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 August 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 - 5,824,627 shares as of
August 31, 2001
Class A Common Stock, $.01 Par Value - 1,020,930 shares as of
August 31, 2001
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
August 31, 2001 and November 30, 2000. . . . . . . . . . . . 1-2
Consolidated Statements of Operations
for the three months and nine months ended
August 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Comprehensive Income
for the three months and nine months ended
August 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for
the nine months ended August 31, 2001
and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
Notes to Consolidated Financial Statements . . . . . . . . .7-16
Management's Discussion and Analysis of
Results of Operations and Financial
Condition . . . . . . . . . . . . . . . . . . . . . . . . 17-18
PART II OTHER INFORMATION. . . . . . . . . . . . . . . . . . . 19-20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
August 31, November 30,
2001 2000
Current Assets
Cash and cash equivalents $ 2,756,097 $ 804,508
Short-term investments and marketable
securities 1,036,978 2,536,344
Accounts receivable, net of allowances of
$2,411,122 and $1,379,424, respectively 5,575,826 6,329,755
Inventories 5,637,942 5,735,427
Prepaid expenses and sundry receivables 215,286 324,980
Deferred income taxes 1,526,688 1,529,522
Prepaid income taxes and refunds due 89,935 777,691
Deferred advertising 734,110 -
Total Current Assets 17,572,862 18,038,227
Property and Equipment, net of accumulated
depreciation and amortization 446,149 675,790
Intangible Assets, net of accumulated
amortization of $119,415 at August 31, 2001
and $96,920 at November 30, 2000 630,171 641,410
Other Assets
Marketable securities 2,802,177 845,101
Due from officers - Non-current 21,218 21,485
Deferred income taxes 39,635 34,517
Other 56,747 55,526
Total Other Assets 2,919,777 956,629
Total Assets $21,568,959 $20,312,056
See Notes Consolidated to Financial Statements.
-1-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
August 31, November 30,
2001 2000
Current Liabilities
Notes payable $ - $ 1,500,000
Accounts payable and accrued
liabilities 5,269,798 4,288,852
Income taxes payable 76,096 -
Total Current Liabilities 5,345,894 5,788,852
Subordinated Debentures (due August 1,
2005) 510,656 556,656
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued 6,042,823
shares, respectively 60,428 60,428
Class A common stock, $.01 par; authorized
5,000,000 shares; issued and outstanding
1,020,930 shares, respectively 10,209 10,209
Additional paid-in capital 3,836,296 3,836,296
Retained earnings 12,079,444 10,300,693
Unrealized gains (losses) on marketable
securities ( 26,763) ( 64,846)
15,959,614 14,142,780
Less: Treasury Stock (218,196 and 107,496
shares at August 31, 2001 and
November 30, 2000, respectively) 247,205 176,232
Total Shareholders' Equity 15,712,409 13,966,548
Total Liabilities and Shareholders'
Equity $21,568,959 $20,312,056
See Notes to Consolidated Financial Statements.
-2-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
August 31, August 31,
2001 2000 2001 2000
Revenues
Sales of Health and
Beauty Aid
Products - Net $10,518,794 $9,905,804 $34,064,161 $30,411,579
Other income 89,322 86,208 247,483 219,032
10,608,116 9,992,012 34,311,644 30,630,611
Costs and Expenses
Costs of sales 3,368,589 3,493,222 11,984,999 11,381,811
Selling, general and
administrative
expenses 3,515,497 3,595,388 10,416,917 10,309,788
Advertising, cooperative
and promotions 2,974,468 2,478,780 8,249,321 7,165,084
Research and
development 238,498 105,879 578,718 388,741
Provision for doubtful
accounts ( 25,982) 10,272 88,691 144,583
Interest expense 11,715 45,992 62,916 97,447
10,082,785 9,729,533 31,381,562 29,487,454
Income before Provision
for Income Taxes 525,331 262,479 2,930,082 1,143,157
Provision for Income
Taxes 221,206 123,710 1,151,331 432,141
Income From Continuing
Operations 304,125 138,769 1,778,751 711,016
Income (Loss) From
Discontinued
Operations - ( 79,735) - ( 107,298)
Net Income $ 304,125 $ 59,034 $ 1,778,751 $ 603,718
Basic Diluted Basic Diluted Basic Diluted Basic Diluted
Earnings per
Share
Continuing
Operations $.04 $.04 $.02 $.02 $.26 $.24 $.10 $.09
Discontinued
Operations $ - $ - ($.01) ($.01) $ - $ - ($.01) ($.01)
Net Income
(Loss) $.04 $.04 $.01 $.01 $.26 $.24 $.08 $.08
See Notes to Consolidated Financial Statements.
-3-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
August 31, August 31,
2001 2000 2001 2000
Net Income $ 304,125 $ 59,034 $1,778,751 $603,718
Other Comprehensive Income
Unrealized holding gains
(loss) on investments 3,248 26,674 38,083 ( 24,630)
Provision (Benefit) for Taxes 1,367 10,185 14,963 ( 9,311)
Other Comprehensive Income
(Loss) - Net 1,881 16,489 23,120 ( 15,319)
Comprehensive Income $ 306,006 $ 75,523 $1,801,871 $588,399
Earnings Per Share:
Basic $.04 $.01 $.26 $.08
Diluted $.04 $.01 $.24 $.08
See Notes to Consolidated Financial Statements.
-4-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
August 31, August 31,
2001 2000
Cash Flows from Operating Activities:
Net income $1,778,751 $ 603,718
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 289,201 286,175
(Gain) loss on sale of marketable securities 5,792 ( 4,956)
(Increase) in deferred income
taxes ( 2,284) ( 151,748)
Decrease (increase) in accounts
receivable - Net 753,929 ( 1,040,284)
Decrease in inventory 97,485 902,795
Decrease in prepaid expenses
and miscellaneous receivables 109,694 385,913
(Increase) in deferred advertising ( 734,110) ( 1,286,557)
Increase (decrease) in accounts payable
and accrued liabilities 980,946 ( 1,536,934)
Increase in taxes payable 76,096 -
(Increase) decrease in security deposits ( 1,221) 343
Decrease in prepaid income
taxes and refunds due 687,756 506,447
Net Cash Provided by (Used in)
Operating Activities 4,042,035 ( 1,335,088)
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment ( 24,292) ( 264,400)
Acquisition of intangible assets ( 24,029) ( 63,886)
Proceeds of money due from officers 267 25,061
Purchase of marketable securities (4,458,073) ( 1,379,933)
Proceeds from sale and maturity of
investments 4,009,654 1,092,795
Net Cash (Used in) Investing Activities ( 496,473) ( 590,363)
Cash Flows from Financing Activities:
Proceeds from borrowings - 3,900,000
Payment on debt (1,500,000) ( 2,700,000)
Purchase of treasury stock ( 70,973) -
Repurchase of outstanding debentures ( 23,000) -
Net Cash (Used in) Provided by
Financing Activities (1,593,973) 1,200,000
Net Increase (Decrease) in Cash 1,951,589 ( 725,451)
Cash at Beginning of Period 804,508 807,360
Cash at End of Period $2,756,097 $ 81,909
See Notes to Consolidated Financial Statements.
-5-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
Nine Months Nine Months
Ended Ended
August 31, August 31,
2001 2000
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 68,865 $ 88,968
Income taxes 495,667 97,442
Supplemental Schedule of Noncash Investing
and Financing Activities:
The Company repurchased common stock in
exchange for the issuance of subordinated
debentures:
Common stock repurchased $ - $ 556,656
Subordinated debentures - ( 556,656)
$ - $ -
See Notes to Consolidated Financial Statements.
-6-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial 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 required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recur
ring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended August 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 Corporation, 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 accounts of CCA and
its wholly-owned subsidiaries (collectively the "Company"). All signif
icant inter-company accounts and transactions have been eliminated.
-7-
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
unrealized gains and losses reported as a separate component of share
holders' 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 obsolescence is determined.
-8-
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 accumu
lated depreciation 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 cur
rently payable and deferred taxes arising from temporary
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.
-9-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 outstand
ing 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.
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 Com
pany, therefore, 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 included as a current
liability in "Accounts payable and accrued liabilities" in the accompa
nying 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 $329,000 and $323,000 as of August
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 $1,873,027 and $1,560,549 for the nine months ended
August 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.
-10-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INVENTORIES
The components of inventory consist of the following:
August 31, November 30,
2001 2000
Raw materials $3,436,718 $3,667,757
Finished goods 2,201,224 2,067,670
$5,637,942 $5,735,427
At August 31, 2001 and November 30, 2000, the Company had a
reserve for obsolescence of $1,334,188 and $1,050,714,
respectively.
NOTE 5 - PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the
following:
August 31, November 30,
2001 2000
Machinery and equipment $ 168,421 $ 323,233
Furniture and equipment 697,388 922,386
Transportation equipment 10,918 10,918
Tools, dies, and masters 526,095 1,972,830
Leasehold improvements 121,083 169,820
1,523,905 3,399,187
Less: Accumulated depreciation
and amortization
1,077,756 2,723,397
Property and Equipment - Net $ 446,149 $ 675,790
Depreciation expense for the nine months ended August 31,
2001 and 2000 amounted to $253,933 and $275,349, respec-
tively.
NOTE 6 - INTANGIBLE ASSETS
Intangible assets consist of the following:
August 31, November 30,
2001 2000
Patents and trademarks $749,586 $738,330
Less: Accumulated amortization 119,415 96,920
Intangible Assets - Net $630,171 $641,410
Amortization expense for the nine months ended August 31,
2001 and 2000 amounted to $35,268 and $10,826, respec-
tively.
-11-
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 propor
tionately over the interim periods based on its total
expected costs per its various advertising programs.
Consequently a deferral of $734,110 is accordingly re-
flected 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 spending 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:
August August
2001 2000
(In Millions) (In Millions)
Media advertising budget for the fiscal year $6.50 $6.00
Pro-rata portion for nine months $4.88 $4.50
Media advertising spent 5.44 5.50
Accrual (deferral) ($.056) ($1.00)
Anticipated Co-op advertising commitments $4.00 $3.10
Pro-rata portion for nine months $3.00 $2.33
Co-op advertising spent 3.17 2.62
Accrual (deferral) ($0.17) ($ .29)
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:
August 31, November 30,
2001 2000
(In Thousands) (In Thousands)
a) Media advertising $ 608 $ -
b) Coop advertising 622 242
c) Accrued returns 493 983
d) Accrued bonuses 329 -
$ 2,052 $1,225
* under 5%
All other liabilities were for trade payables or individually did not
exceed 5% of total current liabilities.
-12-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - OTHER INCOME
Other income consists of the following at August 31:
2001 2000
Interest income $196,143 $154,509
Dividend income 12,644 35,284
Miscellaneous 38,696 29,239
$247,483 $219,032
NOTE 10 - SUBORDINATED DEBENTURES
On August 1, 2000, the Company repurchased (pursuant to a tender offer)
278,328 shares of its outstanding common stock by issuing subordinated
debentures equal to $2 per share, which accrue interest at 6% and are
due to mature on August 1, 2005. The interest is payable semi-annually.
NOTE 11 - 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
securities 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 August 31, 2000 and November 30, 1999 were
as follows:
August 31, November 30,
2001 2000
Current: COST MARKET COST MARKET
Corporate obligations $ 536,000 $ 537,613 $ 536,000 $ 534,590
Government obligations
(including mortgage
backed securities) 495,005 499,365 1,998,756 2,001,754
Total 1,031,005 1,036,978 2,534,756 2,536,344
Non-Current:
Corporate obligations 1,591,900 1,599,325 - -
Government obli-
gations 835,870 838,167 150,510 146,723
Preferred stock 250,000 253,360 612,561 586,448
Other equity
investments 157,142 111,325 148,465 111,930
Total 2,834,912 2,802,177 911,536 845,101
Total $3,865,917 $3,839,155 $3,446,292 $3,381,445
-13-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
The market value at August 31, 2001 was $3,839,155 as compared to $3,381,445 at November 30,
2000. The cost and market values of the investments at August 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 6.350% 536,000 $ 536,000 $ 537,613 $ 537,613
GMAC Smartnotes 1/15/03 5.550 250,000 250,000 254,565 254,565
GMAC Smartnotes 2/15/03 5.750 140,000 140,000 142,940 142,940
GMAC Smartnotes 6/15/03 4.750 300,000 300,000 302,040 302,040
GMAC Smartnotes 7/15/03 4.650 200,000 200,000 200,878 200,878
GMAC Smartnotes 8/15/03 4.250 499,000 499,000 494,649 494,649
International Business
Machines 9/22/03 5.370 100,000 102,040 102,149 102,149
Colgate-Palmolive 12/1/03 5.270 100,000 100,860 102,104 102,104
2,127,900 2,136,938 2,136,938
-14-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
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
GOVERNMENT OBLIGATIONS:
FHLMC 1628-N 12/15/2023 6.500% 29,661 $ 29,099 $ 30,310 $ 30,310
FNMA 93-224-D 11/25/2023 6.500 75,275 75,732 76,616 76,616
FNMA 92-2-N 1/25/2024 6.500 15,804 14,779 15,937 15,937
FHLB 9/15/2003 5.125 255,000 266,200 260,381 260,381
U.S. TREASURY NOTE 11/15/2003 4.250 200,000 199,891 202,188 202,188
U.S. TREASURY NOTE 11/15/2003 4.250 250,000 250,169 252,735 252,735
U.S. TREASURY BILL 10/11/2001 3.815 250,000 245,238 249,053 249,053
U.S. TREASURY NOTE 9/30/2001 5.625 250,000 249,767 250,312 250,312
1,330,875 1,337,532 1,337,532
-15-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
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
EQUITY:
Preferred Stock:
Merrill Lynch Trust 9/30/08 7.28% 6,000 $ 150,000 $ 153,360 $ 153,360
Other Equity Investments:
Aberdeen Asia Pacific
Income Fund 100,000 100,000 100,000
Dreyfus Premier Limited
Term High Income CL B 3.8* 12,824 157,142 111,325 111,325
407,142 364,685 364,685
$3,865,917 $3,839,155 $3,839,155
* Estimated
-16-
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ended August 31, 2001, the Company had
revenues of $10,608,116 and net income of $304,125 after a provision
of taxes of $221,206. Sales returns were 8.5% of gross sales.
Sales returns were 6.5% for the prior year's period. Gross margins
of 68% were up from 64.7%. This was primarily due to the product
mix and better cost control. Selling general and administrative
(SG&A) expenses decreased from $3.6 million to $3.5 million.
For the three month period ending August 31, advertising, cooper-
ative and promotional allowance expenditures were $3.0 million, up
from $2.5 million for the three month period ending August 31, 2000.
Advertising expenditures were 28.3% of sales compared to 25%.
Since both co-op advertising and promotional have a material effect
on the Company's operation, the Company attempts to anticipate its
advertising and promotional 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 advertising
and related costs proportionately over the interim periods based on
its total expected per its various advertising programs. Conse-
quently, a deferral of $.73 million advertising expense for the nine
month period is reflected in the balance sheet. The Company de-
ferred $1.29 million in the prior year for the nine 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 substan-
tially lower spending in the third and fourth quarters. Co-op
expenditures are budgeted at $4 million for the year. Specifically,
the Company spent $5.4 million for media advertising in the nine
months and $3.2 million in co-op advertising. The difference be-
tween 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 nine month period ended August 31, 2001, the Company had
revenue of $34,311,644 and a net income of $1,778,751 after a provi-
sion of income taxes of $1,151,331. In the prior year's period, the
Company had revenues of $30,630,611 and net income of $603,718 after
a provision for income taxes of $432,141. Revenue for the nine
month period ended August 31, 2001 was up approximately $3.7 million
from 2000. Gross profit margins for the nine month period ending
August 31, 2001 increased from 62.5% last year to 64.8%
For the nine month period ended August 31, 2001, advertising,
cooperative and promotional allowance expenditures were $8,249,321
as compared to $7,165,084 for the nine month period ending August
31, 2000. Advertising expenditures were 24.2% of sales vs. 23.6%
last year.
For the nine month period ending August 31, 2001, research and
development expenses were $578,718 compared to $388,741 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 August 31, 2001 consists
of current assets of $17,572,862 and current liabilities of
$5,345,894. In addition, shareholders' equity increased from
$13,966,548 at November 30, 2000 to $15,712,409 at August 31, 2001
primarily due to net income earned during the period.
The Company generated $4.0 million in cash from operations due to
the nine month net income of $1.8 million coupled with the net
effect of the decease in the Company's accounts receivable and
deferred expenses versus the increases in the Company's payables.
The $4.0 million cash generated by operations, however, was used
to retire all of the Company's short-term debt ($1.5 million) and
invest in additional securities ($.4 million), leaving the Company
with a net increase in its cash position of approximately $2
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 Nine Months Ended
August 31, August 31,
2001 2000 2001 2000
Item 6.
Weighted average shares
outstanding - Basic 6,847,006 7,182,301 6,877,678 7,218,251
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 601,497 338,615 509,425 376,836
Weighted average shares
outstanding - Diluted 7,448,503 7,520,916 7,387,103 7,595,087
Net income $ 304,125 $ 59,034 $1,778,751 $ 603,718
Per share amount
Basic $.04 $.01 $.26 $.08
Diluted $.04 $.01 $.24 $.08
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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 nine
months ended August 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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