FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 31, 2001
Commission File Number 2-85538
CCA INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 04-2795439
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
200 Murray Hill Parkway
East Rutherford, NJ 07073
(Address of principal executive offices) (Zip Code)
(201) 330-1400
Registrant's telephone number, including area code
Not applicable
Former name, former address and former fiscal year, if
changed since last report.
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 re-
quired to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date.
Common Stock, $.01 Par Value - 5,841,827 shares as of May 31,
2001
Class A Common Stock, $.01 Par Value - 1,020,930 shares as of
May 31, 2001
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
May 31, 2001 and November 30, 2000 . . . . . . . . . . . . . 1-2
Consolidated Statements of Operations
for the three months and six months ended
May 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Comprehensive Income
for the three months and six months ended
May 31, 2001 and 2000. . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for
the six months ended May 31, 2001
and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . .6-15
Management's Discussion and Analysis of
Results of Operations and Financial
Condition . . . . . . . . . . . . . . . . . . . . . . . . 16-17
PART II OTHER INFORMATION. . . . . . . . . . . . . . . . . . . 18-19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
May 31, November 30,
2001 2000
Current Assets
Cash and cash equivalents $1,757,928 $ 804,508
Short-term investments and marketable
securities (Notes 3 and 10) 2,088,143 2,536,344
Accounts receivable, net of allowances of
$1,259,081 and $1,379,424,
respectively 7,453,359 6,329,755
Inventories 5,825,347 5,735,427
Prepaid expenses and sundry receivables 465,468 324,980
Deferred income taxes 1,674,173 1,529,522
Prepaid income taxes and refunds due - 777,691
Deferred advertising 2,155,380 -
Total Current Assets 21,419,798 18,038,227
Property and Equipment, net of accumulated
depreciation and amortization 512,990 675,790
Intangible Assets, net of accumulated
amortization of $107,531 at May 31, 2001
and $96,920 at November 30, 2000 640,782 641,410
Other Assets
Marketable securities 1,555,287 845,101
Due from officers - Non-current 21,840 21,485
Deferred income taxes 38,461 34,517
Other 58,076 55,526
Total Other Assets 1,673,664 956,629
Total Assets $24,247,234 $20,312,056
See Notes Consolidated to Financial Statements.
-1-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
May 31, November 30,
2001 2000
Current Liabilities
Notes payable - Current portion $ - $1,500,000
Accounts payable and accrued
liabilities 8,049,122 4,288,852
Income tax payable 265,751 -
Total Current Liabilities 8,314,873 5,788,852
Subordinate Debentures (Due August 1,
2005) 511,656 556,656
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued and
outstanding 6,042,823 shares 60,428 60,428
Class A common stock, $.01 par;
authorized 5,000,000 shares;
issued and outstanding
1,020,930 10,209 10,209
Additional paid-in capital 3,836,296 3,836,296
Retained earnings 11,775,318 10,300,693
Accumulated other comprehensive
income ( 30,011) ( 64,846)
15,652,240 14,142,780
Less: Treasury Stock (200,996 and
107,496 shares at May 31, 2001 and
November 30, 2000, respectively) 231,535 176,232
Total Shareholders' Equity 15,420,705 13,966,548
Total Liabilities and
Shareholders' Equity $24,247,234 $20,312,056
See Notes to Consolidated Financial Statements.
-2-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
May 31, May 31,
2001 2000 2001 2000
Revenues
Sales of Health and
Beauty Aid
Products - Net $13,118,998 $11,955,893 $23,545,367 $20,537,001
Other income 76,605 70,995 158,161 133,196
13,195,603 12,026,888 23,703,528 20,670,197
Costs and Expenses
Costs of sales 4,372,263 4,191,876 8,616,410 7,895,907
Selling, general and
administrative
expenses 3,880,089 3,476,287 6,901,420 6,719,140
Advertising, cooperative
and promotions 2,832,541 2,850,053 5,274,853 4,666,354
Research and
development 249,272 157,842 340,220 282,862
Provision for doubtful
accounts 24,155 67,184 114,673 134,311
Interest expense 10,895 46,031 51,201 68,508
11,369,215 10,789,273 21,298,777 19,767,082
Income before
Income Taxes 1,826,388 1,237,615 2,404,751 903,115
Provision for Income
Taxes 688,609 486,809 930,126 358,431
Net Income $1,137,779 $ 750,806 $1,474,625 $ 544,684
Earnings per Share
Basic $.17 $.10 $.21 $.08
Diluted $.16 $.10 $.20 $.07
See Notes to Consolidated Financial Statements.
-3-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
May 31, May 31,
2001 2000 2001 2000
Net Income $1,137,779 $750,806 $1,474,625 $544,684
Other Comprehensive Income
Unrealized holding gains
(loss) on invest
ments ( 4,682) ( 6,459) 34,835 ( 51,304)
Provision (Benefit) for
Taxes ( 2,527) ( 2,996) 13,473 ( 19,496)
Other Comprehensive
Income (Loss) - Net ( 2,155) ( 3,463) 21,362 ( 31,808)
Comprehensive Income $1,135,624 $747,343 $1,495,987 $512,876
Earnings Per Share:
Basic $.17 $.10 $.22 $.08
Diluted $.16 $.10 $.21 $.07
See Notes to Consolidated Financial Statements.
-4-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Six Months
Ended Ended
May 31, May 31,
2001 2000
Cash Flows from Operating Activities:
Net income $1,474,625 $ 544,684
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 202,615 199,575
Loss (gain) on sale of marketable
securities 1,642 ( 4,956)
(Increase) decrease in deferred income
taxes ( 148,595) 10,336
(Increase) in accounts receivable -
Net (1,123,604) (2,787,513)
(Increase) decrease in inventory ( 89,920) 610,589
(Increase) decrease in prepaid
expenses and miscellaneous
receivables ( 140,488) 496,290
(Increase) in deferred advertising (2,155,380)( 2,679,971)
Increase in income taxes payable 265,751 -
Increase in accounts payable and
accrued liabilities 3,760,271 3,251,781
Decrease in prepaid income
taxes and refunds due 777,691 273,076
(Increase) decrease in security
deposits ( 2,550) 343
Net Cash Provided by(Used in)
Operating Activities 2,822,058 ( 85,766)
Cash Flows from Investing Activities:
Acquisition of property, plant and
equipment ( 16,431) ( 252,304)
Acquisition of intangible assets ( 22,756) ( 578)
(Increase) decrease of money due from
officers ( 355) 15,313
Purchase of marketable securities (3,189,974) (1,106,706)
Proceeds from sale and maturity of
investments 2,938,681 1,092,663
Net Cash (Used in) Investing
Activities ( 290,835) ( 251,612)
Cash Flows from Financing Activities:
Proceeds from borrowings - 1,400,000
Payment on debt (1,500,000) (1,400,000)
Purchase of treasury stock ( 55,303) -
Repurchase of outstanding debenture ( 22,500) -
Net Cash (Used in) Provided by
Financing Activities (1,577,803) -
Net Increase (Decrease) in Cash 953,420 ( 337,378)
Cash at Beginning of Period 804,508 807,360
Cash at End of Period $1,757,928 $ 469,982
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 52,271 $ 55,646
Income taxes 51,806 4,467
See Notes to Consolidated Financial Statements.
-5-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated finan
cial statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes re
quired by generally accepted accounting principles for
complete financial statements. In the opinion of manage
ment, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation
have been included. Operating results for the six month
period ended May 31, 2001 are not necessarily indicative
of the results that may be expected for the year ended
November 30, 2001. For further information, refer to the
consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for
the year ended November 30, 2000.
NOTE 2 - ORGANIZATION AND DESCRIPTION OF BUSINESS
CCA Industries, Inc. ("CCA") was incorporated in the
State of Delaware on March 25, 1983.
CCA manufactures and distributes health and beauty aid
products.
CCA has several wholly-owned subsidiaries (CCA Cosmetics,
Inc., CCA Labs, Inc., Berdell, Inc., Nutra Care Corpora
tion, and CCA Online Industries, Inc.), all of which are
currently inactive.
In March of 1998 CCA acquired 80% of the newly organized
Fragrance Corporation of America, Ltd. which manufactures
and distributes perfume products. In 1999, the Company
adopted a formal plan to discontinue the operations of
the subsidiary.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the ac
counts of CCA and its wholly-owned subsidiaries (collec
tively the "Company"). All significant inter-company ac-
counts and transactions have been eliminated.
Use of Estimates:
The consolidated financial statements include the use of
estimates, which management believes are reasonable. The
process of preparing financial statements in conformity
with generally accepted accounting principles requires
the use of estimates and assumptions regarding certain
types of assets, liabilities, revenues, and expenses.
Such estimates primarily relate to unsettled transactions
and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ
from estimated amounts.
Short-Term Investments and Marketable Securities:
Short-term investments and marketable securities consist
of corporate and government bonds and equity securities.
The Company has classified its investments as Available-
for-Sale securities. Accordingly, such investments are
reported at fair market value, with the resultant unreal
ized gains and losses reported as a separate component of
shareholders' equity.
-6-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates:
The consolidated financial statements include the use of
estimates, which management believes are reasonable. The
process of preparing financial statements in conformity
with generally accepted accounting principles requires
the use of estimates and assumptions regarding certain
types of assets, liabilities, revenues, and expenses.
Such estimates primarily relate to unsettled transactions
and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ
from estimated amounts.
Short-Term Investments and Marketable Securities:
Short-term investments and marketable securities consist
of corporate and government bonds and equity securities.
The Company has classified its investments as Available-
for-Sale securities. Accordingly, such investments are
reported at fair market value, with the resultant unreal
ized gains and losses reported as a separate component of
shareholders' equity.
Statements of Cash Flows Disclosure:
For purposes of the statement of cash flows, the Company
considers all highly liquid instruments purchased with an
original maturity of less than three months to be cash
equivalents.
Inventories:
Inventories are stated at the lower of cost (first-in,
first-out) or market.
Product returns are recorded in inventory when they are
received at the lower of their original cost or market,
as appropriate. Obsolete inventory is written off and
its value is removed from inventory at the time its obso
lescence is determined.
-7-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment and Depreciation and Amortization
Property and equipment are stated at cost. The Company
charges to expense repairs and maintenance items, while
major improvements and betterments are capitalized. When
the Company sells or otherwise disposes of property and
equipment items, the cost and related accumulated depre-
ciation are removed from the respective accounts and any
gain or loss is included in earnings.
Depreciation and amortization are provided on the
straight-line method over the following estimated useful
lives or lease terms of the assets:
Machinery and equipment 7-10 Years
Furniture and fixtures 5-7 Years
Tools, dies and masters 2-7 Years
Transportation equipment 7 Years
Leasehold improvements 7-10 Years or life
of lease, whichever is
shorter
Intangible Assets:
Intangible assets are stated at cost. Patents and trade
marks are amortized on the straight-line method over a
period of 17 years. Goodwill represents the excess of
the cost over the fair value of the net assets acquired
and is amortized over 60 months.
Financial Instruments:
The carrying value of assets and liabilities considered
financial instruments approximate their respective fair
value.
Income Taxes:
Income tax expense includes federal and state taxes
currently payable and deferred taxes arising from tempo
rary differences between income for financial reporting
and income tax purposes.
Tax Credits:
Tax credits, when present, are accounted for using the
flow-through method as a reduction of income taxes in the
years utilized.
Earnings Per Common Share:
The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share" in 1998.
Basic earnings per share is calculated using the average
number of shares of common stock outstanding during the
year. Diluted earnings per share is computed on the
basis of the average number of common shares outstanding
plus the effect of outstanding stock options using the
"treasury stock method" and convertible debentures using
the "if-converted" method. Common stock equivalents
consist of stock options. On March 30, 2001, the Company
repriced all of the outstanding stock options to $.56.
-8-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition:
The Company recognizes sales at the time delivery occurs.
Although no legal right of return exists between the
customer and the Company, it is an industry-wide practice
to accept returns from customers. The Company, there
fore, records a reserve for returns equal to its gross
profit on its historical percentage of returns on its
last five months sales.
Accounts Receivable:
Accounts receivable with credit balances have been in
cluded as a current liability in "Accounts payable and
accrued liabilities" in the accompanying balance sheet.
The Company uses the allowance method to account for
uncollectible accounts receivable. Accounts receivable
are presented net of an allowance for doubtful accounts
of $363,000 and $323,000 as of May 31, 2001 and November
30, 2000, respectively.
Shipping and Handling Costs:
The Company presents shipping and handling costs as part
of Selling, general and administrative expense and not as
part of Cost of sales. Freight costs were $1,271,719 and
$1,086,807 for the six months ended May 31, 2001 and
2000, respectively.
Comprehensive Income:
The Company adopted SFAS #130, Comprehensive Income,
which considers the Company's financial performance in
that it includes all changes in equity during the period
from transactions and events from non-owner sources.
Reclassifications
Certain prior year amounts have been reclassified to
conform to the 2001 presentation.
NOTE 4 - INVENTORIES
The components of inventory consist of the following:
May 31, November 30,
2001 2000
Raw materials $3,234,359 $3,667,757
Finished goods 2,590,988 2,067,670
$5,825,347 $5,735,427
At May 31, 2001 and November 30, 2000, the Company had a
reserve for obsolescence of $1,559,190 and $1,050,714,
respectively.
-9-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the
following:
May 31, November 30,
2001 2000
Machinery and equipment $ 168,421 $ 323,233
Furniture and equipment 695,803 922,386
Transportation equipment 10,918 10,918
Tools, dies, and masters 522,045 1,972,830
Leasehold improvements 118,857 169,820
1,516,044 3,399,187
Less: Accumulated depreciation
and amortization 1,003,054 2,723,397
Property and Equipment - Net $ 512,990 $ 675,790
Depreciation expense for the six months ended May 31,
2001 and 2000 amounted to $179,231 and $193,065, respec-
tively.
During the six months ended May 31, 2001, the Company
disposed of approximately $1,900,000 of fully depreciated
property and equipment.
NOTE 6 - INTANGIBLE ASSETS
Intangible assets consist of the following:
May 31, November 30,
2001 2000
Patents and trademarks $748,313 $738,300
Less: Accumulated amortization 107,531 96,920
Intangible Assets - Net $640,782 $641,410
Amortization expense for the six months ended May 31,
2001 and 2000 amounted to $23,384 and $6,510, respec-
tively.
-10-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - DEFERRED ADVERTISING
In accordance with APB 28 Interim Financial Reporting the
Company expenses its advertising and related costs pro
portionately over the interim periods based on its total
expected costs per its various advertising programs.
Consequently a deferral of $2,155,380 is accordingly
reflected in the balance sheet for the interim period.
This deferral is the result of the Company's $6,500,000
media budget for the year which contemplates lower spend
ing in the 4th quarter than in the other three quarters;
as well as the Company's Co-op advertising commitments
which also anticipates a lower expenditure in the 4th
quarter.
The table below sets forth the calculation:
May May
2001 2000
(In Millions) (In Millions)
Media advertising budget for
the fiscal year $6.50 $6.00
Pro-rata portion for six months $3.25 $3.00
Media advertising spent 4.63 5.29
Accrual (deferral) ($1.38) ($2 29)
Anticipated Co-op advertising
commitments $4.00 $2.70
Pro-rata portion for six months $2.00 $1.35
Co-op advertising spent 2.78 1.74
Accrual (deferral) ($0.78) ($ .39)
NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The following items which exceeded 5% of total current
liabilities are included in accounts payable and accrued
liabilities as of:
May 31, November 30,
2001 2000
(In Thousands) (In Thousands)
a) Media advertising $2,022 $ -
b) Coop advertising 750 242
c) Accrued returns 492 983
d) Accrued bonuses 486 -
$3,750 $1,225
* under 5%
-11-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Continued)
All other liabilities were for trade payables or individ-
ually did not exceed 5% of total current liabilities.
NOTE 9 - OTHER INCOME
Other income consists of the following at May 31:
2001 2000
Interest income $120,393 $106,331
Dividend income 8,678 20,698
Miscellaneous 29,090 6,167
$158,161 $133,196
NOTE 10 -SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
Short-term investments and marketable securities, which
consist of stock and various corporate and government
obligations, are stated at market value. The Company has
classified its investments as Available-for-Sale securi
ties and considers as current assets those investments
which will mature or are likely to be sold in the next
fiscal year. The remaining investments are considered
non-current assets. The cost and market values of the
investments at May 31, 2001 and November 30, 2000 were as
follows:
May 31, November 30,
2001 2000
Current: COST MARKET COST MARKET
Corporate obligations $ 536,000 $ 540,883 $ 536,000 $ 534,590
Government obligations
(including mortgage
backed securities) 1,543,598 1,547,260 1,998,756 2,001,754
Total 2,079,598 2,088,143 2,534,756 2,536,344
Non-Current:
Corporate obligations 592,900 593,226 - -
Government obli-
gations 596,700 597,421 150,510 146,723
Preferred stock 250,000 251,920 612,561 586,448
Other equity
investments 154,245 112,720 148,465 111,930
Total 1,593,845 1,555,287 911,536 845,101
Total $3,673,443 $3,643,430 $3,446,292 $3,381,445
-12-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 -SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
The market value at May 31, 2001 was $3,643,430 as compared to $3,381,445 at
November 30, 2000. The cost and market values of the investments at May 31, 2001
were as follows:
COL. A COL. B COL. C COL.D COL.E
Amount at Which
Each Portfolio
Number of Market Of Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
CORPORATE OBLIGATIONS:
GMAC Smartnotes 10/15/01 5.950% 536,000 $ 536,000 $ 540,883 $ 540,883
GMAC Smartnotes 1/15/03 5.550% 250,000 250,000 251,215 251,215
GMAC Smartnotes 2/15/03 5.750% 140,000 140,000 141,161 141,161
International Business
Machines 9/22/03 5.370% 100,000 102,040 100,506 100,506
Colgate-Palmolive 12/1/03 5.270% 100,000 100,860 100,344 100,344
1,128,900 1,134,109 1,134,109
-13-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
COL. A COL. B COL. C COL. D COL. E
Amount at Which
Each Portfolio of
Number of Market Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
GOVERNMENT OBLIGATIONS:
FHLMC 1628-N 12/15/2023 6.500% 32,956 $ 32,395 $ 33,337 $ 33,337
FNMA 93-224-D 11/25/2023 6.500 90,494 90,950 91,540 91,540
FNMA 92-2-N 1/25/2024 6.500 24,320 23,295 24,654 24,654
US Treasury Note 7/31/2001 6.625 200,000 204,378 201,064 201,064
US Treasury Note 9/30/2001 5.625 250,000 249,767 251,640 251,640
US Treasury Note 11/15/2003 4.250 200,000 199,891 199,062 199,062
US Treasury Note 11/15/2003 4.250 250,000 250,169 248,828 248,828
US Treasury Bill 8/9/2001 3.550 300,000 297,312 297,972 297,972
US Treasury Bill 6/14/2001 4.520 300,000 296,631 299,544 299,544
US Treasury Bill 10/11/2001 3.815 250,000 245,238 246,805 246,805
FHLBC 6/22/2001 5.610 250,000 250,272 250,235 250,235
2,140,298 2,144,681 2,144,681
-14-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
COL. A COL. B COL. C COL.D COL.E
Amount at Which
Each Portfolio Of
Number of Market Equity Security
Units-Principal Value of Issues and Each
Amount of Each Issue Other Security
Name of Issuer and Maturity Interest Bonds and Cost of at Balance Issue Carried in
Title of Each Issue Date Rate Notes Each Issue Sheet Date Balance Sheet
EQUITY:
Preferred Stock:
Merrill Lynch Trust 9/30/08 7.28% 6,000 $ 150,000 $ 151,920 $ 151,920
Other Equity Investments:
First Australia Prime 100,000 100,000 100,000
Dreyfus Premier Limited
Term High Income CL B 3.8* 12,824 154,245 112,720 112,720
404,245 364,640 364,640
$3,673,443 $3,643,430 $3,643,430
* Estimated
-15-
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ended May 31, 2001, the Company
had revenues of $13,195,603 and net income of $1,137,779 after
a provision of taxes of $688,609. Sales returns were 7% of
gross sales. Sales returns were 6.5% for the prior year's
period. Gross margins of 66.7% were up from 64.9%. This was
primarily due to the product mix and better cost control.
Selling general and administrative (SG&A) increased from $3.5
million to $3.9 million. This is primarily due to a $350,000
reserve taken based on a proposed settlement on a trademark
infringement case. Provision for doubtful accounts decreased
from $67,000 to $24,000 due to a substantial increase in ac
counts receivable during the prior year's period and a higher
percentage of accounts receivable this year in the current
category.
For the three month period ending May 31, advertising,
cooperative and promotional allowance expenditures were $2.8
million, substantially the same as for the three month period
ending May 31, 2000. Advertising expenditures were 21.6% of
sales compared to 23.8%. Since both co-op advertising and
promotional have a material effect on the Company's operation,
the Company attempts to anticipate its advertising and promo-
tional commitments as a percent of gross sales in order to
control its effect on its net income in accordance with APB
Interim Financial Reporting the company expenses its advertis-
ing and related costs proportionately over the interim periods
based on its total expected per its various advertising pro-
grams. Consequently, a deferral of $2.16 million media expense
for the six month period is reflected in the balance sheet.
The Company deferred $2.67 million in the prior year for the
six month period. The deferral is the result of the Company's
current $6.5 million media budget for the entire year, which is
predicated on substantially lower spending in the third and
fourth quarters. Co-op expenditures are budgeted at $4 million
for the year. Specifically, the company spent $4.6 million for
media advertising in the six months and $2.8 million in co-op
advertising. The difference between the actual expense and the
budgeted expense is deferred or accrued over the subsequent six
month period and by the end of the year will be fully expensed.
For the six month period ended May 31, 2001, the Company
had revenue of $23,703,528 and a net income of $1,474,625 after
a provision of income taxes of $930,126. In the prior year's
period, the Company had revenues of $20,670,197 and net income
of $544,684 after a provision for income taxes of $358,431.
Revenue for the six month period ended May 31, 2001 was up
approximately $3,033,331 from 2000. Gross profit margins for
the six month period ending May 31, 2001 increased from 61.6%
last year to 63.4%
For the six month period ended May 31, 2001, advertising
cooperative and promotional allowance expenditures was
$5,274,853 as compared to $4,666,354 for the six month period
ending May 31, 2000. Advertising expenditures were 22.4% of
sales vs. 22.7% last year.
For the six month period ending May 31, 2001, research and
development expenses were $340,220 compared to $282,862 last
year.
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CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
The Company's financial position as of May 31, 2001 con
sists of current assets of $21,419,798 and current liabilities
of $8,314,873. In addition, shareholders' equity increased
from $13,966,548 at November 30, 2000 to $15,420,705 at May 31,
2001 primarily due to net income earned during the period.
The Company generated $2.8 million in cash from operations
due to the six month net income of $1.5 million coupled with
the net effect of the increase in the Company's accounts re-
ceivable and deferred expenses versus the increases in the
Company's payables.
The $2.8 million cash generated by operations, however, was
used to retire all of the Company's short-term debt ($1.5
million) and invest in additional securities ($.3 million),
leaving the Company with a net increase in its cash position of
approximately $1 million.
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PART II, ITEM 6. (Continued) EXHIBIT 11
CCA INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
Three Months Ended Six Months Ended
May 31, May 31,
2001 2000 2001 2000
Item 6.
Weighted average shares
outstanding - Basic 6,877,058 7,167,242 6,893,183 7,167,242
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 399,909 337,075 316,814 356,188
Weighted average shares
outstanding - Diluted 7,276,967 7,504,317 7,209,997 7,523,430
Net income $1,137,779 $ 750,806 $1,474,625 $ 544,684
Per share amount
Basic $.17 $.10 $.21 $.08
Diluted $.16 $.10 $.20 $.07
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CCA INDUSTRIES, INC.
PART II OTHER INFORMATION
All information pertaining to Part II is omitted pursuant to the
instructions pertaining to that part.
The Company did not file any reports on Form 8-K during the six
months ended May 31, 2001.
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SIGNATURES
Pursuant to the requirements 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.
CCA INDUSTRIES, INC.
By:
David Edell, President
By:
Ira W. Berman, Secretary
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