UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1995 Commission File Number 0-14449
BeautiControl Cosmetics, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2036343
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) number)
2121 Midway, Carrollton, TX 75006
(Address of principal executive offices) (Zip Code)
214/458-0601
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
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 ( 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.[ X ]
Aggregate market value of the voting stock (which consists
solely of shares of Common Stock) held by non-affiliates of the
registrant as of February 9, 1996, computed by reference to the
closing sale price of the registrant's Common Stock on the
NASDAQ National Market System on such date, was approximately
$56,168,000.
Number of shares of the registrant s Common Stock outstanding
as of February 9, 1996: 5,912,461
DOCUMENTS INCORPORATED BY REFERENCE
1. Certain portions of the registrant s definitive Proxy
Statement in connection with the 1996 Annual Meeting of
Stockholders to be held on April 2, 1996 are incorporated by
reference into Part III of this report.
<PAGE>
PART I
Item 1. Business
General
BeautiControl Cosmetics, Inc. is a leading manufacturer and
direct seller of skin care, cosmetics, nail care, toiletries,
health and beauty supplements and related products for women.
The Company sells its products through independent sales
persons, called Skin Care and Image Consultants
("Consultants"), who purchase the products from BeautiControl
and then sell them directly to consumers in the home or
workplace.
The Company presents itself as "The World's Premier Skin Care
and Image Company", offering a "Total Skin Care and Image
Solution" to women through its many value added services.
These services include Skin Condition Analysis, Color Analysis,
Image Analysis and Makeup/Fashion Personality Analysis and are
typically offered to the client at no charge.
Skin Condition Analysis utilizes the patented product "Skin
Sensors" to assist the Consultant in analyzing the customer's
skin condition. This enables the Consultant to recommend the
specific customized skin care regimen required to meet the
individual needs of each consumer.
Color analysis, an image-enhancing service, allows the matching
of color-coded cosmetics with a customer's natural coloring,
helping customers select the most flattering color choices. A
computer-assisted head-to-toe image analysis referred to as the
Personal Image Profile is used to provide women with specific
recommendations on makeup, fashion and accessory styles to
create each individual's best image.
These services, combined with products that are fragrance free,
dermatologist, sensitivity, allergy and ophthalmologist tested,
and which are also certified as non-comedogenic, constitute the
"Total Skin Care and Image Solution" offered by the Company.
<PAGE>
The Company is incorporated under the laws of the State of
Delaware and maintains its principal executive offices at 2121
Midway Road, Carrollton, Texas 75006.
Products
The Company's products consist of skin care products, cosmetic
makeup products, nail care products, fragrances, health and
beauty supplements and color and image analysis accessories.
The Company believes that skin care and cosmetic products sold
at retail may generally be grouped in three price categories:
the least expensive are generally sold in drug stores and
supermarkets; moderately priced and premium priced products
are generally sold in leading department stores and specialty
shops. Although the Company's skin care products and cosmetic
makeup products are considered by the Company to be comparable
in quality and image to premium priced products, the Company
suggests that Consultants sell the Company's products at retail
prices which the Company believes are equivalent to those
moderately priced products sold in leading department stores
and specialty shops.
Cosmetic, color analysis and image analysis accessories sold by
the Company to its Consultants include sales demonstration kits
and literature, sample size products, Skin Condition Analysis
supplies, books of color swatches which are used by customers
to help select appropriate colors and shades, and the Personal
Image Profile questionnaire packet and related supplies. These
accessories are used primarily as hostess gifts, gifts with
purchase, business supplies or sales aids, and in some cases
are for sale to customers.
During 1995 the Company introduced its revolutionary health and
beauty supplements line, Within Beauty . This new product line
includes hair and nail supplements, skin condition supplements
and supplements designed for the different stages of a women s
life.
Marketing and Distribution
The Company's skin care, cosmetics and related products are
sold through Consultants who are independent contractors, not
employees of the Company.
Consultants may sell the Company's products through home
demonstrations called Skin Care and Color Clinics ("Clinics").
Consultants also make individual sales to customers previously
introduced to the Company's products at a Clinic.
Additionally, Consultants are encouraged to market the products
through personal consultations and product brochure sales in
order to utilize multiple selling opportunities.
In order to provide immediate product delivery, Consultants
<PAGE>
generally maintain a small inventory of Company products.
Consultants make their own payment arrangements with their
customers. The Company clears credit card payments to
Consultants for selected credit cards, presently MasterCard,
Visa, Discover Card and American Express.
The Company sells its products to its Consultants on a payment-
in-advance basis. Consultants pay for the Company's products
by wire transfer, Western Union Quick Collect, cashier's
check, money order or credit card except in the case of a
Consultant's inventory order placed at training where, after
credit approval, the Consultant may pay by personal check.
Consultants are offered the Company's products at wholesale
discounts from suggested retail prices for resale to their
customers. These wholesale discounts range from 25% to 55%
based upon the timing and dollar amount of the Consultant's
order. Sales taxes are generally prepaid to the Company by
Consultants for transmittal to taxing authorities.
The Company maintains inventory which generally permits the
Company to ship goods in response to an order within 72 hours
of the Company's receipt of the order.
The Company relies primarily upon United Parcel Service and
United States parcel post and mail to ship products from its
distribution facility in Dallas, Texas.
Under the Client Connection Program, direct mailings to
consumers are made by the Company a minimum of four times a
year. This direct mailing program allows the Company to
communicate directly with the consumer and encourages the
consumer to contact her Consultant to reorder cosmetic
products.
The consumer may order cosmetics either from the Consultant or
directly from the Company by mail or by dialing a toll-free
"800" number. The Consultant earns a sales commission
regardless of the purchase method.
The sales efforts of Consultants are also supported through
Company-sponsored seminars and sales conferences held several
times each year in various locations.
Consultants may advance to the level of Senior Consultant by
achieving specified standards for introducing to the Company
individuals who also become Consultants ("Recruits"). A non-
fluctuating percentage commission is paid to this level of
Consultant based upon products purchased by the new Recruits
for resale to customers and based on the Senior Consultant
maintaining a certain personal monthly purchase volume. The
commission is paid monthly as long as both the Recruiter and
new Consultant remain active with the Company and the Recruiter
maintains a certain personal purchase volume and her Senior
Consultant status. At this level, the Consultant is also
<PAGE>
entitled to purchase products from the Company at a 50%
discount regardless of the order size. A Consultant who has
met further recruiting standards may qualify as a Unit VIP and
thereby earn a higher percentage commission. This commission
percentage is based on the Unit VIP's personal purchase volume
and her Recruits purchase volume. By meeting additional
recruiting and sales goals, a Unit VIP may qualify for the Unit
Manager level. As a Unit Manager, the Consultant earns a
higher percentage commission on product sales of her unit and
is entitled to either drive an automobile furnished by the
Company or receive a cash bonus. Upon meeting certain higher
recruiting and sales levels, a Unit VIP or a Unit Manager may
be appointed as a Unit Director ("Director"). In addition to
the commissions on product sales of her unit and a higher
automobile or cash option, each Consultant who advances to
Director status is eligible to receive a leadership development
bonus for any members of her unit who become Directors
themselves. A unit generally includes all Consultants
recruited directly by the Director or indirectly through
Consultants recruited by the Director, who actively order from
the Company and who have not themselves become Directors. Each
Director also receives a commission on products purchased for
resale by units headed by former members of her unit. In
addition to the foregoing, the Company sponsors programs
through which bonuses and prizes are awarded to Consultants who
reach certain levels of performance in sales and in attracting
new Consultants.
The Company discontinues its relationship with Consultants who
fail to maintain a certain level of sales activity on a regular
basis.
Manufacturing
The Company's manufacturing facility is located in Carrollton,
Texas at which it manufactures or assembles the majority of
products sold.
Of the Company's sales approximately 25% was comprised of items
produced by various unaffiliated manufacturers. Such outside
manufacturers are used when the Company believes that such
firms are able to manufacture products according to Company
specifications less expensively than the Company.
Materials used in the Company's skin care and cosmetic
products consist chiefly of readily available ingredients,
containers and packaging materials. Such raw materials and
components used in goods manufactured and assembled by the
Company are available from a number of sources. To date, the
Company has been able to secure an adequate supply of raw
materials and components for its manufacturing facility. The
Company endeavors to maintain relationships with backup
suppliers in an effort to ensure that no interruptions in the
Company's operations are likely to occur.
<PAGE>
The Company's manufacturing facility includes
microbiology/quality control and product development
laboratories. These laboratories are intended to facilitate
and expedite quality control and to continue the development of
new products for the Company. The Company continually engages
in research and development activities to improve its existing
products and to develop new products. However, during the
fiscal years ended November 30, 1993, 1994 and 1995, such
activities have not required the expenditure of material
amounts.
Employees
At February 1, 1995, the Company employed 274 persons, 42 of
which were engaged in the manufacture and assembly of the
Company's products. None of the Company's employees are
represented by a union and the Company considers its employee
relations to be good. All employees are required to enter into
an agreement with the Company whereby each employee agrees to
maintain the confidentiality of customer lists and other
sensitive information.
Trademarks and Patents
The Company has registered all its trademarks in the United
States and Canada and has registered its principal trademarks
in several other countries. The Company has the exclusive
right to distribute the Skin Condition Analysis product "Skin
Sensors" worldwide with the option to renew this exclusive
right each year. The Company is licensed to use the following
trademarks: "Skinlogics", "Sunlogics" and "Nailogics". The
Company has a patent on the formulas for its "Regeneration and
Regeneration , alpha-hydroxy acid based, products.
Competition
The cosmetics industry is a highly fragmented and competitive
market which is sensitive to changing consumer preferences and
demands. There are many large and well known cosmetics
companies that manufacture and sell broad lines of skin care
products and cosmetics through retail establishments. The
Company competes with a number of direct sales companies who
market skin care and cosmetic products. The Company also
competes, to an extent, with other direct sales companies in
attracting new Consultants. Many cosmetics companies market
products which are better known than the Company's products and
many cosmetics companies are larger and have substantially
greater resources than the Company.
The principal bases of competition in the cosmetic business
generally are marketing, price, quality and newness of
products. The Company has attempted to differentiate itself
and its products from the industry in general through the use
of a number of value-added services previously described and by
<PAGE>
being technologically at the forefront of the industry. There
can be no assurance that similar marketing techniques and
products will not be adopted by competitors in the future.
Regulation
The Company is subject to regulation by the United States Food
and Drug Administration and the Bureau of Alcohol, Tobacco and
Firearms of the Treasury Department, as are other manufacturers
of cosmetic products. The Company's advertising and sales
practices are subject to the jurisdiction of the Federal Trade
Commission. In addition, the Company is subject to numerous
federal, state, and local laws relating to marketing and to the
content, labeling and packaging of its products.
Various governmental agencies regulate direct selling
activities, and the Company has occasionally been requested to
supply information regarding its marketing plan to certain of
such agencies. Although the Company believes that its method
of distribution is in compliance with laws and regulations
relating to direct selling activities, there is no assurance
that legislation and regulations adopted in particular
jurisdictions in the future will not affect the Company's
operations.
In connection with its manufacturing processes, the Company is
subject to various governmental regulations governing the
discharge of materials into the environment. Compliance with
these regulations has not had, and is not anticipated to have,
any material impact upon the Company's capital expenditures,
earnings or competitive position.
Item 2. Properties.
The Company's corporate headquarters is located in Carrollton,
Texas in a building owned by the Company. The manufacturing
and warehouse facility is also located in Carrollton, Texas.
The Company leases this building under a lease that expires in
1999. The Company's distribution center is housed in a leased
building in Dallas, Texas under a lease expiring in 1999. Both
leases, at the Company's option, may be extended for an
additional 5 years at the fair market rental rate in effect at
the time for properties of equivalent use and size in the
area.
Item 3. Legal Proceedings.
Neither the Company nor its subsidiaries is a party to any
pending proceedings which in Management s opinion, would have a
material adverse effect on the financial condition of the
Company.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's security
holders during the fourth quarter of the fiscal year covered by
this report.
<PAGE>
Part II
Item 5. Market for the Company's Common Stock and Related
Stockholder Matters.
The Common Stock is traded in the over-the-counter market under
the symbol BUTI and is quoted on the NASDAQ National Market
System.
The following table sets forth, for the periods indicated, the
high and low closing sale prices for the Company s Common Stock
on the NASDAQ National Market System.
<TABLE>
<CAPTION>
1995 1994
High Low High Low
<S> <C> <C> <C> <C>
First Quarter $15.000 $12.750 $14.250 $11.750
Second Quarter 13.625 11.875 14.250 10.750
Third Quarter 13.000 10.500 15.500 12.000
Fourth Quarter 11.750 9.250 15.500 14.000
</TABLE>
The high and low sales prices on February 9, 1996, as quoted on
the NASDAQ National Market System were $9.63 and $9.25,
respectively.
As of February 1, 1996, there were approximately 2,200 holders
of record of the common stock, including nonobjecting
beneficial holders whose stock is held in nominee or street
name by broker.
Cash dividends were paid in each quarter of 1995 at a rate of
$.105 per share. In 1994, cash dividends were paid at a rate
of $.07 per share for the first three quarters and $.105 per
share for the fourth quarter. While it is anticipated that
quarterly dividends will continue to be declared, the financial
determination will depend upon the future earnings and final
position of the Company and such other factors as the Board of
Directors may deem appropriate.
<PAGE>
<TABLE>
Item 6 - Selected Financial Data
(In thousands, except per share data)
BEAUTICONTROL COSMETICS, INC AND SUBSIDIARIES
INCOME STATEMENT DATA:
<CAPTION>
Years ended November 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Sales $74,679 $70,591 $63,936 $60,142 $58,522
Cost of goods sold 18,920 17,298 16,329 15,825 15,604
Selling, general
and administrative
expenses 48,672 44,238 43,124 37,168 35,518
Income from operations 7,087 9,055 4,483 7,149 7,400
Other income
(expense), net 529 396 204 337 650
Income before
income taxes 7,616 9,451 4,687 7,486 8,050
Income taxes 2,914 3,308 1,590 2,621 2,684
Income before
cumulative effect
of change in
accounting principle 4,702 6,143 3,097 4,865 5,366
Cumulative effect of
change in accounting
principle - 172 - - -
Net income $ 4,702 $ 6,315 $ 3,097 $ 4,865 $ 5,366
Net income per
share(1) $ 0.70 $ 0.88(3) $ 0.44 $ 0.65 $ 0.71
Dividends per
share (1) $ 0.42 $ 0.315 $ 0.28 $ 0.28 $ 0.21
BALANCE SHEET DATA:
Total assets $29,354 $34,935 $28,531 $27,960 $28,028
Working capital 1,949 7,148 6,135 6,182 7,080
Long-term debt - - - - -
Stockholder's equity 17,318 23,788 19,442 20,612 20,938
CONSULTANT DATA:
Number of consultants
at fiscal year end 45,745(2) 42,108 37,728 32,387 30,027
Number of sales
directors at fiscal
year end 551 477 421 410 401
<FN>
(1) In July 1991, the Company declared three-for-two stock splits
in the form of stock dividends. All per share figures are
based on the increased number of shares after giving effect
to the splits.
(2) Excludes Consultant from certain test programs.
(3) Excludes a onetime addition to net income of $.02 per share
from the adoption of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, which
superceded Statement of Financial Accounting Standards
No.96.
</TABLE>
<PAGE>
Item 7 - Management s Discussion and Analysis of Financial
Condition and Results of Operation
BeautiControl Cosmetics, Inc. (the Company) is a leading
manufacturer and direct seller of skin care, cosmetics, health
and beauty nutritional supplements and related products. The
Company sells its products to independent Consultants who in
turn sell to end consumers. Sales figures are based on orders
shipped less returns. The percentage of the Company s total
sales contributed by various product groups for the period set
forth below were as follows:
<TABLE>
<CAPTION>
Year ended November 30
Product Groups 1995 1994 1993
<S> <C> <C> <C>
Skin care products 46% 49% 41%
Cosmetic makeup products 34 32 36
Nail care products 1 1 2
Fragrance and toiletry products 1 1 1
Cosmetics, color and image
analysis accessories 14 17 19
Nutritional supplements 4 - -
Women s clothing and accessories - - 1
Total sales 100% 100% 100%
</TABLE>
1995 was a year of investing in the future for the Company. The
recent purchase of a United Kingdom company and the
establishment of a distributorship in Malaysia helped launch the
Company into the international arena. Significant emphasis was
placed on recruiting toward the end of the year to build a
strong sales force for the future. The Company also invested in
broadening its U.S. Hispanic market.
Plans are in place for 1996, including the test of a more
competitive entry and training method, increased leadership
compensation along with an improved hostess program and
selective expansion into international markets which management
believes will allow the company to achieve long-term sales and
earnings growth.
RESULTS OF OPERATIONS OF THE COMPANY
Fiscal 1995 compared to Fiscal 1994
Net sales increased 6% from $70,591,000 in 1994 to $74,679,000
in 1995. This sales increase is due primarily to new product
<PAGE>
introductions such as Within Beauty TM - a revolutionary health
and beauty nutritional supplement system and expansions in
product lines such as REGENERATION Extreme Repair and
REGENERATION2 which were early year additions to our
REGENERATION alpha hydroxy line. Increased consultant count
also positively impacted sales.
The April 1995 introduction of Within Beauty health and beauty
supplements contributed to increased sales and also caused a
shift in sales from other product lines. A new skin care line
introduction in January of 1994 helped propel skin care products
to 49% of sales in 1994; in 1995, the Company saw a leveling off
of this percentage to 46%. The August 1995 introduction of
newly formulated eye shadows and blushes attributed to the
increase in cosmetic makeup products from 32% in 1994 to 34% in
1995.
Gross profit margins decreased slightly in 1995 from 75.5% in
1994 to 74.7% in 1995. The introduction of Within Beauty
products which carry a lower margin than skin care products and
sales of low margin demonstration kits as a result of the
recruiting promotion impacted this percentage in 1995.
Selling, general and administrative expenses increased as a
percentage of sales from 63% to 65% primarily due to $1,557,000
in expenses related to the Within Beauty product launch,
development of operations in the United Kingdom, U.S. Hispanic
market development and the recruiting promotion.
Other income and expense, net, increased from $397,000 to
$529,000 as a result of increased investment income in the early
part of the year and miscellaneous income from sales which were
outside the normal course of business.
The income tax provision for 1995 was $2,914,000 as compared to
$3,308,000 in 1994. For a complete analysis, see Note D in the
notes to the Consolidated Financial Statements.
Fiscal 1994 compared to Fiscal 1993
Net Sales increased 10% from $63,936,000 in 1993 to $70,591,000
in 1994. The overall success for 1994 was attributable to the
Company s introduction of state-of-the-art products which
allowed the Company to attract and retain new Consultants.
Sales from the Company s new skin care line introduced in
January 1994 in addition to continued strong sales of the
Regeneration line and the new Sculptique Body Contouring Creme
introduced in October 1994 led to the increase in skin care
sales from 41% of sales in 1993 to 49% in 1994. The shift from
36% of sales in 1993 to 32% of sales in 1994 for cosmetic makeup
products is attributable to the company s emphasis on skin care
sales.
Cost of goods sold as a percent of sales decreased from 25.5% in
<PAGE>
1993 to 24.5% in 1994 due to the shift in the product mix and
the elimination of the clothing line.
Selling, general and administrative expenses decreased from 67%
in 1993 to 63% in 1994 primarily due to $2,250,000 in non-
recurring expenses in 1993 related primarily to implementing and
promoting consultant career plan enhancements and the production
and national airing of an infomercial aimed at increased
consumer awareness and recruiting.
Other income and expense, net, increased from $204,000 in 1993
to $397,000 in 1994 as a direct result of the increase in
interest income as the investable cash balance grew during the
year.
The income tax provision for 1994 was $3,308,000 compared to
$1,590,000 in 1993. For a complete analysis of income taxes,
see Note D in the Notes to the Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at November 30, 1995 was $1,949,000 compared to
$7,148,000 at
November 30, 1994. The Company spent $8,428,000 repurchasing
its common stock
in 1995. The common stock was purchased under a plan previously
approved by the Board of Directors that allows the Company to
purchase its common stock in the open market when the Company
believes it to be undervalued.
Four quarterly dividends totaling $2,734,000 or $.42 per share
were paid during 1995.
The Company s capital expenditures for 1995 totaled $1,555,000.
Included in this amount were $537,000 for manufacturing related
equipment, $540,000 for enhancements to computer and information
systems and $233,000 for office equipment and furniture.
The Company has a $10,000,000 revolving line of credit available
to use primarily for the repurchase of its common stock when
opportunities arise and for operating cash when it is needed for
the business. This line of credit reduces to $8,000,000 on
October 1, 1996 and decreases by $2,000,000 per year thereafter
if unused. At November 30, 1995, the Company had $1,400,000
outstanding against the revolving line of credit.
In March 1995 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed of (SFAS 121). The Company will be required to
adopt SFAS 121 on December 1, 1996 and does not believe that
this will result in a material impact to the financial
statements.
<PAGE>
Item 8 - Financial Statements and Supplementary Data
<AUDIT-REPORT>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
BeautiControl Cosmetics, Inc.
We have audited the accompanying consolidated balance sheets of
BeautiControl Cosmetics, Inc. and Subsidiaries as of November
30, 1995 and 1994, and the related consolidated statements of
income, changes in stockholders equity and cash flows for each
of the three years in the period ended November 30, 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 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 BeautiControl Cosmetics, Inc. and
Subsidiaries as of November 30, 1995 and 1994, and the
consolidated results of operations and their consolidated cash
flows for each of the three years in the period ended November
30, 1995 in conformity with generally accepted accounting
principles.
As discussed in Notes A and D to the consolidated financial
statements, the Company changed its method of accounting for
investments in 1995 and for income taxes in 1994.
Grant Thornton LLP
Dallas, Texas
December 26, 1995
</AUDIT-REPORT>
<PAGE
<TABLE>
BEAUTICONTROL COSMETICS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
<CAPTION>
YEARS ENDED NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
Net sales $74,679 $70,591 $63,936
Cost of goods sold 18,920 17,298 16,329
Gross profit 55,759 53,293 47,607
Selling expenses 31,849 28,406 28,658
General and admin-
istrative expenses 16,823 15,833 14,466
48,672 44,239 43,124
Income from operations 7,087 9,054 4,483
Other income
Interest income 266 256 143
Other, net 263 141 61
529 397 204
Income before taxes and
cumulative effect of
change in accounting
principle 7,616 9,451 4,687
Income taxes 2,914 3,308 1,590
Income before cumulative
effect of change in
accounting principle 4,702 6,143 3,097
Cumulative effect of
change in accounting
principle -- 172 --
Net income $ 4,702 $ 6,315 $ 3,097
Earnings per common and
common equivalent share:
Before cumulative effect
of change in accounting
principle $ .70 $ .88 $ .44
Cumulative effect of
change in accounting
principle -- .02 --
Net income $ .70 $ .90 $ .44
Weighted average common
and common equivalent
shares 6,753 7,020 6,990
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
BEAUTICONTROL COSMETICS, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Shares Information)
<CAPTION>
NOVEMBER 30,
1995 1994
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 856 $ 3,275
Investments 845 2,527
Accounts receivable-trade,
net of allowances of $325
in 1995 and $291 in 1994 358 308
Inventories 9,480 10,152
Deferred income taxes 1,140 904
Prepaid expenses 768 601
Other current assets 240 234
Total current assets 13,687 18,001
PROPERTY AND EQUIPMENT, AT COST
Land 766 766
Office building 3,837 3,814
Office furniture and equipment 6,981 6,085
Machinery and equipment 5,337 4,800
Leasehold improvements 1,152 1,014
Transportation equipment 2,448 2,428
20,521 18,907
Less accumulated depreciation
and amortization 10,471 8,654
Property and equipment, net 10,050 10,253
OTHER ASSETS
Cost in excess of net tangible
assets, acquired, net of
amortization of $708 in 1995
and $630 in 1994 1,955 2,022
Investments 3,059 4,227
Other, net of amortization of
$474 in 1995 and $449 in 1994 603 432
Total assets $ 29,354 $ 34,935
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
<TABLE>
BEAUTICONTROL COSMETICS, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Shares Information)
<CAPTION>
NOVEMBER 30,
1995 1994
<S> <C> <C>
CURRENT LIABILITIES
Short-term borrowings $ 1,400 $ -
Accounts payable - trade 2,850 3,826
Sales tax payable 906 833
Accrued commissions and awards 1,763 1,888
Accrued compensation 574 1,241
Accrued property taxes 609 484
Accrued income taxes 772 407
Accrued liabilities 1,270 739
Deferred income 1,594 1,435
Total current liabilities 11,738 10,853
DEFERRED INCOME TAXES 298 294
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock
Authorized - 1,000,000 shares,
$.10 par value
Issued and outstanding - none - -
Common stock
Authorized - 20,000,000 shares,
$.10 par value
Issued - 9,478,976 in 1995 and
9,466,616 shares in 1994 948 947
Capital in excess of par value 12,522 12,472
Unrealized depreciation of
investments, net of taxes (53) -
Retained earnings 33,618 31,658
47,035 45,077
Less treasury stock, at cost
(3,578,000 shares in 1995
and 2,805,175 shares in 1994) 29,717 21,289
Total stockholders equity 17,318 23,788
Total liabilities and
stockholders' equity $ 29,354 $ 34,935
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
BEAUTICONTROL COSMETICS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(In Thousands)
<CAPTION>
Capital Unrealized
Common In excess Losses on Retained Treasury
Stock of Par Investments Earnings Stock
<S> <C> <C> <C> <C> <C>
December 1, 1992 $932 $10,968 $ - $26,260 $17,547
Issuance of common
stock under stock
option plans 5 182 - - -
Purchase of treasury
stock - - - - 2,924
Tax benefit related
to stock options - 385 - - -
Dividends - - - (1,915) -
Net income - - - 3,097 -
November 30, 1993 937 11,535 - 27,442 20,471
Issuance of common
stock under stock
option plans 10 843 - - -
Purchase of treasury
stock - - - - 818
Tax benefit related
to stock options - 94 - - -
Dividends - - - (2,099) -
Net income - - - 6,315 -
November 30, 1994 947 12,472 - 31,658 21,289
Unrealized losses from
initial adoption of
Financial Accounting
Standards No. 115
effective December 1,
1994, net of tax
of $40 - - (78) - -
Issuance of common
stock under stock
option plans 1 50 - - -
Purchase of treasury
stock - - - - 8,428
Foreign currency
translation adjustment - - - (8) -
Dividends - - - (2,734) -
Net change in unrealized
losses, net of tax
of $13 - - 25 - -
Net income - - - 4,702 -
November 30, 1995 $948 $12,522 $ (53) $33,618 $29,717
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
BEAUTICONTROL COSMETICS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<CAPTION>
YEARS ENDED NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income $ 4,702 $ 6,315 $ 3,097
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,866 1,799 2,171
Deferred income taxes (204) (210) (34)
Changes in assets and liabilities:
Accounts receivable (50) (159) 523
Inventories 675 (2,916) 1,354
Prepaid expenses (167) 324 (439)
Other current assets (6) 253 (386)
Accounts payable (977) 1,017 597
Accrued compensation (667) 467 436
Accrued property taxes 124 374 (237)
Accrued income taxes 365 127 36
Other accrued liabilities 291 (433) 1,058
Deferred income 159 (88) 283
Other 236 397 371
Net cash provided by operating activities 6,347 7,267 8,830
Cash flows from investing activities:
Proceeds from sale of investments 3,728 4,828 1,409
Purchase of investments (977) (7,999) (2,974)
Purchase of property and equipment (1,555) (2,910) (773)
Purchase of other assets (252) (116) (150)
Net cash provided by (used in)
in investing activities 944 (6,197) (2,488)
Cash flows from financing activities:
Proceeds from issuance of common stock 51 853 187
Short-term borrowings 1,400 - -
Purchase of treasury stock (8,428) (818) (2,924)
Dividends paid (2,734) (2,099) (1,915)
Net cash used in financing activities (9,711) (2,064) (4,652)
Effect of exchange rate on cash and
cash equivalents 1 - -
Net cash increase (decrease) in cash
and cash equivalents (2,419) (994) 1,690
Cash and cash equivalents at beginning
of period 3,275 4,269 2,579
Cash and cash equivalents
at end of period $ 856 $ 3,275 $ 4,269
Supplemental cash flow information:
Income taxes $ 2,579 $ 2,495 $ 1,469
Interest 21 -- --
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
BEAUTICONTROL COSMETICS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, 1994 AND 1993
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies applied in the
preparation of the accompanying consolidated financial statements
follows:
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its majority-owned
subsidiaries. All intercompany accounts and transactions have been
eliminated.
Reclassifications - Certain amounts for the prior years have been
reclassified to conform to the current year presentation.
Investments - Effective December 1, 1994, the Company adopted
Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities (SFAS 115)
which resulted in a change in the accounting for debt and equity
securities held for investment purposes. Prior to December 1,
1994, the Company carried debt and equity securities at cost,
which approximated market value. In accordance with SFAS 115,
the Company s debt securities are now considered to be held-to-
maturity and its equity securities are classified as available-
for-sale. Held-to-maturity securities represent those securities
that the Company has both the positive intent and ability to
hold to maturity and are carried at amortized cost. Available-
for-sale securities represent those securities that do not meet
the classification of held-to-maturity, are not actively traded
and are carried at fair value. Unrealized gains and losses on
these securities are excluded from earnings and are reported as
a separate component of stockholders equity, net of applicable
taxes, until realized. Since the adoption of this standard, the
Company recorded decreases in available-for-sale securities of
$80,000 and a related deferred tax asset of $27,200, resulting
in a net decrease of $52,800 in stockholders equity.
Inventories - Inventories are stated at the lower of cost
(first-in, first-out method) or market.
Property and Equipment - Depreciation is provided for property
and equipment by the straight-line method over the following
estimated useful lives of the assets:
Office building..............................30 years
Office furniture and equipment................5 years
Machinery and equipment.................... 5-8 years
Transportation equipment.................. 5-15 years
Leasehold improvements are amortized over the lives of the
respective leases or the service life of the improvements,
whichever is shorter.
Cost in Excess of Net Tangible Assets Acquired - Costs in excess
of net tangible assets acquired and other intangible assets are
being amortized on a straight-line basis over the estimated
future periods to be benefited (not exceeding 40 years). The
Company periodically reviews cost in excess of net tangible
assets acquired to assess recoverability. Impairments would be
recognized in operating results if a permanent diminution in
value was to occur.
Cash Equivalents - Investments that are short-term (generally
with original maturities of three months or less) and highly
liquid are considered to be cash equivalents.
Deferred Income Taxes - Deferred income taxes are provided under
the provisions of Financial Accounting Standards Board Statement
No. 109.
Net Income per Common Share - Net income per common share is
based on the weighted average number of common shares and common
equivalent shares outstanding during the period. Common
equivalent shares include net shares issuable upon the assumed
exercise of options using the treasury stock method, assuming
purchases at average market prices during the reporting period.
No difference exists between primary and fully diluted earnings
per share.
<PAGE>
NOTE B - INVENTORIES
Inventories (in thousands) consist of the following:
<TABLE>
<CAPTION>
Year Ended November 30,
1995 1994
<S> <C> <C>
Finished Goods $ 4,548 $ 4,614
Raw Materials 4,932 5,538
Total $ 9,480 $ 10,152
</TABLE>
NOTE C - INVESTMENTS
The amortized cost and fair value of the investments (in
thousands ) at November 30, 1995 are as follows:
<TABLE>
<CAPTION>
Gross Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available-for-sale
Preferred stock $ 1,257 $ - $ (80) $ 1,177
Held-to maturity
Municipal bonds $ 2,636 $ 15 $ (14) $ 2,637
Corporate bonds 100 - (1) 99
$ 2,736 $ 15 $ (15) $ 2,736
</TABLE>
Investments as of November 30, 1994 represent preferred stock
and municipal and corporate bonds for which cost exceeded fair
value by $118.
The cost and fair value of investments (in thousands) by
contractual maturity at November 30, 1995 are as follows:
<TABLE>
<CAPTION>
Held-to-maturity
Amortized Fair
Cost Value
<S> <C> <C>
Due in one year or less $ 845 $ 843
Due from five years to ten years 620 628
Due after ten years 1,271 1,265
$ 2,736 $ 2,736
</TABLE>
NOTE D - INCOME TAXES
Effective December 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income
Taxes. The Company recorded a tax benefit of $172,053 or two
cents per share, reflecting the cumulative effect of the
accounting change.
<PAGE>
<TABLE>
The components of deferred income taxes (in thousands) are as
follows:
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Deferred tax assets:
Inventories $ 530 $ 487
Allowance for doubtful accounts 111 99
Accrued expenses 499 318
Net operating loss carryforwards
from foreign subsidiary 89 -
Other 27 -
1,256 904
Less valuation allowance 89 -
$1,167 $ 904
Deferred tax liabilities:
Property and equipment $ (326) $(294)
Deferred tax assets and liabilities are
classified as follows:
Current deferred tax assets $1,140 $ 904
Noncurrent deferred tax liability (298) (294)
$ 842 $ 610
</TABLE>
<TABLE>
Income tax expense before cumulative effect of accounting change
(in thousands) is comprised of the following:
<CAPTION>
Year Ended November 30,
1995 1994 1993
<S> <C> <C> <C>
Current
Federal $2,766 $3,211 $1,559
State 352 135 64
Deferred (204) (38) (33)
$2,914 $3,308 $1,590
</TABLE>
<TABLE>
Reconciliation of income taxes computed at the Federal statutory
rate and income tax expense is as follows:
<CAPTION
Year Ended November 30,
1995 1994 1993
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
State 3.0 .9 .9
Tax exempt interest (.7) (.7) (.7)
Other 2.0 .8 (.3)
Effective tax rate 38.3% 35.0% 33.9%
</TABLE>
<PAGE>
NOTE E - CAPITAL STOCK
The Company is authorized to issue 1,000,000 shares of $.10 par
value preferred stock with voting powers and other special
rights or restrictions, if any, to be determined by the Board of
Directors at the time of issuance.
As of November 30, 1995, the Company had purchased a total of
3,578,000 shares of its common stock pursuant to a plan approved
by the Board of Directors to acquire up to 3,953,500 shares.
NOTE F - LINE OF CREDIT
During 1994 and 1995, the Company maintained a line of credit
for $10,000,000 of which $1,400,00 was outstanding at November
30, 1995. This line has an annual commitment fee based on the
unused portion of the line. This line of credit reduces to
$8,000,000 on October 1, 1996 and decreases by $2,000,000 per
year thereafter, if unused.
NOTE G - STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS
The Company has three stock option plans covering key employees
and non-employee directors.
The Incentive Stock Option Plan permits the issuance of
incentive stock options to employees of the Company to purchase
up to 875,000 common shares of the Company. Specific terms of
the options will be determined by the Compensation Committee of
the Board of Directors; however, no options may be granted for
less than the fair market value of the common stock nor for
terms exceeding ten years. This plan expired September 23, 1995;
management plans to seek shareholder approval of a new plan with
similar terms.
The Nonqualified Stock Option Plan permits the issuance of
nonqualified stock options to employees and directors of the
Company to purchase up to 700,000 common shares of the Company.
Pursuant to this plan, options may be granted at prices to be
determined by the Compensation Committee of the Board of
Directors of the Company. Through November 30, 1995, the
exercise prices of all options granted under this were equal to
the fair market value of the common shares of the Company on
the date of grant and all options expire ten years from the date
of grant.
The Special Stock Option Plan provides for issuance of stock
options to nonemployee directors of the Company to purchase up
to 412,500 common shares of the Company. The number of options
to be granted under this plan is determined by a formula
specified within the plan and the exercise price must be at
least equal to the fair market value of the common shares of the
Company on the date of grant of the option. All options will
expire ten years from the date of grant and no option is
exercisable until one year from the date of grant.
<PAGE>
<TABLE>
<CAPTION>
INCENTIVE PLAN NONQUALIFIED SPECIAL PLAN
Shares Option Shares Option Shares Option
Under Price Under Price Under Price
Option Range Option Range Option Range
(000's) (000's) (000's)
November 30, 1993
<S> <C> <C> <C> <C> <C> <C>
Outstanding 383 $ 2.11-14.67 390 $ 3.56-17.50 224 $ 3.28-10.67
Granted 21 $12.88-17.50 109 $10.88-13.75 10 $13.75
Exercised (90) $ 2.11-11.17 (13)$ 7.75-10.00 - -
Cancelled (25) $12.88-13.75 (6)$ 7.75- 8.50 - -
November 30, 1994
Outstanding 289 $ 2.11-17.50 480 $ 3.56-17.50 234 $ 3.28-13.75
Granted 32 $14.00 56 $10.75-14.00 27 $10.00-14.25
Exercised (7) $ 2.11-10.67 (5)$ 7.75- 8.50 - -
Cancelled (28) $ 7.75-13.75 (23)$ 7.75-13.75 - -
November 30, 1995
Outstanding 286 $ 2.11-17.50 508 $ 3.56-17.50 261 $ 3.28-14.25
Exercisable 161 374 234
</TABLE>
NOTE H - COMMITMENTS AND CONTINGENCIES
At November 30, 1995, the Company was committed under non-
cancellable operating leases, principally for two buildings,
equipment and automobiles.
Minimum rentals in succeeding periods (in thousands) are as
follows:
1996 ................. $1,627
1997 .................. 1,043
1998 .................. 831
1999 .................. 493
$3,994
Rental expense (in thousands) is as follows:
1995 ..................$2,205
1994 .................. 2,461
1993 .................. 2,593
NOTE I - RELATED PARTY TRANSACTIONS
In early 1994 a subsidiary of the Company was a party to a joint
venture with a company owned by the President and Chairman of
the Board, to jointly own and operate an airplane. Expenses
related to operation of the plane were allocated based on actual
usage. In April 1994 the Company purchased its venture partner s
interest for $1,200,000 based on the fair market value at the
time.
<PAGE>
<TABLE>
NOTE J - UNAUDITED QUARTERLY OPERATING RESULTS
Unaudited quarterly operating results for the year ended
November 30, 1995 and 1994 (in thousands) are as follows:
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1995:
Net sales $18,283 $19,363 $17,906 $19,127
Gross profit 14,063 14,575 13,197 13,924
Net income 1,732 1,427 907 636
Net income per
common share $ .25 $ .21 $ .13 $ .10
1994:
Net sales $16,825 $18,018 $17,306 $18,442
Gross profit 12,517 13,740 13,135 13,901
Net income before
cumulative effect
of change in
accounting principle 1,542 1,824 1,467 1,310
Cumulative effect
of change in
accounting principle 172 - - -
Net income 1,714 1,824 1,467 1,310
Net income before
cumulative effect
of change in
accounting principle $ .22 $ .26 $ .21 $ .19
Cumulative effect of
change in accounting
principle .02 - - -
Net income per
common share $ .24 $ .26 $ .21 $ .19
</TABLE>
<PAGE>
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
On February 12, 1996, the Company dismissed Grant Thornton LLP
as its independent auditors and appointed Ernst & Young as the
new auditors. The decision to dismiss Grant Thornton LLP and
appoint Ernst & Young was proposed by management, recommended by
the Audit Committee of the Board of Directors, and approved by
the Board of Directors.
Grant Thorton LLP s report on the financial statements for the
fiscal years ending November 30, 1995 and 1994 contained no
adverse opinion or disclaimer of opinion or was qualified or
modified as to uncertainty, audit scope or accounting
principles. Further, during the fiscal years ending November 30,
1995 and 1994 and the subsequent interim period preceding the
dismissal, there were no disagreements with Grant Thornton LLP
on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
During the two most recent fiscal years and the subsequent
interim period preceding the dismissal, there have been no
reportable events (as definded in Item 304 of the Securities
and Exchange Commission Regulation S-K) with Grant Thornton LLP.
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant.
The information relating to the Company's directors, nominees for
directors, and executive officers set forth under the headings
"Election of Directors" and "Directors and Executive Officers" on
pages 3 through 6 of the Company's definitive Proxy Statement filed
in connection with the 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
Item 11. Executive Compensation
The information relating to executive compensation set forth under
the heading "Executive Compensation" on pages 7 through 8 of the
Company's definitive Proxy Statement filed in connection with the
1996 Annual Meeting of Stockholders is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Information concerning the security ownership of certain beneficial
owners and management set forth under the heading "Security
Ownership of Principal Stockholders and Management" on pages 1
through 3 of the Company's definitive Proxy Statement filed in
connection with the 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information concerning certain relationships and related
transactions set forth under the heading "Certain Transactions" on
page 6 of the Company's definitive Proxy Statement filed in
connection with the 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) (1) and (2) Financial Statement and Schedules
(3) Exhibits.
(b)Reports on Form 8-K
The Company has filed no reports on Form 8-K during the
fourth quarter of the year ended November 30, 1995.
<PAGE>
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.
February 20, 1996 BEAUTICONTROL COSMETICS, INC.
(Registrant)
By: /S/ RICHARD W. HEATH
President and Chief
Executive Officer
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.
/S/ RICHARD W. HEATH President Chief Executive February 20, 1996
Richard W. Heath Officer and Director
/S/ JINGER L. HEATH Chairman of the Board and February 20, 1996
Jinger L. Heath Director
/S/ J. ROBERT WARD-BURNS Executive Vice-President February 20, 1996
J. Robert Ward-Burns Chief Operating Officer and Director
/S/ M. DOUGLAS TUCKER Vice President-Finance February 20, 1996
M. Douglas Tucker Principal Financial
and Accounting Officer
/S/ HENRY H. DICKERSON, JR. Director February 20, 1996
Henry H. Dickerson, JR.
/S/ CHARLES M. DIKER Director February 20, 1996
Charles M. Diker
/S/ ROBERT S. FOLSOM Director February 20, 1996
Robert S. Folsom
/S/ DENISE I. LITES Director February 20, 1996
Denise I. Lites
/S/ A. STARKE TAYLOR, JR. Director February 20, 1996
A. Starke Taylor, Jr.
/S/ JOEL T. WILLIAMS, JR. Director February 20, 1996
Joel T. Williams, Jr.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SCHEDULE
Board of Directors and Stockholders
BeautiControl Cosmetics, Inc.
In connection with our audit of the consolidated financial statements of
BeautiControl Cosmetics, Inc. and Subsidiaries referred to in our report
dated December 26, 1995, which is included in the Annual Report to
Stockholders and included herewith, we have also audited Schedule II for
each of the three years in the period ended November 30, 1995. In our
opinion, the schedule presents fairly, in all material respects, the
information required to be set forth therein.
GRANT THORNTON LLP
Dallas, Texas
December 26, 1995
<PAGE>
<TABLE>
BEAUTICONTROL COSMETICS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED NOVEMBER 30, 1993, 1994 AND 1995
(In Thousands)
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description Of Period Expenses Deductions Period
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts deducted from
accounts receivable in
the balance sheet:
November 30, 1993 $ 335 $ 245 $ 239 $ 341
November 30, 1994 341 271 321 291
November 30, 1995 291 249 216 324
Reserve for inventory
obsolesecence deducted
from inventories in the
balance sheet:
November 30, 1993 $ 1,573 $ 1,644 $ 1,523 $ 1,694
November 30, 1994 1,694 811 1,311 1,194
November 30, 1995 1,194 1,396 950 1,640
</TABLE>
<PAGE>
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Exhibit
3.1 Restated Certificate of Incorporated
of the Registrant as amended on
February 22, 1986. (Filed with the
Securities and Exchange Commission
as Exhibit 3.1 to the Company's
Registration Statement on Form S-1,
Registration No. 33-2795 and
incorporated herein by reference.)
3.2 By-laws of the Registrant as amended
on February 22, 1986. (Filed with the
Securities and Exchange Commission
as Exhibit 3.2 to the Company's
Registration Statement on Form S-1,
Registration No. 33-2795 and
incorporated herein by reference.)
3.3 Certificate of Amendment of Restated
Certificate of Incorporation dated
April 3, 1992. (Filed with the Securities
and Exchange Commission as Exhibit 3.3 to
the Company's Annual Report on Form 10-K
for the year ended November 30, 1992 and
incorporated herein by reference.)
4.1 Specimen stock certificate for Common
Stock of the Registrant. (Filed with
the Securities and Exchange Commission
as Exhibit 4.1 to the Company's
Registration Statement on Form S-1,
Registration No. 33-2795 and
incorporated herein by reference.)
10.1 BeautiControl Cosmetics, Inc. Incentive
Stock Option Plan as amended on
April 7, 1994. (Filed with the Securities
and Exchange Commission on September 1, 1994
with the Company's Registration Statement on
Form S-8, Registration No.33-83500 and
incorporated herein by reference.)
10.2 Lease Agreement by and between
Crow-Southland Joint Venture No. 1
and BeautiControl Cosmetics, Inc.
dated May 7,1990. (Filed with the
Securities and Exchange Commission,
Exhibit 10.2 to the Company's Annual
Report on Form 10-K for the year ended
November 30, 1990 and incorporated
herein by reference.)
<PAGE>
10.3 Lease Agreement by and between Crow
Deansbank No. 7 and BeautiControl
Cosmetics, Inc. dated June 6, 1990.
(Filed with the Securities and Exchange
Commission as Exhibit 10.3 to the
Company's Annual Report on Form 10-K
for the year ended November 30, 1990
and incorporated herein by reference.)
10.7 Form of Stock Option Agreement for the
BeautiControl Cosmetics, Inc. Incentive
Stock Option Plan. (Filed with the
Securities and Exchange Commission
on June 16, 1992 with the Company's
Registration Statement on Form S-8,
Registration No. 33-48626 and
incorporated herein by reference.)
10.8 BeautiControl Cosmetics, Inc.
Non-Qualified Stock Option Plan as
amended on April 7, 1994. (Filed
with the Securities and Exchange
Commission on September 1, 1994
with the Company's Registration
Statement on Form S-8, Registration
No. 33-83500 and incorporated herein
by reference.)
10.9 Form of Stock Option Agreement for the
BeautiControl Cosmetics, Inc. Non-
Qualified Stock Option Plan. (Filed
with the Securities and Exchange
Commission on June 16, 1992 with the
Company's Registration Statement
on Form S-8, Registration No. 33-48626
and incorporated herein by reference.)
10.11 BeautiControl Cosmetics, Inc. Special
Stock Option Plan as amended on
April 7, 1994. (Filed with the
Securities and Exchange Commission on
September 1, 1994 with the Company's
Registration Statement on Form S-8,
Registration No. 33-83500 and
incorporated herein by reference.)
10.12 Form of Stock Option Agreement for the
BeautiControl Cosmetics, Inc. Special
Stock Option Plan. (Filed with the
Securities and Exchange Commission
on June 16, 1992 with the Company's
Registration Statement on Form S-8,
Registration No. 33-48626 and incorporated
herein by reference.)
<PAGE>
10.14 Amendment to Lease Agreement by and
between Crow-Southland Joint Venture
No. 1 and BeautiControl Cosmetics, Inc.
dated December 17, 1991. (Filed with
the Securities and Exchange Commission
as Exhibit 10.14 to the Company's
Annual Report on Form 10-K for the
year ended November 30, 1991 and
incorporated herein by reference.)
10.15* Amendment to Lease Agreement between
Crow-Southland No. 1 and BeautiControl
Cosmetics, Inc. dated May 7, 1990. (Filed
with the Securities and Exchange Commission,
Exhibit 10.2 to the Company's Annual Report
on Form 10-K for the year ended November 30,
1990 and incorporated herein by reference.)
10.16* Amendment to Lease Agreement by and between
Crow Deansbank No. 7 and BeautiControl
Cosmetics, Inc. dated June 6, 1990. (Filed
with the Securities and Exchange Commission
as Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the year ended November 30,
1990 and incorporated herein by reference.)
11* BeautiControl Cosmetics, Inc. and
Subsidiaries - Computation of Earnings
per Common Share.
21* Subsidiaries of BeautiControl
Cosmetics, Inc.
23* Consent of Independent
Certified Public Accountants.
* Filed herewith
EXHIBIT 10.15
EXTENSION TO LEASE AGREEMENT
This Extension to Lease Agreement to be attached
to and form a part of the lease (which together with any
amendments, modifications and extensions thereof is herein-
after called the Lease) made the 7th day of May, 1990.
Between The Realty Associates Fund III, L.P.,
(hereinafter referred to as "Lessor") is successor in interest
to all rights and obligations of that certain lease (the
"Lease") dated May 7, 1990, between Crow-Southland Joint
Venture No. 1, Joint Venture (by Trammell Crow Company No. 68,
General partner), and BeautiControl Cosmetics, Inc.
(hereinafter referred to as "Lessee") covering the 59,312
square foot facility located at 4545 - 4547 Langland Road,
Farmers Branch, Texas 75234.
WITNESSETH:
o that the Lease is hereby renewed and extended for a
further term of forty-eight (48) months to commence
on the 1st day of October, 1995, and to terminate on
the 30th day of September, 1999 on the condition that
Lessor and Lessee comply with all the terms,
covenants and agreements contained in the Lease,
except that the base monthly rental during said
period shall be 42.65NN per square foot, or Thirteen
Thousand Ninety-Eight and 07/100 Dollars ($13,098.07)
per month.
o Paragraph 28 of the Lease Agreement shall be replaced
by: Provided that Lessee is not in default of any of
the terms, covenants and conditions hereof, and this
Lease has not been assigned or the premises (or a
part thereof) sublet, Lessee shall have the right and
option to extend the original term of this Lease for
one further term of sixty (60) months. Such
extension of the original term shall be on the same
terms, covenants and conditions as provided for in
the original term except for this paragraph and
except that the rental during the extended term shall
be at the fair market rental then in effect on
equivalent properties, of equivalent size. Lessee
shall deliver written notice to Lessor of Lessee's
intent to exercise the renewal option granted herein
not more than six (6) months nor less than four (4)
months prior to the expiration of the original term
of this Lease. In the event Lessee's fails to
deliver such written notice within the time period
set forth above, Lessee's right to extend the term
hereof shall expire and be of no further force and
effect. In the event Lessor and Lessee fail to agree
in writing upon the fair market rental within thirty
(30) days after exercise by Lessee of this renewal
option then Lessee's right hereunder to extend the
term shall become null and void.
o that all other terms, covenants and agreements as
renewed, extended and amended shall remain the same.
IN WITNESS WHEREOF, the parties hereto have signed and sealed
this Extension to Lease Agreement this 20th day of March 1995.
WITNESS: Lessor: The Realty Associates Fund III, L.P.
/S/ Susan Hooper By: /S/ Michael Ruane
Title: Chairman,
Realty Fund III LP, Inc.
WITNESS: Lessee: BeautiControl Cosmetics, Inc.
/S/ R.Holt Lunsford By: /S/ Robert L.Esson
Title: Vice President Manufacturing
& Distribution
LEASE AMENDMENT NUMBER I
BEAUTICONTROL COSMETICS, INC.
NORWOOD REUNION DFW INDUSTRIAL LIMITED
CARROLLTON, TEXAS
MARCH 13,1995
THIS FIRST AMENDMENT TO THE LEASE AGREEMENT (the "Amendment") is
made and entered into this 13th day of March, 1995, by and
between Norwood Reunion DFW Industrial Limited (the "Lessor") and
Beauticontrol Cosmetics, Inc. (the "Lessee").
WITNESSETH
WHEREAS, Crow Deansbank No. 7 ("Prior Lessor") and Lessee entered
into a Lease Agreement (the "Lease Agreement") dated June 6, 1990
pertaining to certain space (102,053) located at 3311 Boyington,
Suite 400, Carrollton, Texas (the "Premises"); and,
WHEREAS, Lessor acquired the property in March, 1992 and
succeeded to all rights and obligations of Lessor under the
Lease; and,
WHEREAS, Lessor and Lessee hereby express their mutual desire and
intent to further amend the lease.
NOW THEREFORE, for and in consideration of the mutual covenants
and agreements herein set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, Lessor and Lessee agree to the following
modifications:
The Lease is hereby renewed and extended for twenty-four
(24) months, commencing on October 1, 1997 and terminating
on September 30, 1999 (the "Extension Period"). Monthly Base
Rental (herein so called) during the Extension Period shall
be Thirty-Three Thousand One Hundred Sixty-Seven and 23/100
Dollars ($33,167.23). Lessee will pay its pro rata share of
taxes, utilities, insurance and common area maintenance
expenses (collectively, the "Expenses") as defined in the
Lease Agreement.
2. Section 28. Renewal Option of the Lease Agreement shall be
deleted in its entirety and replaced with the following:
Section 28. Renewal Option. Provided the Lessee is not in
default of any of the terms, covenants and conditions
hereof, and except as permitted by Paragraph 14.E. and
14.F., this Lease has not been assigned or the Premises (or
a part thereof) sublet, Lessee shall have the right and
option to extend the term of this Lease for one further term
of sixty (60) months. Such extension of the term shall be at
the fair market rental then in effect on equivalent
properties, of equivalent size and in equivalent areas.
Lessee shall deliver written notice to Lessor of Lessee's
intent to exercise the renewal option granted herein not
more than six (6) months nor less than four (4) months
prior to the expiration of the Extension Period of this
Amendment. In the event lessee fails to deliver such
written notice within the time period set forth above,
Lessee's right to extend the term hereof shall expire and be
of no further force and effect.
Lease Amendment 1--BEAUTICONTROL COSMETICS, INC.
Page: 2
3. Section 32. First Right of Refusal. Upon the termination
of the Brinker Texas lease agreement, Lessee will have a First
Right of Refusal on the adjacent space of 12,839 square feet.
lessee's option on the space will be at the fair market rental
then in effect on equivalent properties, of equivalent size and
in equivalent areas.
4. Except as provided herein, the Lease, as amended by this
Amendment, shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, this Amendment has been executed by the
parties hereto on the 13th day of March, 1995.
LESSEE: BEAUTICONTROL COSMETICS, INC.
BY: /S/ ROBERT L. ESSON
ROBERT L. ESSON
VICE PRESIDENT OF MANUFACTURING
AND DISTRIBUTION
LESSOR: NORWOOD REUNION DFW INDUSTRIAL LIMITED
BY: NORWOOD PROPERTIES, its managing partner
BY: /S/ CARLTON R. WILLIAMS
CARLTON R. WILLIAMS
PARTNER
<TABLE>
EXHIBIT 11
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
<CAPTION>
November 30,
1993 1994 1995
<S> <C> <C> <C>
Income before cumulative effect
of change accounting principle $3,097 $6,144 $4,702
Cumulative effect of change in
accounting principle* - 172 -
Net income applicable to common
stock $3,097 $6,316 $4,702
Common and common equivalent
share:
Weighted average common
shares outstanding 6,811 6,661 6,463
Net effect of dilutive
stock options based on
the treasury stock method
using average market price 179 359 290
Weighted average common and
common equivalent shares 6,990 7,020 6,753
Earnings per common and common
equivalent share:
Before cumulative effect of
change in accounting
principle $0.44 $0.88 $0.70
Cumulative effect of change
in accounting principle* - .02 -
Net income per common and
common equivalent share $0.44 $0.90 $0.70
Weighted average common
shares outstanding 6,811 6,661 6,463
Net effect of dilutive stock
options based on the
treasury stock method
using the greater of the
average or ending market
price 245 392 294
Weighted average common shares-
assuming full dilution 7,056 7,053 6,757
Earnings per common share-
assuming full dilution:
Before cumulative effect of
change in accounting principle $0.44 $0.88 $0.70
Cumulative effect of change in
accounting principle* - .02 -
Net income per common share -
assuming full dilution $0.44 $0.90 $0.70
<FN>
* Cumulative effect of change in accounting principle reflects
the impact of the adoption of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" which superseded
Statement of Financial Accounting Standards No. 96.
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF BEAUTICONTROL COSMETICS, INC.
Subsidiary State of Incorporation
JLH Advertising, Inc. Texas
BeautiControl International, Inc. Delaware
BeautiControl International Cosmetics
and Image Services, Inc. Delaware
BeautiControl (UK) Limited Chester,England
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated December 26, 1995,
accompanying the consolidated financial statements included
herewith of BeautiControl Cosmetics, Inc. on Form 10-K for the
year ended November 30, 1995. We hereby consent to the
incorporation by reference of said reports in the Registration
Statements of BeautiControl Cosmetics, Inc. on Forms S-8, (File
No. 33-48626, effective June 16, 1992 and File No. 33-83500,
effective September 1, 1994).
GRANT THORNTON LLP
Dallas, Texas
February 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000788330
<NAME> BEAUTICONTROL COSMETICS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 856
<SECURITIES> 845
<RECEIVABLES> 683
<ALLOWANCES> 325
<INVENTORY> 9,480
<CURRENT-ASSETS> 1,687
<PP&E> 20,521
<DEPRECIATION> 10,471
<TOTAL-ASSETS> 29,354
<CURRENT-LIABILITIES> 11,738
<BONDS> 0
0
0
<COMMON> 948
<OTHER-SE> 16,370
<TOTAL-LIABILITY-AND-EQUITY> 29,354
<SALES> 74,679
<TOTAL-REVENUES> 74,679
<CGS> 18,920
<TOTAL-COSTS> 67,592
<OTHER-EXPENSES> (529)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> 7,616
<INCOME-TAX> 2,914
<INCOME-CONTINUING> 4,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,702
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
