Plan
subsequent to October 27, 2004.
(b) Shares subject to options may be made available from
unissued or treasury shares of stock. Notwithstanding the
provisions of subparagraph 4(a), any shares released from
any unexercised or expired options may be made subject to
additional options granted under this Director Plan.
(c) Nothing contained in this Director Plan or in any option
granted pursuant hereto shall in itself confer upon any
optionee any right to continue serving as a director of the
Company or interfere in any way with any right of the Board
of Directors or stockholders of the Company to remove such
director pursuant to the certificate of incorporation or
by-laws of the Company or applicable law.
5. Option Price. Subject to adjustment under Paragraph 10, the option
price shall be the Fair Market Value (as defined below) of the
Company's Class A common stock on the date the option is granted. For
purposes of the Director Plan, "Fair Market Value" shall mean the
average of the high and low transaction prices of a share of Class A
common stock as reported in the New York Stock Exchange Composite
Transactions on the date as of which such value is being determined
or, if there shall be no reported transactions for such date, on the
next preceding date for which transactions were reported.
6. Duration of Options, Increments and Extensions. Subject to the
provisions of Paragraph 8, each option shall be for a term of ten (10)
years. Subject to the provisions of Paragraph 11, each option shall
become exercisable with respect to 25% of the total number of shares
one year after the date of grant and with respect to an additional 25%
at the end of each twelve-month period thereafter during the
succeeding three years.
7. Exercise of Option. An option may be exercised by giving written
notice to the Company, attention of the Secretary, specifying the
number of shares of Class A common stock to be purchased, accompanied
by the full purchase price for such number of shares, either in cash,
by check, or in shares of Class A common stock, or by a combination
thereof. The per share value of the Class A common stock delivered in
payment of the option price shall be the Fair Market Value of the
Class A common stock on the date of exercise.
<PAGE>
8. Termination - Exercise Thereafter.
(a) If an optionee dies without having fully exercised his or
her option, the executors or administrators of his or her
estate or legatees or distributees shall have the right
during a one (1) year period following his or her death (but
not after the expiration of the term of such option) to
exercise such option in whole or in part but only to the
extent that the optionee could have exercised the option at
the date of his or her death.
(b) If any optionee resigns from the Board of Directors due to
physical disability or retirement, the optionee's option
shall terminate three (3) months after his or her
resignation (but not after the expiration of the term of
such option) and may be exercised only to the extent that
such optionee could have exercised the option at the date of
his or her resignation.
(c) If the optionee resigns from the Board of Directors for any
other reason other than physical disability or retirement,
the optionee's option shall terminate upon said resignation;
provided, however, that if such resignation occurs following
a Change in Control (as such term is defined in paragraph
11(b) hereof), the optionee's option shall terminate three
(3) months after his or her resignation (but not after the
expiration of the term of such option) and may be exercised
to the extent that such optionee could have exercised it at
the date of his or her resignation.
9. Non-Transferability of Options. No option shall be transferable by
the optionee otherwise than by will or the laws of descent and
distribution, and each option shall be exercisable during an
optionee's lifetime only by the optionee.
10. Adjustment upon Change in Stock. Each option and the number and
kind of shares subject to future options under the Director Plan will
be adjusted, as may be determined to be equitable by the Board of
Directors, in the event there is any change in the outstanding Class A
common stock of the Company by reason of a stock dividend,
recapitalization, merger, consolidation, split-up, combination or
exchange of shares, or the like, and the Board of Directors
determination of such adjustment provisions shall be final, conclusive
and binding.
11. Change in Control
(a) (1) Notwithstanding any provision of the Director Plan, in
the event of a Change in Control, all outstanding options
shall immediately be exercisable in full and shall be
subject to the provisions of paragraph 11(a)(2) or 11(a)(3),
to the extent that either such paragraph is applicable.
(2) Notwithstanding any provision of the Director Plan, in the
event of a Change in Control in connection with which the
holders of shares of the Company's Class A common stock
receive shares of common stock that are registered under
Section 12 of the Securities Exchange Act of 1934 (the
"Exchange Act"), all outstanding options shall immediately
be exercisable in full and there shall be substituted for
each share of the Company's Class A common stock available
under the Director Plan, whether or not then subject to an
outstanding option, the number and class of shares into
which each outstanding share of the Company's Class A common
stock shall be converted pursuant to such Change in Control.
In the event of any such substitution, the purchase price
per share of each option shall be appropriately adjusted by
the Board of Directors, such adjustments to be made without
an increase in the aggregate purchase price.
(3) Notwithstanding any provision in the Director Plan, in the
event of a Change in Control in connection with which the
holders of the Company's Class A common stock receive
consideration other than shares of common stock that are
registered under Section 12 of the Exchange Act, each
outstanding option shall be surrendered to the Company by
the holder thereof, and each such option shall immediately
be cancelled by the Company, and the holder shall receive,
within ten (10) days of the occurrence of such Change in
Control, a cash payment from the Company in an amount equal
to the number of shares of the Company's Class A common
stock then subject to such option, multiplied by the excess,
if any, of (i) the greater of (A) the highest per share
price offered to stockholders of the Company in any
transaction whereby the Change in Control takes place or (B)
the Fair Market Value of a share of the Company's Class A
common stock on the date of occurrence of the Change in
Control over (ii) the purchase price per share of the
Company's Class A common stock subject to the option. The
Company may, but is not required to, cooperate with any
person who is subject to Section 16 of the Exchange Act to
assure that any cash payment in accordance with the
foregoing to such person is made in compliance with Section
16 of the Exchange Act and the rules and regulations
thereunder.
(b) "Change in Control" means:
(1) The occurrence of any one or more of the following events:
<PAGE>
(A) The acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act of both (x)
20% or more of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities") and (y)
combined voting power of Outstanding Company Voting Securities in
excess of the combined voting power of the Outstanding Company Voting
Securities held by the Exempt Persons (as such term is defined in
paragraph 11(c)); provided, however, that a Change in Control shall
not result from an acquisition of Company Voting Securities:
(i) directly from the Company, except as otherwise provided in
paragraph 11(b)(2)(A);
(ii) by the Company, except as otherwise provided in paragraph
11(b)(2)(B);
(iii) by an Exempt Person;
(iv) by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company; or
(v) by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after
such reorganization, merger or consolidation, each of the
conditions described in clauses (i) and (ii) of paragraph
11(b)(1)(C) shall be satisfied.
(B) The cessation for any reason of the members of the Incumbent Board
(as such term is defined in paragraph 11(d)) to constitute at least a
majority of the Board of Directors.
(C) Approval by the stockholders of the Company of a reorganization,
merger or consolidation unless, in any such case, immediately after
such reorganization, merger or consolidation:
(i) more than 60% of the combined voting power of the then
outstanding securities of the corporation resulting from
such reorganization, merger or consolidation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities who were
the beneficial owners of the combined voting power of all of
the Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation; and
(ii) at least a majority of the members of the board of directors
of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board
at the time of the execution of the initial agreement or
action of the Board of Directors providing for such
reorganization, merger or consolidation.
(D) Approval by the stockholders of the Company of the sale or other
disposition of all or substantially all of the assets of the Company
other than (x) pursuant to a tax-free spin-off of a subsidiary or
other business unit of the Company or (y) to a corporation with
respect to which, immediately after such sale or other disposition:
(i) more than 60% of the combined voting power of the then
outstanding securities thereof entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of
the combined voting power of all of the Outstanding Company
Voting Securities immediately prior to such sale or other
disposition; and
<PAGE>
(ii) at least a majority of the members of the board of directors
thereof were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the
Board of Directors providing for such sale or other
disposition.
(E) Approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.
(2) Notwithstanding the provisions of paragraph 11(b)(1):
(A) no acquisition of Company Voting Securities shall be subject
to the exception from the definition of Change in Control
contained in clause (i) of paragraph 11(b)(1)(A) if such
acquisition results from the exercise of an exercise,
conversion or exchange privilege unless the security being
so exercised, converted or exchanged was acquired directly
from the Company; and
(B) for purposes of clause (ii) of paragraph 11(b)(1)(A), if any
Person (other than the Company, an Exempt Person or any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company) shall, by reason of an acquisition of Company
Voting Securities by the Company, become the beneficial
owner of (x) 20% or more of the combined voting power of the
Outstanding Company Voting Securities and (y) combined
voting power of Outstanding Company Voting Securities in
excess of the combined voting power of the Outstanding
Company Voting Securities held by the Exempt Persons, and
such Person shall, after such acquisition of Company Voting
Securities by the Company, become the beneficial owner of
any additional Outstanding Company Voting Securities and
such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change in
Control.
(c) "Exempt Person" (and collectively, the "Exempt Persons") means:
(1) Leonard H. Lavin or Bernice E. Lavin;
(2) any descendant of Leonard H. Lavin and Bernice E. Lavin or the
spouse of any such descendant;
(3) the estate of any of the persons described in paragraph 11(c)(1)
or (2);
(4) any trust or similar arrangement for the benefit of any person
described in paragraph 11(c)(1) or (2); or
(5) the Lavin Family Foundation or any other charitable organization
established by any person described in paragraph 11(c)(1) or (2). (d)
"Incumbent Board" means those individuals who, as of October 24, 1996,
constitute the Board of Directors, provided that:
(1) any individual who becomes a director of the Company subsequent to
such date whose election, or nomination for election by the Company's
stockholders, was approved either by the vote of at least a majority
of the directors then comprising the Incumbent Board or by the vote of
at least a majority of the combined voting power of the Outstanding
Company Voting Securities held by the Exempt Persons shall be deemed
to have been a member of the Incumbent Board; and
(2) no individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board
of Directors or the Exempt Persons shall be deemed to have been a
member of the Incumbent Board.
<PAGE>
12. Amendment of Director Plan. The Board of Directors may amend or
discontinue this Director Plan at any time; provided, however, that no
such amendment or discontinuance shall (i) change or impair any option
previously granted without the consent of the optionee, (ii) increase
the maximum number of shares which may be purchased by all eligible
directors pursuant to this Director Plan, (iii) change the purchase
price, or (iv) change the option period or increase the time
limitations on the grant of options.
13. Effective Date. This Director Plan has been adopted and authorized
by the Board of Directors for submission to the stockholders of the
Company. If this Director Plan is approved by the affirmative vote of
the holders of a majority of the voting stock of the Company voting in
person or by proxy at a duly held stockholders' meeting, it shall be
deemed to have become effective on October 27, 1994, the date of
adoption by the Board of Directors. Options may be granted under this
Director Plan prior, but subject, to the approval of this Director
Plan by stockholders of the Company and, in each such case, the date
of grant shall be determined without reference to the date of approval
of this Director Plan by the stockholders of the Company.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Financial Data Schedule
Three Months Ended December 31, 1997
(in thousands)
This schedule contains summary financial information extracted from
the consolidated balance sheet as of December 31, 1996 and the
consolidated statement of earnings for the three months ended December
31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000003327
<NAME> Alberto-Culver
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1997
<PERIOD-START> Oct-1-1997
<PERIOD-END> Dec-31-1997
<EXCHANGE-RATE> 1.00
<CASH> 56,892
<SECURITIES> 6,298
<RECEIVABLES> 126,591
<ALLOWANCES> 9,485
<INVENTORY> 361,746
<CURRENT-ASSETS> 572,158
<PP&E> 365,563
<DEPRECIATION> 165,908
<TOTAL-ASSETS> 1,003,431
<CURRENT-LIABILITIES> 289,605
<BONDS> 148,580
0
0
<COMMON> 13,674
<OTHER-SE> 507,303
<TOTAL-LIABILITY-AND-EQUITY> 1,003,431
<SALES> 445,400
<TOTAL-REVENUES> 445,400
<CGS> 218,040
<TOTAL-COSTS> 218,040
<OTHER-EXPENSES> 195,978
<LOSS-PROVISION> 1,619
<INTEREST-EXPENSE> 2,844
<INCOME-PRETAX> 31,382
<INCOME-TAX> 11,690
<INCOME-CONTINUING> 19,692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,692
<EPS-PRIMARY> .35
<EPS-DILUTED> .32
</TABLE>
