FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended February 29, 1996
Commission File Number 2-85538
CCA INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 04-2795439
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
200 Murray Hill Parkway
East Rutherford, NJ 07073
(Address of principal executive offices) (Zip Code)
(201) 330-1400
Registrant's telephone number, including area code
Not applicable
Former name, former address and former fiscal year, if changed since
last report.
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
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock, $.01 Par Value - 5,952,471 shares as of February 29, 1996
Class A Common Stock, $.01 Par Value - 1,191,280 shares as of
February 29, 1996
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
February 29, 1996 and November 30, 1995 1-2
Consolidated Statements of Operations
for the three months ended February 29, 1996
and 1995 3
Consolidated Statements of Cash Flows for
the three months ended February 29, 1996
and 1995 4
Notes to Consolidated Financial Statements 5-11
Management Discussion and Analysis of
Results of Operations and Financial
Condition 12
PART II OTHER INFORMATION 13-14
SIGNATURES 15
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
<CAPTION>
February 29, November 30,
1996 1995
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 145,796 $ 312,150
Short-term investments and marketable
securities (Note 4) 2,544,168 2,539,037
Accounts receivable, net of allowances of
$988,348 and $905,953, respectively
(Note 8) 6,762,065 4,044,420
Inventories 6,003,409 6,414,097
Prepaid expenses and sundry receivables 302,558 329,935
Due from officers - Current 71,490 1,500
Prepaid income taxes 547,498 652,710
Deferred income taxes 719,871 698,415
Deferred Advertising 701,506 -
Total Current Assets 17,798,361 14,992,264
Property and Equipment, net of accumulated
depreciation and amortization 676,310 713,125
Intangible Assets, net of accumulated
amortization of $28,245 at February 29, 1996
and $25,945 at November 30, 1995 130,024 128,538
Other Assets
Marketable securities 1,298,643 1,701,138
Treasury bonds 90,576 87,300
Due from officers - Non-current 25,250 25,250
Deferred income taxes 39,444 33,807
Other 63,614 62,664
Total Other Assets 1,517,527 1,910,159
Total Assets $20,122,222 $17,744,086
</TABLE>
See Notes Consolidated to Financial Statements.
-1-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
February 29, November 30,
1996 1995
<S> <C> <C>
Current Liabilities
Notes payable - Current portion $ 688,000 $ 298,078
Accounts payable and accrued liabilities 8,181,683 6,878,425
Income taxes payable 218,526 -
Total Current Liabilities 9,088,209 7,176,503
Long-Term Debt (net of current portion) 39,067 111,067
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued and
outstanding 5,952,471 and 5,603,871
shares, respectively 59,525 56,039
Class A common stock, $.01 par; authorized
5,000,000 shares; issued and outstanding
and 1,191,280 shares, respectively 11,912 11,912
Additional paid-in capital 4,445,462 4,282,008
Retained earnings 6,469,389 6,101,229
Unrealized gains (losses) on marketable
securities 8,658 5,328
Total Shareholders' Equity 10,994,946 10,456,516
Total Liabilities and Shareholders' Equity $20,122,222 $17,744,086
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
February 29, February 28,
1996 1995
<S> <C> <C>
Sales of health and beauty products, net $10,125,118 $9,442,194
Other income 60,591 92,041
10,185,709 9,534,235
Costs and Expenses
Costs of sales 3,855,577 3,713,318
Selling, general and administrative
expenses 2,844,468 3,027,642
Advertising, cooperative and promotions 2,609,294 2,882,863
Research and development 136,286 154,944
Provision for doubtful accounts 60,768 4,509
Interest expense 13,441 17,920
9,519,834 9,801,196
Income before Income Taxes 665,875 ( 266,961)
Provision for Income Taxes 297,715 ( 84,379)
Net Income $ 368,160 ($ 182,582)
Net Income per Common Share (Note 2) $.05 ($.03)
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
February 29, February 28,
1996 1995
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss) $ 368,160 ($ 182,582)
Adjustments to reconcile net income
to net cash (used in) operating activities:
Depreciation and amortization 86,081 71,666
Amortization of bond premium 762 2,082
(Increase) in deferred income taxes ( 27,093) ( 1,363)
(Increase) decrease in accounts receivable ( 2,717,645) 1,229,039
Decrease in inventory 410,688 251,515
(Increase) in prepaid expenses ( 744,119) ( 431,428)
Increase (decrease) in accounts payable 1,299,869 ( 768,363)
(Decrease) increase in income taxes payable 323,738 ( 6,354)
Net Cash (Used in) Provided by
Operating Activities ( 999,559) 164,212
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment ( 50,752) ( 53,193)
Proceeds of monies due from officers - 7,598
(Increase) in other assets ( 950) ( 5)
Purchase of short-term investments - ( 79,768)
Proceeds from sale of investments 400,045 29,678
Net Cash Provided by (Used in)
Investing Activities 348,343 ( 95,690)
Cash Flows from Financing Activities:
Payment on debt ( 82,078) ( 72,000)
Proceeds from stock option exercises 166,940 6,250
Proceeds form short term borrowing 400,000 -
Net Cash Provided by (Used in)
Financing Activities 484,862 ( 65,750)
Net (Decrease) Increase in Cash ( 166,354) 2,772
Cash and Cash Equivalents at Beginning
of Period 312,150 100,705
Cash and Cash Equivalents at End
of Period $ 145,796 $ 103,477
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 14,246 $18,372
Income taxes - 55,181
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month period ended February 29, 1996 are not necessarily indicative of the
results that may be expected for the year ended November 30, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
November 30, 1995.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated.
Advertising and Related Costs
In accordance with APB 28 Interim Financial Reporting the Company expenses its
advertising and related costs proportionately over the interim periods based on
its total expected costs per its various advertising programs. Any necessary
accrual or deferral is accordingly reflected in the balance sheet for the
interim period. However, for annual reporting purposes, no advertising or
related costs are capitalized and all are expensed in the fiscal year in which
they are incurred.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid instruments purchased with an original maturity of less than three months
to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
Product returns are recorded in inventory when they are received at the lower
of their original cost or market, as appropriate. Obsolete inventory is
written off and its value is removed from inventory at the time its obsolescence
is determined.
<PAGE>
-5-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment and Depreciation and Amortization:
Property and equipment are stated at cost. The Company charges to expense
repairs and maintenance items, while major improvements and betterments are
capitalized. When the Company sells or otherwise disposes of property and
equipment items, the cost and related accumulated depreciation are removed
from the respective accounts and any gain or loss is included in earnings.
Depreciation and amortization are provided on the straight-line method over
the following estimated useful lives or lease terms of the assets:
Machinery and equipment 7-10 years
Furniture and fixtures 5-7 years
Tools, dies and masters 2--7 years
Transportation equipment 7 years
Leasehold improvements 7-10 years or life of lease
which ever is shorter
Intangible Assets:
Intangible assets are stated at cost. Patents and trademarks are amortized
on the straight-line method over a period of 17 years; organization expenses
are amortized on the straight-line method over five (5) years.
Tax Credits:
Tax credits, when present, are accounted for using the flow-through method as
a reduction of income taxes in the years utilized.
Earnings Per Share
Earnings per share have been computed based on the weighted average of
outstanding common shares and common stock equivalents during the periods,
based on the treasury stock method using average market price.
Fully diluted earnings per share are not presented because they result
in dilution of less than 3%.
NOTE 3: INVENTORIES
The components of inventory consist of the following:
February 29, November 30,
1996 1995
Raw materials $3,516,130 $3,875,751
Finished goods 2,487,279 2,538,346
$6,003,409 $6,414,097
<PAGE>
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CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The following items which exceeded 5% of total current liabilities are included
in accounts payable and accrued liabilities as of:
February 29, November 30,
1996 1995
a) Media advertising $2,872 $1,812
b) Coop advertising 708 519
c) Accrued returns 631 435
d) Payroll and bonuses 571 *
$4,782 $2,766
All other liabilities were for trade payables or individually did not exceed 5%
of total current liabilities.
* Under 5%.
NOTE 5: OTHER INCOME
Other income consists of the following at February 29,
1996 1995
Interest income $56,532 $69,864
Royalty income - 8,349
Dividend income 4,059 4,016
Miscellaneous - 9,812
$60,591 $92,041
NOTE 6: SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
Short-Term Investments and Marketable Securities:
Short-term investments and marketable securities consist of corporate and
government bonds and equity securities. In 1994 the Company adopted the
accounting principles promulgated by SFAS No. 115 Accounting for Certain
Investments in Debt and Equity Securities. The Company has classified its
investments as Available-for-Sale securities. Accordingly, such investments
are reported at fair market value, with the resultant unrealized gains and
losses reported as a separate component of shareholders' equity. Prior to
1994, the Company reported marketable securities at the lower of cost or
market value; unrealized losses were charged to earnings.
The market value at February 29, 1996 was $3,933,387 as compared to
$4,327,475 at November 30, 1995. The cost and market values of the investments
at February 29, 1996 were as follows:
-7-
<PAGE>
<TABLE>
SCHEDULE I
CCA INDUSTRIES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
<CAPTION>
COL. A COL. B COL. C COL.D COL.E
Amount at Which
Each Portfolio
Number of Market Of Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
CORPORATE OBLIGATIONS:
<S> <C> <C> <C> <C> <C> <C>
AT&T 6/01/98 4.750% $100,000 $ 99,006 $ 98,500 $ 98,500
Bank America 7/15/97 6.000 200,000 200,000 200,882 200,882
Bankers Trust 7/01/96 4.700 100,000 100,084 99,663 99,663
Con Edison 12/15/96 5.900 100,000 99,875 99,997 99,997
Dayton P & L 5/01/97 5.625 100,000 98,265 99,979 99,979
General Motors Acceptance
Corp. 10/01/96 8.000 200,000 200,350 202,648 202,648
</TABLE>
-8-
<PAGE>
<TABLE>
SCHEDULE I (Continued)
CCA INDUSTRIES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
<CAPTION>
COL. A COL. B COL. C COL.D COL.E
Amount at Which
Each Portfolio
Number of Market Of Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
CORPORATE OBLIGATIONS:(Continued)
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch 6/24/96 4.750% $100,000 $ 100,057 $ 99,774 $ 99,774
Merrill Lynch 6/24/96 4.750 100,000 100,057 99,774 99,774
Tennessee Valley 3/04/98 5.125 100,000 100,000 98,781 98,781
Union Electric 3/01/97 5.500 50,000 49,244 49,921 49,921
$1,146,938 $1,149,919 $ 1,149,919
</TABLE>
-9-
<PAGE>
<TABLE>
SCHEDULE I (Continued)
CCA INDUSTRIES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
<CAPTION>
COL. A COL. B COL. C COL.D COL.E
Amount at Which
Each Portfolio
Number of Market Of Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
GOVERNMENT OBLIGATIONS:
<S> <C> <C> <C> <C> <C> <C>
US Treasury Note 10/31/98 4.750% $100,000 $ 99,684 $ 98,094 $ 98,094
US Treasury Note 10/31/98 4.750 200,000 199,992 196,188 196,188
US Treasury Note 5/15/96 4.250 100,000 99,939 99,844 99,844
US Treasury Note 5/15/96 4.250 100,000 100,002 99,844 99,844
US Treasury Note 11/15/96 4.375 100,000 99,969 99,438 99,438
US Treasury Note 10/15/98 7.125 250,000 252,791 259,610 259,610
US Treasury Note 5/15/96 4.250 100,000 99,909 99,844 99,844
US Treasury Note 1/31/97 6.250 100,000 99,500 100,938 100,938
US Treasury Note 12/31/96 6.125 200,000 197,423 201,562 201,562
US Treasury Note 11/15/96 4.375 200,000 197,852 198,876 198,876
US Treasury Note 11/15/96 4.375 200,000 196,133 198,876 198,876
US Treasury Note 11/15/96 4.375 100,000 98,003 99,438 99,438
US Treasury Note 11/15/96 4.375 100,000 97,855 99,438 99,438
US Treasury Bill 7/25/96 5.330 45,000 42,552 44,113 44,113
</TABLE>
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<PAGE>
<TABLE>
SCHEDULE I (Continued)
CCA INDUSTRIES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
<CAPTION>
COL. A COL. B COL. C COL.D COL.E
Amount at Which
Each Portfolio
Number of Market Of Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
GOVERNMENT OBLIGATIONS: (Continued)
<S> <C> <C> <C> <C> <C> <C>
US Treasury Note 8/15/96 4.375% $200,000 $ 195,936 $ 199,312 $ 199,312
FHLMC 1628-N 12/25/2013 6.500 50,000 48,024 46,008 46,008
EE Bonds - 7.050 90,000 90,576 90,576 90,576
FNMA 93-6-26-B 8/25/2023 7.000 10,000 8,897 8,629 8,629
FNMA 93-224-D 11/25/2023 6.500 104,000 101,873 94,786 94,786
FNMA 92-2-N 1/28/2024 6.500 52,000 47,424 45,897 45,897
FHJMC 1702-U 3/15/2024 7.00 4,000 3,507 3,469 3,469
FNMA 11/10/98 5.050 200,000 199,950 196,688 196,688
2,577,791 2,581,468 2,581,468
EQUITY SECURITIES:
Number of
Shares
Preferred Stock:
Bank America Corp. 8,000 200,000 202,000 202,000
$3,924,729 $3,933,387 $3,933,387
</TABLE>
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<PAGE>
CCA INDUSTRIES, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ended February 29, 1996, the Company had net
sales of $10,125,118 and net income of $368,180 after a provision for income
taxes of $297,715, as compared to net sales of $9,442,194 and net (loss) of
($182,582) after provision for income taxes of ($84,379) for the three month
period ended February 28, 1995.
All of the Company's sales were primarily to mass merchandisers throughout
the United States.
The cost of sales percentage for the quarter decreased from 39% in 1995 to
38% in 1996 primarily due to the higher percentage overhead costs (factored
into the cost of goods) represented in the total cost of goods in 1995; as
well as certain product mix fluctuations. Advertising, cooperative and
promotional allowance expenditures during the quarter decreased as a percentage
of sales from 31% in 1995 to 26% in 1996 due to the increase in sales volume
and the decision of the Company to reduce the percentage of sales spent on the
media for the year. As part of the registrant's business it is necessary to
enter into co-operative advertising agreements and other promotional activities
with its accounts, especially upon the introduction of a new product.
Both co-op advertising and promotions have a material effect on the Company's
operations. If the advertising and promotions are successful, revenues will
be increased accordingly. Should the co-op and promotions not be successful,
it will have a negative impact on the Company's promotional cost per sale,
and have a negative effect on income. The Company attempts to anticipate its
advertising and promotional commitments as a percent of gross sales in order
to attempt to control its effect on its net income.
The Company was able to anticipate its sales level better in 1996 and
accordingly the percentage dropped.
Income before taxes for the quarter increased to $665,875 from ($266,961).
This was primarily a result of the higher sales and reduced advertising as
compared to the prior year. Selling, general and administrative expenses
("SG&A") decreased due to decreased personnel costs as well as other cost
retainment factors. This decrease in SG&A costs coupled with the increase
in sales resulted in the sharp decrease in the percentage of sales from 32%
in 1995 to 28% in 1996.
The Company's financial position as at February 29, 1996 consists of current
assets of $17,798,361 and current liabilities of $9,088,096. Shareholders'
Equity increased for the three month period from $10,456,516 on November 30,
1995 to $10,995,059 as of February 29, 1996 primarily due to the income of
$368,160 for the period, and the exercise of stock options of $166,940.
Although the Company's operations resulted in a use of cash of nearly
$1,000,000, the Company was easily able to cover its cash needs by selling
some of its "Available for Sale" securities and using $400,000 of its
$3,000,000 line of credit. Due to its accessibility to funds, the Company
believes that its current financial condition is sufficient to support its
proposed operations for the near future.
-12-
<PAGE>
CCA INDUSTRIES, INC.
PART II OTHER INFORMATION
All information pertaining to Part II is omitted pursuant to the
instructions pertaining to that part.
The Company did not file any reports on Form 8-K during the three
months ended February 29, 1996.
-13-
<PAGE>
PART II, ITEM 6. (Continued) EXHIBIT 11
CCA INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
Three Months Three Months
Ended Ended
February 29, February 28,
1996 1995
Item 6.
Primary:
Average shares outstanding 6,986,689 6,793,118
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 833,087 *
TOTALS 7,819,776 6,793,118
Net income $ 368,160 ($ 182,582)
Per share amount $.05 ($.03)
* Not included as their effect would be anti-dilutive.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CCA INDUSTRIES, INC.
By: David Edell, President
By: Ira W. Berman, Secretary
-15-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> FEB-29-1996
<CASH> 145,796
<SECURITIES> 3,933,387
<RECEIVABLES> 7,750,413
<ALLOWANCES> 988,348
<INVENTORY> 6,003,409
<CURRENT-ASSETS> 17,798,361
<PP&E> 1,942,854
<DEPRECIATION> 1,136,521
<TOTAL-ASSETS> 20,122,222
<CURRENT-LIABILITIES> 9,088,209
<BONDS> 0
0
0
<COMMON> 71,437
<OTHER-SE> 10,923,509
<TOTAL-LIABILITY-AND-EQUITY> 10,994,946
<SALES> 10,125,118
<TOTAL-REVENUES> 10,185,709
<CGS> 3,855,577
<TOTAL-COSTS> 9,519,834
<OTHER-EXPENSES> 5,650,816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,441
<INCOME-PRETAX> 665,875
<INCOME-TAX> 297,715
<INCOME-CONTINUING> 368,160
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368,160
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
