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 February 28, 2002
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 required 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 - $6,242,823 shares of as February 28, 2002
Class A Common Stock, $.01 Par Value - $1,020,930 shares as of
February 28, 2002
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
February 28, 2002 and November 30, 2001 1-2
Consolidated Statements of Operations
for the three months ended February 28, 2002
and 2001 3
Consolidated Statements of Comprehensive Income
for the three months ended February 28, 2002
and 2001 4
Consolidated Statements of Cash Flows for
the three months ended February 28, 2002
and 2001 5
Notes to Consolidated Financial Statements 6-15
Management Discussion and Analysis of
Results of Operations and Financial
Condition 16
PART II OTHER INFORMATION 17-18
SIGNATURES 19
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE> CONSOLIDATED BALANCE SHEETS
A S S E T S
<CAPTION>
February 28, November 30,
2002 2001
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 2,265,526 $ 2,555,938
Short-term investments and marketable
securities 753,150 355,345
Accounts receivable, net of allowances of
$1,128,580 and $1,295,086, respectively 5,657,862 4,464,991
Inventories 4,855,619 4,783,530
Prepaid expenses and sundry receivables 490,848 401,403
Deferred income taxes 1,553,613 1,617,403
Prepaid income taxes and refunds due 325,659 221,989
Deferred advertising 777,096 -
Total Current Assets 16,679,373 14,400,599
Property and Equipment, net of accumulated
depreciation and amortization 448,516 482,261
Intangible Assets, net of accumulated
amortization 609,275 618,933
Other Assets
Marketable securities 4,745,469 4,979,758
Due from officers - Non-current 19,991 20,598
Deferred income taxes 39,439 40,105
Other 56,663 56,663
Total Other Assets 4,861,562 5,097,124
Total Assets $22,598,726 $20,598,917
</TABLE>
See Notes Consolidated to Financial Statements.
-1-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
February 28, November 30,
2002 2001
<S> <C> <C>
Current Liabilities
Accounts payable and accrued liabilities $ 5,875,383 $ 4,154,256
Income taxes payable - 9,366
Total Current Liabilities 5,875,383 4,163,622
Subordinated Debentures (due August 1, 2005) 510,656 510,656
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued and
outstanding 6,242,823 and
6,042,823 shares, respectively 62,428 62,428
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 3,834,296 3,834,296
Retained earnings 12,615,125 12,315,062
Unrealized (losses) on marketable securities ( 62,166) ( 50,151)
16,459,892 16,171,844
Less: Treasury Stock (218,196 shares at
February 28, 2002 and November
30, 2001, respectively) 247,205 247,205
Total Shareholders' Equity 16,212,687 15,924,639
Total Liabilities and Shareholders' Equity $22,598,726 $20,598,917
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended
February 28,
2002 2001
<S> <C> <C>
Revenues
Sales of health and beauty aid
products - Net $10,158,386 $10,096,529
Other income 88,808 81,556
10,247,194 10,178,085
Costs and Expenses
Costs of sales 3,764,904 4,244,147
Selling, general and administrative
expenses 3,736,324 3,021,331
Advertising, cooperative and promotions 2,263,526 2,112,472
Research and development 89,802 90,948
Provision for doubtful accounts ( 104,360) 90,518
Interest expense 8,915 40,306
9,759,111 9,599,722
Income before Provision for Income
Taxes 488,083 578,363
Provision for Income Taxes 188,020 241,517
Net Income $ 300,063 $ 336,846
Earnings per Share:
Basic $.04 $.05
Diluted $.04 $.05
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
February 28,
2002 2001
<S> <C> <C>
Net Income $300,063 $336,846
Other Comprehensive Income
Unrealized holding gains (loss)
on investments ( 12,015) 39,517
Provision (Benefit) for Taxes ( 4,628) 16,000
Other Comprehensive (Loss) Income
- Net ( 7,387) 23,517
Comprehensive Income $292,676 $360,363
Earnings Per Share:
Basic $.04 $.05
Diluted $.04 $.05
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
February 28,
2002 2001
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 300,063 $ 336,846
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 93,946 101,744
(Gain) on sale of marketable securities ( 1,025) ( 2,048)
Decrease in deferred income
taxes 64,456 7,721
(Increase) in accounts receivable ( 1,192,871) ( 1,617,694)
(Increase) decrease in inventory ( 72,089) 773,677
(Increase) in prepaid expenses and
miscellaneous receivables ( 89,445) ( 52,438)
(Increase) in deferred advertising ( 777,096) ( 862,885)
Increase in accounts payable
and accrued liabilities 1,721,127 2,629,449
Decrease (increase) in prepaid income
taxes ( 103,670) 186,403
(Decrease) in taxes payable ( 9,366) -
Net Cash (Used in) Provided by
Operating Activities ( 65,970) 1,500,775
Cash Flows from Investing Activities:
Acquisition of property, plant and
equipment ( 48,258) ( 4,200)
Acquisition of intangible assets ( 2,285) -
Proceeds of money due from officers 607 -
Purchase of marketable securities ( 227,573) ( 1,693,657)
Proceeds from sale and maturity of
investments 53,067 1,394,983
Net Cash (Used in) Investing Activities ( 224,442) ( 302,874)
Cash Flows from Financing Activities:
Repayment of debt - ( 1,500,000)
Purchase of treasury stock - ( 28,002)
Repurchase of outstanding debenture - ( 22,500)
Net Cash (Used in) Provided by
Financing Activities - ( 1,550,502)
Net (Decrease) in Cash ( 290,412) ( 352,601)
Cash and Cash Equivalents at Beginning
of Period 2,555,938 804,508
Cash and Cash Equivalents at End
of Period $2,265,526 $ 451,907
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 16,575 $ 46,552
Income taxes 324,770 51,444
</TABLE>
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 financial state-
ments have been prepared in accordance with generally accepted ac-
counting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accord
ingly, 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 recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the
three month period ended February 28, 2002 are not necessarily
indicative of the results that may be expected for the year ended
November 30, 2002. For further information, refer to the consoli-
dated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended November 30,
2001.
NOTE 2 - ORGANIZATION AND DESCRIPTION OF BUSINESS
CCA Industries, Inc. ("CCA") was incorporated in the State of Dela
ware 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. As of November 30,
2001, the Company had completed its plan of dissolution.
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"). The
minority interest in the discontinued consolidated subsidiary is no
longer reflected in the financial statements. All significant inter-
company accounts and transactions have been eliminated.
-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 classi
fied its investments as Available-for-Sale securities. Accordingly,
such investments are reported at fair market value, with the resul
tant unrealized 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 obsolescence 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 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 trademarks are
amortized on the straight-line method over a period of 17 years.
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 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.
-8-
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 outstanding during the year. Diluted earnings per share is
computed on the basis of the average number of common shares out
standing 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 op
tions. In fiscal 2001, the Company repriced all of the outstanding
stock options to $.50.
Revenue Recognition:
The Company recognizes sales upon shipment of merchandise. Net sales
are comprised of gross revenues less expected returns, trade dis
counts, customer allowances and various sales incentives. 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, 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 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 $365,202 and $391,806 as of
February 28, 2002 and 2001, 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 $486,853 and $513,670 for the three months ended
February 28, 2002 and 2001, 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
2002 presentation.
-9-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INVENTORIES
The components of inventory consist of the following:
February 28, November 30,
2002 2001
Raw materials $3,628,614 $2,225,814
Finished goods 2,263,486 3,610,432
$5,892,100 $5,836,246
At February 28, 2002 and November 30, 2001, the Company had a reserve
for obsolescence of $1,036,481 and $1,052,716, respectively.
NOTE 5 - PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the following:
February 28, November 30,
2002 2001
Machinery and equipment $ 211,773 $ 168,421
Furniture and equipment 727,292 741,414
Transportation equipment 10,918 10,918
Tools, dies, and masters 559,321 550,825
Leasehold improvements 172,815 162,283
1,682,119 1,633,861
Less: Accumulated depreciation
and amortization 1,233,603 1,151,600
Property and Equipment - Net $ 448,516 $ 482,261
Depreciation expense for the three months ended February 28, 2002 and
2001 amounted to $82,003 and $95,393, respectively.
NOTE 6 - INTANGIBLE ASSETS
Intangible assets consist of the following:
February 28, November 30,
2002 2001
Patents and trademarks $752,541 $750,256
Less: Accumulated amortization 143,266 131,323
Intangible Assets - Net $609,275 $618,933
Amortization expense for the three months ended February 28, 2002 and
2001 amounted to $11,943 and $6,351, respectively.
-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 proportionately over the
interim periods based on its total expected costs per its various
advertising programs. Consequently a deferral of $777,096 is accord
ingly reflected in the balance sheet for the interim period. This
deferral is the result of the Company's $7,000,000 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:
February February
2002 2001
(In Millions) (In Millions)
Media advertising budget for the fiscal year $7.00 $5.40
Pro-rata portion for three months $1.75 $1.35
Media advertising spent 1.38 2.21
Accrual (deferral) $ .37 ($ .86)
Anticipated Co-op advertising commitments $4.00 $4.00
Pro-rata portion for three months $1.00 $1.00
Co-op advertising spent 1.78 .89
Accrual (deferral) ($0.78) $ .11
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:
February 28, November 30,
2002 2001
(In Thousands) (In Thousands)
a) Vacation accrual $ * $ 254
a) Media advertising 1,708 424
b) Coop advertising 760 392
c) Accrued returns * 301
d) Accrued bonuses 410 510
$2,878 $1,881
* under 5%
All other liabilities were for trade payables or individually did not
exceed 5% of total current liabilities.
-11-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - OTHER INCOME
Other income consists of the following at February 28:
2002 2001
Interest income $68,643 $69,996
Dividend income 3,066 4,619
Miscellaneous 17,099 6,941
$88,808 $81,556
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 February
28, 2002 and November 30, 2001 were as follows:
February 28, 2002 November 30, 2001
Current: COST MARKET COST MARKET
Corporate obligations $ 390,000 $ 398,009 $ - $ -
Mutual Funds 162,378 105,723 159,805 107,015
Government obligations
(including mortgage
backed securities) 247,330 249,418 247,330 248,330
Total 799,708 753,150 407,135 355,345
Non-Current:
Corporate obligations 2,026,846 2,026,753 2,416,846 2,434,080
Government obli-
gations 2,484,231 2,465,356 2,311,273 2,294,058
Preferred stock 250,000 253,360 250,000 251,620
Total 4,761,077 4,745,469 4,978,119 4,979,758
Total $5,560,785 $5,498,619 $5,385,254 $5,335,103
The market value at February 28, 2002 was $5,498,619 as compared to
$5,335,103 at November 30, 2001. The gross unrealized gains and losses
as at February 28, 2002 and November 30, 2001 were $30,605 and ($92,771)
for February 28, 2002 and $35,542 and ($85,693) for November 30, 2001,
respectively. The cost and market values of the investments at February
28, 2002 were as follows:
-12-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
<CAPTION>
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 Is Carried
Title of Each Issue Date Rate Notes Each Issue Sheet Date In Balance Sheet
CORPORATE OBLIGATIONS:
<S> <C> <C> <C> <C> <C> <C>
GMAC Smartnotes 10/15/03 4.600% 250,000 $ 250,000 $ 249,708 $ 249,708
GMAC Smartnotes 10/15/03 4.750 325,000 325,000 325,130 325,130
GMAC Smartnotes 1/15/03 5.550 250,000 250,000 255,318 255,318
GMAC Smartnotes 2/15/03 5.750 140,000 140,000 142,691 142,691
GMAC Smartnotes 6/15/03 4.750 300,000 300,000 301,488 301,488
GMAC Smartnotes 7/15/03 4.650 200,000 200,000 200,516 200,516
GMAC Smartnotes 8/15/03 4.250 499,000 499,000 496,804 496,804
International Business
Machines 9/22/03 5.370 100,000 102,040 103,188 103,188
Colgate-Palmolive 12/1/03 5.270 100,000 100,860 103,018 103,018
Ford Motor Credit 3/20/04 6.125 245,000 249,946 246,901 246,901
2,416,846 2,424,762 2,424,762
</TABLE>
-13-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
<CAPTION>
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 Is Carried
Title of Each Issue Date Rate Notes Each Issue Sheet Date In Balance Sheet
GOVERNMENT OBLIGATIONS:
<S> <C> <C> <C> <C> <C> <C>
FHLMC 1628-N 12/15/2023 6.500% 21,142 $ 18,367 $ 19,308 $ 19,308
FNMA 93-224-D 11/25/2023 6.500 18,929 21,600 21,234 21,234
FHLB 9/15/2003 5.125 255,000 266,200 264,007 264,007
FHLB 11/15/2005 4.250 750,000 753,004 745,553 745,553
US Treasury Note 11/15/2003 4.250 200,000 199,891 204,812 204,812
US Treasury Note 11/15/2003 4.250 250,000 250,169 256,015 256,015
US Treasury Bill 4/18/2002 2.160 250,000 247,330 249,418 249,418
FNMA 11/6/2009 4.250 250,000 250,000 243,305 243,305
FNMA 11/6/2009 4.250 500,000 500,000 486,610 486,610
FHLMC 2/27/12 4.000 225,000 225,000 224,512 224,512
2,731,561 2,714,774 2,714,774
</TABLE>
-14-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 -SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED)
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
Amount at Which
Each Portfolio
Market Of Equity Security
Interest Value of Issues and Each
Next and Stock Other Security
Name of Issuer and Call Dividend Number of Cost of at Balance Issue Is Carried
Title of Each Issue Date Rate Shares Stock Sheet Date In Balance Sheet
EQUITY:
Preferred Stock:
<S> <C> <C> <C> <C> <C> <C>
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 8.3%* 12,824 162,378 105,723 105,723
412,378 359,083 359,083
$5,560,785 $5,498,619 $5,498,619
*Estimated
</TABLE>
-15-
CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ending February 28, 2002, the Company had
revenues of $10,247,194 and net income of $300,063 after a provision for taxes
of $188,020; as compared to revenues of $10,178,085 and net income of $336,846
for the quarter ended February 28, 2001. The Company's improvement in its
gross profit percentage (from 58% to 63%) enabled it to realize approximately
the same earnings as the prior year's first quarter despite an additional
$151,054 in advertising expense and an increase in the other (non-advertising)
costs of $487,578. The increase in other expenses was primarily due to an
increase in labor and commission costs, as well as an increase in insurance
costs (mostly due to an additional $62,500 accrued to reflect an anticipated
$250,000 increase in the Company''s annual product liability insurance
premium), offset by a credit of $104,000 in the provision for doubtful
accounts. This credit was due to the collection of some previously reserved
amounts as well as a proportionate reduction of the decrease in the over
90-day accounts receivable.
The Company's financial position as at February 28, 2002 consists of current
assets of $16,679,373 and current liabilities of $5,875,383, which equals a
current ratio of 2.8:1. In addition, shareholders' equity increased from
$15,924,639 at November 30, 2001 to $16,212,687 at February 28, 2002 primarily
due to net income earned during the period.
The Company's cash position decreased primarily due to the purchase of
assets and marketable securities ($224,000) and the net effect of cash used in
operations ($65,000). Deferred advertising increased due to quarters' commit
ments exceeding the prorata share of the annual budget, accounts receivable
increased due to an increase in sales in the last month of the quarter, and
accounts payable increased primarily due to accruals for advertising. The
changes in the aforementioned accounts are "seasonal" and within a normal range
for the first quarter.
-16-
CCA INDUSTRIES, INC.
PART II OTHER INFORMATION
All information pertaining to Part II is omitted pursuant to the instruc-
tions pertaining to that part.
The Company did not file any reports on Form 8-K during the three months
ended February 28, 2002.
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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
February 28,
2002 2001
Item 6.
Weighted average shares outstanding -
Basic 7,045,557 6,909,666
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 533,691 79,310
Weighted average shares outstanding -
Diluted 7,579,248 6,988,976
Net income $ 300,063 $ 336,846
Per share amount
Basic $.04 $.05
Diluted $.04 $.05
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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 under-
signed, thereunto duly authorized.
CCA INDUSTRIES, INC.
By:/s David Edell
David Edell, President
By:/s Ira W. Berman
Ira W. Berman, Secretary
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