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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 FEBRUARY 28, 1995
COMMISSION FILE NO. 1-8797
HELENE CURTIS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-3398349
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
325 NORTH WELLS STREET, CHICAGO, ILLINOIS 60610
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 312-661-0222
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Common Stock -- $.50 par value New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: NONE
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
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 the 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/
Aggregate market value of Common Stock (par value $.50 per share) held by
non-affiliates of the registrant on May 17, 1995, based on the closing price as
reported in the Wall Street Journal on May 18, 1995: Approximately $214,207,074.
Number of shares of Common Stock (par value $.50 per share) outstanding as
of May 17, 1995: 6,847,730.
Number of shares of Class B Common Stock (par value $.50 per share)
outstanding as of May 17, 1995: 3,048,029 (such shares are generally
non-transferable, but are convertible share-for-share into Common Stock).
The Proxy Statement filed on or before May 25, 1995, for the Annual Meeting
of Stockholders scheduled for June 27, 1995, is partially incorporated by
reference into Part III, Items 10, 11, 12 and 13; and Part IV, Item 14,
excluding the sections entitled "Compensation Committee Report" and "Common
Stock Performance." The Annual Report to Stockholders for the fiscal year ended
February 28, 1995, is partially incorporated by reference into Part I, Part II
and Part IV.
Exhibit index is located at page 12.
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DOCUMENTS INCORPORATED BY REFERENCE
Part I
- Business Segments Page 30, Note 12 of the
Annual Report to Stockholders
for the fiscal year ended
February 28, 1995.
Part II
Item 5 - Market for the Registrant's Page 31 of the Annual
Common Stock and Related Report to Stockholders for
Stockholder Matters the fiscal year ended
February 28, 1995.
Item 6 - Selected Financial Data Page 31 of the Annual
Report to Stockholders for
the fiscal year ended
February 28, 1995.
Item 7 - Management's Discussion and Pages 22-23 of the Annual
Analysis of Financial Report to Stockholders for
Condition and Results of the fiscal year ended
Operations February 28, 1995.
Item 8 - Financial Statements and Pages 24-30 of the Annual
Supplementary Data Report to Stockholders for
the fiscal year ended
February 28, 1995.
Part III
Item 10 - Directors and Executive Pages 6-7 and 21 of the
Officers of the Registrant Proxy Statement for the
Company's Annual
Stockholders' Meeting
to be held June 27, 1995.
Item 11 - Executive Officer Compensation Pages 9-12 of the Proxy
Statement for the Company's
Annual Stockholders' Meeting
to be held June 27, 1995, but
excluding information
contained under "Compensation
Committee Report on Executive
Compensation."
Item 12 - Security Ownership of Pages 2-5 of the Proxy
Certain Beneficial Owners Statement for the Company's
and Management Annual Stockholders'
Meeting to be held
June 27, 1995.
Item 13 - Certain Relationships and Pages 16 and 18 of the Proxy
Related Transactions Statement for the Company's
Annual Stockholders'
Meeting to be held
June 27, 1995.
Part IV
Exhibits, Financial Statement Exhibits as specified in Item
Schedules and Reports on 12.
Form 8-K.
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Part I
Item 1. Business
General
Helene Curtis Industries, Inc. (together with its subsidiaries, the
"Company") is a holding company incorporated in Delaware on April 16, 1984,
whose principal subsidiary, Helene Curtis, Inc., has been operating since
January 1928.
The Company develops, manufactures and markets personal care products
consisting primarily of consumer brand name hair and skin care products and
antiperspirants and deodorants. The Company is one of the largest sellers of
hair care products in the United States, mainly with its Suave, Finesse, Salon
Selectives and Vibrance hair care brands.
The Company is also the fourth leading seller in the United States of
antiperspirant/deodorant products through its Degree and Suave brands, and the
third leading seller of hand and body lotion products with its Suave brand.
The Company also develops, manufactures and markets professional hair care
products for use and resale by licensed cosmetologists. The Company's Quantum
permanent wave is the leading permanent wave brand sold to licensed
cosmetologists in the United States.
The Company's products, particularly its Finesse and Salon Selectives
brands, are among the market leaders in most countries where the Company has an
operating subsidiary and have been introduced through licensees and others in
over 100 countries throughout the world. Sales of the Company's products
outside the U.S. account for approximately 36 percent of annual volume.
Products
U.S. Consumer Products
The Company markets a wide variety of hair care products to consumers
under the Suave, Finesse, Salon Selectives and Vibrance brand names. It
markets antiperspirants/deodorants under the Suave and Degree brand names and
skin care and baby care products under the Suave brand name.
The Company targets its Suave products to consumers who desire a high
quality product priced considerably below premium-priced lines. This
positioning has proven successful as Suave is both the best-selling shampoo and
the best-selling conditioner in the United States in terms of units sold. The
Company sells Suave shampoo, Suave conditioner and Suave styling aids for this
price-value segment of the market.
Finesse, the sixth largest hair care brand in the United States on a
dollar-sales basis, is marketed as a premium-priced line of products. Finesse
conditioner, relying on a unique patented formulation, was launched in 1982 and
Finesse shampoo was introduced in 1983. The Company also sells Finesse styling
aids, including hair spray, gel and mousse.
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The Company's Salon Selectives line of consumer shampoos, conditioners and
styling aids is marketed to consumers who are interested in purchasing products
which were traditionally available only in beauty salons and which can be
customized to their hair and lifestyle needs. Salon Selectives, introduced in
1987, is the third largest hair care brand on a dollar-sales basis, in the
United States.
The Company also markets Vibrance hair care products, which were
introduced in 1991 and targeted toward consumers who desire strong, healthy
looking hair. The line was repositioned at the start of the fiscal year
commencing March 1, 1995.
The Company's Degree antiperspirant/deodorant products were introduced in
1990. Degree antiperspirant products provide consumers with additional odor and
wetness protection in response to rising body heat. The Company's Suave
antiperspirant/deodorant products are targeted to the price-value segment of
the market. With its Degree and Suave brands, the Company ranks fourth in
antiperspirant/deodorant sales in the United States.
The Company ranks third in the category of hand and body lotion products
in the U.S. in units sold. The Company sells these products under its Suave
brand. The Company also markets a line of Suave facial care products and a
line of Suave baby care products, which build on Suave's brand equity and
reputation of offering quality products at a value price.
U.S. Professional Products
The Company develops and markets a wide range of permanent waves and other
hair care products to licensed cosmetologists for use in beauty salons and for
resale to consumers through salons. Since its founding, the Company has been a
technological leader in this industry, pioneering, among other things, the
"cold" permanent wave, which is safer and more effective than prior methods of
waving hair. Its Quantum permanent wave is applicable for all hair types and
is the best-selling permanent wave brand for professional use in the United
States.
The Company markets numerous professional product lines, including the
following: Quantum, Naturelle and Hair Specifics hair care products; ISO,
Catio Therm, Post Impressions, One Better, Impact, Even Heat, Fine Solutions
and Luxuriance permanent waves.
International Products
The Company sells its products in over 100 countries through wholly-owned
operating subsidiaries in Australia, Canada, Italy, Japan, New Zealand, Sweden
(serving Scandinavia) and the United Kingdom and through licensees and
authorized distributors in other countries, and export sales from the United
States. The Company is among the market leaders in the consumer hair care
business in each market in which it has a subsidiary, except Italy, where the
business has focused on the sale of professional products.
The Company has introduced Degree antiperspirant/deodorant in Canada,
Australia, New Zealand and Scandinavia.
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Additionally, in some markets, the Company's subsidiaries have developed
and introduced their own brands. For example, the Company's Japanese
subsidiary markets Program, a hair care line targeted to women with damaged
hair.
The Company's international business is subject to all the risks inherent
in operations in foreign countries. The sales, operating profit and
identifiable assets attributable to each geographic area for the fiscal years
ended in February 1995, 1994 and 1993 are set forth in Note (12) of the Notes
to the Consolidated Financial Statements, which Note is incorporated herein by
reference.
Competition
The markets for the Company's products are intensely competitive and
sensitive to changing consumer preferences and demands. They are characterized
by frequent introductions of competitive products, often accompanied by major
advertising and promotional programs which can significantly affect sales and
earnings of the product sponsor and its competitors. The Company competes
primarily on the basis of product quality, price and brand-name recognition
built by advertising and promotion.
At least 10 domestic manufacturers, some of which are highly diversified
and have significantly greater financial resources than the Company, can be
regarded as major competitors in the United States and throughout the world.
The Company is a significant competitor in its industry.
Marketing
The Company competes in businesses where growth is achieved largely by
gaining market share at the expense of competitors. Accordingly, the Company
maintains an aggressive strategy utilizing substantial television advertising,
consumer promotion and merchandising support of existing brands, coupled with
periodic major investments in new products and line extensions of established
brand names. During the fiscal years ended in February 1995, 1994 and 1993,
the Company's advertising and media expenses were approximately $150.5 million,
$152.3 and $147.6 million, respectively.
The Company believes there is substantial consumer recognition for its
major brands and that this recognition is a meaningful contributor to its
sales. Significant and repeated advertising and promotion serve to build and
retain a brand's position in the marketplace. In order for a brand's position
to be sustained for many years, as in the case of the Suave brand which has
been marketed for nearly 60 years, product formulas and packaging must continue
to be improved. In addition, major advertising expenditures are necessary from
time to time to maintain the brand's market share. Although these expenditures
may impact the Company's earnings in the year in which they are made, to the
extent that they sustain a brand's position, they support the Company's growth.
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New product development also plays a significant role in the Company's
marketing strategy. The Company relies on its market research and new product
development groups to identify consumer needs, to foresee shifts in consumer
preferences and to assess the competitive marketplace. The successful
introduction of any new product is largely dependent on product positioning,
product quality and innovation, packaging, advertising and promotional support
and the level of competitive activity. In view of the intensely competitive
industry in which the Company competes, new product introductions require
substantial advertising and promotional expenditures which are made at a
proportionally higher rate relative to sales than expenditures for
well-established products. Although these expenditures materially impact
earnings in the particular period in which they are made, they foster the
Company's growth well beyond that period if the new product is ultimately
successful.
Customers and Distribution
In the United States, the Company's products are distributed through
wholesalers and directly to major drug chains, mass merchandisers and food
outlets and major chains of beauty salons. In international markets, the
Company's products are manufactured and marketed through a network of
subsidiaries, licensees and distributors.
Approximately 15% of the Company's net sales for the fiscal year ended
February 28, 1995 were to one customer. None of the Company's customers has
any continuing contractual obligations to make purchases from the Company.
Trademarks and Patents
The Company markets its products under a number of trademarks and trade
names (e.g., Helene Curtis, Suave, Finesse, Salon Selectives, Degree, Vibrance
and Quantum) which are registered in the United States and many foreign
countries. The Company's position in the marketplace is dependent upon the
goodwill engendered in these trademarks as well as in the individual
performance and price of products using them. The Company considers trademark
protection to be of material importance to its business.
The Company is not materially dependent on any patent, license, franchise
or concession, whether owned by or licensed to the Company. Although the
Company owns certain patents, the loss of any patent would not have a
materially adverse effect on the Company's operations as a whole. During the
fiscal year ended February 28, 1995, the Company successfully prevented the
continued sale of several products that infringed the Company's patent on its
ISO permanent wave.
Research and Development
The Company is continuously engaged in the development of new products and
maintains an extensive laboratory facility for such purpose. The Company
relies principally on its experience in the personal care business in
formulating new products and maintains a staff of approximately 230 people for
research and development. The Company expended $26.8 million, $22.5 million
and $22.0 million during the fiscal years ended in February 1995, 1994 and
1993, respectively, on research activities relating to the development of new
products and the improvement of existing personal care products.
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Regulation
Government regulation has not materially restricted or impeded the
Company's operations. Certain of the Company's products are subject to
regulation under the Federal Food, Drug and Cosmetic Act and the Fair Packaging
and Labeling Act. The Company is also subject to regulation by the Federal
Trade Commission with respect to the content of its advertising, its trade
practices and other matters.
Employees
The Company currently employs approximately 3,400 employees. Virtually
all of the Company's employees are non-union. The Company considers its
relationship with its employees to be good.
Manufacturing and Supplies
Most of the Company's products are manufactured, filled and packaged by
the Company at its facilities in Chicago, Illinois and the City of Industry,
California, as well as at its subsidiary operation in New Zealand. See
"Properties." Some of the Company's products sold in the United States or by
its international subsidiaries are manufactured by outside contractors, none of
which manufactures a significant portion of the Company's output.
Raw materials used in the Company's products are available from several
sources. If any single supplier should be unable to furnish materials, the
Company believes that other sources could be obtained without material
disruption to or other adverse effect upon its business.
Backlog
As the Company manufactures and ships its products against orders received
in a relatively short period of time thereafter, the dollar amount of backlog
orders at any given date, or from year to year, is not a material element in
the Company's business.
Item 2. Properties
The principal office of the Company is located at 325 North Wells Street
in Chicago, Illinois. The office building, which has approximately 120,000
square feet of space used by the Company, was purchased in 1981 and
rehabilitated by the Company.
The Company owns its principal manufacturing plant, which comprises
approximately 315,000 square feet, and is located at 4401 West North Avenue,
Chicago, Illinois. The Company owns a connecting building and land of
approximately 60,500 square feet. An additional 238,000 square feet of land
and building adjacent to said plant is leased until 1996. This lease contains
five renewal options of five years each, giving the Company the right to extend
the term to 2021.
The Company owns approximately 12 acres of property in Chicago adjacent to
its principal manufacturing facility. This property includes a building of
approximately 587,000 square feet, which is used for offices, manufacturing and
warehousing. Approximately one-third of the building has been leased to its
former owner for a ten-year period ending in 2001.
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The Company owns its principal warehouse and distribution facility,
comprising approximately 376,000 square feet of building on 32.5 acres of land,
located in Chicago, Illinois. This facility became fully operational in 1989.
The Company also owns a warehouse facility comprising approximately 475,000
square feet of building space on 10.5 acres of land at 1657 N. Kilpatrick
Avenue, Chicago, Illinois. Additional warehouse and shipping facilities are
located at the Company's principal manufacturing plant.
The Company owns a 128,000 square foot manufacturing and warehousing
facility in the City of Industry, California, which was constructed in 1982.
In addition, in 1989, the Company purchased 8.36 acres of property, including
an industrial building of approximately 150,000 square feet, adjacent to the
facility.
In March 1995, the Company relocated its research and development
operations to an approximately 151,000 square foot facility located in Rolling
Meadows, Illinois which is leased until 2012. The building includes offices
and laboratories. The relocation will allow for the expansion of the Company's
principal manufacturing and operations facility. The lease contains ten (10)
renewal options of five (5) years each, giving the Company the right to extend
the term until 2062.
The Company also leases or owns other smaller properties and facilities in
various locations in the United States and in foreign countries.
Although some of the Company's manufacturing plants were constructed a
number of years ago, such plants, together with newer additions, are, in the
opinion of management, deemed to be in good condition and sufficient for the
Company's current needs.
Item 3. Legal Proceedings
There are no material pending legal proceedings involving the Company.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted during the fourth quarter of fiscal 1995
to a vote of security holders.
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Executive Officers of the Registrant:
Title Name Age
Chairman of the Board Gerald S. Gidwitz 88
Vice Chairman of the Board Joseph L. Gidwitz 90
President and Chief Executive
Officer Ronald J. Gidwitz 50
Executive Vice President and
Chief Operating Officer Michael Goldman 58
Executive Vice President Gilbert P. Smith 58
Senior Vice President Charles G. Cooper 67
Senior Vice President Colin J. Morgan 59
Senior Vice President Eugene Zeffren 53
Vice President and Chief
Information Officer Thomas J. Gildea 51
Vice President and Chief
Financial Officer Lawrence A. Gyenes 44
Vice President V. James Marino 45
Vice President Robert K. Niles 50
Vice President and
Corporate Controller Mary J. Oyer 46
Vice President Robert Sack 58
Vice President,
Secretary and General Counsel Roy A. Wentz 45
Treasurer Arthur A. Schneider 48
Foreign-Based Officers:
President and Managing Director,
Helene Curtis United Kingdom
and Vice President of the Company Robert G. Kelly 51
President, Helene Curtis Ltd.
(Canada) and Vice President
of the Company Jack D. Pogue 62
Ronald J. Gidwitz is the son of Gerald S. Gidwitz; Joseph L. Gidwitz and
Gerald S. Gidwitz are brothers.
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All executives have served in the capacities shown for the last five years
except as follows: Charles G. Cooper, Michael Goldman, Robert G. Kelly, V.
James Marino, Colin J. Morgan, Mary J. Oyer, Jack D. Pogue, Arthur A.
Schneider, Gilbert P. Smith, Roy A. Wentz and Eugene Zeffren, all of whom have
been employed by the Company in other executive capacities for at least five
years and were elected to the positions shown during this five-year period.
Prior to joining the Company in 1991, Robert K. Niles served in various
capacities for The Quaker Oats Company, most recently as Vice President, Human
Resources for its Breakfast Division. Prior to joining the Company in 1994,
Lawrence A. Gyenes served in various capacities for G. D. Searle & Co., most
recently as Corporate Vice President of Finance.
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder Matters
Incorporated by reference to the Company's Annual Report to Stockholders
for the fiscal year ended February 28, 1995, under the caption "Common Stock
Data," page 31.
Item 6. Selected Financial Data
Incorporated by reference to the Company's Annual Report to Stockholders
for the fiscal year ended February 28, 1995, under the caption "Ten-Year
Summary," page 31.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Incorporated by reference to the Company's Annual Report to Stockholders
for the fiscal year ended February 28, 1995, under the caption "Management's
Discussion and Analysis," pages 22-23.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to the Company's Annual Report to Stockholders
for the fiscal year ended February 28, 1995, see index in Part IV, Item 14 (a).
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to directors is incorporated by reference to the
Company's Proxy Statement for the Company's Annual Meeting of Stockholders to
be held June 27, 1995, under the captions "Nominees for Directors,"
"Continuing Directors" and "Compliance with Section 16(a)," pages 6-7 and 21.
Information with respect to Executive Officers is set forth in Part I, under
the caption "Executive Officers of the Registrant."
Item 11. Executive Compensation
Incorporated by reference to the Company's Proxy Statement for the Annual
Meeting of Stockholders to be held on June 27, 1995, under the caption
"Executive Officer Compensation" but excluding information contained under
"Compensation Committee Report on Executive Compensation," pages 9-12.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
Incorporated by reference to the Company's Proxy Statement for the Annual
Meeting of Stockholders to be held on June 27, 1995, under the captions
"Principal Security Holders" and "Security Ownership of Management," pages 2-5.
Changes in Control: The Company knows of no contractual arrangements
which may, at a subsequent date, result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to the Company's Proxy Statement for the Annual
Meeting of Stockholders to be held on June 27, 1995, under the caption
"Compensation Committee Interlocks and Insider Participation" and "Transactions
with Affiliated Persons" on pages 16 and 18, respectively.
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PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
Page in Annual Report
to Stockholders
---------------
(a) 1. Financial Statements:
Independent Accountants' Report 21
Consolidated Statements of Earnings
for the years ended February 28,
1995, 1994 and 1993 24
Consolidated Statements of Stockholders'
Equity for the years ended February 28,
1995, 1994 and 1993 24
Consolidated Balance Sheets as of
February 28, 1995 and 1994 25
Consolidated Statements of Cash Flows
for the years ended February 28, 1995,
1994 and 1993 26
Notes to Consolidated Financial Statements 27-30
(b) Reports on Form 8-K
During the last quarter of the fiscal year ended February 28, 1995,
the Company did not file any reports on Form 8-K.
(c) Exhibits
3 (i) The Certificate of Incorporation of Helene Curtis Industries,
Inc., as amended, incorporated by reference to the Company's
Annual Report listed on Form 10-K for the fiscal year ended
February 29, 1992, Exhibit 3(a).
(ii) The bylaws of the Company, as amended, effective April 24,
1991. Incorporated by reference to the Company's Annual Report
filed on Form 10-K for the fiscal year ended February 28, 1991,
Exhibit 3(b).
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4 (a) Letter of Credit Agreement dated as of October 1, 1986, between
Helene Curtis, Inc. and Harris Trust and Savings Bank, relating
to an Industrial Revenue bond refinancing. Incorporated by
reference to the Company's Annual Report filed on Form 10-K for
the fiscal year ended February 28, 1987, Exhibit 4(a).
(b) Revolving Credit Agreement dated as of September 13, 1990,
between Helene Curtis, Inc. and the Harris Trust and Savings
Bank; The First National Bank of Chicago; Bank of America
National Trust & Savings Association; NBD Bank, N.A.; Mellon
Bank, N.A.; Chemical Bank; The Industrial Bank of Japan,
Limited; and The Mitsubishi Bank, Limited. Incorporated by
reference to the Company's Annual Report filed on Form 10-K for
the fiscal year ended February 28, 1991, Exhibit 4(c).
(c) Note Purchase Agreement dated as of January 31, 1992, between
Helene Curtis, Inc. and Nationwide Life Insurance Company,
West Coast Life Insurance Company, Financial Horizons Life
Insurance Company, Farmland Life Insurance Company and
Wisconsin Health Care Liability Insurance Plan. Incorporated
by reference to the Company's Annual Report filed on Form 10-K
for the fiscal year ended February 29, 1992, Exhibit 4(d).
(d) Note Agreement dated as of March 1, 1994, between Helene
Curtis, Inc. and Connecticut Mutual Life Insurance Company,
Connecticut General Life Insurance Company, Life Insurance
Company of North America, Great-West Life and Annuity Insurance
Company, Nationwide Life Insurance Company, Financial Horizons
Life Insurance Company and Employers Life Insurance Company of
Wausau. Incorporated by reference to the Company's Annual
Report filed on Form 10-K for the fiscal year ended February
28, 1994, Exhibit 4(d).
10 Executive Compensation Plans and Arrangements
(a) Executive Pension Agreement. Incorporated by reference to the
Helene Curtis, Inc. Annual Report filed on Form 10-K for the
fiscal year ended February 28, 1981, Exhibit 10(a).
(b) 1983 Stock Option Plan, as amended. Incorporated by reference
to the Company's Annual Report filed on Form 10-K for the
fiscal year ended February 28, 1989, Exhibit 3(d).
(c) Death Benefit Agreement. Incorporated by reference to the
Helene Curtis, Inc. Annual Report filed on Form 10-K for the
fiscal year ended February 28, 1982, Exhibit 10(c).
(d) Supplemental Profit Sharing and Retirement Savings Plan.
(e) Directors Stock Option Plan. Incorporated by reference to the
Proxy Statement for the Helene Curtis Industries, Inc. Annual
Meeting of Stockholders held June 21, 1988.
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(f) 1992 Stock Option Plan. Incorporated by reference to the Proxy
Statement for the Helene Curtis Industries, Inc. Annual Meeting
of Stockholders held June 16, 1992.
(g) 1994 Stock Appreciation Right Plan. Incorporated by reference
to the Proxy Statement for the Helene Curtis Industries, Inc.
Annual Meeting of Stockholders held June 28, 1994.
(h) Executive Management Incentive Plan. Incorporated by reference
to the Proxy Statement for the Helene Curtis Industries, Inc.
Annual Meeting of Stockholders held June 28, 1994.
(i) Executive Incentive Plan.
11 Computation of Earnings Per Share.
13 Annual Report to Stockholders, for the fiscal year ended February 28,
1995 (only those portions incorporated by reference in this document
are deemed "filed.")
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(REGISTRANT) HELENE CURTIS INDUSTRIES, INC.
BY (SIGNATURE) s/Ronald J. Gidwitz
(NAME AND TITLE) Ronald J. Gidwitz, President and Chief
Executive Officer
DATE May 25, 1995
BY (SIGNATURE) s/Lawrence A. Gyenes
(NAME AND TITLE) Lawrence A. Gyenes, Vice President and Chief
Financial Officer
DATE May 25, 1995
BY (SIGNATURE) s/Mary J. Oyer
(NAME AND TITLE) Mary J. Oyer, Vice President and Corporate
Controller
DATE May 25, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
BY (SIGNATURE) s/Marshall L. Burman
(NAME AND TITLE) Marshall L. Burman, Director
DATE May 25, 1995
BY (SIGNATURE) s/Frank W. Considine
(NAME AND TITLE) Frank W. Considine, Director
DATE May 25, 1995
BY (SIGNATURE) s/Charles G. Cooper
(NAME AND TITLE) Charles G. Cooper, Director
DATE May 25, 1995
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BY (SIGNATURE) s/Gerald S. Gidwitz
(NAME AND TITLE) Gerald S. Gidwitz, Chairman of the Board;
Director
DATE May 25, 1995
BY (SIGNATURE) s/Michael Goldman
(NAME AND TITLE) Michael Goldman, Director
DATE May 25, 1995
BY (SIGNATURE) s/Joseph L. Gidwitz
(NAME AND TITLE) Joseph L. Gidwitz, Director
DATE May 25, 1995
BY (SIGNATURE) s/Ronald J. Gidwitz
(NAME AND TITLE) Ronald J. Gidwitz, President; Principal
Executive Officer; Director
DATE May 25, 1995
BY (SIGNATURE) s/John C. Stetson
(NAME AND TITLE) John C. Stetson, Director
DATE May 25, 1995
BY (SIGNATURE) s/Abbie J. Smith
(NAME AND TITLE) Abbie J. Smith, Director
DATE May 25, 1995
BY (SIGNATURE) s/Gilbert P. Smith
(NAME AND TITLE) Gilbert P. Smith, Director
DATE May 25, 1995
<PAGE> 1
EXHIBIT 10(d)
HELENE CURTIS INDUSTRIES, INC.
SUPPLEMENTAL PROFIT SHARING AND RETIREMENT SAVINGS PLAN
Helene Curtis Industries, Inc., a Delaware corporation with its
principal place of business in Chicago, Illinois ("Company"), hereby
establishes the Helene Curtis Industries, Inc. Supplemental Profit Sharing and
Retirement Savings Plan ("Supplemental Retirement Plan") effective as of
January 1, 1985.
Section 1 - Purpose
The purpose of the Supplemental Retirement Plan is to provide benefits
which Participants in the Helene Curtis Industries, Inc. Profit Sharing
Retirement Savings Plan ("Retirement Plan") would have received under such plan
except for the maximum benefit limitations ("Benefit Limitations") provided in
the Retirement Plan, as required by Section 415 of the Internal Revenue Code of
1954, as amended ("Code").
Section 2 - Definitions
The words and phrases as used herein shall be as defined in the
Retirement Plan, unless the context clearly requires otherwise.
Section 3 - Eligibility and Participation
An employee shall be a Participant in and entitled to benefits under
the Supplemental Retirement Plan if he is a participant in the Retirement Plan,
and he is designated as a participant in the Supplemental Retirement Plan by
the Compensation and Stock Option Committee of the Board of Directors of the
Company ("Committee"). Once an employee becomes a Participant in the
Supplemental Retirement Plan he shall remain a Participant until his
Supplemental Retirement Account has been fully distributed.
<PAGE> 2
Notwithstanding the foregoing, the Committee may suspend the active
participation of any Participant and thereupon such Participant shall be deemed
an inactive Participant.
Section 4 - Participant Accounts
The Company shall establish a bookkeeping account for the benefit of
each Participant (which account shall be hereinafter referred to as
"Supplemental Retirement Account").
Section 5 - Credits to Supplemental Retirement Accounts
The Company shall credit to the Participant's Supplemental Retirement
Account the following amounts:
(a) For each Plan Year during which the employee is an active
Participant under the Supplemental Retirement Plan, the amount by
which (i) below exceeds (ii) below:
(i) The amount of Employer contributions and forfeitures which the
Employer would have allocated to the Participant's Employer
Contribution Account under the Retirement Plan without regard
to the Benefit Limitations contained therein.
(ii) The amount of Employer contributions and forfeitures actually
allocated to the Participant's Employer Contribution Account
under the Retirement Plan; plus
(b) For each Plan Year during which the employee is an active or
inactive Participant under the Supplemental Retirement Plan an
amount equal to the earnings that would have been credited
- 2 -
<PAGE> 3
to the Participant's Supplemental Retirement Account if that
account had been an Employer Contribution Account invested
pursuant to Section 5.1 of the Retirement Plan.
Section 6 - Time and Method of Payment
6.1 Time of Payment
The payment of the benefit under the Supplemental Retirement Plan will
commence at the same time as the first payment of benefits under the Retirement
Plan.
6.2 Method of Payment
(a) The benefits under the Supplemental Retirement Plan shall be paid
pursuant to the election made by the Participant in accordance with
Section 6.2(b).
(b) Prior to the end of each Plan Year, the Participant shall elect
whether the amounts, if any, credited to his Supplemental
Retirement Account for such year under Section 5(a), and any
earnings attributable thereto, shall be paid as a lump sum payment
or in substantially equal quarterly installments over a five year
period. If payments are to be in installments, the amount of each
installment shall be calculated based upon the balance in the
Participant's Supplemental Retirement Account as of the last day
of the Plan Year preceding the date of payment.
- 3 -
<PAGE> 4
Section 7 - Beneficiary
Each Participant shall have the right to designate, by giving a written
designation in an approved form to the Company, a person or persons, entity or
entities to receive any benefit which may become payable upon his death or any
installments under Section 6.2(b) of the Supplemental Retirement Plan remaining
unpaid at his death. Successive designations may be made, and the last
designation received by the Company prior to the death of the Participant shall
be effective and shall revoke all prior designations. If a designated person
shall die before the Participant, his interest shall terminate, and, unless
otherwise provided in the Participant's designation, such interest shall be
paid in equal shares to those Beneficiaries, if any, who survive the
Participant. The Participant shall have the right to revoke the designation of
any Beneficiary without the consent of the Beneficiary subject to prevailing
community property laws, if any.
Section B - Funding
All benefits under the Supplemental Retirement Plan will be paid from
the general assets of the Company. The Company is not obligated to segregate
any assets for payment of benefits but will reserve on its books such sums as
it deems necessary to provide the benefits hereunder. Since no separate fund
will be established, such sums will remain the sole property of the Company and
will continue to be subject to the claims of the Company's creditors.
Section 9 - Forfeitures
The Participant will forfeit all rights under the Supplemental
Retirement Plan in the event he commits any fraud or malfeasance against
- 4 -
<PAGE> 5
the Employer or violates the terms of any employment agreement with the
Employer, either before or after termination of employment.
Section 10 - Miscellaneous
10.1 Employment Rights
The Supplemental Retirement Plan does not constitute a contract of
employment and participation in the Supplemental Retirement Plan will not give
any Participant the right to be retained in the employ of the Employer, nor any
right or claim to a benefit under the Supplemental Retirement Plan unless
specifically provided by the Supplemental Retirement Plan.
10.2 Restrictions Upon Assignments and Creditor's Claims
No active Participant or inactive Participant or any Beneficiary or the
estate of any such person shall have any power to assign, pledge, encumber or
transfer any interest in any benefits under the Supplemental Retirement Plan.
Any such attempt at alienation shall be void. The interests of persons entitled
to benefits under the Supplemental Retirement Plan are not subject to their
debts or other obligations and, except as may be required by the tax
withholding provision of the Code, or any state's income tax act or pursuant to
compliance with a Qualified Domestic Relations Order pursuant to the Employee
Retirement Income Security Act of 1974, as amended.
10.3 Controlling Law
The laws of Illinois shall be controlling in all matters relating to
the Plan except to the extent superseded by the laws of the United States.
- 5 -
<PAGE> 6
10.4 Action by Company
Any action required or permitted by the Company under the Supplemental
Retirement Plan shall be by resolution of the Committee or any person or
persons authorized by resolution of the Board of Directors.
10.5 Interpretation
The Supplemental Retirement Plan shall be administered and interpreted
by the Committee or any person or persons authorized by resolution of the Board
of Directors in a manner consistent with the Retirement Plan and all
Participants shall be bound by the decision of the Committee or other
authorized person or persons.
10.6 Gender and Number
Where the context admits, words in the masculine gender shall include
the feminine and neuter genders, the singular shall include the plural and the
plural shall include the singular.
Section 11 - Amendment or Termination
The Board of Directors of the Company may amend or terminate the
Supplemental Retirement Plan at any time, except that, without the consent of
any Participant in the Supplemental Retirement Plan, no such amendment or
termination shall reduce his right to receive any benefit accrued hereunder
prior to the date of such amendment or termination.
- 6 -
<PAGE> 1
EXHIBIT 10(i)
Helene Curtis, Inc.
Executive Incentive Plan
I. Plan Purpose
To enhance the company's ability to attract and retain key executives,
to strengthen their interest in the success of the company, to
reinforce their excellent performance through the payment of
significant rewards for successful results and to coordinate incentive
opportunities of the various units of the company.
II. Plan Year
The period over which performance is measured is the Plan Year, which
coincides with the company's fiscal year.
III. Guidelines for Participation
A. Generally, participation is limited to key employees whose
actions have significant impact on the continued success of
the company. Participation is not automatic, and it is
subject to the President's approval.
B. The corporate President (President) establishes Plan
eligibility guidelines for each Plan Year. These guidelines
consider such criteria as:
1. The executive's organizational level and reporting
relationship, position or title;
2. If the executive has a reasonably direct impact on
profits; and
3. Other pertinent measures of the position's influence
on business success, as determined by the President.
C. Once the eligibility criteria have been established, Business
Unit heads have the responsibility for
<PAGE> 2
recommending and nominating individuals within their
organization to the President.
D. Nothing contained herein shall be construed that participation
in the Plan is a contract of employment which confers upon the
participant the right to continue in the employ of the company
nor does it obligate the company to allow the employee to
participate in the Plan in future years.
IV. Individual Incentive Awards
A. Prior to the beginning of each Plan Year, individual bonus
targets are established for each Participant. These bonus
targets generally vary in relation to job grade.
B. Bonus targets are expressed as a percentage of the individual
participant's base salary for the Plan Year. "Base Salary" is
defined as the total salary (excluding any incentive
compensation payments) paid to a Participant by the company
before reduction for any contribution authorized under the
Helene Curtis Profit Sharing Retirement Savings Plan, plus any
compensation which the Participant elects to defer under any
deferred compensation plan of the company.
V. Incentive Award Components
A. The individual incentive awards are related, in part, to the
performance of the following:
1. The corporation;
2. The business unit; and
3. The individual's goals and objectives.
B. The assigned award components may differ for participants in
different business units. The assigned award components may
also vary by each participant's responsibility level.
C. As a guideline, sixty percent (60%) of the incentive award
should be generated by corporate and/or business unit profit
components. This rule may vary from individual to individual.
However, each participant
<PAGE> 3
should have a minimum of thirty percent (30%) of the incentive
award generated by a financial component.
D. Forty percent (40%) of the incentive award should be generated
by an individual goals and objectives component. As in the
case of "C" above, this rule may vary from individual to
individual.
VI. Measures of Performance
A. The President (assisted by business unit heads) reviews and
approves the Plan's performance measures prior to the
beginning of each Plan Year. In addition, the levels of
performance will be evaluated annually to determine whether
changing market conditions require alteration of the
performance benchmarks.
B. The profit performance or financial components are based on
goals that require persistence, diligence and hard work. The
annual corporate and business unit budgets are considered
target profit goals. The profit goals are defined as follows:
1. Threshold Profit Goal - This is the minimum profit
level that produces an incentive payout. It
signifies a proficient performance level for the
corporation and/or business unit.
2. Target Profit Goal - This is the profit level that
produces a 100% incentive payout. It signifies a
superior performance level for the corporation and/or
business unit.
3. Maximum Profit Goal - This is the profit level that
produces a 130% incentive payout. It represents an
extraordinary performance level for the corporation
and/or business unit.
C. The individual goals and objectives component of the incentive
award is only payable if at least 70% of budgeted corporate
and/or business unit target profit goals are met. The
purposes for including an individual performance category are
as follows:
1. To reward those contributions that may not be
adequately measured by financial figures.
<PAGE> 4
2. To stimulate a high level of performance and
outstanding contributions that exceed the
individual's job description. The agreed upon goals
and objectives should go well beyond the day-to-day
job performance factors. As is the case in
establishing profit goals, high performance goals
must also be established with regard to individual
goals and objectives.
3. To reward contributions that are based on strategy
that is not immediately and directly tied to
quarterly or annual profits. For example, long term
instead of short term goals; risk-taking rather than
risk aversion; and corporate/business unit strategy
rather than singular strategy.
D. Separate weightings may be used for each incentive award
component. Guidelines on variances in these weightings are
outlined in Section V. The measures used to evaluate each
component's performance are as follows:
1. Corporate Performance - In evaluating corporate
performance, the financial measure is reported
pre-tax earnings, exclusive of extraordinary items.
If at least 70% of budgeted corporate target profit
goals are met, a participant is eligible for an
incentive award payout based on individual goals and
objectives.
2. Business Unit Performance - In evaluating business
unit performance, budgeted business unit income
before corporate charges and/or budgeted business
unit income after corporate charges (in either case,
before the provision for federal income taxes,
performance compensation under this Plan, and any
extraordinary items) is the financial measure used.
If at least 70% of budgeted business unit target
profit goals are met, a participant is eligible for
an incentive
<PAGE> 5
award payout based on individual goals and
objectives.
3. Individual Performance - The company uses the
Management by Objectives (MBOs) approach to monitor
individual performance. In evaluating individual
performance, it is appropriate for the company to
place heavy emphasis upon the participant's
performance with regard to these pre-established
goals.
a. The individual performance component of the
incentive award is determined in relation to
an appraisal of the participant's achievement
of his/her pre-established goals and
objectives.
b. The President will review and approve (or
modify) all individual award recommendations
submitted by business unit heads for the Plan
participants in their area of responsibility.
VII. Performance/Award Relationship
A. For award determination purposes, the President (assisted by
business unit heads) establishes performance levels in
relation to each of the established corporate and business
unit performance goals.
B. A weighted schedule is established for each goal to express
the relationship between the percentage of target achieved and
the associated payout percentage. (See Exhibits IA and IB)
VIII. Determination of Incentive Awards
The participant's incentive award is composed of a Helene Curtis
earnings portion, a business unit earnings portion, and an individual
MBO portion. A participant's final incentive award payout represents
the sum of the following:
A. Helene Curtis Earnings Portion - If any, the extent to which
HCI meets its pre-tax earnings goals. (See
<PAGE> 6
Exhibit IA for Profit Attainment Percentages) This will be
the basis for the HCI earnings portion of the incentive
award for both corporate and business unit participants.
B. Business Unit Earnings Portion - If any, for business unit
participants only, the extent to which each business unit
meets it's budgeted income goals (as defined in Section VI,
Section D, Paragraph 2). Refer to Exhibit IB for Profit
Attainment Percentages which is the basis for the business
unit's earnings portion of the incentive award.
C. Individual MBO Portion - If any, the extent to which the
participant achieved their pre-established MBOs.
IX. Calculation of the Award
A. Payout percentages are determined from the Profit Attain-
ment Percentages as described in Section VIII. (Refer to
Exhibits IA, IB and IC, Section B)
B. To determine the target values for the budgeted income goals,
multiply the weighting assigned to the budgeted income goal by
a participant's target bonus. (Refer to Exhibits IIA, IIB
and IIC, Section A)
C. To determine the earnings portion of the incentive award,
multiply the payout percentage by the target value of the
budgeted income goal. (Refer to Exhibits IIA, IIB and IIC,
Section C) The personal portion is determined by multiplying
the target value of the personal portion by the MBO rating
percentage.
D. The incentive award will be the sum of the earnings portions
and the personal portion. There will be no incentive payout
with regard to the earnings portion unless the threshold level
for the earnings segment has been reached. Likewise, there
will be no incentive payout with regard to the personal
portion unless 70% of budgeted target profit goals have been
reached.
X. Less Than Full Year Plan Participation
<PAGE> 7
A. Awards will be available to those who become eligible for
participation in the Plan during the first six (6) months of
the Plan Year. Participants approved by the President for
participation prior to September 1st will have their incentive
awards based on their earnings during the Plan Year.
B. Employees newly promoted into incentive level positions and
employees promoted into higher incentive level positions
during the Plan Year will have their incentive awards
pro-rated for the number of full months in their
new position.
XI. Form and Timing of Payment
A. The payment of an incentive award is intended for those
employees who have participated in the Plan as regular
full-time employees of Helene Curtis for the entire Plan Year.
If employment with Helene Curtis terminates voluntarily or
otherwise before the Plan Year ends, there will be no payment.
B. All incentive awards are paid in cash, less all applicable
withholding requirements.
C. Incentive awards will be paid by May 1.
XII. Voluntary (Unfunded) Deferral Option
A. Voluntary Deferral Provision - The Plan provides participants
the opportunity to defer payment of incentive awards (with a
minimum deferral requirement of $5,000) to some later time.
The company will credit deferred amounts with interest
increments during the deferral period.
B. Eligibility and Participation - All participants in the
Executive Incentive Plan are eligible for this provision.
<PAGE> 8
C. Deferral Elections - Within the first sixty (60) days of each
Plan Year, a participant may voluntarily (but irrevocably)
elect in writing to defer part or all (but no less than
$5,000) of the payment of his/her incentive award for that
Plan Year. A new participant with less than a full year in
the Plan must make the election to defer the incentive award
within sixty (60) days of notification of his/her eligibility
to participate in the Plan. The deferral period must be
designated at the time the deferral election is executed. All
deferral elections must be approved and executed by the
Company. The Election to Defer Form must be obtained from the
Compensation Department. After a participant's actual
incentive award amount has been ascertained, the deferred
portion will be credited to a bookkeeping reserve account.
This account will be established for the participant and set
up on the books of the company. This account, however, is not
secured and will constitute only a claim on the general funds
of the company.
D. Deferral Period - The deferral period may be for any period of
time ending on the January 15th of a specified year. The
participant makes a separate, irrevocable election for each
incentive award deferral and associated deferral period.
E. Payment of Deferred Amounts - The deferred amount is paid to a
participant in a lump sum on the specified date.
Notwithstanding the specified date of a deferral, payment of
deferred amounts will occur in a lump sum within sixty (60)
days of a participant's death, retirement, or total and
permanent disability (as defined in the Internal Revenue
Code).
F. Financial Hardship - Early payout may be approved in the event
of a severe financial hardship (e.g., excessive medical
expenses or impending bankruptcy) and providing no other funds
are available. An early payment of an amount equal to the
hardship expenses may be approved by the company upon proper
application to the participant.
G. Growth Factors During Deferral - During the deferral period,
the company will credit the participant's beginning account
balance of deferred amounts with an
<PAGE> 9
interest factor on a quarterly basis. This interest factor
will be the three-month Treasury Bill rate.
H. Effect of Deferral on Other Benefits - The Internal Revenue
Service has held that deferred compensation will not be
considered as "annual earnings" for the purposes of
calculating benefits under a qualified retirement (pension and
profit sharing) plan. Thus, the company will not be permitted
to match the amount of deferred compensation which is equal to
1% of a participant's Basic Profit Sharing Contribution.
However, this amount will be multiplied by the Profit Sharing
matching factor and credited to the participant's account in
the company's supplemental Profit Sharing and Retirement
Savings Plan. It will earn the same return in the sup-
plemental Plan as it would if it had been contributed to the
qualified Profit Sharing Plan. Unlike the qualified Profit
Sharing Plan, the Supplemental Profit Sharing Plan is unfunded
and account balances therein constitute only a claim on the
company's general funds.
I. Beneficiary - The participant has the right to file with the
company a "written instrument" designating a named
beneficiary. If the participant dies prior to payment of
deferred amounts, the balance will be paid in a lump sum to
the participant's beneficiary. If no beneficiary is named,
payment will be made to the participant's estate. The
original Designation of Beneficiary Form will remain in effect
for each deferral until it is subsequently changed by the
participant.
J. Unsecured Interest - No participant will have any interest
whatsoever in any specific assets of the company. Each
participant's rights to deferred incentive awards are general
obligations of the company and these rights are no greater
than the rights of any unsecured general creditors of the
company.
To the extent permitted by law, the rights of any parti-
cipant or any beneficiary in any deferred incentive award
shall not be subject to attachment or other legal process for
the debts of such participant or beneficiary.
K. Income Tax Consequences - Generally, under current law, the
participant, under a deferred compensation provision, will be
taxed only when amounts are actually paid. Deferred
compensation and interest increments qualify as ordinary
income subject to a maximum marginal tax rate.
<PAGE> 10
L. Tax Counsel - Deferral of incentive awards for tax purposes
is a complicated issue. Therefore, participants should obtain
expert tax advice prior to making elections to defer their
awards.
M. Plan Administration - The books and records to be maintained
for the purpose of the Deferral Option shall be maintained by
the company and subject to the control of the company. No
member of the Board of Directors and no Officer or employee of
the company shall be liable to any person for any action taken
or omitted in connection with the administration of this Plan
unless attributable to his/her own fraud or willful
misconduct. The voluntary Deferral Option provisions of the
Plan can only be amended in writing and the participants will
be advised about any amendments.
XIII. Discretionary Awards
A. The President will consider special, one-time discretionary
awards, upon recommendations by business unit heads.
Discretionary awards are intended for unique contributions and
achievements. Discretionary awards may be made to regular,
full-time employees of the company in one of the following
situations:
1. Payable to an individual not participating in the
Plan who makes a significant contribution to the
operation or growth of the company in excess of that
normally expected.
2. Payable to an individual who participates in the Plan
if incentive awards are not payable under the Plan by
virtue of the corporation (or certain business units
in the corporation) not achieving specified goals.
In such cases, the individual should have made an
extraordinary contribution through his/her
performance in the organization.
<PAGE> 11
B. The granting of discretionary awards and the amounts of such
awards will be based on an appraisal of individual performance
under the following guidelines:
1. No award in excess of 10% of recipient's base pay;
2. No award less than $500.00; and
3. No more than one award per person within a single
Fiscal Year.
C. Discretionary awards are to recognize:
1. Achievements outside the scope of regular
responsibilities performed in addition to an
individual's current assignment.
2. Service in assignments entailing hardship
circumstances such as prolonged assignment away from
home base.
3. Achievements resulting in substantial and
unanticipated improvements in cost reduction programs
or profits.
<PAGE> 1
EXHIBIT 11
Helene Curtis Industries, Inc. and Subsidiaries
Computation of Earnings Per Share
for the years ended February 28, 1995, 1994 and 1993
(Dollars in thousands, except per-share data)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Primary earnings per share:
Net earnings $ 19,169 $ 12,942 $ 22,109
========== ========== ==========
Weighted average number of shares
outstanding:
Common and Class B Common Shares 9,441,787 9,423,817 9,341,709
Common stock equivalents 45,450 52,667 164,832
---------- ---------- ----------
Total 9,487,237 9,476,484 9,506,541
========== ========== ==========
Primary earnings per share $ 2.02 $ 1.37 $ 2.33
========== ========== ==========
Fully diluted earnings per share:
Net earnings $ 19,169 $ 12,942 $ 22,109
========== ========== ==========
Weighted average number of shares
outstanding:
Common and Class B Common Shares 9,441,787 9,423,817 9,341,709
Common stock equivalents 29,264 24,941 232,972
---------- ---------- ----------
Total 9,471,051 9,448,758 9,574,681
========== ========== ==========
Fully diluted earnings per share $ 2.02 $ 1.37 $ 2.31
========== ========== ==========
</TABLE>
Note:
Fully diluted amounts are not included on the face of the Consolidated
Statement of Earnings because they differ from primary earnings per share by
less than 3%.
<PAGE> 1
EXHIBIT 13
ANNUAL REPORT
Financial Table of Contents:
Management's Report 21
Independent Accountants' Report 21
Management's Discussion and Analysis 22
Consolidated Financial Statements 24
Notes to Consolidated Financial Statements 27
Ten-Year Summary 31
Common Stock Data 31
Management Information 32
Corporate and Stockholder Information 32
20
<PAGE> 2
MANAGEMENT'S REPORT / INDEPENDENT ACCOUNTANTS' REPORT
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S REPORT
The consolidated financial statements presented in this annual report have been
prepared by the Company in conformity with generally accepted accounting
principles. The management of Helene Curtis Industries, Inc. is responsible for
all information and representations made in this report and for the integrity
and objectivity of the financial statements. The statements include informed
judgements and estimates necessary for their preparation.
Systems of internal accounting controls are designed to be cost-effective while
providing reasonable assurance that assets are safeguarded from unauthorized
use or disposition, that transactions are properly recorded and that financial
statements conform in all material respects with generally accepted accounting
principles. Internal accounting control systems and related financial policies
and procedures are communicated to employees responsible for accounting and
reporting activities. The systems are continually reviewed and modified, where
appropriate.
Internal auditors, using audit programs designed to determine compliance with
financial policies and procedures and the systems of internal accounting
controls, independently monitor the effectiveness of the Company's application
of these control systems. Their findings are reported to operating management
for resolution as needed.
The selection of the Company's independent accountants, Coopers & Lybrand
L.L.P., has been approved by the Board of Directors. The audit of the Company's
consolidated financial statements by the independent accountants is made in
accordance with generally accepted auditing standards and is coordinated with
the Company's internal audit program.
The Audit Committee, comprised solely of outside directors who are not
employees of the Company, meets regularly with the independent accountants and
with management to review the results and findings of the audit work, the
evaluation of the adequacy of internal controls and the quality of financial
reporting. The internal auditors, as well as all financial and other personnel
of the Company, are available to the Audit Committee and to the independent
accountants. Reports of the internal auditors are, as a matter of regular
procedure, available to the independent accountants and to the Audit Committee.
/s/ Ronald J. Gidwitz /s/ Lawrence A. Gyenes /s/ Mary J. Oyer
President and Chief Vice President and Vice President
Executive Officer Chief Financial Officer and Corporate
Controller
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Directors
Helene Curtis Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Helene Curtis
Industries, Inc. and Subsidiaries as of February 28, 1995 and 1994, and the
related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three years in the period ended February 28, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 Helene Curtis
Industries, Inc. and Subsidiaries as of February 28, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended February 28, 1995, in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
April 3, 1995
21
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
OVERVIEW Fiscal year 1995 was a satisfying year. Consolidated net sales
reached a record $1.27 billion in 1995, compared to $1.19 billion in 1994,
representing an increase of 7%. Domestically, sales in all product
categories -- hair care, antiperspirants/deodorants and skin care -- grew
versus last year. Internationally, some of the Company's brands grew while
others were called upon to defend their market positions in the face of
increased competitive pressures and changing market conditions.
The Company will continue to grow long-term sales and profits through the
support of existing brands in major geographic markets, expansion and growth in
new markets and the creation of new brands using proprietary product
technologies. Future results will continue to be impacted by a number of
uncertainties regarding economic and market conditions; increased levels of
competitive activity; foreign currency translation; interest rates and force
majeure such as the earthquake in Kobe, Japan.
FISCAL 1995 COMPARED WITH FISCAL 1994 Domestic net sales increased 5% compared
to last year and accounted for 64% of worldwide net sales. The increase was
attributable to the fiscal second-quarter introduction of Suave Baby Care as
well as continued growth in the skin care category where Suave Skin Therapy
Lotions registered significant sales increases. There was also modest growth
in the Company's hair care brands in total where gains for Suave and Finesse
were partially offset by a decline in sales for Vibrance.
The largest market in which the Company competes, U.S. hair care (representing
about two-thirds of domestic sales), began to grow after several relatively
level years. Sales of Suave increased over 9% for the year, responding
positively to the brand's new packaging, with particularly strong results in
both shampoos and conditioners. Finesse sales showed increases for the year,
particularly in shampoos. Salon Selectives sales were flat overall as
increased sales in shampoos and conditioners were offset by lower sales of
styling aids. Vibrance sales were down significantly as the marketing strategy
shifted to a premium promotional brand focus to improve operating profits.
The Company's sales growth in the antiperspirant/deodorant category, which
represents about 18% of domestic sales, exceeded the overall U.S. market
growth of 5%. Degree showed strong sales increases, particularly with its new
deodorant products launched late last year. Suave, which launched its
antiperspirant Super Stick products late last year, also recorded higher sales
for the year.
In other domestic categories, skin care recorded double-digit
increases in sales and now represents about 6% of domestic revenues. The
Company's professional business in the U.S. also showed increases for the year
led by higher sales in permanent wave products despite an overall
flat-to-declining market.
International net sales increased 9% (4% in local currency) compared with last
year and represented 36% of consolidated net sales. This increase was
attributable to higher sales in Japan that benefited from favorable currency
translation and Italy where the Company's newest wholly-owned subsidiary was
formed in the second quarter of last year. Sales increases in U.S. exports
also contributed to the increase in international sales.
Sales in Japan, which represents 61% of international sales, increased 2% in
local currency and 11% with the benefit of favorable foreign currency
translation. Salon Selectives achieved record sales for the year that were
offset, in part, by decreases in sales of Finesse. The Kobe earthquake did not
affect the Company's business in the current fiscal year that ended in
mid-December but will disrupt sales in fiscal 1996.
Sales in Canada, the Company's second largest foreign subsidiary, increased 4%
in local currency but decreased 2% after the impact of unfavorable foreign
currency translation. Sales increases for Finesse and Salon Selectives in the
hair care market and the Degree antiperspirant/deodorant product line
contributed to the increase in local sales.
In other international markets, sales in the United Kingdom, Australian and New
Zealand subsidiaries decreased slightly on a local currency basis as a result
of competitive new hair care product launches and unprecedented increases in
their related marketing expenditures. On the positive side, Degree
antiperspirant/deodorant sales continued to register significant growth in
Australia, New Zealand and Scandinavia.
Cost of sales increased $36 million, or 7%, in 1995 attributable primarily to
higher sales volume. As a percentage of net sales, cost of sales increased
slightly to 44.7% in 1995 from 44.6% in 1994. Lower domestic gross margins
were offset substantially by higher international margins. Domestically,
changes in product mix to lower margin products and increases in material and
packaging costs were offset partially by savings from manufacturing process
improvement initiatives and packaging changes. Internationally, gross margins
improved reflecting the impact of cost reduction initiatives, particularly in
Japan.
Selling, general and administrative expenses increased $32 million, or 5%, in
1995 driven substantially by a 3% increase in advertising and promotion
expense. This increase reflects higher spending in support of major domestic
brands and in certain overseas markets which faced increased competition,
particularly Japan, Australia and the United Kingdom. These increases were
partially offset by reductions in domestic advertising and promotion spending
for Vibrance. Research and development costs increased 19% reflecting the
Company's growing commitment to the development of timely, technologically
superior and innovative products and line extensions. As a percentage of net
sales, overall selling, general and administrative expenses decreased to 51.7%
in 1995 from 52.4% in 1994.
Interest expense increased 17%, to $9 million in 1995 attributable primarily to
rising interest rates coupled with the refinancing of variable-rate debt with a
$50 million fixed-rate private placement early in the year. The average
interest rate for the year was 1.5 percentage points higher than last year
while average borrowings for the year were $15 million lower. Fixed-rate
borrowings at year end represented about 55% of total debt and are at rates
over 100 basis points better than the current market for debt with similar risk
and maturities.
The effective tax rate was 47% in the current period compared with 48% in the
prior year. The decline results from a higher proportion of profits
originating in the domestic operations with a lower effective tax rate.
Earnings before the cumulative effect of an accounting change increased 34% to
$19 million ($2.02 per share) in 1995 from $14 million ($1.51 per share) in the
previous year. The increase was attributable primarily to increased sales
coupled with lower advertising and promotion expenses as a percentage of those
sales. Operating profits in the domestic and Japanese business segments
increased as a result of the aforementioned margin improvements while operating
profits in other geographic areas were lower due to investments in developing
subsidiaries and higher marketing spending in response to competitive
initiatives.
FISCAL 1994 COMPARED WITH FISCAL 1993 Consolidated net sales were $1.19 billion
in 1994, compared to $1.17 billion in 1993, representing an increase of 2%.
Higher sales in international markets and the U.S. antiperspirant/ deodorant
market were offset by lower sales in the U.S. hair care market.
22
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
Domestic net sales decreased approximately 5%, compared with the prior year,
due largely to the decline in sales of the Company's hair care brands --
particularly Salon Selectives and Vibrance. This decline can be attributed to
a decrease in the U.S. hair care market, intense competitive activity and a
reduction in retail inventory levels. Sales of the Company's professional hair
care products also declined as a result of lower sales of perm products due to
style trends and a decrease in salon traffic attributable to an uncertain
economy. These disappointing results were offset partially by increases in
sales of Suave skin lotion and in the antiperspirant/deodorant category where
the Company's two brands, Degree and Suave, recorded sales increases of almost
9% -- significantly higher than the market growth rate.
International net sales increased approximately 17%, compared with the prior
year, due largely to favorable currency translation in Japan where sales
increased 16%. On a local currency basis, sales increased 1% in Japan despite
a weak economy and changing distribution environment. Conversely,
significantly higher local currency sales in the United Kingdom and Canada were
offset substantially by the unfavorable impact of currency translation. Sales
in Scandinavia and Italy, both wholly-owned subsidiaries formed in 1994, also
contributed to the increase in international sales.
Cost of sales increased $15 million, or 3%, in 1994 due mainly to higher sales
volume. As a percentage of net sales, cost of sales increased to 44.6% in 1994
from 44.1% in 1993, due to changes in product mix. Domestically, the shift was
unfavorable as sales of higher gross margin products, such as Salon Selectives
and Vibrance, decreased. Internationally, gross margins improved reflecting
the introduction of higher margin products in Scandinavia, Italy and Japan.
Selling, general and administrative expenses increased $17 million, or 3%, in
1994. As a percentage of net sales, these expenses increased to 52.4% in 1994
from 51.8% in 1993. Selling and marketing expenses were higher in response to
increased competition and difficult market conditions; and support of new
product and subsidiary initiatives in international markets. These increases
were offset partially by significantly lower executive bonus and profit sharing
expenses as a result of lower than expected earnings performance.
Interest expenses remained constant at $8 million in 1994 and 1993 as the lower
cost of borrowing was offset by higher levels of borrowing compared to the
prior year.
The effective tax rate increased to 48% in 1994, compared with 45% in 1993, due
principally to the increase in the statutory U.S. federal tax rate of 1% and
higher effective tax rates for the Company's international operations compared
to the prior year.
Earnings before the cumulative effect of the accounting change discussed below
decreased approximately 35% to $14 million ($1.51 share) in 1994 from $22
million ($2.33 per share) in 1993. The decrease was due primarily to a shift
in sales mix toward products with a lower profit margin, higher selling and
marketing expenses (as a percentage of net sales) and a higher effective tax
rate.
As part of adopting Statement of Financial Accounting Standards No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions," the
cumulative effect of the accounting change resulted in a one-time, non-cash
charge of $2.2 million, or $1.4 million ($.14 per share) after taxes. This
standard required the accrual of postretirement benefits during the years an
employee provides service. These expenses were previously recognized on a
pay-as-you-go basis.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES Cash and equivalents increased to $5 million
at year end, compared with $3 million the prior year. In addition, borrowings
were significantly reduced and capital expenditure requirements were funded
through operating cash flows.
Net cash provided by operating activities increased 45% to $55 million in 1995
from $38 million in 1994. The increase was attributable to higher net earnings
and the favorable impact of cash flow adjustments to those earnings in 1995
compared to 1994. Payables and accrued expenses increased by $28 million due
primarily to the timing of payments affecting trade payables and marketing
accruals as well as an increase in certain compensation and tax related
accruals based on higher earnings. Receivables increased by $18 million due
largely to the increase in fourth quarter net sales as compared with the same
quarter a year ago. Working capital increased to $153 million at year end,
compared with $151 million a year ago; while, the current ratio decreased from
1.7 to 1.6 : 1.
Capital spending decreased to $27 million in 1995 from $45 million in 1994, due
primarily to the completion of significant projects in the prior year and
increased emphasis on cash flow. One of the larger capital expenditures in the
prior year was the investment in a multi-year project to bring the manufacture
of antiperspirant/deodorant sticks in-house and realize long-term cost savings
in this high growth category. Capital expenditures in both years included a
large number of smaller projects to increase manufacturing and distribution
capabilities and improve efficiencies. The Company expects to continue and,
when justified, increase this level of investment to support business
operations.
The total-debt-to-total-capital ratio decreased to 40% at year end, compared
with 46% the prior year end. Total debt decreased to $144 million from $168
million with fixed-cost borrowings representing 55% of total year-end debt,
compared with 17% the prior year. In March 1994, the Company borrowed $50
million under a private placement agreement whereby senior unsecured notes were
issued. These notes mature in fiscal 2002 and 2005. The funds were used to
refinance existing debt and for general corporate purposes.
Dividend payments remained constant at $2.2 million in 1995 and 1994. In both
years, the Company paid a dividend of six cents per share quarterly to holders
of its Common Stock and one cent per share in the first quarter and six cents
per share in each of the subsequent three quarters to holders of its Class B
Common Stock. This dividend, while one of the lowest in the Company's industry
group, has reflected management's strategy to reinvest operational cash flows
in business expansion opportunities in the U.S. and abroad. The dividend has
been increased only twice since fiscal 1987 when dividend payments were resumed
after a 21-year hiatus. In April 1995, the Board of Directors voted to
increase the annual cash dividend by 33% in 1996 -- from 24 cents to 32 cents
for holders of its Common Stock and from 19 cents to 27 cents for holders of
its Class B Common Stock. The increase acknowledges the improved cash flows
from operating activities and the increased emphasis on the management of those
flows.
Management believes the funds to be provided from operations and present credit
arrangements will be sufficient to meet anticipated working capital, capital
spending and other funding requirements.
23
<PAGE> 5
CONSOLIDATED STATEMENTS OF EARNINGS / CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS Dollars in thousands, except per-share data
<TABLE>
<CAPTION>
Years ended February 28, 1995 1994 1993
------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
NET SALES $1,265,600 $1,187,081 $1,167,819
---------- ---------- ----------
Costs and expenses:
Cost of sales 565,738 529,667 514,447
Selling, general and administrative 654,758 622,288 605,113
Interest 8,933 7,640 7,767
---------- ---------- ----------
1,229,429 1,159,595 1,127,327
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 36,171 27,486 40,492
Provision for income taxes 17,002 13,193 18,383
---------- ---------- ----------
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 19,169 14,293 22,109
Cumulative effect of accounting change -- (1,351) --
---------- ---------- ----------
NET EARNINGS $ 19,169 $ 12,942 $ 22,109
========== ========== ==========
NET EARNINGS PER SHARE:
Earnings before cumulative effect of accounting change $ 2.02 $ 1.51 $ 2.33
Cumulative effect of accounting change -- (.14) --
---------- ---------- ----------
Net earnings $ 2.02 $ 1.37 $ 2.33
========== ========== ==========
Average number of shares outstanding 9,487,237 9,476,484 9,506,541
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Dollars in thousands
<TABLE>
<CAPTION>
Class B Capital Treasury Stock
Common Stock Common Stock in Currency (Common)
------------------ ------------------ Excess of Retained Translation ------------------
Shares Amount Shares Amount Par Value Earnings Adjustment Shares Amount
------------------- ------------------ --------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 29, 1992 7,913,431 $3,957 3,080,709 $1,540 $36,617 $130,404 $2,000 1,227,430 $ (6,063)
Net earnings 1993 22,109
Currency translation adjustment (1,457)
Issuance of treasury stock for
various plans 2,415 (152,453) 906
Repurchase of Common Stock 93,696 (4,033)
Exchange of Class B Common
Stock for Common Stock 340 (340)
Cash dividends paid (2,195)
--------- ------ --------- ------ ------- -------- ------ --------- --------
BALANCE, FEBRUARY 28, 1993 7,913,771 $3,957 3,080,369 $1,540 $39,032 $150,318 $ 543 1,168,673 $ (9,190)
Net earnings 1994 12,942
Currency translation adjustment 675
Issuance of treasury stock for
various plans 1,516 (68,750) 543
Repurchase of Common Stock 14,108 (217)
Exchange of Class B Common Stock
for Common Stock 7,700 4 (7,700) (4)
Cash dividends paid (2,215)
--------- ------ --------- ------ ------- -------- ------ --------- --------
BALANCE, FEBRUARY 28, 1994 7,921,471 $3,961 3,072,669 $1,536 $40,548 $161,045 $1,218 1,114,031 $ (8,864)
Net earnings 1995 19,169
Currency translation adjustment 4,321
Issuance of treasury stock for
various plans 1,479 (57,328) 464
Repurchase of Common Stock 67,287 (2,242)
Exchange of Class B Common
Stock for Common Stock 12,140 6 (12,140) (6)
Cash dividends paid (2,217)
--------- ------ --------- ------ ------- -------- ------ --------- --------
BALANCE, FEBRUARY 28, 1995 7,933,611 $3,967 3,060,529 $1,530 $42,027 $177,997 $5,539 1,123,990 $(10,642)
========= ====== ========= ====== ======= ======== ====== ========= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
24
<PAGE> 6
CONSOLIDATED BALANCE SHEETS
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS Dollars in thousands
As of February 28, 1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 5,136 $ 2,802
Receivables--net 270,824 242,514
Inventories 108,178 102,344
Other current assets 22,029 20,059
-------- --------
Total current assets 406,167 367,719
-------- --------
Property, plant and equipment:
Land 16,167 16,142
Buildings and improvements 104,212 102,271
Machinery, equipment and other 165,186 128,012
Construction in progress 29,980 46,246
-------- --------
315,545 292,671
Less accumulated depreciation 100,209 77,402
-------- --------
Net property, plant and equipment 215,336 215,269
-------- --------
Other assets 25,329 29,495
-------- --------
Total assets $646,832 $612,483
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 6,706 $ 7,361
Accounts payable 121,199 99,566
Income taxes 15,099 8,401
Advertising and promotion 62,193 54,843
Compensation and other benefits 28,828 22,747
Other accrued expenses 19,557 23,606
-------- --------
Total current liabilities 253,582 216,524
Long-term debt 137,248 160,990
Deferred income taxes 11,686 15,230
Accrued retirement and other benefits 23,898 20,295
-------- --------
Total liabilities 426,414 413,039
-------- --------
Stockholders' equity:
Common Stock, issued 7,933,611 shares (1995) and
7,921,471 shares (1994) 3,967 3,961
Class B Common Stock, issued 3,060,529 shares (1995) and
3,072,669 shares (1994) 1,530 1,536
Capital in excess of par value 42,027 40,548
Retained earnings 177,997 161,045
Currency translation adjustment 5,539 1,218
Treasury Stock (Common), 1,123,990 shares (1995) and
1,114,031 shares (1994), at cost (10,642) (8,864)
-------- --------
Total stockholders' equity 220,418 199,444
-------- --------
Total liabilities and stockholders' equity $646,832 $612,483
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
25
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS Dollars in thousands
Years ended February 28, 1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $19,169 $12,942 $22,109
------- ------- -------
Adjustments to net earnings:
Depreciation and amortization 31,017 25,717 22,277
Provision for deferred taxes (4,961) 1,656 2,733
Cumulative effect of accounting change -- 1,351 --
Other 8,281 1,256 4,519
Changes in operating assets and liabilities:
Receivables--net (18,319) 11,826 (21,961)
Inventories (3,584) 1,186 (7,910)
Payables and accrued expenses 27,578 (16,482) 19,407
Other (3,928) (1,865) (12,191)
------ ------ ------
Net cash provided by operating activities 55,253 37,587 28,983
------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (27,011) (44,991) (35,381)
Other 162 (815) (6,527)
------ ------ ------
Net cash used by investing activities (26,849) (45,806) (41,908)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 17,647 18,852 71,343
Repayment of borrowings (42,788) (14,199) (57,347)
Dividends paid (2,217) (2,215) (2,195)
Other (299) 589 (471)
------ ------ ------
Net cash provided (used) by financing activities (27,657) 3,027 11,330
------ ------ ------
Effect of exchange rate changes on cash and equivalents 1,587 430 (382)
------ ------ ------
Increase (decrease) in cash and equivalents 2,334 (4,762) (1,977)
Cash and equivalents at beginning of year 2,802 7,564 9,541
------ ------ ------
Cash and equivalents at end of year $ 5,136 $ 2,802 $ 7,564
======= ======== =======
Supplemental cash flow data:
Cash paid during the year for:
Interest $ 7,653 $ 7,702 $ 8,117
Income taxes $15,266 $ 13,035 $14,509
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
26
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dollars in thousands
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of Helene Curtis Industries, Inc. and its subsidiary companies, all of
which are wholly-owned. Intercompany transactions and balances are eliminated.
Subsidiaries located outside the United States and Canada have been included on
the basis of their years ended December 15 or 31 to facilitate timely
consolidation of financial statements. Certain prior year amounts have been
reclassified to conform to the current year's presentation.
FOREIGN CURRENCY TRANSLATION The results of operations for the foreign
subsidiaries are translated using the average exchange rates during the period,
while the assets and liabilities are translated into U.S. dollars using current
rates. Resulting translation adjustments are recorded as currency translation
adjustments in a separate component of stockholders' equity. Gains or losses
resulting from foreign currency transactions are included in net earnings and
were not material in any of the years presented.
CASH AND EQUIVALENTS The Company considers securities with original maturities
of three months or less to be cash equivalents.
INVENTORIES Inventories are valued at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for all U.S. inventories
and first-in, first-out (FIFO) method for inventories of foreign subsidiaries.
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at cost
less depreciation accumulated to date. Depreciation is principally computed on
the straight-line method for financial reporting purposes and generally on an
accelerated method for income tax purposes. Maintenance and repair costs are
charged to earnings as incurred. Upon retirement or other disposition of
property, any gain or loss is included in earnings.
INCOME TAXES Deferred income taxes are recognized for the future tax
consequences attributable to temporary differences between the carrying amounts
and tax bases of existing assets and liabilities. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which temporary differences are estimated to be
recovered or settled. Deferred income taxes are not provided on undistributed
earnings of foreign subsidiaries, aggregating approximately $19,760 at February
28, 1995, as such earnings are expected to be permanently reinvested in these
subsidiaries. If these earnings were remitted, the credit for foreign taxes
paid would substantially offset the applicable U.S. income taxes.
NET EARNINGS PER SHARE Net earnings per share is computed by dividing net
earnings by the weighted average number of shares outstanding during the year.
Common stock equivalents, which are shares issuable on the exercise of stock
options net of shares assumed to have been purchased with the proceeds, have
been included in this computation.
2. RECEIVABLES
Receivables, principally trade, consist of the following amounts at
February 28:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Accounts receivable $210,755 $187,452
Notes receivable 66,282 60,161
-------- --------
277,037 247,613
Less allowance for doubtful accounts 6,213 5,099
-------- --------
$270,824 $242,514
======== ========
</TABLE>
3. INVENTORIES
Inventories consist of the following components at February 28:
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Raw materials $ 18,336 $ 16,252
Work in process 3,003 2,037
Finished goods 86,839 84,055
-------- --------
$108,178 $102,344
======== ========
</TABLE>
Inventories valued using the LIFO method amounted to $77,906 and $70,552 at
February 28, 1995 and 1994, respectively. Approximate current cost exceeded
LIFO cost by $3,321 and $2,893 at February 28, 1995 and 1994, respectively.
4.DEBT
Long-term debt consists of the following at February 28:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
$180,000 Unsecured Revolving Credit Facility -
due 1999; 1995 - 6.3%, 1994 - 4.2% $ 51,000 $124,000
6.68% Unsecured Notes - due 1996 25,000 25,000
6.11% Unsecured Notes - due 2002 27,500 --
6.50% Unsecured Notes - due 2005 22,500 --
Industrial Development Revenue Bonds -
due 2007; 1995 - 4.2%, 1994 - 2.5% 6,000 6,000
Other 5,821 6,646
-------- --------
137,821 161,646
Less current maturities included
in short-term debt 573 656
-------- --------
$137,248 $160,990
======== ========
</TABLE>
The $180,000 Unsecured Revolving Credit Facility has an "evergreen" provision
allowing the Company to request a one-year extension on each anniversary date.
The various debt agreements require the Company to maintain certain financial
ratios relating to fixed charge coverage and leverage among others. The
following payments are required during the next five fiscal years: 1996 -
$25,573; 1997 - $415; 1998 - $208; 1999 - $51,051; 2000 - $2,699.
The 6.68% Unsecured Notes due January, 1996, are classified as long-term debt
based on the Company's intent and ability to repay the notes using additional
funds available under the $180,000 unsecured revolving credit agreement.
The Company had unused lines of credit, which are mostly uncommitted, of
approximately $83,345 with various banks at February 28, 1995.
The weighted average interest rate on short-term debt outstanding at February
28, 1995 and 1994, was 8.8% and 5.1%, respectively.
5. RETIREMENT PLANS AND OTHER BENEFITS
RETIREMENT PLANS The Company provides retirement benefits to substantially all
employees through profit sharing and other retirement plans. Profit sharing
plans cover employees in the U.S. and Canada. Company contributions to these
plans are discretionary. Retirement benefits for employees in other foreign
subsidiaries are provided through separate plans often based on local statutes.
The provision for retirement benefit costs charged to earnings was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Profit sharing plans $ 9,103 $ 8,281 $ 9,509
Other retirement plans 1,464 2,098 1,287
------- ------- -------
$10,567 $10,379 $10,796
======= ======= =======
</TABLE>
The liability for unfunded retirement benefits for all plans combined was
$12,986 and $11,185 at February 28, 1995 and 1994, respectively.
POSTRETIREMENT BENEFITS The Company's cost of postretirement benefits other
than pensions relates to the payment of Medicare Part B premiums for retirees.
In the prior year, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This standard required the
expected cost of retiree benefits be charged to expense during the years
employees render service rather than the Company's past practice of recognizing
this cost on a pay-as-you-go basis. As part of adopting the new standard, the
first quarter of the prior year included a one-time, non-cash charge against
earnings of $2,178 before taxes and $1,351 after taxes or $.14 per share.
Additionally,
27
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands, except per-share data
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
5. RETIREMENT PLANS AND OTHER BENEFITS Continued
expense of $323 was recognized in fiscal years 1995 and 1994. The unfunded
accumulated postretirement benefit obligation was $2,685 and $2,453 at February
28, 1995 and 1994, respectively.
POSTEMPLOYMENT BENEFITS In fiscal 1995, the Company adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." This new standard requires
the accrual of postemployment benefits during the years an employee provides
service to the Company. The current annual expense for these benefits,
previously recognized on a pay-as-you-go basis, is not material. The impact of
the adoption did not have a material effect on the Company's consolidated
financial position.
6. COMMON STOCK AND STOCK PLANS
At February 28, 1995, 5,000,000 shares of $.50 par value Preferred Stock were
authorized and unissued, and 15,000,000 shares each of $.50 par value Common
Stock and $.50 par value Class B Common Stock were authorized. In April 1995,
the Board of Directors recommended, subject to stockholders' approval at the
1995 Annual Meeting, an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock to 30,000,000.
The Class B Common Stock is identical to the Common Stock, except that it has
ten-times greater voting power but lesser dividend rights per share than the
Common Stock. While transfer of the Class B Common Stock is restricted, the
Class B Common Stock is convertible at no cost into Common Stock on a
share-for-share basis; under certain conditions, all outstanding shares of the
Class B Common Stock must be converted.
1979 NON-QUALIFIED STOCK OPTION PLAN Under the 1979 Non-Qualified Stock Option
Plan, which expired in 1989, options were granted to officers and other key
employees of the Company and its subsidiaries to purchase shares from the
Company for $1 each. Acquired shares are non-transferable and may be resold at
any time, but only to the Company, and must be resold to the Company within 60
days after termination of employment. The repurchase price to be paid by the
Company for the shares is the exercise price plus the increase in book value
per share from the date of exercise of the option to the date the shares are
resold to the Company. The aggregate change in book value for these shares
during the year is accrued and charged to earnings. Shares repurchased under
this plan during fiscal years 1995, 1994 and 1993 were 3,000; 8,000; and zero,
respectively. Shares outstanding under this plan are restricted and excluded
from the calculation of the weighted average number of shares outstanding and
stockholders' equity per share. Shares outstanding under this plan at February
28, 1995, 1994 and 1993, were 433,000; 436,000; and 444,000, respectively.
1992, 1991 AND 1983 STOCK OPTION PLANS The 1992 Stock Option Plan, which
expires in 2002, provides for the grant of incentive stock options (ISOs),
non-qualified stock options (NQSOs) and restricted stock to officers and other
key employees to purchase up to 1,500,000 shares of the Company's Common Stock.
This plan supersedes the 1983 and 1991 Stock Option Plans which expired in
fiscal 1993.
The exercise price for ISOs must be 100% of the fair market value of the
Company's Common Stock as of the date of grant. The exercise price for NQSOs
may be at a price less than the fair market value. Granted options are
exercisable in four equal annual installments commencing one year after the
date of grant and expire ten years from the date of grant except for options
granted under the 1983 Stock Option Plan which expire five years from the date
of grant. The Company has the first right to purchase shares acquired by an
optionee. The following summarizes the activity of the ISO and NQSO plans for
fiscal years 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Option Price Available
Per Share Outstanding Exercisable For Grant
---------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
At February 29, 1992 $18.31 to $34.25 533,456 180,341 218,974
======= =========
Granted $43.63 269,550
Exercised $18.31 to $34.25 (152,453)
Cancelled $29.75 to $34.25 (10,700)
--------
At February 28, 1993 $18.31 to $43.63 639,853 165,690 1,230,450
======= =========
Exercised $18.31 to $34.25 (38,750)
Cancelled $29.75 to $43.63 (34,600)
--------
At February 28, 1994 $29.75 to $43.63 566,503 273,241 1,249,150
======= =========
Granted $27.38 TO $32.00 531,634
Exercised $29.75 TO $34.25 (57,328)
Cancelled $27.38 TO $43.63 (76,624)
--------
At February 28, 1995 $27.38 TO $43.63 964,185 270,512 702,315
======== ======= =========
</TABLE>
Under the 1992 Stock Option Plan, restricted Common Stock may be granted at no
cost to officers and other key employees. Recipients are entitled to cash
dividends and to vote the granted shares. Restrictions limit the sale or
transfer of these shares during a five-year period whereby the restrictions
lapse on 20% of these shares after each of the five years. In fiscal 1994, the
Company awarded 30,000 shares of restricted stock which had a fair value at the
date of grant of $1,253. In fiscal 1995, restrictions on 6,000 shares expired
and no additional shares were granted. Compensation is charged to earnings
over the five-year restriction period and amounted to $251 and $209 in fiscal
years 1995 and 1994, respectively.
DIRECTORS' STOCK OPTION PLAN Under the Directors' Stock Option Plan, which
expires in 1998, a total of 120,000 shares are authorized and each non-employee
director is entitled to receive options for 8,000 shares of the Company's
Common Stock. Options are issued at the fair market value of the Company's
Common Stock on the date of grant and have a term of ten years. Granted options
vest over a five-year period. In fiscal years 1995, 1994 and 1993, no options
were granted, exercised or cancelled.
There were 54,400; 52,800; and 41,600 options exercisable at February 28, 1995,
1994 and 1993, respectively. Options for 64,000 shares were available for
future grants at February 28, 1995, 1994 and 1993. There were 56,000 options
(48,000 at $18.06 and 8,000 at $25.13) outstanding at February 28, 1995, 1994
and 1993.
ALL-EMPLOYEE STOCK OPTION PROGRAM The All-Employee Stock Option Program
provided for the one-time grant of incentive stock options to each employee
(who was on the Company's payroll on March 30, 1992) to purchase 100 shares of
the Company's Common Stock. Options become exercisable on March 30, 1997, and
expire on March 30, 2002. The Company has the first right to purchase shares
acquired by an optionee. The one-time grant included options for 324,100 shares
at $35.88. In fiscal years 1995, 1994 and 1993, options for 36,600; 21,600; and
17,700 were cancelled, respectively. There were 248,200; 284,800; and 306,400
options outstanding at February 28, 1995, 1994 and 1993, respectively.
EMPLOYEE STOCK PURCHASE PLAN Under the Employee Stock Purchase Plan, which
expires in 1998, a total of 400,000 shares are authorized for sale to
employees. Payroll deductions are accumulated for plan participants and applied
to the purchase of shares on a quarterly basis. The price per share is 85% of
the lower of the market price at the beginning or end of the quarterly period.
In fiscal 1995, 52,391 shares were purchased by employees at $21.41 to $24.92
per share. In fiscal 1994, 50,576 shares were purchased by employees at $21.41
to $35.28 per share. In fiscal 1993, 33,998 shares were purchased by employees
at $26.19 to $30.34 per share. At February 28, 1995, there were 190,726 shares
available for sale to employees.
28
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dollars in thousands
HELENE CURTIS INDUSTSRIES, INC. AND SUBSIDIARIES
1994 STOCK APPRECIATION RIGHT PLAN Under the 1994 Stock Appreciation Right
Plan, which was approved at the 1994 Annual Meeting of Stockholders and which
expires in 2004, a total of 2,000,000 units were authorized for issuance to
officers and other key employees of the Company. A unit is a right which
entitles the participant to receive an amount equal to the difference between
the fair market value on the date of exercise and the base price of the unit.
Units are issued at the fair market value at the date of grant (base price),
vest over a four-year period and have a term of five years.
In fiscal 1995, the Company granted 160,348 units, cancelled 3,404 units and
recognized compensation expense of $158. At February 28, 1995, there were
156,944 units outstanding and 1,843,056 available for future grants.
7. INCOME TAXES
Earnings before income taxes and cumulative effect of accounting change is
comprised of:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Domestic $40,632 $22,771 $28,961
Foreign (4,461) 4,715 11,531
------- ------- -------
$36,171 $27,486 $40,492
======= ======= =======
</TABLE>
The provision for income taxes is comprised of:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Currently payable:
Federal $13,620 $ 5,227 $ 6,227
Foreign, including
taxes withheld 5,124 5,293 8,053
State 3,219 1,017 1,370
------- ------- -------
21,963 11,537 15,650
Deferred (4,961) 1,656 2,733
------- ------- -------
$17,002 $13,193 $18,383
======= ======= =======
</TABLE>
The provision for income taxes as shown in the financial statements differs
from a provision computed using the statutory rate for the following reasons:
<TABLE>
<CAPTION>
1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
Statutory rate 35% 35% 34%
======= ======= =======
Tax expense using
statutory rate $12,661 $ 9,620 $13,767
Increase (decrease) in taxes
resulting from:
State income taxes net
of federal tax benefit 1,850 718 767
Effect of foreign operations 4,013 2,026 2,601
Other (1,522) 829 1,248
------- ------- -------
$17,002 $13,193 $18,383
======= ======= =======
</TABLE>
The components of deferred tax assets and liabilities are as follows at
February 28:
<TABLE>
<CAPTION>
Deferred Tax Assets Deferred Tax Liabilities
-------------------- ------------------------
1995 1994 1995 1994
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Current:
Advertising and
promotion $ 7,457 $ 8,368 $ 744 $ 1,030
Compensation and
other benefits 2,550 2,334 -- --
Inventories 2,081 1,572 338 369
Accounts receivable 1,639 1,280 -- --
Other 1,984 1,589 441 360
------- ------- ------- -------
15,711 15,143 1,523 1,759
------- ------- ------- -------
Noncurrent:
Depreciation and
amortization 7,377 5,355 25,847 26,499
Retirement and
other benefits 8,595 7,397 -- --
Other 1,694 1,041 424 464
------- ------- ------- -------
17,666 13,793 26,271 26,963
------- ------- ------- -------
$33,377 $28,936 $27,794 $28,722
======= ======= ======= =======
</TABLE>
Deferred tax assets and liabilities are classified in the consolidated
balance sheets as follows at February 28:
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Assets
Other current assets $14,188 $13,384
Other assets 3,081 2,060
Liabilities
Deferred income taxes 11,686 15,230
------- -------
Net deferred tax assets $ 5,583 $ 214
======= =======
</TABLE>
8. FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments to reduce exposures to market
risks resulting from fluctuations in interest rates and foreign exchange. Most
financial instruments expose the holders to credit risk for non-performance and
market risk for changes in interest and currency rates. The Company mitigates
credit risk by dealing only with major financial institutions and does not have
significant exposure with any single counter-party. Management believes that
risk of loss is remote and in any event would be immaterial. The Company
manages market risk by limiting the use of derivatives to hedging activities or
by limiting the potential exposure to amounts that are not material to the
results of operations or cash flows. The Company does not enter into financial
instruments for trading or speculative purposes.
The purpose of the Company's foreign currency hedging activities is to reduce
the risk that the eventual dollar cash inflows from intercompany transactions
will be adversely impacted by changes in exchange rates. The Company enters
into forward contracts and options, generally with maturities of a year or
less, to hedge certain firm commitments denominated in foreign currencies
(primarily Japanese yen). Gains and losses on forward contracts and premiums
paid on options are not significant and are recognized in earnings in the same
period as the hedged transaction. The notional amounts of open forward
contracts and options were $7,527 and $5,055, at February 28, 1995 and 1994,
respectively.
The Company uses various interest rate contracts to maintain the desired
proportion of variable-rate versus fixed-rate debt and manage the overall cost
of borrowings. The notional amounts of interest rate contracts outstanding were
$12,500 and zero, at February 28, 1995 and 1994, respectively. Interest
expense under forward rate agreements, and the respective debt instruments
which they hedge, are recorded at the net effective interest rate of the hedged
transactions. Premiums paid under interest-rate cap agreements are not
significant and are amortized to interest expense over the terms of the
respective agreements.
29
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands, except per-share data
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
8. FINANCIAL INSTRUMENTS Continued
The carrying amount of derivative financial instruments, cash and equivalents,
receivables, short-term debt and accounts payable approximates their fair value
due to the short-term maturities of these instruments. At February 28, 1995 and
1994, the estimated fair value of long-term debt was $131,922 and $162,223,
respectively, compared with a carrying amount of $137,821 and $161,646,
respectively. The fair value of long-term debt was estimated based on quoted
market prices for debt with similar risk and maturities.
Financial instruments which potentially subject the Company to concentrations
of credit risk are cash and receivables. Excess cash is deposited with major
banks in countries in which the Company does business and invested in high
quality short-term financial instruments. The Company sells personal care
products to a diverse group of customers throughout the world. In the U.S. and
Japan, substantial sales were made to a relatively few large customers with
sales to one customer representing 15%, 13% and 11% of consolidated net sales
in fiscal years 1995, 1994 and 1993, respectively. Credit limits, ongoing
credit evaluation and account monitoring procedures are utilized to minimize
the risks of loss. Collateral is generally not required. The Company maintains
reserves for potential credit losses and such losses, in the aggregate, have
not exceeded management's expectations.
9. SUPPLEMENTAL INFORMATION
The following costs are expensed as incurred and classified as part of selling,
general and administrative expenses:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- ---------
<S> <C> <C> <C>
Advertising $150,479 $152,309 $147,597
Research and development $ 26,762 $ 22,474 $ 21,983
</TABLE>
10. LEASES
Rental expense under operating leases (principally for computer equipment,
research facility, office and warehouse space) for fiscal years 1995, 1994 and
1993 was $17,692, $15,866, and $12,334, respectively. Renewal and purchase
options are available on certain of these leases. Future minimum lease
payments under noncancellable operating leases at February 28, 1995, are as
follows:
<TABLE>
<S> <C>
1996 $ 9,622
1997 7,397
1998 5,186
1999 4,515
2000 4,354
Thereafter 41,533
-------
$72,607
=======
</TABLE>
11. UNAUDITED QUARTERLY FINANCIAL DATA
The following table provides summarized unaudited quarterly financial data:
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
---- -------- ------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $265,670 $352,539 $282,370 $365,021
======== ======== ======== ========
Gross profit $149,238 $192,964 $155,363 $202,297
======== ======== ======== ========
Net earnings $ 1,436 $ 6,597 $ 3,363 $ 7,773
======== ======== ======== ========
Per share:
Net earnings $ .15 $ .70 $ .35 $ .82
======== ======== ======== ========
Dividends:
Common Stock $ .06 $ .06 $ .06 $ .06
======== ======== ======== ========
Class B
Common Stock $ .01 $ .06 $ .06 $ .06
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter
---- --------- -------- --------- --------
<S> <C> <C> <C> <C>
Net sales $243,372 $338,135 $266,918 $338,656
======== ======== ======== ========
Gross profit $136,702 $184,821 $146,858 $189,033
======== ======== ======== ========
Net earnings (loss):
Earnings before
cumulative effect of
accounting change $ 834 $ 4,236 $ 2,777 $ 6,446
Cumulative effect of
accounting change (1,351) -- -- --
-------- -------- -------- --------
$ (517) $ 4,236 $ 2,777 $ 6,446
======== ======== ======== ========
Per share:
Net earnings (loss):
Earnings before
cumulative effect of
accounting change $ .09 $ .44 $ .30 $ .68
Cumulative effect of
accounting change (.14) -- -- --
-------- -------- -------- --------
$ (.05) $ .44 $ .30 $ .68
======== ======== ======== ========
Dividends:
Common Stock $ .06 $ .06 $ .06 $ .06
======== ======== ======== ========
Class B
Common Stock $ .01 $ .06 $ .06 $ .06
======== ======== ======== ========
</TABLE>
12. BUSINESS SEGMENTS
The Company is in the personal care products business, which includes the
development, manufacture and sale of brand-name personal care products. The
Company markets its products to consumers through supermarkets, mass
merchandisers and drugstores, and to beauty salons through distributors. The
following table provides information about the Company's continuing operations
in different geographic areas:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net sales:
Domestic $ 809,121 $ 768,870 $ 810,925
---------- ---------- ----------
Foreign:
Japan 276,947 249,785 216,179
Other geographic areas 179,532 168,426 140,715
---------- ---------- ----------
456,479 418,211 356,894
---------- ---------- ----------
Consolidated $1,265,600 $1,187,081 $1,167,819
========== ========== ==========
Operating profit (loss):
Domestic $ 59,928 $ 36,626 $ 52,509
---------- ---------- ----------
Foreign:
Japan 12,283 10,917 11,249
Other geographic areas (5,768) 3,708 7,184
---------- ---------- ----------
6,515 14,625 18,433
---------- ---------- ----------
Consolidated 66,443 51,251 70,942
General corporate expenses (21,339) (16,125) (22,683)
Interest expense (8,933) (7,640) (7,767)
---------- ---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change $ 36,171 $ 27,486 $ 40,492
========== ========== ==========
Identifiable assets:
Domestic $ 401,059 $ 383,583 $ 391,892
---------- ---------- ----------
Foreign:
Japan 141,614 125,196 113,749
Other geographic areas 71,338 66,840 57,960
---------- ---------- ----------
212,952 192,036 171,709
---------- ---------- ----------
Corporate 32,821 36,864 36,484
---------- ---------- ----------
Consolidated $ 646,832 $ 612,483 $ 600,085
========== ========== ==========
</TABLE>
Operating profit represents net sales less operating expenses and is exclusive
of interest, general corporate expenses and income taxes. Export sales and
sales between geographic areas were not material in any of the years presented.
30
<PAGE> 12
TEN-YEAR SUMMARY/COMMON STOCK DATA
HELENE CURTIS INDUSTRIES, INC. AND SUBSIDIARIES
TEN-YEAR SUMMARY Dollars in thousands, except per-share data
<TABLE>
<CAPTION>
Years ended
February 28 or 29, 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONTINUING
OPERATIONS
Net sales $1,265,600 $1,187,081 $1,167,819 $1,019,911 $ 867,708 $ 690,863 $ 584,497 $ 458,519 $ 373,927 $ 336,185
Gross profit $ 699,862 $ 657,414 $ 653,372 $ 565,931 $ 493,293 $ 403,380 $ 352,406 $ 275,068 $ 222,729 $ 198,959
Gross profit
percent 55.3% 55.4% 55.9% 55.5% 56.9% 58.4% 60.3% 60.0% 59.6% 59.2%
Earnings
before
income
taxes $ 36,171 $ 27,486 $ 40,492 $ 35,622 $ 16,272 $ 30,196 $ 25,803 $ 19,483 $ 20,212 $ 17,575
Earnings $ 19,169 $ 14,293 $ 22,109 $ 19,236 $ 6,502 $ 17,446 $ 15,224 $ 10.618 $ 10,157 $ 9,139
Earnings per
share $ 2.02 $ 1.51 $ 2.33 $ 2.04 $ .70 $1.87 $ 1.81 $ 1.44 $ 1.38 $ 1.25
Average
number
of shares
outstanding 9,487,237 9,476,484 9,506,541 9,439,493 9,323,897 9,320,787 8,422,052 7,380,286 7,335,316 7,337,998
Dividends
paid per
share:
Common
Stock $ .24 $ .24 $ .24 $ .20 $ .20 $ .175 $ .15 $ .15 $ .15 --
Class B
Common
Stock $ .19 $ .19 $ .19 $ .15 $ .15 $ .125 $ .10 $ .10 $ .10 --
===================================================================================================================================
FINANCIAL
POSITION
Total assets $ 646,832 $ 612,483 $ 600,085 $ 542,380 $ 479,981 $ 403,476 $ 325,193 $ 236,662 $ 198,182 $ 175,483
Working
capital $ 152,585 $ 151,195 $ 151,484 $ 146,931 $ 121,189 $ 124,467 $ 87,283 $ 53,309 $ 48,926 $ 45,972
Current
ratio 1.6 1.7 1.7 1.7 1.7 2.0 1.7 1.5 1.6 1.7
Long-term
debt $ 137,248 $ 160,990 $ 154,438 $ 146,412 $ 126,298 $ 108,545 $ 50,833 $ 32,403 $ 28,882 $ 29,904
Stock-
holders'
equity $ 220,418 $ 199,444 $ 186,200 $ 168,455 $ 150,971 $ 148,826 $ 131,795 $ 88,827 $ 77,408 $ 67,286
Stockholders'
equity
per share $ 23.36 $ 21.12 $ 19.85 $ 18.07 $ 16.36 $ 16.21 $ 14.44 $ 11.98 $ 10.54 $ 9.17
Return on
stock-
holders'
equity 9.1% 6.7% 12.5% 12.0% 1.1% 12.0% 13.1% 13.0% 14.2% 18.0%
Capital
expendi-
tures $ 27,011 $ 44,991 $ 35,381 $ 35,583 $ 32,307 $ 49,319 $ 35,563 $ 15,903 $ 13,182 $ 13,021
===================================================================================================================================
</TABLE>
Per-share data reflects a two-for-one stock split in 1990.
COMMON STOCK DATA
Helene Curtis Industries, Inc. shares are traded on the New York Stock Exchange
(ticker symbol: HC). The market price ranges and close, by quarter, for the
past two fiscal years were:
<TABLE>
<CAPTION>
1995 1994
-----------------------------------------------------------------------------------
HIGH LOW CLOSE HIGH LOW CLOSE
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First quarter 28 5/8 22 3/4 27 5/8 43 3/4 32 1/4 33 3/4
Second quarter 34 3/8 27 1/2 33 1/8 34 1/8 25 3/4 26 3/4
Third quarter 36 3/8 31 31 3/4 27 3/4 25 26 1/2
Fourth quarter 34 28 3/4 29 29 1/8 24 7/8 25 3/4
</TABLE>
Number of stockholders of record at February 28, 1995: 1,516.
31
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Company (State of
Incorporation Parent Percentage of Stock
---------------------- ------------------ -------------------
<S> <C> <C>
Helene Curtis, Inc.
(Illinois) Registrant 100%
Helene Curtis, Ltd./LTEE
(Canada) Helene Curtis, Inc. 100%
Helene Curtis (Europa)
B.V. (Holland) Helene Curtis, Inc. 100%
Loma Holdings
Incorporated (Nevada) Helene Curtis, Inc. 100%
Economy Beauty Supply
Company (California) Loma Holdings Incorporated 100%
H.C. Enterprises, Inc.
(Japan) Economy Beauty Supply Company 100%
Helene Curtis Japan, Inc.
(Japan) H.C. Enterprises, Inc. 100%
Helene Curtis Australia Pty.
Ltd. (Australia) Helene Curtis, Inc. 100%
Helene Curtis New Zealand
(New Zealand) Helene Curtis, Inc. 100%
Helene Curtis Scandinavia AB
(Sweden) Helene Curtis, Inc. 100%
Helene Curtis International Italia, S.p.A.
(Italy) Helene Curtis, Inc. 100%
</TABLE>
Above listing does not include subsidiaries, which considered in the
aggregate would not constitute a significant subsidiary.
Note: All subsidiaries are included in the consolidated financial statements.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Helene Curtis Industries, Inc. on Form S-8 (File Nos. 33-4837, 33-27695 and
33-26922) of our report dated April 3, 1995, on our audits of the consolidated
financial statements of Helene Curtis Industries, Inc., as of February 28, 1995
and 1994 and for each of the three years in the period ended February 28, 1995,
which report is incorporated by reference in this Annual Report on Form
10-K from the 1995 Annual Report to Stockholders of Helene Curtis Industries,
Inc. on Page 21 therein.
BY (SIGNATURE) s/COOPERS & LYBRAND L.L.P.
(NAME AND TITLE) COOPERS & LYBRAND L.L.P.
Chicago, Illinois
DATE May 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Consolidated
Statements of Earnings and Consolidated Balance Sheets on pages 24 and 25, and
footnote two from Page 27, of the Company's Form 10-K for the period ending
February 28, 1995, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> FEB-28-1995
<CASH> 5,136
<SECURITIES> 0
<RECEIVABLES> 277,037
<ALLOWANCES> 6,213
<INVENTORY> 108,178
<CURRENT-ASSETS> 406,167
<PP&E> 315,545
<DEPRECIATION> 100,209
<TOTAL-ASSETS> 646,832
<CURRENT-LIABILITIES> 253,582
<BONDS> 137,248
<COMMON> 5,497
0
0
<OTHER-SE> 214,921
<TOTAL-LIABILITY-AND-EQUITY> 646,832
<SALES> 1,265,600
<TOTAL-REVENUES> 1,265,600
<CGS> 565,738
<TOTAL-COSTS> 565,738
<OTHER-EXPENSES> 654,758<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,933
<INCOME-PRETAX> 36,171
<INCOME-TAX> 17,002
<INCOME-CONTINUING> 19,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,169
<EPS-PRIMARY> 2.02
<EPS-DILUTED> 2.02
<FN>
<F1>Represents selling, general and administrative expenses.
</FN>
</TABLE>
