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 August 31, 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 October 10, 1996.
Title of Each Class of Common Stock Number of Shares Outstanding
Common Stock, $0.10 par value 5,778,011 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
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
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
August 31, November 30,
1996 1995
CURRENT ASSETS
Cash and cash equivalents $34,004 $855,856
Short-term investments - 844,680
Accounts receivable-net of
allowance for doubtful accounts
of $351,300 and $324,500 at
August 31, 1996 and
November 30, 1995, respectively 736,936 358,671
Inventories
Raw materials 5,868,967 4,932,131
Finished goods 7,777,273 4,547,889
13,646,240 9,480,020
Deferred income taxes 1,139,682 1,139,682
Other current assets 715,520 1,008,341
Total current assets 16,272,382 13,687,250
PROPERTY AND EQUIPMENT, AT COST 21,376,280 20,521,226
LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION 11,783,580 10,471,727
9,592,700 10,049,499
OTHER ASSETS
Cost in excess of net tangible
assets, acquired, net of
amortization of $790,600 and
$707,800 at August 31, 1996 and
November 30, 1995, respectively 2,097,050 2,129,074
Investments in bonds (at cost) 2,840,645 3,058,593
Other, net of amortization of
$505,200 and $474,100 at August
31, 1996 and November 30, 1995,
respectively 548,174 429,289
Total assets $31,350,951 $29,353,705
<FN>
The accompanying notes are an integral part of these statements.
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
August 31, November 30,
1996 1995
CURRENT LIABILITIES
Short-term borrowings $2,600,000 $1,400,000
Accounts payable - trade 4,816,240 2,842,701
Sales tax payable 1,110,784 906,013
Accrued commissions and awards 2,128,318 1,762,683
Accrued compensation 720,875 573,722
Accrued liabilities 1,744,712 1,878,673
Deferred income 558,564 1,593,951
Income taxes payable 64,503 772,222
Total current liabilities 13,743,996 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 - 9,486,811 and 9,478,986
shares at August 31, 1996 and
November 30, 1995, respectively 948,681 947,899
Capital in excess of par value 12,548,283 12,522,145
Unrealized losses on investment,
net of taxes (52,800) (52,800)
Retained earnings 34,769,619 33,625,163
48,213,783 47,042,407
Less cost of 3,708,800 and
3,578,000 common shares held in
treasury at August 31, 1996 and
November 30, 1995 30,905,194 29,717,033
17,308,589 17,325,374
Total liabilities and
stockholders' equity $31,350,951 $29,353,705
<FN>
The accompanying notes are an integral part of these statements.
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1996 1995 1996 1995
Sales $19,532,082 $17,905,604 $57,314,631 $55,551,899
Cost of goods sold 4,648,019 4,708,219 14,083,274 13,716,346
Gross profit 14,884,063 13,197,385 43,231,357 41,835,553
Selling expenses 8,400,185 7,856,756 25,006,567 23,695,852
General and
administrative expenses 4,416,135 3,989,949 13,592,260 12,158,940
12,816,320 11,846,705 38,598,827 35,854,792
Income from operations 2,067,743 1,350,680 4,632,530 5,980,761
Other income and expenses
Interest income 47,140 61,610 130,933 219,527
Other, net 57,444 76,828 205,623 200,769
104,584 138,438 336,556 420,296
Income before income taxes 2,172,327 1,489,118 4,969,086 6,401,057
Income taxes 840,380 582,302 1,995,837 2,335,373
Net Income $1,331,947 $906,816 $2,973,249 $4,065,684
Net income per common and
common equivalent share $0.23 $0.13 $0.50 $0.59
Weighted average common
and common equivalent
shares 5,907,633 6,752,384 5,986,945 6,893,001
<FN>
The accompanying notes are an integral part of these statements.
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Nine Months Ended
August 31, August 31,
1996 1995
Net cash provided by (used in)
operating activities $2,184,021 $2,407,633
Cash flows from investing activities:
Proceeds from sale of investments 1,040,000 3,628,000
Purchase of investments - (976,972)
Purchase of property and equipment (855,055) (1,092,953)
Purchase of other assets (200,667) (214,176)
Net cash provided by (used in)
investing activities (15,722) 1,343,899
Cash flows from financing activities:
Proceeds from issuance of common
stock 26,920 1,014
Purchase of common stock for
treasury (1,188,161) (4,451,174)
Dividends paid (1,828,910) (2,085,790)
Net cash provided by (used in)
financing activities (2,990,151) (6,535,950)
Net increase (decrease) in cash and
cash equivalents (821,852) (2,784,418)
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 $34,004 $490,885
Supplemental Cash Flow Information:
Income Taxes $1,948,658 $2,080,400
Interest 92,069 -
<FN>
The accompanying notes are an integral part of these statements.
BEAUTICONTROL COSMETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED August 31, 1996 AND August 31, 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 August 31, 1996 and November 30, 1995
and the results of operations and cash flows for the three and
nine months ended August 31, 1996 and August 31, 1995. The
results for the three and nine months ended August 31, 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 Operations
Quarters ended August 31, 1996 and August 31, 1995. Net sales
were $19,532,000 for the third quarter of 1996, a 9% increase
over net sales of $17,906,000 for the same period in 1995. During
the third quarter of 1996, the Company had several new product
introductions including All Clear Skin System for acne, Vintage
Eau de Parfum, a PMS Support Complex Supplement and a Fall
Limited Collection Line, Vive La France which included Color
Freeze lip, eye and nail products.
Cost of goods sold decreased to 24% of sales in 1996 compared to
26% of sales in 1995. During the third quarter of 1995, the
Company s recruiting drive resulted in more sales of
demonstration kits carrying lower margins and thus there was a
higher cost of goods sold as a percent of sales in 1995 than in
1996.
Selling, general and administrative expenses remained even at 66%
of sales in both 1996 and 1995.
Other income and expenses (net) was $105,000 compared to $138,000
for the same period in 1995.
Net income increased to $1,332,000 in 1996 from $907,000 in 1995
primarily as a result of the year over year sales increase.
Nine Months ended August 31, 1996 and August 31, 1995. Sales
increased to $57,315,000 for the first nine months of 1996
compared to $55,552,000 for the same period in 1995. Successful
new product introductions and skin care products continued to
support sales.
Cost of goods sold as a percent of sales remained constant at 25%
in 1996 and in 1995.
Selling, general and administrative costs were 67% of sales or
$38,599,000 in 1996 compared to 65% of sales or $35,855,000 in
1995 due to concentration on expanding domestic markets and
developing and establishing international markets. The Company
also spent approximately $500,000 testing new ways to recruit,
train and develop Consultants. Currently, the states of
Louisiana and Mississippi are participating in the test, and
management is monitoring results for possible expansion to other
states.
Other income, (net), decreased to $337,000 in 1996 from $420,000
in 1995.
Net income was $2,973,000 for the first nine months of 1996
compared to $4,066,000 for the same period in 1995 due to the
factors stated above combined with the Company's United
Kingdom subsidiary first year losses which are not expected to
continue in future periods.
Liquidity and Capital Resources
The Company's primary source of liquidity is funds provided by
operations.
The Company's cash position decreased to $34,000 at August 31,
1996 from $856,000 at November 30, 1995. The Company invested
$1,188,000 to repurchase 130,800 shares of its stock, paid
dividends of $1,829,000 and paid $855,000 for additional property
and equipment. Under a plan previously authorized by the Board
of Directors, the Company may repurchase shares of its common
stock when they are believed to be undervalued. The Company has
authorization remaining for 244,700 shares for repurchase.
The Company has a $15,000,000 line of credit to use for share
repurchase and for operating cash for the business. The
outstanding borrowings balance at August 31, 1996 was
$2,600,000.
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
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: 10/14/96 /s/ RICHARD W. HEATH
Richard W. Heath
President, Chief Executive Officer
Date: 10/14/96 /s/ M. DOUGLAS TUCKER
M. Douglas Tucker
Senior Vice President-Finance
Principle Financial Officer