FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X QUARTERLY 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 Quarter Ended February 28, 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 including zip code of principal executive offices)
214/458-0601
(Registrant's telephone number including area code)
Indicated below is the number of shares outstanding of each class of the
registrant's common stock, as of April 11, 1995.
Title of Each Class of Common Stock Number of Shares Outstanding
Common Stock, $0.10 par value 6,606,211 shares
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
Page 1 of 11 sequentially
numbered pages
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statement
Index to BeautiControl Cosmetics, Inc. Consolidated Financial Statement
Page
Balance Sheet 3-4
Statements of Income 5
Statements of Cash Flows 6
Notes to Financial Statements 7-8
2
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
February 28, November 30,
1995 1994
CURRENT ASSETS
Cash and cash equivalents $ 2,506,417 $3,275,303
Short-term investments 1,758,628 2,526,808
Accounts receivable-net of
allowance for doubtful accounts
of $287,000 and $291,100 at
February 28, 1995 and
November 30, 1994, respectively 352,332 308,414
Inventories
Raw materials 6,530,809 5,538,426
Finished goods 4,837,803 4,613,823
11,368,612 10,152,249
Deferred income taxes 903,770 903,770
Other current assets 895,432 834,290
Total current assets 17,785,191 18,000,834
PROPERTY AND EQUIPMENT, AT COST 19,100,644 18,906,585
LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION 9,088,362 8,653,705
10,012,282 10,252,880
OTHER ASSETS
Cost in excess of net tangible
assets, acquired, net of
amortization of $646,300 and
$629,700 at February 28, 1995 and
November 30, 1994, respectively 2,005,058 2,021,629
Investments in bonds (at cost) 3,768,325 4,227,254
Other, net of amortization of
$453,600 and $449,100 at February
28, 1995 and November 30, 1994,
respectively 444,279 432,174
Total assets $34,015,135 $34,934,771
<FN>
The accompanying notes are an integral part of these financial
statements.
3
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
February 28, November 30,
1995 1994
CURRENT LIABILITIES
Accounts payable - trade $3,095,367 $3,825,867
Sales tax payable 892,229 833,262
Accrued commissions 1,439,201 1,446,265
Accrued compensation 469,306 1,240,693
Accrued awards 436,043 441,268
Accrued liabilities 1,131,244 1,631,379
Deferred income 889,612 1,434,775
Income taxes payable 781,147 -
Total current liabilities 9,134,149 10,853,509
DEFERRED INCOME TAXES 293,674 293,674
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 - 9,467,136 and
9,466,616 shares at February
28, 1995 and November 30, 1994,
respectively 946,714 946,662
Capital in excess of par value 12,471,754 12,471,754
Retained earnings 32,692,043 31,657,996
46,110,511 45,076,412
Less cost of 2,822,675 and
2,805,175 common shares held in
treasury at February 28, 1995 and
November 30, 1994 21,523,199 21,288,824
24,587,312 23,787,588
Total liabilities and
stockholders' equity $34,015,135 $34,934,771
<FN>
The accompanying notes are an integral part of these statements.
4
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
February 28, February 28,
1995 1994
Sales $18,283,178 $16,825,338
Cost of goods sold 4,219,805 4,308,763
Gross profit 14,063,373 12,516,575
Selling expenses 7,558,086 6,547,473
General and administrative
expenses 3,949,719 3,675,187
11,507,805 10,222,660
Income from operations 2,555,568 2,293,915
Other income and expenses
Interest income 80,726 54,782
Other, net 50,325 21,279
131,051 76,061
Income before income taxes 2,686,619 2,369,976
Income taxes 954,957 828,142
Income before cumulative effect of
change in accounting principle 1,731,662 1,541,834
Cumulative effect of change in
accounting principle* - 172,053
Net income $ 1,731,662 $ 1,713,887
Earnings per common and common
equivalent share:
Before cumulative effect of $ 0.25 $ 0.22
change in accounting principle
Cumulative effect of change in - 0.02
accounting principle*
Net income $ 0.25 $ 0.24
Weighted average common and common
equivalent shares 7,008,755 7,000,844
<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 supercedes
Statement of Financial Accounting Standards No. 96.
The accompanying notes are an integral part of these statements.
5
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Three Months Ended
February 28, February 28,
1995 1994
Net cash provided by (used in)
operating activities $(840,776) $1,204,173
Cash flows from investing activities:
Proceeds from sale of investments 2,203,000 844,372
Proceeds from sale of property and
equipment - 1,700
Purchase of property and equipment (194,058) (393,292)
Purchase of investments (976,972) (795,762)
Purchase of other assets (28,142) -
Net cash provided by (used in)
investing activities 1,003,828 (342,982)
Cash flows from financing activities:
Proceeds from issuance of common
stock 52 613,052
Purchase of common stock for
treasury (234,375) -
Dividends paid (697,615) (464,533)
Net cash provided by (used in)
financing activities (931,938) 148,519
Net increase (decrease) in cash and
cash equivalents (768,886) 1,009,710
Cash and cash equivalents at the
beginning of the period 3,275,303 4,268,913
Cash and cash equivalents at the end
of the period $2,506,417 $5,278,623
<FN>
The accompanying notes are an integral part of these statements.
6
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED FEBRUARY 28, 1995 AND FEBRUARY 28, 1994
Note 1 - Basis of Presentation
In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position as of
February 28, 1995 and November 30, 1994 and the result of operations and
cash flows for the three months ended February 28, 1995 and February 28,
1994. The results for the three months ended February 28, 1995 are not
necessarily indicative of the results for the year.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, it is suggested that these financial
statements be read in conjunction with the consolidated financial
statements and notes included in the Company's annual report on Form 10-K
for the year ended November 30, 1994.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operation
Quarters Ended February 28, 1995 and February 28, 1994. Net sales
increased 9% from $16,825,000 in 1994 to $18,238,000 in 1995. The Company
continued its focus on new products in the first quarter of 1995 with the
addition of three extension products to the very successful Regeneration
line, new Perfecting Creme to Powder foundations in 20 shades, new lip and
eye pencils, and Body Glue, (a revolutionary roll-on adhesive to keep
clothing and accessories in place). New product sales combined with the
strong sales of the current product line generated the increase in sales
over 1994.
Cost of goods sold as a percent of sales decreased from 25.6% in 1994 to
23.1% in 1995 due to the shift in product mix as a percent of sales from
80% for products for resale in 1994 to 87% in 1995. Products for resale
carry a higher gross margin than other products (sales aids). This
decrease was offset by the increase in selling, general and administrative
expenses.
Selling, general and administrative expenses as a percent of sales
increased from 60.8% in 1994 to 62.9% in 1995. This increase is due to the
increase in the sales of products for resale which raised overall
commission expense.
Other income and expenses increased from $76,000 in 1994 to $131,000 in
1995, mostly due to the increase in interest income generated by higher
interest rates.
Net income increased from $1,714,000 in 1994 to $1,732,000 in 1995 as a
result of the sales increase in 1995 as compared to 1994. Additionally,
income for the first quarter of 1994 included a onetime increase in income
of $172,000 from the cumulative effect of the adoption of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes."
7
Liquidity and Capital Resources
The Company's primary source of liquidity is funds provided by operations.
Management believes that these funds will be sufficient to meet present and
foreseeable capital needs.
The Company's cash position decreased by $769,000 from $3,275,000 at
November 30, 1994 to $2,506,000 at February 28, 1995 due to the increase in
inventory to support the introduction of new products, the $.105 per share
dividend or $698,000 paid in the quarter, $194,000 spent to purchase
additional property and equipment and $234,000 spent for stock repurchase.
Under a plan previously authorized by the Board of Directors the Company
can repurchase shares of its common stock in the open market when they are
believed to be undervalued. In the first quarter of 1995, the Company
repurchased 17,500 shares of common stock.
The Company has a $10,000,000 line of credit available to use primarily for
share repurchase in the event that the Company believes its stock is
undervalued and operating cash is needed for the business. This line of
credit reduces to $8,000,000 on May 1, 1995 and decreases by $2,000,000 per
year thereafter if unused.
8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Index to Exhibits
11 BeautiControl Cosmetics, Inc. and Subsidiaries -
Computation of Earnings per Common
Share - filed herewith at page 11.
(b) Reports on Form 8-K
None
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BeautiControl Cosmetics, Inc.
(Registrant)
Date: 4/11/95 /s/ RICHARD W. HEATH
Richard W. Heath
President, Chief Executive Officer
Date: 4/11/95 /s/ VICKI S. MILLER
Vicki S. Miller
Senior Vice President-Finance
Principle Financial Officer
10
EXHIBIT 11
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
Three Months Ended
February 28, February 28,
1995 1994
Income before cumulative effect of change
in accounting principle $1,731,662 $1,541,834
Cumulative effect of change in accounting
principle* - 172,053
Net income applicable to common stock $1,731,662 $1,713,887
Common and common equivalent share:
Weighted averge common shares
outstanding 6,648,101 6,641,924
Net effect of dilutive stock options
based on the treasury stock method
using average market price 360,654 358,920
Weighted average common and common
equivalent shares 7,008,755 7,000,844
Earnings per common and common equivalent
share:
Before cumulative effect of change in
accounting principle* $ .25 $ .22
Cumulative effect of change in
accounting principle* - .02
Net income per common and common
equivalent share $ .25 $ .24
Common share - assuming full dilution:
Weighted average common shares
outstanding 6,648,101 6,641,924
Net effect of dilutive stock options
based on the treasury stock method
using the greater of the average or
ending market price 360,659 358,949
Weighted average common shares - assuming
full dilution 7,008,760 7,000,873
Earnings per common share - assuming full
dilution:
Before cumulative effect of change in
accounting principle $ .25 $ .22
Cumulative effect of change in
accounting principle - .02
Net income per common share - assuming
full dilution $ .25 $ .24
<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 supercedes Statement of Financial Accounting
Standards No. 96.
11