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 29, 1996 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 8, 1996.
Title of Each Class of Common Stock Number of Shares Outstanding
Common Stock, $0.10 par value 5,871,706 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
1
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 29, November 30,
1996 1995
CURRENT ASSETS
Cash and cash equivalents $1,020,424 $855,856
Short-term investments 602,371 844,680
Accounts receivable-net of
allowance for doubtful accounts
of $344,200 and $324,500 at
February 29, 1996 and
November 30, 1995, respectively 405,457 358,671
Inventories
Raw materials 4,764,199 4,932,131
Finished goods 4,921,862 4,547,889
9,686,061 9,480,020
Deferred income taxes 1,139,682 1,139,682
Other current assets 667,046 1,008,341
Total current assets 13,521,041 13,687,250
PROPERTY AND EQUIPMENT, AT COST 20,706,695 20,521,226
LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION 10,919,276 10,471,727
9,787,419 10,049,499
OTHER ASSETS
Cost in excess of net tangible
assets, acquired, net of
amortization of $733,600 and
$707,800 at February 29, 1996 and
November 30, 1995, respectively 2,145,458 2,129,074
Investments in bonds (at cost) 3,052,610 3,058,593
Other, net of amortization of
$483,600 and $474,100 at February
29, 1996 and November 30, 1995,
respectively 422,600 429,289
Total assets $28,929,128 $29,353,705
<FN>
The accompanying notes are an integral part of these statements.
3
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
February 29, November30,
1996 1995
CURRENT LIABILITIES
Short-term borrowings $2,100,000 $1,400,000
Accounts payable - trade 3,193,974 2,842,701
Sales tax payable 807,627 906,013
Accrued commissions and awards 1,531,064 1,762,683
Accrued compensation 617,668 573,722
Accrued liabilities 1,820,260 1,878,673
Deferred income 923,377 1,593,951
Income taxes payable 575,169 772,222
Total current liabilities 11,569,139 11,729,965
DEFERRED INCOME TAXES 298,366 298,366
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 - 9,482,086 and
9,478,986 shares at
February 29, 1996 and
November 30, 1995, respectively 948,209 947,899
Capital in excess of par value 12,532,241 12,522,145
Unrealized losses on investment,
net of taxes (52,800) (52,800)
Retained earnings 33,669,214 33,625,163
47,096,864 47,042,407
Less cost of 3,610,800 and
3,578,000 common shares held in
treasury at February 29, 1996 and
November 30, 1995 30,035,241 29,717,033
17,061,623 17,325,374
Total liabilities and
stockholders' equity $28,929,128 $29,353,705
<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 29, February 28,
1996 1995
Sales $16,304,786 $18,283,178
Cost of goods sold 3,702,010 4,219,805
Gross profit 12,602,776 14,063,373
Selling expenses 7,126,828 7,558,086
General and administrative expenses 4,415,329 3,949,719
11,542,157 11,507,805
Income from operations 1,060,619 2,555,568
Other income and expenses
Interest income 41,203 80,726
Other, net 70,857 50,325
112,060 131,051
Income before income taxes 1,172,679 2,686,619
Income taxes 505,177 954,957
Net income $667,502 $1,731,662
Net income per common and common
equivalent share $ .11 $.25
Weighted average common and common equivalent
shares 6,067,373 7,008,755
<FN>
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 29, February 28,
1996 1995
Net cash provided by (used in)
operating activities $1,078,977 $(840,776)
Cash flows from investing activities:
Proceeds from sale of investments 240,000 2,203,000
Purchase of property and equipment (185,470) (194,058)
Purchase of investments - (976,972)
Purchase of other assets (44,384) (28,142)
Net cash provided by (used in)
investing activities 10,146 1,003,828
Cash flows from financing activities:
Proceeds from issuance of common
stock 10,406 52
Purchase of common stock for
treasury (318,208) (234,375)
Dividends paid (616,753) (697,615)
Net cash provided by (used in)
financing activities (924,555) (931,938)
Net increase (decrease) in cash and
cash equivalents 164,568 (768,886)
Cash and cash equivalents at the
beginning of the period 855,856 3,275,303
Cash and cash equivalents at the end
of the period $1,020,424 $2,506,417
<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 29, 1996 AND FEBRUARY 28, 1995
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 29, 1996 and November 30, 1995
and the results of operations and cash flows for the three months
ended February 29, 1996 and February 28, 1995. The results for
the three months ended February 29, 1996 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, 1995.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operation
Quarters Ended February 29, 1996 and February 28, 1995. Net sales
decreased 11% from $18,283,000 in 1995 to $16,305,000 in 1996.
The first quarter of 1995 was a strong quarter for the Company
with several successful new product introductions including three
extension products to the Regeneration line. In 1996 the
Company instead chose to focus its attention on several new
programs and promotions being offered for its Consultants later
in the year including a new method of entry and training, a
hostess program and a more lucrative career plan. A recruiting
promotion is also planned for the second quarter to help build a
strong Consutlant base for the future. Additionally, the Company
continued to target expansions in both the Hispanic and African-
American markets. Once these programs are in place, the Company
believes these investments will result in sales and recruiting
growth in the latter part of the year.
Cost of goods sold as a percent of sales decreased slightly from
23.1% in 1995 to 22.7% in 1996 due to a lower number of recruits
and thus a decrease in sales of low margin demonstration kits in
the first quarter of 1996.
Selling, general and administrative expenses as a percent of
sales increased from 62.9% in 1995 to 70.8% in 1996 due primarily
to the decline in sales and to the investments in the development
of new programs and market expansions as discussed above.
Other income and expenses decreased $19,000 from $131,000 in 1995
to $112,000 in 1996 due to a decrease in investable cash and thus
lower interest income.
Net income decreased from $1,732,000 in 1995 to $668,000 in 1996
as a result of the lower sales volume coupled with the
investments the Company made in future programs.
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 increased by $164,000 from $856,000
at November 30, 1995 to $1,020,000 at February 29, 1996 . 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 belived to be undervalued. In the first quarter of
1996, the Company repurchased 32,800 shares of common stock for
$318,000.
The Company has a $15,000,000 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. The outstanding balance at February 29, 1996
was $2,100,000.
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.
(b) Reports on Form 8-K
None
SIGNATURES
9
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: 4/10/96 /s/ RICHARD W. HEATH
Richard W. Heath
President, Chief Executive
Officer
Date: 4/10/96 /s/ M. DOUGLAS TUCKER
M. Douglas Tucker
Senior Vice President-Finance
Principle Financial Officer
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