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 August 31, 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 required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock, $.01 Par Value - 5,946,827 shares as of August 31, 2000
Class A Common Stock, $.01 Par Value - 1,020,930 shares as of
August 31, 2000
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
August 31, 2000 and November 30, 1999. . . . . . . . . . . . 1-2
Consolidated Statements of Operations
for the three months and nine months ended
August 31, 2000 and 1999 . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Comprehensive Income
for the three months and nine months ended
August 31, 2000 and 1999 . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for
the nine months ended August 31, 2000
and 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
Notes to Consolidated Financial Statements . . . . . . . . .7-16
Management's Discussion and Analysis of
Results of Operations and Financial
Condition . . . . . . . . . . . . . . . . . . . . . . . . 17-19
PART II OTHER INFORMATION. . . . . . . . . . . . . . . . . . . 20-21
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
A S S E T S
<CAPTION>
August 31, November 30,
2000 1999
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 81,909 $ 807,360
Short-term investments and marketable
securities 2,001,307 1,490,469
Accounts receivable, net of allowances of
$1,364,993 and $1,183,576, respectively 8,411,816 7,371,532
Inventories 5,332,475 6,235,270
Prepaid expenses and sundry receivables 436,903 822,816
Deferred income taxes 1,333,428 1,178,513
Prepaid income taxes and refunds due 208,388 714,835
Deferred advertising 1,286,557 -
Total Current Assets 19,092,783 18,620,795
Property and Equipment, net of accumulated
depreciation and amortization 728,779 739,728
Intangible Assets, net of accumulated
amortization of $82,666 at August 31, 2000
and $71,840 at November 30, 1999 222,816 169,756
Other Assets
Marketable securities 1,566,398 1,809,770
Due from officers - Non-current 32,857 57,918
Deferred income taxes 38,864 42,031
Other 54,646 54,989
Total Other Assets 1,692,765 1,964,708
Total Assets $21,737,143 $21,494,987
</TABLE>
See Notes Consolidated to Financial Statements.
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
August 31, November 30,
2000 1999
<S> <C> <C>
Current Liabilities
Notes payable $ 2,600,000 $ 1,400,000
Accounts payable and accrued liabilities 3,391,971 4,928,905
Total Current Liabilities 5,991,971 6,328,905
Subordinated Debentures (due August 1, 2005) 556,656 -
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued 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 shares, respectively 10,209 10,209
Additional paid-in capital 4,453,478 4,453,478
Retained earnings 11,558,921 10,955,203
Unrealized gains (losses) on marketable
securities ( 175,482)( 150,854)
15,910,338 15,331,248
Less: Treasury Stock (374,324 and 95,996
shares at August 31, 2000 and
November 30, 1999, respectively) 721,822 165,166
Total Shareholders' Equity 15,188,516 15,166,082
Total Liabilities and Shareholders' Equity $21,737,143 $21,494,987
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues
Sales of Health and
Beauty Aid
Products - Net $9,905,804 $8,631,951 $30,411,579 $28,398,978
Other income 86,208 102,623 219,032 186,702
9,992,012 8,734,574 30,630,611 28,585,680
Costs and Expenses
Costs of sales 3,493,222 3,508,009 11,381,811 11,073,391
Selling, general and
administrative expenses 3,595,388 3,200,777 10,309,788 9,509,870
Advertising, cooperative
and promotions 2,478,780 1,851,391 7,165,084 6,636,603
Research and development 105,879 118,183 388,741 373,392
Provision for doubtful
accounts 10,272 ( 4,044) 144,583 89,758
Interest expense 45,992 - 97,447 -
9,729,533 8,674,316 29,487,454 27,683,014
Income before Provision
for Income Taxes 262,479 60,258 1,143,157 902,666
Provision for Income
Taxes 123,710 19,694 432,141 290,648
Income From Continuing
Operations 138,769 40,564 711,016 612,018
Income (Loss) From
Discontinued Operations ( 79,735) (1,132,848) ( 107,298) (1,451,509)
Net Income (Loss) $ 59,034 ($1,092,284) $ 603,718 ($ 839,491)
Basic Diluted Basic Diluted Basic Diluted Basic Diluted
Earnings per Share
Continuing Operations $.02 $.02 $.01 $.01 $.10 $.09 $.09 $.09
Discontinued Operations($.01)($.01) ($.16) ($.16) ($.01)($.01) ($.21)($.21)
Net Income (Loss) $.01 $.01 ($.15) ($.15) $.08 $.08 ($.12)($.12)
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net Income (Loss) $59,034 ($1,157,167) $603,718 ($839,491)
Other Comprehensive Income
Unrealized holding gains
(loss) on investments 26,674 ( 77,580) ( 24,630) ( 84,699)
Provision (Benefit) for Taxes 10,185 ( 29,922) ( 9,311) ( 27,272)
Other Comprehensive Income
(Loss) - Net 16,489 ( 47,658) ( 15,319) ( 57,427)
Comprehensive Income $75,523 ($1,204,825) $588,399 ($896,918)
Earnings Per Share:
Basic $.01 ($.17) $.08 ($.12)
Diluted $.01 ($.17) $.08 ($.12)
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Nine Months
Ended Ended
August 31, August 31,
2000 1999
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 603,718 ($ 839,491)
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation and amortization 286,175 287,428
Minority deficiency in consolidated
subsidiaries - ( 155)
Amortization of bond premium - 1,414
Loss on abandoned intangibles - 463,512
(Gain) on sale of marketable securities ( 4,956) ( 21,532)
(Increase) decrease in deferred income
taxes ( 151,748) 114,883
(Increase) decrease in accounts
receivable - Net ( 1,040,284) 944,108
Decrease in inventory 902,795 1,996,368
Decrease (increase) in prepaid expenses
and miscellaneous receivables 385,913 ( 32,010)
(Increase) in deferred advertising ( 1,286,557) ( 1,551,113)
(Decrease) in accounts payable and
accrued liabilities ( 1,536,934) ( 53,425)
(Decrease) in taxes payable - ( 600,720)
Decrease (increase) in security deposits 343 ( 400)
Decrease (increase) in prepaid income
taxes and refunds due 506,447 ( 1,222,085)
Net Cash (Used in) Operating Activities ( 1,335,088) ( 513,218)
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment( 264,400) ( 117,946)
Acquisition of intangible assets ( 63,886) ( 454,735)
Proceeds of money due from officers 25,061 1,857
Purchase of marketable securities ( 1,379,933) ( 282,960)
Proceeds from sale and maturity of
investments 1,092,795 1,320,331
Net Cash (Used in) Provided by
Investing Activities ( 590,363) 466,547
Cash Flows from Financing Activities:
Proceeds from borrowings 3,900,000 2,850,000
Payment on debt ( 2,700,000) ( 2,500,000)
Purchase of treasury stock - ( 9,557)
Net Cash Provided by Financing Activities 1,200,000 340,443
Net (Decrease) Increase in Cash ( 725,451) 293,772
Cash at Beginning of Period 807,360 542,289
Cash at End of Period $ 81,909 $ 836,061
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<CAPTION>
Nine Months Nine Months
Ended Ended
August 31, August 31,
2000 1999
<S> <C> <C>
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 88,968 $ 95,971
Income taxes 97,442 1,128,793
Supplemental Schedule of Noncash Investing
and Financing Activities:
The Company repurchased common stock in
exchange for the issuance of subordinated
debentures:
Common stock repurchased $556,656 $ -
Subordinated debentures ( 556,656) -
$ - $ -
Minority Shareholders' Losses Absorbed
by the Company:
Minority interest $ - $ 7,643
Retained earnings - ( 7,643)
$ - $ -
</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 financial state-
ments have been prepared in accordance with generally accepted ac-
counting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accord
ingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the nine
month period ended August 31, 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 footnotes 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., Nutra Care Corporation, and CCA Online
Industries, Inc.), 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.
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 elimi
nated.
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<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 of 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.
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<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 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.
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.
-9-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 outstand
ing 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 and the restatement for discontinued operations.
NOTE 4 - INVENTORIES
The components of inventory consist of the following:
August 31, November 30,
2000 1999
Raw materials $3,060,925 $3,509,103
Finished goods 2,271,550 2,726,167
$5,332,475 $6,235,270
At August 31, 2000 and November 30, 1999, the Company had a reserve for
obsolescence of $815,078 and $1,056,789, respectively.
-10-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the following:
August 31, November 30,
2000 1999
Machinery and equipment $ 323,233 $ 299,528
Furniture and equipment 910,698 742,547
Transportation equipment 10,918 10,918
Tools, dies, and masters 1,968,055 1,914,684
Leasehold improvements 166,820 147,647
3,379,724 3,115,324
Less: Accumulated depreciation
and amortization 2,650,945 2,375,596
Property and Equipment - Net $ 728,779 $ 739,728
Depreciation expense for the nine months ended August 31, 2000 and 1999
amounted to $275,349 and $220,086, respectively.
NOTE 6 - INTANGIBLE ASSETS
Intangible assets consist of the following:
August 31, November 30,
2000 1999
Patents and trademarks $242,173 $241,596
Financing costs 63,309 -
305,482 241,596
Less: Accumulated amortization 82,666 71,840
Intangible Assets - Net $222,816 $169,756
Amortization expense for the nine months ended August 31, 2000 and 1999
amounted to $10,826 and $67,342, respectively.
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - DEFERRED ADVERTISING
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. Consequently a deferral of $1,286,557 is
accordingly reflected in the balance sheet for the interim period.
This deferral is the result of the Company's $6,000,000 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:
August August
2000 1999
(In Millions) (In Millions)
Media advertising budget for the fiscal year $6.00 $5.30
Pro-rata portion for nine months $4.50 $3.98
Media advertising spent 5.50 4.71
Accrual (deferral) ($1.00) ($ .73)
Anticipated Co-op advertising commitments $3.10 $3.30
Pro-rata portion for nine months 2.33 2.48
Co-op advertising spent 2.62 3.30
Accrual (deferral) ($ .29) ($ .82)
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:
August 31, November 30,
2000 1999
(In Thousands) (In Thousands)
a) Media advertising $ 726 $ 560
b) Coop advertising 542 *
c) Accrued returns 301 630
$1,569 $1,190
* under 5%
All other liabilities were for trade payables or individually did not
exceed 5%of total current liabilities.
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - OTHER INCOME
Other income consists of the following at August 31:
2000 1999
Interest income $154,509 $146,190
Dividend income 35,284 32,673
Miscellaneous 29,239 7,839
$219,032 $186,702
NOTE 10 - SUBORDINATED DEBENTURES
On August 1, 2000, the Company repurchased (pursuant to a tender offer)
278,328 shares of its outstanding common stock by issuing subordinated
debentures equal to $2 per share, which accrue interest at 6% and are
due to mature on August 1, 2005. The interest is payable semi-annually.
NOTE 11 - 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 August 31, 2000 and November 30, 1999 were
as follows:
August 31, November 30,
2000 1999
Current: COST MARKET COST MARKET
Corporate obligations $ - $ - $ 745,044 $ 748,894
Government obligations
(including mortgage
backed securities) 1,998,196 2,001,307 743,777 741,575
Total 1,998,196 2,001,307 1,488,821 1,490,469
Non-Current:
Corporate obligations 536,000 531,755 536,000 532,891
Government obli-
gations 151,511 146,094 399,534 390,517
Preferred stock 612,561 579,328 612,561 571,535
Other equity
investments 444,919 309,221 414,177 314,827
Total 1,744,991 1,566,398 1,962,272 1,809,770
Total $3,743,187 $3,567,705 $3,451,093 $3,300,239
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 11 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
The market value at August 31, 2000 was $3,567,705 as compared to $3,300,239 at November 30, 1999.
The cost and market values of the investments at August 31, 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>
GMAC Smartnotes 10/15/019 5.950% 536,000 $536,000 $531,755 $531,755
</TABLE>
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<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 11 - 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 $ 31,561 $ 31,561
FNMA 93-224-D 11/25/2023 6.500 104,000 91,182 86,642 86,642
FNMA 92-2-N 1/25/2024 6.500 52,000 27,831 27,891 27,891
US Treasury Note 11/30/2000 4.625 100,000 100,190 99,563 99,563
US Treasury Note 1/31/2001 4.500 250,000 247,891 248,125 248,125
US Treasury Note 9/30/2000 4.500 300,000 300,924 299,343 299,343
US Treasury Note 5/31/2001 5.250 250,000 251,615 247,970 247,970
US Treasury Note 11/30/2000 4.625 200,000 198,694 199,126 199,126
US Treasury Note 5/15/2001 5.625 200,000 202,075 199,000 199,000
US Treasury Bill 10/5/2000 450,000 436,637 447,314 447,314
US Treasury Bill 11/9/2000 6.080 240,000 260,170 260,866 260,866
2,149,707 2,147,401 2,147,401
</TABLE>
-15-
<PAGE>
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 11 - 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:
<S> <C> <C> <C> <C> <C> <C>
Preferred Stock:
Tennessee Valley Authority
(QIDS) Qtrly Income Debt
Secs 3/31/45 8.00% 13,600 $ 362,561 $ 341,700 $ 341,700
Merrill Lynch Trust 9/30/08 7.28 6,000 150,000 137,628 137,628
Other Equity Investments:
First Australia Prime 100,000 100,000 100,000
Dreyfus Premier Limited
Term High Income CL B 3.80* 11,537 145,444 116,045 116,045
Dreyfus High Yield
Strategies Fund 10.50* 20,382 299,475 193,176 193,176
1,057,480 888,549 888,549
$3,743,187 $3,567,705 $3,567,705
* Estimated
</TABLE>
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<PAGE>
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ending August 31, 2000, the Company had
revenues and income from continuing operations of $9,992,012 and $262,479,
respectively. The Company had a provision for income taxes of $123,710
and incurred a loss from discontinued operations of its fragrance
subsidiary of $79,735. Net income was $59,034. For the prior year
period, the Company had revenues from continuing operations of $8,734,574,
income before taxes of $134,248, a provision for taxes of $38,697 and a
write-off of $1,252,768 from discontinued operations. The Company had a
net loss of $1,157,167.
For the nine month period ending August 31, 2000, the Company had
revenues and income from continuing operations of $30,630,611 and
$1,143,157, respectively; a provision for income taxes of $432,141 and
income of $711,016. The Company incurred a loss of $107,298 from
discontinued operations resulting in net income for the nine month period
of $603,718.
For the nine month period in the prior year, the Company had revenues
of $28,585,680 from continuing operations, income of $902,666, a provision
for income taxes of $290,648 and income of $612,018. The Company had a
loss of $1,451,509 from discontinued operations resulting in a net loss
of $839,491.
Net sales for the nine month period ended August 31, 2000 were up
$2,012,601 over the prior year's period. Sales returns ran approximately
9% of gross sales, up slightly from 8% during the prior year's period.
Gross margins of 62.5% were up from 61% for the prior year.
Advertising, cooperative and promotional allowance expenditures
increased during the nine month period from $6,636,603 to $7,165,084.
Advertising expenditures were 23.5% of sales for the nine months ended
August 31, 2000 as compared with 23.4% for the period ended August 31,
1999. As part of the registrant's business it is necessary to enter into
co-operative advertising agreements and other promotional activities with
its accounts, especially upon the introduction of a new product. Both co-
op advertising and promotions have a material effect on the Company's
operations. If the advertising and promotions are successful, revenues
will be increased accordingly. Should the co-op and promotions not be
successful, it will have a negative impact on the Company's promotional
cost per sale, and have a negative effect on income. The Company attempts
to anticipate its advertising and promotional commitments as a percent of
gross sales in order to attempt to control its effect on its net income.
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.
Consequently, a deferral of $1,286,557 is accordingly reflected in the
balance sheet for the interim period, as compared to $1,551,113 at August
31, 1999. This deferral is the result of the Company's $6.0 million 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 lower expenditures in the
4th quarter. Specifically, the Company spent approximately $5.5
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<PAGE>
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
million in the nine months on media advertising and, therefore, expensed
$4.5 million and deferred $1.0 million as of August 31,2000. Similarly,
as of August 31, 1999, the Company's co-op advertising commitments for
the year ended November 30, 2000 are anticipated to be approximately $3.1
million of which approximately $2.62 million was spent in the first nine
months resulting in an expense of $2.33 million and a deferral of
approximately $.29 million as of August 31, 2000.
Comparatively as of August 31, 1999, the Company had anticipated
media advertising expense in fiscal year 1999 of $5.3 million and spent
approximately $4.71 million in the first nine months resulting in a
deferral of approximately $.73 million.
Selling, general and administrative expenses ("SG&A") increased
compared to the prior year. The increase to $10,309,788 from $9,509,870
was due mostly to increased freight costs of approximately $400,000, and
the increase in commissions, recruiting and royalties.
For the three month period ended August 31, 2000, net sales were
$9,905,804 as compared to $8,631,951 for August 31, 1999. Income for the
quarter before taxes increased to $262,479 from $134,298. Gross margins
of approximately 64.7% for the three months ended August 31, 2000 were up
from 59.4% in 1999. This was due mainly to the better product mix
achieved in 2000. Advertising, cooperative and promotional allowance
expense during the quarter increased to $2,478,780 from $1,851,391.
Advertising expenses were 25% of sales for the quarter in 2000 as compared
to 21.45% in 1999. Selling, general and administrative expenses were
approximately 36.3% in the current quarter as compared to 37% in 1999.
Research and development expenses for the three and nine months were
less than the prior year's period due to the economies of utilizing the
services of more in-house staff rather than outside consultants.
Bad debt expense for the periods increased due to the increase in
reserves on the increasing accounts receivable. Actual write-offs were
approximately $40,000 in 1999 as compared to $42,000 in 1998. The
Company's interest expense of $97,447 was less than the prior year's
amount of $108,626 (all of which was attributable to its discontinued
operations).
The Company's sales were primarily to drugstore chains, food chains
and mass merchandisers.
The Company's financial position as at August 31, 2000 consists of
current assets of $19,092,783 and current liabilities of $5,991,971. The
Company's cash position decreased mostly due to its operations
($1,335,000), but also due to the acquisition of $328,000 of fixed assets,
and the net purchase of $286,000 of marketable securities. The Company
borrowed an additional $1,200,000 on its line to offset some of the drain
on its cash. During the nine month period ended August 31, 2000,
shareholders' equity increased from $15,166,082 at November 30, 1999 to
$15,188,516 at August 31, 2000. This was primarily due to the difference
between the net gain for the period ($603,718) and the subordinated
debentures issued ($556,656) to repurchase 278,328 shares of the Company's
stock.
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<PAGE>
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
During the nine months ended August 31, 1999, the Company used
$513,000 in operations, $454,000 to pay for costs incurred relating to the
acquisition of Shiara Inc's assets in excess of their fair market value,
and $118,000 to purchase new fixed assets; and generated $350,000 from new
borrowings and approximately $1,037,000 from the net liquidations of
securities. These factors resulted in a net increase in the Company's
cash of about $294,000.
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<PAGE>
PART II, ITEM 6. (Continued)
EXHIBIT 11
CCA INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
Three Months Ended Nine Months Ended
August 31, August 31,
2000 1999 2000 1999
Item 6.
Weighted average shares
outstanding - Basic 7,182,301 7,276,085 7,218,251 7,276,085
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 338,615 * 376,836 *
Weighted average shares
outstanding - Diluted 7,520,916 7,276,085 7,595,087 7,276,085
Net income $ 59,034 ($1,092,284) $ 603,718 ($ 839,491)
Per share amount
Basic $.01 ($.15) $.08 ($.12)
Diluted $.01 ($.15) $.08 ($.12)
* Anti-dilutive
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<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 nine months ended
August 31, 2000.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned,thereunto duly authorized.
CCA INDUSTRIES, INC.
By:
David Edell, President
By:
Ira W. Berman, Secretary
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