CCA10K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File Number
November 30, 1996 2-85538-B
CCA INDUSTRIES, INC.
(Exact Name of Registrant as specified in Charter)
DELAWARE 04-2795439
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Murray Hill Parkway, East Rutherford, New Jersey 07073
(Address of principal executive offices, including zip code)
(201) 330-1400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Class A Common Stock, par value $.01 per share
(Title of Class)
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
filed such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes X . No .
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ].
The aggregate market value of the voting stock held by non-
affiliates of the Registrant (i.e., by persons other than
officers and directors of the Registrant), at the average bid and
asked prices, at February 14, 1997, was as follows:
Class of Voting Stock Market Value
5,624,221 shares; Common Bid Asked
Stock, $.01 par value $14,412,066 $14,763,580
At February 14, 1997 there were an aggregate of
7,208,551 shares of Common Stock and Class A Common Stock of the
Registrant outstanding.
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CROSS REFERENCE SHEET
Headings in this Form
Form 10-K 10-K for Year Ended
Item No. November 30, 1996
1. Business Business
2. Properties Property
3. Legal Proceedings Legal Proceedings
4. Submission of Matters Submission of Matters to a
to a Vote of Security Vote of Security Holders
Holders
5. Market for Registrant's Market for the Company's
Common Equity and Common Stock and Related
Related Stockholder Shareholder Matters
Matters
6. Selected Financial Data Selected Financial Data
7. Management's Discussion Management's Discussion and
and Analysis of Financial Analysis of Financial
Condition and Results Condition and Results of
of Operation Operations
8. Financial Statements Financial Statements
and Supplementary Data and Supplementary Data
9. Changes In and Dis- Changes In and Dis-
agreements With agreements With
Accountants On Accounting Accountants On Accounting
and Financial Disclosure and Financial Disclosure
10. Directors and Directors and Executive
Executive Officers Officers
of the Registrant
11. Executive Compensation Executive Compensation
12. Security Ownership Security Ownership
of Certain Beneficial of Certain Beneficial
Owners and Management Owners and Management
13. Certain Relationships Certain Relationships
and Related Transactions and Related Transactions
14. Exhibits, Financial Exhibits, Financial
Statement Schedules, Statement Schedules,
and Reports on Form and Reports on Form
8-K 8-K
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TABLE OF CONTENTS
ITEM PAGE
PART I
1. Business 1
2. Property 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of 4
Security Holders
PART II
5. Market for the Company's Common Stock 5
and Related Shareholder Matters
6. Selected Financial Data 6
7. Management's Discussion and 7
Analysis of Financial Condition
and Results of Operations
8. Financial Statements and 9
Supplementary Data
9. Changes In and Disagreements 10
with Accountants On Accounting
and Financial Disclosure
PART III
10. Directors and Executive Officers 11
11. Executive Compensation 13
12. Security Ownership of Certain 19
Beneficial Owners and Management
13. Certain Relationships and Related 21
Transactions
PART IV
14. Exhibits, Financial Statement 22
Schedules, and Reports on Form 8-K
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PART I
Item 1. BUSINESS
(a) General
CCA INDUSTRIES, INC. (hereinafter, the "Company") was
incorporated in Delaware on March 25, 1983.
The Company operates in one industry segment, which may
be described generally as the health-and-beauty aids business,
selling numerous products, in several health-and-beauty
categories. Most are manufactured by contract manufacturers,
pursuant to the Company's specifications and formulations.
The Company owns (or owns license to use) registered
trademarks for all of its brand-name products. Thus, its nail
treatment products are sold under the trademarked names "Nutra
Nail" and "Nutra 60"; hair treatment products are sold under the
names "Pro Perm," "Wash 'n Curl," "Wash n Tint" and "Wash 'n
Straight"; depilatory products under the name "Hair Off"; skin
care products under the name "Sudden Change; oral hygiene
products under the mark "Plus+White" and dietary products under
the names "Eat 'n Lose," "Hungrex Plus" and "Permathene."
A substantial number of the Company's products are sold
under exclusive license agreements. (See "Business-License
Agreements") All of the licensed products and the Company's
"wholly-owned" products, are sold to major drug and food chains,
mass merchandisers, and wholesale beauty-aids distributors
throughout the United States and Canada. Foreign sales accounted
for approximately 7.5% of sales.
Including the principal members of management (see
Directors and Executive Officers), the Company, at November 30,
1996, had 127 sales, administrative, creative, accounting,
receiving, and warehouse personnel in its employ.
(b) Manufacturing and Shipping
The Company manufactures its hot-wax depilatory 'in
house.' Otherwise, the company creates formulations, chooses
colors and mixtures, and arranges with independent contractors
for the manufacture of its products pursuant to Company
specifications. Manufacturing and component-supply arrangements
are maintained with several manufacturers and suppliers. Almost
all orders and other product shipments are delivered from the
Company's own warehouse facilities, which results in more
effective inventory control, more efficient shipping procedures,
and the realization of related economies.
(c) Marketing
The Company markets its products through an in-house
sales force of employees, and independent sales representatives
throughout the United States. Major drug, food and mass-
merchandise retail chains, and leading wholesalers, are the
primary focus of the overall sales effort.
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The Company sells its products to approximately 600
accounts, most of which have numerous outlets. (The Company
estimates that at least one of its brands is sold in
approximately 40,000 stores.) During the fiscal year ended
November 30, 1996, the Company's largest customer accounted for
approximately 22% of the Company's sales revenues. (None other
accounted for as much as 10%.) The loss of this principal
customer could materially and negatively effect the Company's
earnings.
Sales of the Company's products are not seasonally
dependent. Nevertheless, certain products are sensitive to
seasonal trends. For example, sales of depilatories and diet
aids, customarily, are considerably stronger in spring and summer
months.
The Company has an in-house advertising department. The
advertising staff designs point-of-purchase displays including
'blister cards', sales brochures and packaging layouts. Actual
production of displays, brochures, layouts and the like is
accomplished through contract suppliers.
(d) License Agreements
On March 3, 1986, the Company entered into a license
agreement with Alleghany Pharmacal Corporation (the "Alleghany
Pharmacal License"). Under the terms of the Alleghany Pharmacal
License, the Company was granted, and yet retains, the exclusive
right to manufacture subject products, and to use their
trademarks: "Nutra Nail," "Nutra 60," "Pro Perm," "Hair Off,"
"Permathane", "Hungrex Plus," and "IPR 3."
The Alleghany Pharmacal License requires the Company to
pay royalties of 6% per annum on net sales of nail-enamel
products sold under the "Nutra Nail" trademark, hair-care
products ("Pro-Perm") and dietary products ("Permathane,"
"Hungrex Plus" and "IPR 3"), and a 1% royalty for nail-enamel
products sold under the name "Nutra 60," and for the mitten
product sold for use in connection with the "Hair-Off" line of
products.
The Company is required to pay not less than $360,000
per annum in order to maintain the Alleghany Pharmacal License
rights. (Royalties have always exceeded the minimum; but, if
they did not, the Company would be entitled to maintain the
license rights by electing to pay the 'difference.' At the same
time, the Company would not be required to pay any fee in excess
of actual royalties if sales did not yield 'minimum royalties'
and the Company chose in such circumstance to concede the
rights.)
The Alleghany Pharmacal License agreement provides that
if, and when, in aggregate, $9,000,000 in royalties has been paid
thereunder, the royalty-rate for those products now 'charged' at
6% will be reduced to 1%. As at November 30, 1996, the Company
had paid $5,082,202 in royalty payments.
The products subject of the Alleghany-Pharmacal License
accounted for approximately 33% of sales in the fiscal year ended
November 30, 1996.
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The Company has entered into various other license
agreements, none of which has had material impact upon the
Company's sales or financial results.
The overwhelming majority of sales revenues other than
those realized in respect of Alleghany-Pharmacal License products
are from sales of the Company's own, 'wholly owned' products
(e.g., Plus+White, Sudden Change, Wash-n-Curl and others).
(e) Advertising
The Company primarily utilizes local and national
television advertisements to promote its leading brands. On
occasion, print and radio advertisements are engaged. In
addition and more-or-less continuously, store-entered product
promotions are co-operatively undertaken with customers.
Each of the Company's brand-name products has attraction
for a particular demographic segment of the consumer market, and
advertising campaigns are directed to the respective market-
segments.
The Company's in-house staff is responsible for the
'traffic' of its advertising. Placement is accomplished directly
and through media-service companies.
(f) Trademarks
The Company owns, or owns licensed-use of numerous
trademarks for health-and-beauty aids products, which serve to
identify the products and the Company's proprietary interests,
for and in respect of domestic and international sales. The
Company considers these marks to be valuable assets, but there
can be no assurance that trademark registration results, or will
result, in 'enforceable' marketplace advantages.
(g) Competition
The market for cosmetics, health-and-beauty aids,
fragrances, and patent medicines is characterized by vigorous
competition among producers, many of which have substantially
greater financial, technological and marketing resources than the
Company. Competitors such as Revlon, L'Oreal, Colgate, Del
Laboratories, Unilever, and Procter & Gamble, have Fortune 500 or
like status, and public recognition of their products is
immediate and 'universal.' Moreover, the Company and its
products compete with a large number of manufacturers and
distributors of lesser renown that may also have greater
resources than the Company.
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(h) Government Regulation
All of the products which the Company markets is subject
to particular regulation by governmental agencies, such as the
U.S. Food and Drug Administration, the Federal Trade Commission,
and various state and/or local regulatory bodies. In some
instances assuming reasonable and sufficient market expectations,
the Company would attempt to obtain necessary approvals, but
there can be no assurance, in the absence of particular
circumstances, that any submissions will result in approvals.
Moreover, in the event such requirement circumstances should
arise in respect of a planned product, delays inherent in the
application process could have a material adverse affect upon any
plan of operations subject to the regulatory process.
Item 2. PROPERTY
The principal executive offices of the Company are
located at 200 Murray Hill Parkway, East Rutherford, New Jersey.
There, under a net lease, the Company occupies approximately
55,000 square feet of space. Approximately 40,000 square feet
in such premises is used for warehousing and 15,000 for offices.
The annual rental is $259,284, and the lease expires on March 31,
2001.
The Company leases an additional 30,000 square feet of
warehouse space in Paterson, New Jersey, on a net lease basis,
for $6,875 a month. That lease expires on September 30, 1997.
Item 3. LEGAL PROCEEDINGS
The Company is not engaged in any material litigation,
but is involved in various legal proceedings in the ordinary
course of its business activities.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 12, 1996, the Company held its annual meeting of
shareholders. At the meeting, David Edell, Ira W. Berman, Jack
Polak, and Stanley Kreitman were elected as directors by the
holders of Class A Common Stock. (No proxy was solicited
therefor, whereas Messrs. Berman, Polak and David Edell own more
than 98% of the Class A Common Stock, and they proposed
themselves and Mr. Kreitman.) As proposed by the Board, Sidney
Dworkin, Irwin Gedinsky and Dunnan Edell were elected as
directors by the holders of the Common Stock, with 5,066,273
votes 'for' the slate and 43,654 votes withheld. Also, the
Board's appointment of Sheft Kahn & Company LLP as the company's
independent certified public accountants for the 1996 fiscal year
was approved, with 4,996,912 votes for, 101,000 against and
12,015 abstentions.
The Company has not submitted any matter to a vote of
security holders since the 1996 Annual Meeting.
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PART II
Item 5. MARKET FOR THE COMPANY'S COMMON STOCK
AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock is traded on NASDAQ. The
range of high and low bids during each quarter of the 1995 and
1996 fiscal years is as follows:
Quarter Ended 1996 1995
Feb. 28 2 1/2 - 1 1/16 4 1/16 - 2 7/8
Mar. 31 3 11/16 - 2 1/4 3 3/8 - 2 1/2
Aug. 31 5 1/8 - 3 3 - 2 1/8
Nov. 30 3 1/16 - 2 2 5/8 - 1 3/8
The published market value of the Common Stock as at
February 14, 1997 was 2 5/8 high bid, and 2 9/16 low asked.
The only unregistered securities sold by the Company
during the 1996 fiscal year were the result of sales of Common
Stock effected upon exercises of Stock Options previously issued
pursuant to the Company's Stock Option Plans (see, "Executive
Compensation"), as follows:
Number Per Share
Date Purchaser of Shares Consideration
Dec. 11, 1995 David Edell 100,000 $ .50
Dec. 11, 1995 Ira W. Berman 100,000 .50
Dec. 11, 1995 Jack Polak 25,000 .50
Dec. 11, 1995 Sidney Dworkin 50,000 .50
Dec. 11, 1995 Drew Edell 50,000 .40
Dec. 11, 1995 Dunnan Edell 48,600 .40
Each of the Purchasers is a director and/or officer.
(See, "Directors And Executive Officers") The registration
exemption relied upon is that afforded by Section 4(2) of the
Securities Act of 1933.
As at February 1, 1997, there were approximately 350
holders of shares of the Company's equity stock. (There are a
substantial number of shares held of record in various street and
depository trust accounts which represent approximately 1000
additional shareholders.)
The Company has never paid any Common Stock dividend.
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<TABLE>
Item 6. SELECTED FINANCIAL DATA
<CAPTION>
Year Ended November 30,
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
Statement of Income
Sales $39,469,098 $36,849,803 $47,311,591 $43,973,633 $27,064,480
Other income 235,925 316,927 357,080 367,248 297,105
39,705,023 37,166,730 47,668,671 44,340,881 27,361,585
Costs and Expenses 37,790,397 39,397,255 42,956,794 40,020,477 25,327,550
Income (Loss) Before Provision for
Income Taxes 1,914,626 ( 2,230,524) 4,711,877 4,320,404 2,034,035
Net Income (Loss) 1,114,934 ( 1,566,568) 2,815,926 2,605,818 1,210,490
Earnings Per Share:
Net Income (Loss) $ .14 ($ .23) $ .35 $ .32 $ .15
Weighted Average Number of Shares
Outstanding 7,989,383 6,794,368 8,116,489 8,033,460 8,022,553
</TABLE>
<TABLE>
Balance Sheet Data:
<CAPTION>
As At November 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Working Capital $ 9,070,115 $ 7,815,761$ 7,600,824 $ 5,424,524 $ 5,938,322
Total Assets 16,708,079 17,744,086 20,053,893 18,218,629 12,597,015
Total Liabilities 4,983,870 7,176,503 8,293,534 9,127,235 5,850,567
Total Stockholders' Equity 11,724,209 10,456,516 11,760,359 9,091,394 6,746,448
</TABLE>
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Under the terms of the Alleghany Pharmacal License (see
"Business-License Agreements"), the royalty-rate for those
Alleghany Pharmacal License products now 'charged' at 6% will be
reduced to 1% after the sum of $9,000,000 in royalties has been
paid thereunder. (Certain products subject of the license are,
even now, 'charged' at only 1%. See "Business-License
Agreements")
As at November 30, 1996, the Company had paid or accrued
$5,082,202 in royalty payments to Alleghany.
Comparison of Results for Fiscal years 1996 and 1995
The Company's revenues for fiscal 1996 increased to
$39,705,023, from $37,166,731 in 1995. The increase was due
principally to a substantial increase in foreign sales, and a
slight increase in domestic sales.
Gross margins for the year were 62% in 1996 and 62% in
1995. Advertising, cooperative and promotional expenses were
$10,655,496, and 27% of sales, in 1996, and $13,332,216, and 36%
of sales, in 1995.
Selling, general and administrative expenses were
$11,408,154, and 29% of sales in 1996, and $11,253,543, and 31%
of sales, in 1995.
Comparison of Results for Fiscal Years 1995 and 1994
The Company's sales decreased from $47,311,591 in fiscal
1994 to $37,166,731 in fiscal 1995, primarily due to a decrease
in sales of the Company's shampoo products.
Gross margins were 62% in 1995 and 64% in 1994.
Advertising, cooperative and promotional expenses were
$13,332,216, and 36% of sales, in 1995, and $13,428,116, 28% of
sales, in 1994.
Selling, general and administrative expenses were
$11,253,543, and 31% of sales, in 1995, and $11,817,462, and 25%
of sales, in 1994.
Liquidity and Capital Resources
As at November 30, 1996, the Company had working capital
of $9,070,115 as compared to $7,815,761 at November 30, 1995.
The ratio of total current assets to current liabilities was 2.82
to 1, as compared to a ratio of 2.09 to 1 for the prior year.
Stockholders' equity increased to $11,724,209, from $10,456,516.
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The Company's cash position at year end increased to
$1,422,783 from $312,150 for the prior year. The increase came
mostly from net cash provided by operating activities of
approximately $485,000 and the net liquidation approximately of
$1,150,000 marketable securities. The Company also spent
approximately $407,000 in the acquisition of property and
equipment, and $37,000 for intangible assets.
Management adjusted its advertising budget in line with
its sales projections for fiscal 1996, reducing its advertising,
cooperative and promotional expenditures to $10,655,495 from
$13,332,216.
Sales increased $2,619,295, at a 62% gross profit
margin. The $1,620,000 net profit before taxes from the
increased sales, plus the reduction of $2,600,000 in advertising,
cooperative and promotional expenses, substantially accounts for
the turn around from a pre-tax loss of $2,230,524 in 1995, to
pre-tax profit of $1,914,626 in 1996.
The Company's selling general and administrative
expenses were substantially the same for both years. Inventories
were down $539,000, and accounts receivable were flat. Current
liabilities decreased $2,192,633. Cash at the beginning of the
year was $312,150, and increased to $1,422,783 at year end.
As of November 30, 1996, the Company had the remainder
of a term note from a banking institution in the amount of
$163,500 at prime rate, and a $3,000,000 line of credit at 1%
below prime. As at November 30, 1996, the Company was not
utilizing any of its availability under this credit line. The
Company has issued a security agreement in connection with the
bank financing.
Inventory, Seasonality, Inflation and General Economic Factors
The Company attempts to keep its inventory for every
product at levels that will enable shipment against orders within
a three week period. However, certain components must be
inventoried well in advance of actual orders because of time-to-
acquire circumstances. For the most part, purchases are based
upon projected quarterly requirements, which are projected based
upon sales indications received by the sales and marketing
departments, and general business factors. All of the Company's
contract-manufacture products and components are purchased from
non-affiliated entities. Warehousing is provided at Company
facilities, and all products are shipped from the Company's
warehouse facilities.
The Company does not believe that any of its products
are seasonal in nature other than its depilatory and diet brands,
which are more active during the Spring and Summer seasons. The
Company does not have a product that can be identified as a
"Christmas" item.
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Because its products are sold to retail stores
(throughout the United States and, in small part, abroad), sales
are particularly affected by general economic conditions.
Accordingly, any adverse change in the economic climate can have
an adverse impact on the Company's sales and financial condition.
The Company does not believe that inflation or other general
economic circumstance that would negatively affect costs can be
predicted, but if unforeseeable such circumstances should occur,
they could have material and negative impact on the Company's net
sales and revenues, unless the Company were able to pass along
related cost increases to its customers.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements are listed under Item 14 in
this Form 10-K. The following financial data is a summary of the
quarterly results of operations (unaudited) during and for the
years ended November 30, 1996 and 1995:
Three Months Ended
Fiscal 1996 Feb. 28 May 31 Aug. 31 Nov. 30
Net Sales $10,125,118 $10,498,104 $10,232,749 $8,613,127
Total Revenue 10,185,709 10,551,604 10,283,988 8,683,722
Cost of Pro- 3,855,577 4,002,443 3,872,840 3,440,195
ducts Sold
Net Income 368,160 464,585 152,116 130,073
Net Income per .05 .06 .02 .02
common share
Three Months Ended
Fiscal 1995 Feb. 28 May 31 Aug. 31 Nov. 30
Net Sales $9,442,194 $10,936,213 $9,023,458 $7,447,938
Total Revenue 9,534,235 11,005,479 9,126,706 7,500,311
Costs of Pro- 3,713,318 3,962,589 3,993,808 2,501,315
ducts Sold
Net Income (182,582) 260,579 (489,395) (1,155,170)
(loss)
Net Income
(loss) per (.03) .03 (.07) (.17)
common share
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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company did not change its accountants within the
twenty-four months prior to the date of the most recent financial
statements (nor since), and had no reported disagreement with its
accountants on any matter of accounting principles or practices.
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The Executive Officers and Directors of the Company are
as follows:
DATE OF FIRST
NAME POSITION COMPANY SERVICE
David Edell President and Chief
Executive Officer,
Director 1983
Ira W. Berman Chairman of the Board
of Directors, Secretary,
Executive Vice President 1983
Steven Manenti Sr. Executive Vice
President-Sales 1995
Dunnan Edell Executive Vice Pres.-
Sales, Director 1984
Drew Edell Vice President-
Manufacturing and
New Product Development 1983
Stanley Kreitman Director 1996
John Bingman Treasurer 1986
Jack Polak Director 1983
Sidney Dworkin Director 1985
Irwin Gedinsky Director 1991
David Edell, age 65, is President and Chief Executive
Officer. Prior to his association with the Company he was a
marketing and financial consultant; and, by 1983, he had
extensive experience in the health and beauty aids field as an
executive director and/or officer of Hazel Bishop, Lanolin Plus
and Vitamin Corporation of America.
Ira W. Berman, age 65, is the Company's Executive Vice
President and Corporate Secretary. He is also Chairman of the
Board of Directors. Mr. Berman is an attorney who has been
engaged in the practice of law since 1955. He received a
Bachelor of Arts Degree (1953) and Bachelor of Laws Degree (1955)
from Cornell University, and is a member of the American Bar
Association.
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Steven Manenti, age 62, graduated with an MBA from
Bernard Baruch College in 1956. Mr. Manenti was the President of
Faberge, Ltd. from 1984 to 1987, and of Eclipse Laboratories,
Inc. from 1987 to 1989. From 1990 to 1992 he was the Executive
Vice President of Pavion, Ltd., and from 1992 until he joined the
Company in December 1995, he was Executive Vice President and
General Manager of Mana Products, Inc.
Dunnan Edell, An Executive Vice President-Sales, the 41
year-old son of David Edell, became a director in 1994., he
joined the Company in 1984, and was appointed Divisional Vice-
President in 1986. He was employed by Alleghany Pharmacal
Corporation form 1982 to 1984, and by Hazel Bishop from 1977 to
1981.
Drew Edell, the 39 year-old son of David Edell, is a
graduate of Pratt Institute, where he received a Bachelor's
degree in Industrial Design. He has been associated with the
Company since 1983. In March 1985 he was appointed Vice
President-Product Development and Production.
John Bingman, age 45, received a Bachelor of Science
degree from Farleigh Dickenson University in 1973. He is a
certified public accountant who practiced with the New Jersey
accounting firm of Zarrow, Zarrow & Klein from 1976 to 1986.
Jack Polak, age 84, has been a private investment
consultant since April 1982, and holds a tax consultant
certification in The Netherlands. Mr. Polak is a director and
Vice President of New York Offices, Inc., Chicago Offices, Inc.
and Atlanta Offices, Inc. (each a private company engaged in
subleasing and providing office services). From 1977 until 1995,
he was a director of Petrominerals Corporation, a public company
engaged in oil and gas production, located in Tustin, California.
from August 1993 until February 1995, he was a director of
Convergent Solutions, Inc. Since February 1995 (upon a merger
involving Convergent Solutions), he has been a director of K.T.I.
Industries, Inc. of Guttenberg, NJ, and a member of its Board's
Audit and Compensation Committee. Convergent Solutions was, and
K.T.I. is, a public company engaged in the waste - to - energy
business.
Stanley Kreitman, age 65, has been Vice Chairman of the
Board of Manhattan Associates, an equity - investment firm, since
1994. He is also a director of Medallion Financial Corp., an
SBIC. Mr. Kreitman has been Chairman of the Board of Trustees of
the New York Institute of Technology since 1989, and of Crime-
Stoppers Nassau County (NY), since 1994. He is also a director
and/or executive committee member of the following organizations:
The New York City Board of Corrections, The New York City Police
Foundation, St. Barnabas Hospital, The New York College of
Osteopathic Medicine, and the Police Athletic League. From 1975
until 1993, he was President of United States Banknote
Corporation, a security printer.
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Irwin M. Gedinsky, age 61, is a certified public
accountant who has been affiliated with the New York City public
accounting firm of Richard A. Eisner & Company since July 1992.
From 1989 until 1992, he was a partner with J.H. Cohn, a public
accounting firm in Roseland, New Jersey. From 1956 to 1989, he
was an employee and then a partner in the public accounting firm
of Granet & Granet. Mr. Gedinsky is a member of numerous
accounting societies, a lecturer on taxation and a member of the
Board of Directors of Ronson Corp.
Sidney Dworkin, age 76, has been a director since 1985.
He was one of the founders, and from 1966 until 1987, was the
President and Chairman of the Board of Revco D.S., Inc., one of
the largest drug store chains in the United States. (He
terminated his association with Revco in September 1987.) Mr.
Dworkin is a certified public accountant and a graduate of Wayne
State University. He is also a director of Northern
Technologies, Inc., Crager Industries, Inc. and Viragen Inc., and
is Chairman of the boards of Comtrex Systems, Inc. General
Computer Corp., MarbleEdge Group, Inc., and Interactive
Technologies, Inc. He was a director of Neutrogena Corp. until
its acquisition by Johnson & Johnson, and is a former Chairman of
the National Association of Chain Drug Stores.
Item 11. EXECUTIVE COMPENSATION
i. Summary Compensation Table
The following table summarizes compensation earned in
1996, 1995 and 1994 by the Chief Executive Officer and all other
executive officers (the "named officers") who were paid as much
as $100,000 in 1996.
Annual Compensation Long-Term Compensation
Number
of Other
Shares Long-
All Covered Term
Other by com-
Name and Annual Stock pen-
Principal Compen- Options sa-
Position Year Salary Bonus sation(1) Granted(2) tion
David Edell, 1996 $337,080 $131,896 $21,560 - 0
President 1995 318,000 63,600 18,456 - 0
and Chief 1994 300,000 185,990 13,571 - 0
Executive
Officer
Ira W. Berman 1996 337,080(3) 131,896 22,876 - 0
Secretary 1995 318,000(4) 63,600 17,096 - 0
and Executive 1994 300,000(4) 185,990 11,609 - 0
vice President
-13-
<PAGE>
Annual Compensation Long-Term Compensation
Number
of
Shares
All Covered
Other by
Other
Name and Annual Stock -Long-
Term
Principal Compen- Options -
compen-
Position Year Salary Bonus sation(1) Granted(2)
sation
Dunnan Edell, 1996 185,096 25,000 15,659 - 0
Executive 1995 175,000 3,365 13,440 - 0
Vice President 1994 175,000 50,000 9,498 25,000 0
- - Sales
Drew Edell 1996 112,100 15,000 12,063 - 0
Vice Presi- 1995 98,000 1,885 2,925 - 0
dent-Manufact- 1994 98,000 30,000 1,973 25,000 0
uring
Steven Manenti 1996 300,000 - 24,485 100,000 0
Sr. Vice 1995 - - - - -
President- 1994 - - - - -
Sales
- -------------------------
(1) Includes the personal-use value of Company-leased
automobiles, the value of Company-provided life insurance, and
health insurance that is made available to all employees, plus
directors fees.
(2) Information in respect of stock option plans, appears below
in the sub-topic, Employment Contracts/Executive Compensation
Program.
(3) Includes $110,046 paid to the law firm of Ira W. Berman &
Associates, P.C.
(4) Includes $99,396 paid to the New York City law firm of Berman
& Murray, where Mr. Berman was the Senior Partner through 1995.
-14-
<PAGE>
ii. 1996 Option Grants, Fiscal Year Option Exercises,
Year-End Option Valuation, Option Repricing
Fiscal 1996 Option Grants
Potential
% of Realizable
Total Value At
Options Assumed
Granted Annual
Number of To Expir- Rates
Underlying All ation of Appre-
Shares Employees Date ciation(1)
5% 10%
Mr. Manenti 100,000 100 Dec. , 2000 $94,334 $239,062
- -----------------------
(1) Net gains from potential exercises are estimated based on the
SEC-provided assumed rates, and are not intended to forecast
possible future appreciation. Actual net gains, if any, are
dependent upon the actual future performance of the Common Stock,
and overall economic conditions.
Other than those to Mr. Manenti, no options were granted
or issued to named officers in the fiscal year ended November 30,
1996. The next table identifies 1996 fiscal-year option
exercises by named officers, and reports a valuation of their
options.
Fiscal 1996 Aggregated Option Exercises
and November 30, 1996 Option Values
Number of Value of
Shares Unexer-
Number of Covered by cised
Shares Unexercised In-the-Money
Acquired Value Options at Options at
On Exercise Realized November November
30, 1996 30, 1996(1)
David Edell 100,000 $116,600 497,500 $854,969
Ira W. Berman 100,000 $116,600 492,000 845,000
Dunnan Edell 48,600 61,520 25,000 -
Drew Edell 50,000 107,350 25,000 -
Jack Polak 25,000 29,150 - -
Sidney Dworkin 50,000 58,200 50,000 90,625
Steven Manenti - - 100,000 81,250
-15-
<PAGE>
(1) Represents the difference between market price and the
respective exercise prices of options at November 30, 1996.
Repriced Options
The following table identifies the stock options held by
the named officers and all other officers and directors, the
exercise prices of which have been reduced during the past 10
years.
Original
Number Grant Original Date New
of Shares Date Price Repriced Price
David Edell 100,000 1/90 $1.50 3/91 .625
Ira W. Berman 100,000 1/90 1.50 3/91 .625
David Edell 100,000 3/90 .75 3/91 .625
Ira W. Berman 100,000 3/90 .75 3/91 .625
Sidney Dworkin 100,000 12/85 1.87 1/88(1) .50
David Edell 200,000(2)(3) 2/86 1.50(2)(3) 12/87(1) .55
Ira W. Berman 200,000(2)(3) 2/86 1.50(2)(3) 12/87(1) .55
David Edell 197,500(3) 2/87 2.50(3) 12/87(1) .50
Ira W. Berman 192,000(3) 2/87 2.50(3) 12/87(1) .50
- ---------------------
(1) In fact, these are options that were canceled and replaced.
In respect thereof, the original price and new price columns
represent the canceled option price and the 'replacement' option
price.
(2) Represents 101,235 "Non-Qualified Options" at $1.38 per
share, and 98,765 "Employee Incentive Stock Options" at $1.80 per
share.
(3) These options were canceled and 185,000 "Employee Incentive
Stock Options" at $.55 and 15,000 such options at $.50 were
issued to Mr. David Edell and to Mr. Berman.
iii. Executive Compensation Principles;
Audit and Compensation Committee
The Company's Executive Compensation Program is based on
guiding principles designed to align executive compensation with
Company values and objectives, business strategy, management
initiatives, and financial performance. In applying these
principles the Audit and Compensation Committee of the Board of
Directors, comprised of David Edell, Ira W. Berman, Irwin
Gedinsky and Jack Polak, has established a program to:
-16-
<PAGE>
* Reward executives for long-term strategic management and
the enhancement of shareholder value.
* Integrate compensation programs with both the Company's
annual and long-term strategic planning.
* Support a performance-oriented environment that rewards
performance not only with respect to Company goals but
also Company performance as compared to industry
performance levels.
iv. Employment Contracts/Compensation Program
The total compensation program consists of both cash and
equity based compensation. The Audit and Compensation Committee
(the "Committee") determines the level of salary and bonuses, if
any, for key executive officers other than Messrs. David Edell
and Ira Berman. The Committee determines the salary or salary
range based upon competitive norms. Actual salary changes are
based upon performance.
Bonuses (see the Summary Compensation Tables), other
than Mr. David Edell's and Mr. Berman's, were awarded in
consideration of the Company's performance during 1996.
On March 17, 1994, the Board of Directors approved 10-
year employment contracts for David Edell and Ira Berman (with
Mr. Edell and Mr. Berman abstaining). Pursuant thereto, each was
provided a base salary of $300,000 in fiscal 1994, with a year-
to-year CPI or 6% increment, and each is paid 2-1/2% of the
Company's pre-tax income, less depreciation and amortization,
plus 20% of the base salary, as bonus.
Long-term incentives are provided through the issuance
of stock options.
v. Stock Option Plans
The Company's 1984 Stock Option Plan covered 1,500,000
shares of its Common Stock.
The Company's 1986 Stock Option Plan covered 1,500,000
shares of its Common Stock.
The Company's 1994 Stock Option Plan covers 1,000,000
shares of its Common Stock.
The 1994 Option Plan provides (as had the 1984 and 1986
plans) for the granting of two (2) types of options: "Incentive
Stock Options" and "Nonqualified Stock Options". The Incentive
Stock Options (but not the Nonqualified Stock Options) are
intended to qualify as "Incentive Stock Options" as defined in
Section 422(a) of The Internal Revenue Code. The Plans are not
qualified under Section 401(a) of the Code, nor subject to the
provisions of the Employee Retirement Income Security Act of
1974.
-17-
<PAGE>
Options may be granted under the Options Plans to
employees (including officers and directors who are also
employees) and consultants of the Company, provided, however,
that Incentive Stock Options may not be granted to any non-
employee director or consultant.
Option plans are administered and interpreted by the
Board of Directors. (Where issuance to a Board member is under
consideration, that member must abstain.) The Board has the
power, subject to plan provisions, to determine the persons to
whom and the dates on which options will be granted, the number
of shares subject to each option, the time or times during the
term of each when options may be exercised, and other terms. The
Board has the power to delegate administration to a Committee of
not less than two (2) Board members, each of whom must be
disinterested within the meaning of Rule 16b-3 under the
Securities Exchange Act, and ineligible to participate in the
option plan or in any other stock purchase, option or
appreciation right under plan of the Company or any affiliate.
Members of the Board receive no compensation for their services
in connection with the administration of option plans.
Option Plans permit the exercise of options for cash,
other property acceptable to the Board or pursuant to a deferred
payment arrangement. The 1994 Plan specifically authorizes that
payment may be made for stock issuable upon exercise by tender of
Common Stock of the Company; and the Executive Committee is
authorized to make loans to option exercisers to finance optionee
tax-consequences in respect of option exercise, but such loans
must be personally guaranteed and secured by the issued stock.
The maximum term of each option is ten (10) years. No
option granted is transferable by the optionee other than upon
death.
Under the plans, options will terminate there (3) months
after the optionee ceases to be employed by the Company or a
parent or subsidiary of the Company unless (i) the termination of
employment is due to such person's permanent and total
disability, in which case the option may, but need not, provide
that it may be exercised at any time within one (1) year of such
termination (to the extent the option was vested at the time of
such termination); or (ii) the optionee dies while employed by
the Company or a parent or subsidiary of the Company or within
three (3) months after termination of such employment, in which
case the option may, but need not provide that it may be
exercised (to the extent the option was vested at the time of the
optionee's death) within eighteen (18) months of the optionee's
death by the person or persons to whom the rights under such
option pass by will or by the laws of descent or distribution; or
(iii) the option by its terms specifically provides otherwise.
-18-
<PAGE>
The exercise price of all nonqualified stock options
must be at least equal to 85% of the fair market value of the
underlying stock on the date of grant. The exercise price of all
Incentive Stock Options must be at least equal to the fair market
value of the underlying stock on the date of grant. The
aggregate fair market value of stock of the Company (determined
at the date of the option grant) for which any employee may be
granted Incentive Stock Options in any calendar year may not
exceed $100,000, plus certain carryover allowances. The exercise
price of an Incentive Stock Option granted to any participant who
owns stock possessing more than ten (10%) of the voting rights of
the Company's outstanding capital stock must be at least 110% of
the fair market value on the date of grant and the maximum term
may not exceed five (5) years.
Consequences to the Company: There are no Federal income
tax consequences to the Company by reason of the grant or
exercise of an Incentive Stock Option.
As at November 30, 1996, 1,242,000 stock options, yet
exercisable, to purchase 1,242,000 shares of the Company's Common
Stock, were outstanding.
vi. Performance Graph
Set forth below is a line graph comparing cumulative
total shareholder return on the Company's Common Stock, with the
cumulative total return of companies in the NASDAQ Stock Market
(U.S.) and the cumulative total return of Dow Jones's
Cosmetics/Personal Care Index.
[Chart Appears On Last Page of 10K]
Cumulative Total Return
11/91 11/92 11/93 11/94 11/95 11/96
CCA Industries, Inc. 100 255 964 545 209 336
DJ Equity Market 100 119 131 132 182 233
DJ Cosmetics/personal 100 136 134 162 219 294
Care
Item 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information
regarding the ownership of the Company's Common Stock and/or
Class A Common Stock as of February 11, 1997 by (i) all those
known by the Company to be owners of more than five percent of
the outstanding shares of Common Stock or Class A Common Stock,
(ii) the Chief Executive Officer and "named officers" (see
Executive Compensation-Summary Compensation Table); (iii) each
officer and director; and (iv) all officers and directors as a
group. Unless otherwise indicated, each of the shareholders has
sole voting and investment power with respect to the shares owned
(subject to community property laws, where applicable), and is
beneficial owner of them.
-19-
<PAGE>
Ownership, As A
Percentage of
Number of All Shares
Name and Address Shares Owned: Outstanding
Common
Stock Class A
David Edell
c/o CCA Industries, Inc. 123,300 557,615 9.45
200 Murray Hill Parkway
East Rutherford, NJ 07073
Ira W. Berman 128,300 534,615 9.20
c/o CCA Industries, Inc.
Norman Pessin 292,500 (2) - 4.06
c/o Neuberger & Berman
605 Third Avenue
New York, NY 10158
Jack Polak 25,000 47,700 1.01
98 Park Avenue
New York, NY 10016
Steven Manenti - - -
c/o CCA Industries, Inc.
Stanley Kreitman - - -
c/o CCA Industries, Inc.
Dunnan Edell 51,250 - 0.71
c/o CCA Industries, Inc.
Drew Edell 51,250 - 0.71
c/o CCA Industries, Inc.
Irwin Gedinsky - - -
c/o Richard A. Eisner & Co.
574 Madison Avenue
New York, NY 10022
Sidney Dworkin 50,000 - 0.70
1550 No. Powerline Road
Pompano, FL 33069
John Bingman - - -
c/o CCA Industries, Inc.
Officers and Directors 429,100 1,139,930 21.77
as a group (10 persons)
-20-
<PAGE>
(1) David Edell, Ira Berman and Jack Polak own over 98% of the
outstanding shares of Class A Common Stock. Messrs. David Edell,
Dunnan Edell and Ira Berman are officers and directors. Messrs.
Manenti, Bingman and Drew Edell are officers. Messrs. Kreitman,
Polak, Gedinsky and Dworkin are directors.
(2) Mr. Pessin's 292,500 shares is 4.83% of the Common Stock
shares (i.e., not including Class A Common Stock).
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As at November 30, 1996 Dunnan Edell, Vice President of
Sales, was indebted to the Company in the amount of $25,250. The
Company charges him interest at the prime rate plus 1% per annum.
-21-
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS,
SCHEDULES AND REPORTS ON FORM 8-K
Financial Statements:
Table of Contents, Independent Auditors' Report,
Consolidated Balance Sheets as of November 30, 1996 and 1995,
Consolidated Statements of Income for the years ended November
30, 1996, 1995 and 1994, Consolidated Statements of Shareholders'
Equity for the periods December 1, 1993 through November 30,
1996, Consolidated Statements of Cash Flows for the years ended
November 30, 1996, 1995 and 1994, Notes to Consolidated Financial
Statements.
Financial Statement Schedules:
Schedule II Valuation Accounts; Years Ended Nov. 30, 1996,
1995 and 1994
Exhibits:
(a) The Company's Articles of Incorporation and
Amendments thereof, and its By-Laws, are
incorporated by reference to their filing with
the Form 10-K A filed April 5, 1995. (Exhibit
pages 000001-23).
(b) The Following Material Contracts and Amendments
are incorporated by reference to their filing
with the Form 10-KA filed April 5, 1995:
Amended and Restated Employment Agreements,
with David Edell and Ira Berman; License
Agreement made February 12, 1986 with Alleghany
Pharmacal Corporation (Exhibit pages 000056-
90).
(c) The Company's 1994 Stock Option Plan is
incorporated by reference to its filing as an
exhibit printed in the 1994 Proxy Statement,
filed on or about May 15, 1994.
(d) Exhibit 11: Statement re Per Share Earnings
-22-
<PAGE>
<TABLE>
PART IV, ITEM 14. (d) (Continued) EXHIBIT 11
CCA INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Year Ended November 30,
1996 1995 1994
Item 14.A(3)c.
<S> <C> <C> <C>
Primary:
Average shares outstanding 7,120,099 6,794,368 6,777,241
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 869,284 * 1,339,248
TOTALS 7,989,383 6,794,368 8,116,489
Net income (Loss) $1,114,934 ($1,566,568) $2,815,926
Per share amount $.14 ($.23) $.35
Fully Diluted:
Average shares outstanding 7,120,099 6,794,368 6,777,241
Net effect of dilutive stock
options--based on the
treasury stock method
using higher of ending or
average market price 869,284 * 1,339,248
TOTALS 7,989,383 6,794,368 8,116,489
Net income (Loss) $1,114,934 ($1,566,568) $2,815,926
Per share amount $.14 $ .23 $ .35
* Anti-dilutive
</TABLE>
-23-
<PAGE>
No Form 8-K was filed during the last quarter of 1995.
Shareholders may obtain a copy of any exhibit not filed
herewith by writing to CCA Industries, Inc., 200 Murray Hill
Parkway, East Rutherford, New Jersey 07073.
-24-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(A) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this Annual Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CCA INDUSTRIES, INC.
By: s/ David Edell
DAVID EDELL, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Annual Report has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
s/ David Edell President, Director,
DAVID EDELL Chief Executive Officer,
and Chief Financial
Officer February 25,1997
s/ Ira W. Berman Chairman of the Board
IRA W. BERMAN of Directors, Executive
Vice President,
Secretary February 25,1997
s/ Dunnan Edell Vice President, February 25,1997
DUNNAN EDELL Director
s/ Stanley Kreitman Director February 25,1997
STANLEY KREITMAN
s/ Irwin Gedinsky Director February 25,1997
IRWIN GEDINSKY
s/ Jack Polak Director February 25,1997
JACK POLAK
s/ Sidney Dworkin Director February 25,1997
SIDNEY DWORKIN
-25-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND 1995
<PAGE>
C O N T E N T S
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS . . . . . . . . . .1
FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . .2-3
CONSOLIDATED STATEMENTS OF INCOME (LOSS). . . . . . . . . . . . . . . .4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY . . . . . . . . . . . .5
CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . .6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . 7-22
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
CCA Industries, Inc.
East Rutherford, New Jersey
We have audited the consolidated financial statements and related schedules
of CCA Industries, Inc. and Subsidiaries listed in Item 14(a)(1) and (2) of the
annual report on Form 10-K of CCA Industries, Inc. and Subsidiaries for the
years ended November 30, 1996, 1995 and 1994. These financial statements are
the responsibility of management. Our responsibility is to express an opinion
on these financial statements and related schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain a reasonable assurance about whether the financial statements and
related schedules are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and related schedules. 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 audits provide 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 CCA
Industries, Inc. and Subsidiaries as of November 30, 1996 and 1995, and the
consolidated results of their operations and cash flows for the years ended
November 30, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.
In our opinion, the schedules referred to above present fairly, in all
material respects, in relation to the basic consolidated financial statements,
the information set forth therein in compliance with the applicable accounting
regulation of the Securities and Exchange Commission.
SHEFT KAHN & COMPANY LLP
CERTIFIED PUBLIC ACCOUNTANTS
February 17, 1997
Jericho, New York
-1-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
<CAPTION>
November 30,
1996 1995
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 1,422,783 $ 312,150
Short-term investments and marketable
securities (Note 6) 1,546,289 2,539,037
Accounts receivable, net of allowances of
$1,066,549 and $904,953, respectively
(Note 8) 4,017,500 4,044,420
Inventories (Notes 2, 3 and 8) 5,875,742 6,414,097
Prepaid expenses and sundry receivables 603,952 329,935
Due from officers - Current 3,900 1,500
Prepaid income taxes and refunds due 87,552 652,710
Deferred income taxes (Note 9) 496,267 698,415
Total Current Assets 14,053,985 14,992,264
Property and Equipment, net of accumulated
depreciation and amortization
(Notes 2 and 4) 729,706 713,125
Intangible Assets, net of accumulated
amortization (Note 5) 155,037 128,538
Other Assets
Marketable securities (Note 6) 1,540,596 1,701,138
Treasury bonds 93,996 87,300
Due from officers - Non-current 25,250 25,250
Deferred income taxes (Note 9) 55,292 33,807
Other 54,217 62,664
Total Other Assets 1,769,351 1,910,159
Total Assets $16,708,079 $17,744,086
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
November 30,
1996 1995
<S> <C> <C>
Current Liabilities
Notes payable - Current portion (Note 8)$ 163,500 $ 298,078
Accounts payable and accrued
liabilities (Note 11) 4,794,865 6,878,425
Income taxes payable (Note 9) 25,505 -
Total Current Liabilities 4,983,870 7,176,503
Long-Term Debt (net of current portion)
(Note 8) - 111,067
Commitments and Contingencies
(Note 13)
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued and
outstanding 6,012,621 and 5,603,871
shares, respectively 60,126 56,039
Class A common stock, $.01 par; authorized
5,000,000 shares; issued and outstanding
1,154,930 and 1,191,230 shares,
respectively 11,549 11,912
Additional paid-in capital 4,455,224 4,282,008
Retained earnings 7,216,163 6,101,229
Unrealized gains (losses) on marketable
securities (Note 6) ( 6,353) 5,328
11,736,709 10,456,516
Less: Treasury Stock (5,000 shares at
November 30, 1996) 12,500 -
Total Shareholders' Equity 11,724,209 10,456,516
Total Liabilities and Shareholders' Equity $16,708,079 $17,744,086
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
<CAPTION>
Year Ended November 30,
1996 1995 1994
<S> <C> <C> <C>
Revenues
Sales of health and beauty
aid products, net $39,469,098 $36,849,803 $47,311,591
Other income 235,925 316,928 357,080
39,705,023 37,166,731 47,668,671
Costs and Expenses
Cost of sales 15,171,055 14,171,030 16,884,542
Selling, general and
administrative expenses 11,408,154 11,253,593 11,817,462
Advertising, cooperative and
promotions 10,655,495 13,332,216 13,428,116
Research and development 459,082 496,716 593,556
Provision for doubtful accounts 45,855 87,697 156,649
Interest expense 50,756 56,003 76,469
37,790,397 39,397,255 42,956,794
Income (Loss) before Provision
for Income Taxes 1,914,626 ( 2,230,524) 4,711,877
Provision for Income Tax
(Benefit) 799,692 ( 663,956) 1,895,951
Net Income (Loss) $ 1,114,934 ($ 1,566,568) $ 2,815,926
Weighted Average Shares
Outstanding 7,989,383 6,794,368 8,116,489
Income Per Common Share
(Note 2):
Net Income (Loss) $.14 ($ .23) $.35
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIODS DECEMBER 1, 1993 THROUGH NOVEMBER 30, 1996
<S> <C> <C> <C> <C> <C>
Unrealized
Additional Gain (Loss) on
Common Stock Paid-In Retained Marketable
Shares Amount Capital Earnings Securities
Balance - December 1, 1993 6,740,251 $67,402 $ 4,172,121 $4,851,871 $ -
Issuance of common stock 49,200 492 103,414 - -
Net income for the year - - - 2,815,926 -
Unrealized loss on marketable
securities - - - - ( 250,867)
Balance - December 1, 1994 6,789,451 67,894 4,275,535 7,667,797 ( 250,867)
Issuance of common stock 5,700 57 6,473 - -
Net loss for the year - - - ( 1,566,568) -
Unrealized gain on marketable
securities - - - - 256,195
Balance - December 1, 1995 6,795,151 67,951 4,282,008 6,101,229 5,328
Issuance of common stock 372,400 3,724 173,216 - -
Net Income for the year - - - 1,114,934 -
Unrealized (loss) on marketable
securities - - - - ( 11,681)
Purchase of Treasury Stock ( 5,000) ( 50) ( 12,450) - -
Balance - November 30, 1996 7,162,551 $71,625 $4,442,774 $7,216,163 ($ 6,353)
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30,
1996 1995 1994
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $1,114,934 ($1,566,568) $2,815,926
Adjustments to reconcile net
income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 400,790 332,802 251,245
Amortization of bond discount 2,041 6,576 -
Decrease in advanced royalties - - 81,667
(Gain) loss on disposal of assets( 18,237) 5 ( 26,033)
Decrease (increase) in accounts
receivable 26,920 1,294,608 ( 2,618,736)
Decrease (increase) in inventory 538,355 1,104,429 ( 570,003)
Decrease (increase) in prepaid
expenses and sundry receivables 288,741 ( 608,999) 38,959
Decrease (increase) in deferred
income taxes 180,663 ( 185,355) ( 92,464)
(Decrease) increase in accounts
payable and accrued liabilities ( 2,083,560)( 721,688) ( 323,474)
Increase (decrease) in income
taxes payable 25,505 ( 6,354) ( 295,601)
Decrease (increase) in security
deposits 8,447 ( 12,094) 6,211
Net Cash Provided by (Used in)
Operating Activities 484,599 ( 362,638) ( 732,303)
Cash Flows from Investing Activities:
Acquisition of property and
equipment ( 407,206)( 355,719) ( 440,962)
Proceeds from sale of property - - 42,150
Payment for intangible assets ( 36,664) ( 49,764) ( 51,045)
Purchase of marketable securities ( 1,102,669)( 116,475) ( 1,929,337)
Proceeds from sale of marketable
securities 2,253,778 1,353,894 1,604,196
Purchase of treasury stock ( 12,500) - -
Proceeds of money due from
officers - 19,731 -
Increase in other assets - ( 6,192) -
Net Cash Provided (Used In)
Investing Activities 694,739 845,475 ( 774,998)
Cash Flows from Financing Activities:
Proceeds from borrowings 1,769,152 688,320 700,000
Payment on debt ( 2,014,797) ( 966,242) ( 994,715)
Proceeds from exercise of
stock options 176,940 6,530 103,906
Net Cash (Used In)
Financing Activities ( 68,705)( 271,392) ( 190,809)
Net Increase (Decrease) In Cash 1,110,633 211,445 ( 1,698,110)
Cash at Beginning of Year 312,150 100,705 1,798,815
Cash at End of Year $1,422,783 $ 312,150 $ 100,705
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 54,487 $ 72,021 $ 76,912
Income taxes 26,245 102,625 2,219,481
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated in Delaware on March 25, 1983.
The Company manufactures and distributes health and beauty aid
products.
The Company has several subsidiaries (CCA Cosmetics, Inc., CCA Labs,
Inc., CCA Industries (UK) Limited and Berdell, Inc.), all of which are
currently inactive.
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. The consolidated
financial statements include the use of estimates, which management
believes are reasonable.
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.
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.
-7-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, whichever 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.
Financial Instruments:
The carrying value of assets and liabilities considered financial
instruments under SFAS Note #107 approximate their respective fair value.
Tax Credits:
Tax credits, when present, are accounted for using the flow-through
method as a reduction of income taxes in the years utilized.
Income Per Common Share:
Income per common share has been computed using the weighted average
number of shares of common stock outstanding during the periods based
on the treasury stock method using average market price.
Fully diluted earnings per share are not presented because they are either
anti-dilutive or result in dilution of less than 3%.
-8-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
NOTE 3 - INVENTORIES
At November 30, 1996 and 1995, inventories consist of the following:
1996 1995
Raw materials $4,065,961 $3,875,751
Finished goods 1,809,781 2,538,346
$5,875,742 $6,414,097
NOTE 4 - PROPERTY AND EQUIPMENT
At November 30, 1996 and 1995, property and equipment consisted of
the following:
1996 1995
Machinery and equipment $ 288,067 $ 225,312
Furniture and equipment 280,942 264,589
Transportation equipment 1,917 1,917
Tools, dies, and masters 1,465,425 1,137,327
Leasehold improvements 108,474 108,474
2,144,825 1,737,619
Less: Accumulated depreciation
and amortization 1,415,119 1,024,494
Property and Equipment - Net $ 729,706 $ 713,125
Depreciation and amortization expense for the years ended November 30,
1996, 1995 and 1994 amounted to $390,625, $325,609 and $247,018,
respectively.
-9-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consist of the following at November 30, 1996 and
1995:
1996 1995
Patents and trademarks $191,148 $154,484
Less: Accumulated amortization 36,111 25,946
Intangible Assets - Net $155,037 $128,538
Amortization expense for the years ended November 30, 1996, 1995 and
1994 amounted to $10,165, $7,193 and $4,227, respectively.
NOTE 6 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
Short-term investments and marketable securities, which consist of stock
and various corporate and government obligations, are stated at market
value. In accordance with SFAS No. 115, the Company has classified its
investments as Available-for-Sale securities and considers as current
assets those investments which will mature or are likely to be sold in the
next fiscal year. The remaining investments are considered non-current
assets. The cost and market values of the investments at November 30,
1996 and 1995 were as follows:
1996 1995
Current: COST MARKET COST MARKET
Corporate obligations $ 447,384 $ 450,319 $ 701,026 $ 704,373
Government obligations
(including mortgage
backed securities) 886,711 891,346 1,633,616 1,631,664
Preferred stock 200,000 204,624 200,000 203,000
Total 1,534,095 1,546,289 2,534,642 2,539,037
Non-Current:
Corporate obligations 199,006 198,282 846,340 843,026
Government obligations 1,454,133 1,436,310 941,165 945,412
Total 1,653,139 1,634,592 1,787,505 1,788,438
Total $3,187,234 $3,180,881 $4,322,147 $4,327,475
-10-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
A detail list of the securities held follows:
<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 $ 98,938 $ 98,938
Bank America 7/15/97 6.000 200,000 200,000 200,334 200,334
Con Edison 12/15/96 5.900 100,000 99,875 100,004 100,004
Dayton P & L 5/01/97 5.625 100,000 98,265 100,005 100,005
Tennessee Valley 3/04/98 5.125 100,000 100,000 99,344 99,344
Union Electric 3/01/97 5.500 50,000 49,244 49,976 49,976
$646,390 $648,601 $648,601
</TABLE>
-11-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 6 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
<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 $ 98,469 $ 98,469
US Treasury Note 10/31/98 4.750 200,000 199,992 196,938 196,938
US Treasury Note 10/15/98 7.125 250,000 251,994 256,798 256,798
US Treasury Note 1/31/97 6.250 100,000 99,500 100,156 100,156
US Treasury Note 12/31/96 6.125 200,000 197,423 200,126 200,126
US Treasury Note 5/2/97 5.275 200,000 194,874 195,108 195,108
US Treasury Note 1/31/98 5.125 200,000 199,695 198,876 198,876
US Treasury Note 4/30/98 5.125 190,000 189,883 188,991 188,991
US Treasury Note 4/30/98 5.125 10,000 9,992 9,947 9,947
</TABLE>
-12-
<PAGE>
<TABLE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
NOTE 6 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
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 2/6/97 5.176% $200,000 $ 197,452 $ 197,884 $ 197,884
US Treasury Note 2/13/97 5.155 200,000 197,462 198,072 198,072
FHLMC 1628-N 12/25/2013 6.500 50,000 48,024 45,503 45,503
EE Bonds - 7.050 90,000 93,996 93,996 93,996
FNMA 93-6-26-B 8/25/2023 7.000 10,000 8,688 8,588 8,588
FNMA 93-224-D 11/25/2023 6.500 104,000 101,873 93,017 93,017
FNMA 92-2-N 1/28/2024 6.500 52,000 47,424 44,738 44,738
FHJMC 1702-U 3/15/2024 7.00 4,000 2,938 2,887 2,887
FNMA 11/10/98 5.050 200,000 199,950 197,562 197,562
2,340,844 2,327,656 2,327,656
EQUITY SECURITIES:
Number of
Shares
Preferred Stock:
Bank America Corp. 8,000 200,000 204,624 204,624
$3,187,234 $3,180,881 $3,180,881
</TABLE>
-13-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
(Continued)
During the year ended November 30, 1996 available-for-sale securities
were liquidated and proceeds amounting to $2,253,778 were received,
with resultant realized gains totaling $18,237. Cost of available-for-sale
securities includes unamortized premium or discount.
NOTE 7 - PREPAID ROYALTY EXPENSE (DEFERRED)
On March 3, 1986, the Company entered into a License Agreement (the
"Agreement") with Alleghany Pharmacal Corporation ("Alleghany") under
the terms of which the Company was granted the exclusive right to use
the licensed products and trademarks for the manufacture and distribution
of the products subject to the license. Under the terms of the Agreement,
on July 5, 1986, the Company paid to Alleghany a non-refundable advance
payment of $1,015,000. The license runs for an indeterminate period. An
additional $525,000 non-refundable advance payment was paid to
Alleghany on July 5, 1987.
From the period March 3, 1986 to June 3, 1986, the Company was
required to pay a 7% royalty on all net sales. Thereafter, it is required
to pay a 6% royalty on net sales but no less than $360,000 per annum to
maintain its license. After the sum of $9,000,000 in royalties has been
paid to Alleghany, the royalty is reduced to 1% of net sales. The
Company has expanded the lines licensed from Alleghany and pays only
1% royalty on various new products created by the Company. As of
November 30, 1996, $5,082,202 of royalties have been paid or accrued
and only $3,917,798 still remains until the $9,000,000 level is reached.
As of November 30, 1996, all of the advance payments have been
charged against income.
NOTE 8 - LONG-TERM DEBT
Long-term debt consisted of the following at November 30, 1996 and
1995:
1996 1995
Note payable - Bank (A) $163,500 $399,067
Notes payable - AFCO (B) - 10,078
163,500 409,145
Less: Current portion 163,500 298,078
$ - $111,067
-14-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - LONG-TERM DEBT (Continued)
(A) Note payable - Bank represents the balance of a $1,119,067 loan that
was due in monthly installments of $24,000 plus interest to February
1996. Interest was calculated on the outstanding balance at prime. In
connection with this loan, the bank has been given a secured interest
in all of the accounts receivable and inventory of the Company and its
subsidiaries. At November 30, 1996, the bank's prime rate was
8 1/4%.
In May 1996 the Company refinanced $327,000 (representing the
balance on its term note) at prime. The note is due in installments of
$27,250 plus interest through May 1997.
(B) Notes payable - AFCO represented a 9-month financing arrangement
of the Company's insurance premiums at 8.93% and 8.065% during
1996 and 1995, respectively.
The Company's long-term debt is due to mature as follows:
Year Ending
November 30,
1997 $163,500
1998 -
1999 -
2000 -
2001 -
$163,500
The Company has an available line of credit of $3,000,000. Interest is
calculated on the outstanding balance at prime minus 1% or Libor plus 150
basis points. As of November 30, 1996, the Company was not utilizing
any of its available line.
NOTE 9 - INCOME TAXES
The Company and its subsidiaries file a consolidated federal income tax
return. No returns have been examined by the Internal Revenue Service.
-15-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 -INCOME TAXES (Continued)
The Company has temporary differences arising from the following:
Classified As
Deferred Short- Long-
Type Amount Tax Term Term
Asset (Liability)
Depreciation $ 220,070 $ 88,441 $ - $88,441
Reserve for bad debts 143,647 57,728 57,728 -
Reserve for returns 679,675 273,144 273,144 -
Reserve for obsolete
Inventory 922,903 370,892 370,892 -
Section 263A costs 228,995 92,027 92,027 -
$2,195,290 882,232 793,791 88,441
Tax asset valuation
allowance ( 330,673) ( 297,524) ( 33,149)
Net deferred income
tax $551,559 $496,267 $55,292
The tax asset valuation allowance decreased by $63,600 during the year
ended November 30, 1996.
Income tax expense (benefit) is made up of the following components:
November 30, 1996
State &
Federal Local Total
Current tax expense $85,795 $ 57,622 $143,417
Tax credits - - -
Deferred tax benefit 513,007 143,268 656,275
$598,802 $200,890 $799,692
-16-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - INCOME TAXES (Continued)
November 30, 1995
Federal Local Total
Current tax (benefit)
expense ($482,202) $ 10,781 ($471,421)
Tax credits ( 7,180) - ( 7,180)
Deferred tax (benefit) ( 68,364) ( 116,991) ( 185,355)
($557,746) ($106,210) ($663,956)
The current tax benefit for the year ended 1995 includes a net operating
loss carryback which is reflected in income tax refunds on the balance
sheet.
November 30, 1994
State &
Federal Local Total
Current tax expense $1,514,097 $495,485 $2,009,582
Tax credits ( 21,162) - ( 21,162)
Deferred tax (benefit) ( 70,905) ( 21,564)( 92,469)
$1,422,030 $473,921 $1,895,951
Income taxes payable are made up of the following components:
State &
Federal Local Total
November 30, 1996 $24,598 $ 907 $25,505
November 30, 1995 $ - $ - $ -
November 30, 1994 $ - $6,354 $ 6,354
-17-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - INCOME TAXES (Continued)
<TABLE>
A reconciliation of income tax expense computed at the statutory rate to income tax expense at the
effective rate for each of the three years ended November 30, 1996 is as follows:
<CAPTION>
1996 1995 1994
Percent Percent Percent
Of Pretax of Pretax of Pretax
Amount Income Amount Income Amount Income
<S> <C> <C> <C> <C> <C> <C>
Income tax (benefit) expense at
statutory rate $650,973 34.00% ($758,379) ( 34.00%) $1,602,038 34.00%
Increases (decreases) in taxes
resulting from:
State income taxes, net of federal
income tax benefit 120,810 6.31 ( 106,377) ( 4.77 ) 292,988 6.22
Non-deductible expenses and
other adjustments 27,909 1.46 207,980 9.32 22,087 .47
Utilization of tax credits - - ( 7,180) ( .32 ) ( 21,162) ( .45)
Income tax expense at
effective rate $799,692 41.77% ($663,956) ( 29.77%) $1,895,951 40.24%
</TABLE>
-18-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - STOCK OPTIONS
On November 15, 1984, the Company authorized the granting of incentive
stock options as well as non-qualified options. The plan was amended in
1986 and again in 1994. The following summarizes the stock options
outstanding under these plans as of November 30, 1996.
Number Per Share
Of Option
Date Granted Shares Price Expiration
December 1987 294,500 .50 1997
January 1988 370,000 .55 1997
March 1989 200,000 .75 1999
January 1990 200,000 .63 1999
December 1991 27,500 .50 1996
June 1995 50,000 4.50 2000
December 1995 100,000 1.50 2000
1,242,000
The following summarizes the activity of shares under option for the two
years ended November 30, 1996:
Number Per Share
Of Option
Shares Price Value
Balance - November 30,
1994 1,466,300 $ .40 - $ .75 816,720
Granted 55,000 $1.25- $4.50 231,250
Exercised ( 5,700) $ .40- $ .75 ( 6,530)
Balance - November 30,
1995 1,515,600 $ .40- $4.50 $1,041,440
Granted 100,000 $.150 150,000
Exercised ( 373,600) $.40 - $.50( 176,940)
Balance - November 30,
1996 1,242,000 $.50- $4.50 $1,014,500
-19-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - ACCRUED EXPENSES AND OTHER ACCOUNTS PAYABLE
The following items which exceeded 5% of total current liabilities are
included in accounts payable and accrued liabilities as of:
November 30,
1996 1995
(In Thousands)
Media advertising $* $1,812
Coop advertising 321 519
Accrued returns 505 435
$ 826 $2,766
All other liabilities were for trade payables or individually did not exceed
5% of total current liabilities.
* Under 5%
NOTE 12 - OTHER INCOME
Other income was comprised of the following:
November 30,
1996 1995 1994
Interest income $195,234 $271,505 $311,684
Dividend income 16,511 16,164 16,357
Realized gain (loss) on
disposal of assets 18,237 ( 5) 26,033
Royalty income - 11,648 -
Miscellaneous 5,943 17,616 3,006
$235,925 $316,928 $357,080
NOTE 13 - COMMITMENTS AND CONTINGENCIES
On April 1, 1995, the Company renewed their lease for approximately
55,000 square feet of office and warehouse space at an annual rental of
$259,284. This lease on the Company's premises expires March 31,
2001. On September 22, 1995 the Company leased an additional 30,000
square feet of warehouse space in Paterson, NJ on a net lease basis at a
rental of $6,875 per month. The lease expires on September 30, 1997.
-20-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company has entered into various operating leases with expiration
dates ranging through February 1998.
Rent expense for the years ended November 30, 1996, 1995 and 1994
was $426,621, $414,907 and $381,805, respectively.
Future commitments under noncancellable operating lease agreements for
each of the next five (5) years and in the aggregate are as follows:
Year Ending
November 30,
1997 $ 414,866
1998 315,076
1999 290,018
2000 278,049
2001 and thereafter 90,428
Total $1,388,437
On March 3, 1986, the Company entered into a License Agreement with
Alleghany Pharmacal Corporation (See Note 7).
The Company has entered into various other License Agreements, none of
which materially affect the Company's sales, financial results, financial
condition, or should materially affect its future results of operations.
There are various matters in litigation that arose out of the normal opera-
tions of the Company which, in the opinion of management, will not have
a material adverse effect on the financial condition of the Company.
NOTE 14 - RELATED PARTY TRANSACTIONS
The Company has an outstanding loan of $25,250 from its Vice President
in charge of Sales; which was made to aid him in obtaining a first
mortgage on his home. This loan is secured by a second mortgage and
carries an interest rate at 1% over prime. Interest is payable semi-annu-
ally. The Vice President is the son of Mr. David Edell, the President of the
Company.
As at November 30, 1996, one of the members of the board was indebted
to the Company for $12,500 used to exercise stock options. The note
was repaid in full, with interest, in January 1997
The Company has retained the law firm of Berman & Murray as its general
counsel. Ira W. Berman, a former member of the firm, is the Secretary,
Chairman of the Board and a principal shareholder of the Company.
-21-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - MAJOR CUSTOMERS AND FOREIGN SALES
During the years ended November 30, 1996, 1995 and 1994, certain
customers each accounted for more than 5% of the Company's total sales,
as follows:
Customer 1996 1995 1994
A 22% 22% 18%
B 9 7 9
C 7 7 9
D 6 5 *
* Under 5%
During the year ended November 30, 1996, foreign sales accounted for
7.57% of the Company's total sales. Foreign sales had been under 5% in
total for each of the prior two years.
NOTE 16 - SUBSEQUENT EVENTS
In December 1996 David Edell and Ira W. Berman exercised stock options
and purchased 30,000 shares of the Company's common stock
respectively at $.50 per share. They paid for the stock by giving back to
the Company 7,000 shares of the Company's own stock valued at
approximately $2 5/32 per share.
-22-
<PAGE>
SCHEDULE II
CCA INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION ACCOUNTS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
COL. A COL. B COL. C COL. D COL. E
Additions
Balance at Charged To Balance
Beginning Costs and At End
Description Of Year Expenses Deductions Of Year
Year ended November 30, 1996:
Allowance for doubtful
accounts $157,204 $45,855 $59,412 $143,647
Reserve for returns $747,749 $4,555,422 $4,380,269 $922,902
Year ended November 30, 1995:
Allowance for doubtful
accounts $208,863 $139,355 $191,014 $157,204
Reserve for returns $770,933 $2,841,439 $2,864,623 $747,749
Year ended November 30, 1994:
Allowance for doubtful
accounts $102,388 $156,649 $50,174 $208,863
Reserve for returns $779,273 $3,056,002 $3,064,342 $770,933
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> NOV-30-1996 NOV-30-1996
<PERIOD-END> NOV-30-1996 NOV-30-1996
<CASH> 1,422,783 1,422,783
<SECURITIES> 3,180,881 3,180,881
<RECEIVABLES> 5,084,049 5,084,049
<ALLOWANCES> (1,066,549) (1,066,549)
<INVENTORY> 5,875,742 5,875,742
<CURRENT-ASSETS> 14,053,985 14,053,985
<PP&E> 2,335,973 2,335,973
<DEPRECIATION> (1,451,230) (1,451,230)
<TOTAL-ASSETS> 16,708,079 16,708,079
<CURRENT-LIABILITIES> 4,983,870 4,983,870
<BONDS> 0 0
0 0
0 0
<COMMON> 71,675 71,675
<OTHER-SE> 11,652,534 11,652,534
<TOTAL-LIABILITY-AND-EQUITY> 16,708,079 16,708,079
<SALES> 8,613,127 39,469,098
<TOTAL-REVENUES> 8,683,722 39,705,023
<CGS> 3,440,195 15,171,055
<TOTAL-COSTS> 8,582,289 37,790,397
<OTHER-EXPENSES> 5,202,639 22,522,731
<LOSS-PROVISION> (65,948) 45,855
<INTEREST-EXPENSE> 5,403 50,756
<INCOME-PRETAX> 101,433 1,914,626
<INCOME-TAX> (28,640) 799,692
<INCOME-CONTINUING> 130,073 1,114,934
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 130,073 1,114,934
<EPS-PRIMARY> .02 .14
<EPS-DILUTED> .02 .14
</TABLE>
