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, 2000
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 re-
quired 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 - $6,225,155 shares of as February
29, 2000
Class A Common Stock, $.01 Par Value - $1,020,930 shares as of
February 29, 2000
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
February 29, 2000 and November 30, 1999 1-2
Consolidated Statements of Operations
for the three months ended February 29, 2000
and February 28, 1999 3
Consolidated Statements of Comprehensive Income
for the three months ended February 29, 2000
and February 28, 1999 4
Consolidated Statements of Cash Flows for
the three months ended February 29, 2000
and February 28, 1999 5
Notes to Consolidated Financial Statements 6-14
Management Discussion and Analysis of
Results of Operations and Financial
Condition 15-16
PART II OTHER INFORMATION 17-18
SIGNATURES 19
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
A S S E T S
<CAPTION>
February 29, November 30,
2000 1999
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 296,022 $ 807,360
Short-term investments and marketable
securities (Notes 3 and 10) 1,439,498 1,490,469
Accounts receivable, net of allowances of
$930,596 and $1,183,576, respectively 9,460,869 7,371,532
Inventories 6,201,272 6,235,270
Prepaid expenses and sundry receivables 417,374 822,816
Deferred income taxes 1,197,797 1,178,513
Prepaid income taxes and refunds due 805,420 714,835
Deferred advertising 1,684,810 -
Total Current Assets 21,503,062 18,620,795
Property and Equipment, net of accumulated
depreciation and amortization 839,375 739,728
Intangible Assets, net of accumulated
amortization of $75,090 at February 29,
2000 and $71,840 at November 30, 1999 166,506 169,756
Other Assets
Marketable securities 1,826,522 1,809,770
Due from officers - Non-current 48,302 57,918
Deferred income taxes 58,531 42,031
Other 54,989 54,989
Total Other Assets 1,988,344 1,964,708
Total Assets $24,497,287 $21,494,987
</TABLE>
See Notes Consolidated to Financial Statements.
-1-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
February 29, November 30,
2000 1999
<S> <C> <C>
Current Liabilities
Notes payable - Current portion $ 1,600,000 $ 1,400,000
Accounts payable and accrued liabilities 7,965,672 4,928,905
Total Current Liabilities 9,565,672 6,328,905
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued and
outstanding 6,321,151 and 6,321,151
shares, respectively 63,212 63,212
Class A common stock, $.01 par; authorized
5,000,000 shares; issued and outstanding
1,020,930 and 1,020,930 shares,
respectively 10,209 10,209
Additional paid-in capital 4,453,478 4,453,478
Retained earnings 10,749,081 10,955,203
Accumulated other comprehensive income ( 179,199) ( 150,854)
15,096,781 15,331,248
Less: Treasury Stock (95,996 and 95,996
shares at February 29, 2000 and
November 30, 1999, respectively) 165,166 165,166
Total Shareholders' Equity 14,931,615 15,166,082
Total Liabilities and Shareholders'
Equity $24,497,287 $21,494,987
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
February 29, February 28,
2000 1999
(Restated)
<S> <C> <C>
Net sales of health and beauty products $8,573,919 $ 8,657,183
Other income 62,201 40,978
8,636,120 8,698,161
Costs and Expenses
Costs of sales 3,704,031 3,539,119
Selling, general and administrative
expenses 3,201,487 2,919,575
Advertising, cooperative and promotions 1,836,251 2,020,117
Research and development 125,020 129,766
Provision for doubtful accounts 67,127 43,708
Interest expense 5,424 -
8,939,340 8,652,285
Income (Loss) before Income Taxes ( 303,220) 45,876
Provision (Benefit) for Income Taxes ( 107,173) 35,947
Net Income (Loss) Before From
Discontinued Operations ( 196,047) 9,929
Income (Loss) from Discontinued
Operations ( 10,075) 61,732
Net Income (Loss) ($ 206,122) $ 71,661
Earnings per Share:
Basic ($.03) $.01
Diluted ($.03) $.01
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
February 29, February 28,
2000 1999
(Restated)
<S> <C> <C>
Net Income (Loss) ($206,122) $71,661
Other Comprehensive Income
Unrealized holding gains (loss)
on investments ( 44,845) ( 13,580)
Provision (Benefit) for Taxes ( 16,500) ( 5,500)
Other Comprehensive Income - Net ( 28,345) ( 8,080)
Comprehensive Income (Loss) ($234,467) $63,581
Earnings Per Share:
Basic ($.03) $.01
Diluted ($.03) $.01
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
February 29, February 28,
2000 1999
(Restated)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income ($ 206,122) $ 71,661
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation and amortization 99,464 97,959
Amortization of bond premium - 471
(Loss) gain on sale of securities ( 923) 6,043
Decrease (increase) in deferred income
taxes ( 35,784) 32,347
(Increase) in accounts receivable ( 2,089,337) 330,653
Decrease (increase) in inventory 33,998 ( 1,133,147)
(Increase) in prepaid expenses 415,058 ( 943)
(Increase) in deferred advertising ( 1,684,810) ( 437,146)
Increase in accounts payable 3,036,767 209,763
(Increase) decrease in prepaid income
taxes ( 90,585) ( 702,636)
Net Cash (Used in) Provided by
Operating Activities ( 522,274) ( 1,524,975)
Cash Flows from Investing Activities:
Acquisition of property, plant and
equipment ( 195,861) ( 35,816)
Acquisitions of intangible assets - ( 175,000)
Purchase of short-term investments ( 408,529) ( 110,841)
Proceeds from sale and maturity of
investments 415,326 451,500
Net Cash (Used in) Provided by
Investing Activities ( 189,064) 129,843
Cash Flows from Financing Activities:
Proceeds from borrowings 200,000 1,150,000
Purchase of treasury stock - ( 9,557)
Net Cash Provided by (Used in)
Financing Activities 200,000 1,140,443
Net (Decrease) in Cash ( 511,338) ( 254,689)
Cash and Cash Equivalents at Beginning
of Period 807,360 542,289
Cash and Cash Equivalents at End
of Period $ 296,022 $ 287,600
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 16,663 $ 30,963
Income taxes 600 660,804
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated finan
cial 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 re
quired by generally accepted accounting principles for
complete financial statements. In the opinion of manage
ment, 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, 2000 are not necessarily
indicative of the results that may be expected for the
year ended November 30, 2000. For further information,
refer to the consolidated financial statements and foot
notes thereto included in the Company's annual report on
Form 10-K for the year ended November 30, 1999.
NOTE 2 - ORGANIZATION AND DESCRIPTION OF BUSINESS
CCA Industries, Inc. ("CCA") was incorporated in the State
of Delaware on March 25, 1983.
CCA manufactures and distributes health and beauty aid
products.
CCA has several wholly-owned subsidiaries (CCA Cosmetics,
Inc., CCA Labs, Inc., Berdell, Inc., and Nutra Care Corpora
tion), all of which are currently inactive.
In March of 1998 CCA acquired 80% of the newly organized
Fragrance Corporation of America, Ltd. which manufactures
and distributes perfume products. In 1999, the Company
adopted a formal plan to discontinue the operations of the
subsidiary. The 1999 financial statements have been
restated to give effect for discontinued operations.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the accounts
of CCA and its wholly-owned subsidiaries (collectively the
"Company"). All significant inter-company accounts and
transactions have been eliminated.
-6-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates:
The consolidated financial statements include the use of
estimates, which management believes are reasonable. The
process of preparing financial statements in conformity with
generally accepted accounting principles requires the use
of estimates and assumptions regarding certain types of
assets, liabilities, revenues, and expenses. Such estimates
primarily relate to unsettled transactions and events as of
the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated
amounts.
Short-Term Investments and Marketable Securities:
Short-term investments and marketable securities consist of
corporate and government bonds 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.
Statements of Cash Flows Disclosure:
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.
During fiscal 1999, two officers/shareholders exercised in
the aggregate 100,000 options in exchange for 25,000 shares
previously issued common stock. The common shares were put
into treasury and were subsequently cancelled.
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
(UNAUDITED)
NOTE 3 - 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 deprecia
tion 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 trade
marks are amortized on the straight-line method over a
period of 17 years. Goodwill represents the excess of the
cost over the fair value of the net assets acquired and is
amortized over 60 months.
Financial Instruments:
The carrying value of assets and liabilities considered
financial instruments approximate their respective fair
value.
Income Taxes:
Income tax expense includes federal and state taxes
currently payable and deferred taxes arising from temporary
differences between income for financial reporting and
income tax purposes.
Tax Credits:
Tax credits, when present, are accounted for using the
flow-through method as a reduction of income taxes in the
years utilized.
-8-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Common Share:
The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share" in 1998.
Basic earnings per share is calculated using the average
number of shares of common stock outstanding during the
year. Diluted earnings per share is computed on the basis
of the average number of common shares outstanding plus the
effect of outstanding stock options using the "treasury
stock method" and convertible debentures using the "if-
converted" method. Common stock equivalents consist of
stock options.
Revenue Recognition:
The Company recognizes sales at the time delivery occurs.
Although no legal right of return exists between the
customer and the Company, it is an industry-wide practice
to accept returns from customers. The Company, therefore,
records a reserve for returns equal to its gross profit on
its historical percentage of returns on its last five
months sales.
Comprehensive Income:
The Company adopted SFAS #130, Comprehensive Income, which
considers the Company's financial performance in that it
includes all changes in equity during the period from
transactions and events from non-owner sources.
Reclassifications
Certain prior year amounts have been reclassified to
conform to the 2000 presentation.
NOTE 4 - INVENTORIES
The components of inventory consist of the following:
February 29, November 30,
2000 1999
Raw materials $3,668,952 $3,509,103
Finished goods 2,532,320 2,726,167
$6,201,272 $6,235,270
At February 29, 2000 and November 30, 1999, the Company had
a reserve for obsolescence of $880,958 and $1,056,789,
respectively.
NOTE 5 - PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the
following:
February 29, November 30,
2000 1999
Machinery and equipment $ 299,528 $ 299,528
Furniture and equipment 892,499 742,547
Transportation equipment 10,918 10,918
Tools, dies, and masters 1,941,420 1,914,684
Leasehold improvements 166,820 147,647
3,211,185 3,115,324
Less: Accumulated
depreciation
and amortization 2,471,810 2,375,596
Property and Equipment
- Net $ 839,375 $ 739,728
-9-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PROPERTY AND EQUIPMENT (Continued)
Depreciation and amortization expense for the three months
ended February 29, 2000 and February 28, 1999 amounted to
$96,214 and $82,989, respectively.
NOTE 6 - INTANGIBLE ASSETS
Intangible assets consist of the following:
Februaryy 29, November 30,
2000 1999
Patents and trademarks $241,596 $241,596
Less: Accumulated amortization 75,090 71,840
Intangible Assets - Net $166,506 $169,756
Amortization expense for the three months ended February
29, 2000 and February 28, 1999 $3,250 and $16,434, respec
tively.
NOTE 7 - DEFERRED ADVERTISING
In accordance with APB 28 Interim Financial Reporting the
Company expenses its advertising and related costs propor
tionately over the interim periods based on its total
expected costs per its various advertising programs.
Consequently a deferral of $1,684,810 is accordingly
reflected in the balance sheet for the interim period.
This deferral is the result of the Company's $5,000,000
media budget for the year which contemplates lower spending
in the 4th quarter than in the other three quarters; as
well as the Company's Co-op advertising commitments which
also anticipates a lower expenditure in the 4th quarter.
The table below sets forth the calculation:
February February
2000 1999
(In Millions) (In Millions)
Media advertising budget for the
fiscal year $5.00 $5.00
Pro-rata portion for three months $1.25 $1.25
Media advertising spent 2.68 1.41
Accrual (deferral) ($1.43) ($ .16)
Anticipated Co-op advertising
commitments $2.35 $3.00
Pro-rata portion for three months $ .59 $ .75
Co-op advertising spent .84 1.03
Accrual (deferral) ($ .25) ($ .28)
NOTE 8 -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,
2000 1999
(In Thousands) (In Thousands)
a) Media advertising $2,364 $ 560
b) Coop advertising 545 *
c) Accrued returns 622 630
$3,531 $1,190
-10-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Continued)
All other liabilities were for trade payables or individu
ally did not exceed 5% of total current liabilities.
* Under 5%
NOTE 9 -OTHER INCOME
Other income consists of the following at February 29:
2000 1999
Interest income $51,983 $32,800
Dividend income 9,295 6,692
Miscellaneous 923 1,486
$62,201 $40,978
NOTE 10 -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. 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 February
28, 2000 and November 30, 1999 were as follows:
February 29, November 30,
2000 1999
Current: COST MARKET COST MARKET
Corporate obliga-
tions $ 445,967 $ 449,693 $ 745,044 $ 748,894
Government obliga-
tions(including
mortgage
backed securities) 991,344 989,805 743,777 741,575
Total 1,437,311 1,439,498 1,488,821 1,490,469
Non-Current:
Corporate obliga-
tions 536,000 529,187 536,000 532,891
Government obli-
gations 453,805 439,122 399,534 390,517
Preferred stock 612,561 556,350 612,561 571,535
Other equity
investments 422,040 301,863 414,177 314,827
Total 2,024,406 1,826,522 1,962,272 1,809,770
Total $3,461,717$3,266,020 $3,451,093 $3,300,239
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 10 -SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
The market value at February 29, 2000 was $3,266,020 as compared to $3,300,239 at
November 30, 1999. The cost and market values of the investments at February 29, 2000
were as 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>
Virginia Electric &
Power 4/01/00 5.875% 250,000 $ 246,117 $ 249,855 $ 249,855
GMAC Smartnotes 10/15/01 5.950% 536,000 536,000 529,187 529,187
Florida Power &
Light 4/01/00 5.375% 200,000 199,850 199,838 199,838
981,967 978,880 978,880
</TABLE>
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 10 - 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>
FHLMC 1628-N 12/15/2023 6.500 50,000 $ 32,498 $ 30,962 $ 30,962
FNMA 93-224-D 11/25/2023 6.500 104,000 91,182 83,949 83,949
FNMA 92-2-N 1/25/2024 6.500 52,000 27,860 27,242 27,242
US Treasury Note 11/30/2001 4.625 100,000 100,190 98,781 98,781
US Treasury Note 1/31/2001 4.500 250,000 247,891 245,860 245,860
US Treasury Note 9/30/2000 4.500 300,000 300,924 297,000 297,000
US Treasury Note 3/16/2000 5.183 250,000 243,835 249,383 249,383
US Treasury Note 11/30/2000 4.625 200,000 198,694 197,562 197,562
US Treasury Note 5/15/2001 5.625 200,000 202,075 198,188 198,188
1,445,149 1,428,927 1,428,927
</TABLE>
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
MARKETABLE SECURITIES - OTHER INVESTMENTS
NOTE 10 -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
EQUITY:
Preferred Stock:
<S> <C> <C> <C> <C> <C> <C>
Tennessee Valley Authority
(QIDS) Qtrly Income Debt
Secs - Matures 3/31/2045 3/31/00 8.00% 13,600 $ 362,561 $ 328,100 $ 328,100
Merrill Lynch Trust 9/30/08 7.28 6,000 150,000 128,250 128,250
Other Equity Investments:
First Australia Prime 100,000 100,000 100,000
Dreyfus Premier Limited
Term High Income CL B 3.8* 11,443 139,193 116,614 116,614
Dreyfus High Yield
Strategies Fund 10.5* 20,121 282,847 185,249 185,249
1,034,601 858,213 858,213
$3,461,717 $3,266,020 $3,266,020
* Estimated
-14-
<PAGE>
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ended February 29, 2000, the Company
had revenues of $8,636,120 and a net loss of ($206,122). In the
prior year's period, the Company had revenues of $8,698,161 and a
net income of $9,929 (excluding sales from discontinued operations
of $1,088,577 and income of $61,732). Sales for the three month
period were substantially the same as the prior period except the
reduction of sales of Nutra Enamel of ($85,000) as a result of the
commencement of the discontinuance of Color Line. Sales returns ran
approximately 6% of gross sales. Sales returns were 8% for the
prior year's period. Other income was $62,000 compared to $41,000.
Gross margins of 57% were down from 59%, this was primarily due to
a reduction in the margins with a major account which were offset
by reductions in cooperative expenses with that account; and a
slight increase in inflationary costs.
Advertising, cooperative and promotional allowance expenditures
were $1,836,251 as compared to $2,020,117. The reduction was offset
by the 1.3% reduction in gross profit margins of approximately
$120,000. Advertising expenditures were 21.4% of sales compared to
23.3%. Since both co-op advertising and promotions have a material
effect on the Company's operations, the Company attempts to
anticipate its advertising and promotional commitments as a percent
of gross sales in order to control its effect on its net income.
In accordance with APB 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. Consequently, a deferral of $1,430,000 of
media expense and $250,000 of co-op expenses is reflected in the
balance sheet. The Company deferred $437,146 in the prior year.
This deferral is the result of the Company's $5 million media budget
for the entire year which is predicated on substantially lower
spending in the third and fourth quarters. Co-op expenditures are
budgeted at $2,350,000 for the year. Specifically, the Company
spent $2.68 million for media advertising in the three months and
$840,000 in co-op advertising. The difference is deferred over the
subsequent nine month period and by the end of the year will be
fully expensed.
Selling, general and administrative expenses ("SG&A") increased
from $2,919,575 to $3,201,487. The increase was primarily due to
the additional freight costs incurred due to the increase in oil
prices and their effect on shipping charges as well as the necessity
to resort to special deliveries to the Company's accounts caused by
inadvertent delays from the Company's suppliers; and the additional
pack-out labor expenditures incurred due to special displays packed
and shipped for promotional sales offers.
Research and development expenses for the three months were
substantially the same as the prior year's period.
Bad debt expense for the period increased due to the substantial
increase in the Company's accounts receivable. Actual write-offs
were approximately $30,000 as compared to $4,000 in 1999.
-15-
<PAGE>
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
The Company's interest expense increased to $5,429 (net of the
interest attributed to the discontinued operations of $17,053) as
compared to none (net of the $34,645 attributable to discontinued
operations in 1999).
The Company's sales were primarily to drugstore chains, food
chains and mass merchandisers.
The Company's financial position as at February 29, 2000
consists of current assets of $21,503,062 and current liabilities
of $9,565,672. The Company's cash position decreased due to the
significant increase in its accounts receivable primarily as a
result of the sales in the latter month of the quarter. The
Company's accounts payable increased due to the change in the
increased expenditures for media during the latter part of the
month.
During the three months, the Company used approximately $522,000
in operations, generated $200,000 from new borrowings, and used
approximately $189,000 to purchase assets and investments. These
factors resulted in a net decrease in the Company's cash of about
$511,000.
-16-
<PAGE>
CCA INDUSTRIES, INC.
PART II OTHER INFORMATION
All information pertaining to Part II is omitted pursuant to the
instructions pertaining to that part.
The Company did not file any reports on Form 8-K during the
three months ended February 29, 2000.
-17-
<PAGE>
PART II, ITEM 6. (Continued)
EXHIBIT 11
CCA INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
Three Months Three Months
Ended Ended
February 28, February 28,
2000 1999
Item 6.
Weighted average shares outstanding -
Basic 7,246,085 7,111,472
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price * 478,827
Weighted average shares outstanding -
Diluted 7,246,085 7,590,299
Net income ($ 206,122) $ 71,661
Per share amount
Basic ($.03) $.01
Diluted ($.03) $.01
* Antidilutive
-18-
<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:/s David Edell
David Edell, President
By:/s Ira W. Berman
Ira W. Berman, Secretary
-19-
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> NOV-30-2000 NOV-30-1999
<PERIOD-END> FEB-28-2000 FEB-28-1999
<CASH> 296,022 287,600
<SECURITIES> 3,266,020 3,444,971
<RECEIVABLES> 10,391,465 9,679,516
<ALLOWANCES> 930,596 2,132,169
<INVENTORY> 6,201,272 7,239,145
<CURRENT-ASSETS> 21,503,062 23,463,275
<PP&E> 3,552,781 5,473,233
<DEPRECIATION> 2,546,900 2,237,544
<TOTAL-ASSETS> 24,497,287 24,751,451
<CURRENT-LIABILITIES> 9,565,672 9,172,024
<BONDS> 0 0
0 0
0 0
<COMMON> 73,421 72,671
<OTHER-SE> 14,858,194 15,506,756
<TOTAL-LIABILITY-AND-EQUITY> 24,497,287 24,751,451
<SALES> 8,573,919 8,657,451
<TOTAL-REVENUES> 8,636,120 8,698,161
<CGS> 3,704,031 3,539,119
<TOTAL-COSTS> 8,939,340 8,652,285
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 67,127 43,708
<INTEREST-EXPENSE> 5,424 0
<INCOME-PRETAX> (303,220) 45,876
<INCOME-TAX> (107,173) 35,947
<INCOME-CONTINUING> (196,047) 9,929
<DISCONTINUED> (10,075) 61,732
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (206,122) 71,661
<EPS-BASIC> (.03) .01
<EPS-DILUTED> (.03) .01
</TABLE>
