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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED:
SEPTEMBER 30, 1997
-OR-
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-5050
ALBERTO-CULVER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-2257936
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2525 Armitage Avenue
Melrose Park, Illinois 60160
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (708)450-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Stock, par value $.22 per share New York Stock Exchange
Class B Common Stock, par value $.22 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of common stock held by non-affiliates (assuming for
this purpose only that all directors and executive officers are affiliates) on
November 25, 1997 was $547.9 million for Class A Common Stock and $508.5 million
for Class B Common Stock.
At November 25, 1997, there were 22,850,658 shares of Class A Common Stock
outstanding and 33,532,480 shares of Class B Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II........ Portions of annual report to stockholders for the year
ended September 30, 1997
Part III.............. Portions of proxy statement and notice of annual
meeting of stockholders on January 22, 1998
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This Annual Report on Form 10-K and the documents incorporated by reference
herein include certain forward- looking statements, estimates and projections
with respect to the anticipated future performance of the business. Such
statements, estimates and projections are based on management's current
expectations and assessments of risks and uncertainties and reflect various
assumptions concerning anticipated results, which may or may not prove to be
correct. Some of the factors that could cause actual results to differ
materially from estimates or projections contained in such forward looking
statements include the pattern of brand sales, including variations in sales
volume within periods; competition within the relevant product markets,
including pricing, promotional activities, continuing customer acceptance of
existing products and the ability to develop and successfully introduce new
products; risks inherent in acquisitions and strategic alliances; changes in
costs including changes in labor costs, raw material prices or promotional
expenses; the costs and effects of unanticipated legal or administrative
proceedings; variations in political, economic or other factors such as currency
exchange rates, inflation rates, recessionary or expansive trends, tax changes,
legal and regulatory changes or other external factors over which Alberto-Culver
Company has no control.
PART I
ITEM 1. BUSINESS
BUSINESS SEGMENTS AND GEOGRAPHIC AREA INFORMATION
Alberto-Culver Company and its consolidated subsidiaries (herein referred to
collectively as the "company", unless indicated otherwise) have two principal
business segments. One segment, "Consumer Products" principally includes
developing, manufacturing, distributing and marketing branded consumer products
worldwide and includes the company's Alberto-Culver USA and Alberto-Culver
International business units. This segment also includes products intended for
end use by institutions and industries and the manufacturing of custom label
products for other companies. The second segment, "Specialty Distribution -
Sally", consists of Sally Beauty Company, a specialty distributor of
professional beauty supplies with 1,833 stores as of September 30, 1997 in the
United States, Puerto Rico, the United Kingdom, Japan and Germany.
Financial information about business segments and geographic area information is
incorporated herein by reference to the Business Segments and Geographic Area
Information note of "Notes to Consolidated Financial Statements" in the
company's annual report to stockholders for the year ended September 30, 1997.
PRODUCTS
The classes of products in the "Consumer Products" business segment include
health and beauty care products as well as food and household products. Health
and beauty care products accounted for approximately 43%, 43% and 39% of the
company's consolidated net sales for the years ended September 30, 1997, 1996
and 1995, respectively. Food and household products accounted for approximately
7%, 8% and 10% of the company's consolidated net sales for the years ended
September 30, 1997, 1996 and 1995, respectively.
The company's major health and beauty care products in the United States include
the ALBERTO VO5, TRESemme and CONSORT lines of hair care products, the St. Ives
SWISS FORMULA line of hair and skin care products, CORTEXX hair care products,
FDS feminine deodorant sprays and the TCB line of hair care products for the
ethnic market.
Food and household products sold in the United States include MRS. DASH
salt-free seasonings, MOLLY McBUTTER dairy sprinkles, SUGARTWIN sugar substitute
and STATIC GUARD anti-static spray. The company sold its Milani, Diafoods,
Thick-It and Smithers institutional food lines in July, 1996.
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The company's consumer products are sold in more than 120 countries. Through its
Cederroth subsidiary, the company manufactures and markets health and beauty
care products throughout Scandanavia and Europe. Major products include
SALVEKVICK adhesive bandages, ALBERTO VO5 hair care products, SAMARIN antacids,
SELTIN salt substitute, LACTACYD liquid soap, TOPZ cotton buds, BLIW liquid
soaps, DATE antiperspirants and cologne for women, FAMILY FRESH shampoo and
shower products, SUKETTER artificial sweetener, HEMANENT home permanents, St.
Ives SWISS FORMULA line of hair and skin care products, HTH and L300 skin care
products and GRUMME TVATTSAPA detergents.
In the United Kingdom, the company markets, among other products, the ALBERTO
VO5 line of hair care products, the St. Ives SWISS FORMULA line of hair and skin
care products, ALBERTO BALSAM shampoo and conditioner and the TRESemme line of
hair care products. INDOLA professional color bleaches, shampoos, conditioners
and styling products are sold throughout Europe and other international markets.
Other major international markets include Australia, Canada, Italy, Mexico, New
Zealand and Puerto Rico.
The "Specialty Distribution - Sally" business segment represents the operations
of Sally Beauty Company, Inc. which operates a network of cash-and-carry
professional beauty supply stores and also sells professional beauty products to
hairdressers, beauticians and cosmetologists through its own full-service
distributors. Sally stores provide salon owners, hairdressers and consumers with
an extensive selection of hair care and skin care products, cosmetics, styling
appliances and other beauty items. Sales of the "Specialty Distribution - Sally"
business segment accounted for approximately 50%, 49% and 51% of the company's
consolidated net sales for the years ended September 30, 1997, 1996 and 1995,
respectively.
Many of the company's consumer products are developed in the company's
laboratories. New products introduced by the company are assigned product
managers who guide the products from development to the consumer. The product
managers are responsible for the overall marketing plans for the products and
coordinate advertising, promotion and market research activities.
MARKETING
The company allocates a large portion of its revenues to advertising, promotion
and market research. Net earnings are materially affected by these expenditures,
which are charged to income in the period incurred. Advertising, promotion and
market research expenditures were $255.3 million in 1997, $208.4 million in 1996
and $188.0 million in 1995.
Advertising, promotion, and market research expenditures relating to a new
product will ordinarily constitute a higher percentage of sales than in the case
of a well-established product. There can be no assurance that such expenditures
will result in consumer acceptance and profitability for a product.
The company regards television as the best medium for its advertising and uses
it to conduct extensive network, spot and cable television advertising
campaigns. The company also advertises through other media such as newspapers,
magazines and radio as well as through Sally Beauty Company's direct mailings to
professional customers.
Extensive advertising and promotion are required to build and protect a
product's market position. The company believes there is significant consumer
awareness of its major brands and that such awareness is an important factor in
the company's operating results.
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COMPETITION
The markets for the company's branded consumer products are highly competitive
and sensitive to changes in consumer preferences and demands. The company's
competitors range in size from large, highly diversified companies (some of
which have substantially greater financial resources than the company) to small,
specialized producers. The company competes on the basis of product quality and
price and believes that brand loyalty and consumer acceptance are important
factors. The company's markets are characterized by frequent introductions of
competitive products and by the entry of other manufacturers as new competitors,
both typically accompanied by extensive advertising and promotional campaigns.
Such campaigns are often very costly and can significantly affect the sales and
earnings of the company and its competitors.
Sally Beauty Company experiences competition from local and regional
professional beauty supply stores, full-service dealers calling directly on
salons and a wide range of retail outlets carrying a limited selection of
professional beauty products.
DISTRIBUTION IN THE UNITED STATES
Retail health and beauty care products and food and household products are sold
in the United States primarily through the company's sales force of
approximately 74 employees and 131 food brokers calling upon wholesale drug
establishments and retail outlets such as supermarkets, drug stores, mass
merchandisers and variety stores.
Hair care products for the professional trade in the United States are sold by
company sales representatives and brokers to beauty supply outlets and to beauty
distributors who in turn sell to beauty salons, barber shops and beauty schools.
Sally Beauty Company sells its professional beauty supplies through full-service
distributors and its 1,833 stores located in 46 states, Puerto Rico, the United
Kingdom, Japan and Germany. Sally's stores are self-service, cash-and-carry and
are primarily located in shopping centers. Sally operates the world's largest
chain of professional beauty supply stores and as such is a major customer of
some of the company's competitors in the personal care products industry. Sally
sells the company's professional hair care products, but these products
represent only a small portion of Sally's selection of salon brands.
FOREIGN OPERATIONS
Products of the company are sold in more than 120 countries or geographic
regions, primarily through direct sales by subsidiaries, independent
distributors and licensees.
The company's foreign operations are subject to risks inherent in transactions
involving foreign currencies and political uncertainties.
EMPLOYEES
In its domestic and foreign operations, the company had approximately 11,000
full-time equivalent employees as of September 30, 1997, consisting of 6,000
hourly personnel and 5,000 salaried employees. At September 30, 1996, the
company had approximately 10,700 full-time equivalent employees. The increase in
employees in fiscal year 1997 is principally due to the growth in the number of
Sally Beauty Company stores.
Certain subsidiaries of the company have union contracts covering production,
warehouse, shipping and maintenance personnel. The company considers relations
with its employees to be satisfactory.
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REGULATION
The company is subject to the regulations of several federal and state agencies,
including the Federal Food and Drug Administration and the Federal Trade
Commission.
TRADEMARKS AND PATENTS
The company's trademarks, certain of which are material to its business, are
registered or legally protected in the United States, Canada and other countries
throughout the world in which products of the company are sold. Although the
company owns patents and has other patent applications pending, its business is
not materially dependent upon patents or patent protection.
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ITEM 2. PROPERTIES
The company's properties, plants and equipment are maintained in good condition
and are suitable and adequate to support the business. The company's principal
properties and their general characteristics are described in the following
table:
Business
Locate Type of Facility Segment
Company-Owned Properties:
Melrose Park, Illinois
(2525 Armitage Avenue) Executive Offices, Manufacturing, Warehouse (1)
(2150 N. 15th Avenue) Manufacturing, Warehouse (1)
(2100 N. 15th Avenue) Warehouse (1)
(1930 George Street) Office, Warehouse (1)
Basingstoke, Hampshire, England Office (1)
Columbus, Ohio Warehouse (2)
Denton, Texas Office, Warehouse (2)
Falun, Sweden Office, Manufacturing, Warehouse (1)
Jacksonville, Florida Warehouse (2)
Madrid, Spain Office, Manufacturing, Warehouse (1)
Naguabo, Puerto Rico Manufacturing, Warehouse (1)
Naucalpan de Juarez, Mexico Office, Manufacturing, Warehouse (1)
North Rocks, New South Wales,
Australia Office, Manufacturing, Warehouse (1)
Reno, Nevada Warehouse (2)
Swansea, Wales, England Office, Manufacturing, Warehouse (1)
Tilburg, Holland Office, Manufacturing, Warehouse (1)
Toronto, Ontario, Canada Office, Manufacturing, Warehouse (1)
Leased Properties:
Atlanta, Georgia Warehouse (1)
Albertslund, Denmark Office, Warehouse (1)
Auckland, New Zealand Office, Warehouse (1)
Chatsworth, California Office, Manufacturing, Warehouse (1)
Espoo, Finland Office, Warehouse (1)
Geneva, Switzerland Office (1)
Macedonia, Ohio Warehouse (2)
Morrow, Georgia Warehouse (2)
Ontario, California Warehouse (1)
Rakkestad, Norway Office, Warehouse (1)
Stockholm, Sweden Office, Manufacturing, Warehouse (1)
Various (1,833 locations in 46 states,
Puerto Rico, the United Kingdom, Japan Sally Beauty Company Stores (2)
and Germany)
(1) Consumer Products
(2) Specialty Distribution - Sally
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ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the year
ended September 30, 1997.
EXECUTIVE OFFICERS
The following table sets forth the names and current positions of the
registrant's executive officers, including their five-year business history and
ages. Executive officers of the company and its subsidiaries are elected
annually.
Name Current Position and Five-Year Business History Age
Leonard H. Lavin (1) October, 1994 - Chairman; previously Chairman and 78
Chief Executive Officer for more than five years
Howard B. Bernick (1) October, 1994 - President and Chief Executive Officer; 45
previously President and Chief Operating Officer for
more than five years
Bernice E. Lavin (1) July, 1994 - Vice Chairman, Secretary and Treasurer; 72
previously Vice President, Secretary and Treasurer for
more than five years
Carol L. Bernick (1) October, 1994 - Executive Vice President and Assistant 45
Secretary, Alberto-Culver Company and President,
Alberto-Culver USA, Inc., a subsidiary
of registrant; September, 1992 to
October, 1994 - Executive Vice President
and Assistant Secretary
John T. Boone June, 1994 - Group Vice President, Domestic Consumer 62
Products, Alberto-Culver USA, Inc., a subsidiary of
registrant; August, 1993 to June, 1994 - Vice President,
Operations, Modami Services, Inc.; August, 1991 to
August, 1993 - President, JTB Management, Inc.
William J. Cernugel October, 1993 - Senior Vice President, Finance & 55
Controller; April, 1982 to October, 1993 - Vice President,
Finance & Controller
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Name Current Position and Five-Year Business History Age
Raymond W. Gass July, 1997 - Senior Vice President, Law; March, 1989 60
to June, 1997 - Vice President and General Counsel
John G. Horsman, Jr. January, 1994 - President, Alberto-Culver International, 59
Inc., a subsidiary of registrant;
January, 1992 to January, 1994 -
Retired; 1978 to January, 1992 - Group
Vice President, American Home Products
Corporation
Thomas J. Pallone Vice President, Research and Development 52
Michael H. Renzulli President, Sally Beauty Company, Inc., a subsidiary of 57
registrant
Gary P. Schmidt July, 1997 - Vice President and General Counsel and
Assistant Secretary; April, 1990 to June, 1997 -
Vice-President and Secretary, Fujusawa USA, Inc. 46
(1) Leonard H. Lavin and Bernice E. Lavin are husband and wife. Carol L. Bernick is the wife of Howard B.
Bernick and the daughter of Mr. and Mrs. Lavin.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information required for this Item is incorporated herein by reference to the
section entitled "Market Price of Common Stock and Cash Dividends Per Share" and
notes 3 and 4 of "Notes to Consolidated Financial Statements" in the
registrant's annual report to stockholders for the year ended September 30,
1997.
ITEM 6. SELECTED FINANCIAL DATA
Information required for this Item is incorporated herein by reference to the
section entitled "Selected Financial Data" in the registrant's annual report to
stockholders for the year ended September 30, 1997.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required for this Item is incorporated herein by reference to the
section entitled "Management's Discussion and Analysis of Results of Operations
and Financial Condition" in the registrant's annual report to stockholders for
the year ended September 30, 1997.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required for this Item is incorporated herein by reference to the
consolidated financial statements and notes and "Independent Auditors' Report"
of KPMG Peat Marwick LLP in the registrant's annual report to stockholders for
the year ended September 30, 1997.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required for this Item regarding the directors of the company and
regarding delinquent filers pursuant to Item 405 of Regulation S-K is
incorporated herein by reference to the sections entitled "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance",
respectively, in the registrant's proxy statement for its annual meeting of
stockholders on January 22, 1998. Information concerning Executive Officers of
the registrant is included in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information required for this Item is incorporated herein by reference to the
section entitled "Executive Compensation" in the registrant's proxy statement
for its annual meeting of stockholders on January 22, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required for this Item is incorporated herein by reference to the
sections entitled "Share Ownership of Directors and Executive Officers" and
"Principal Stockholders" in the registrant's proxy statement for its annual
meeting of stockholders on January 22, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required for this Item is incorporated herein by reference to the
section entitled "Certain Business Relationships" in the registrant's proxy
statement for its annual meeting of stockholders on January 22, 1998.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial statements:
The consolidated financial statements and notes to be
included in Part II, Item 8 are incorporated by reference
to the registrant's annual report to stockholders for the
year ended September 30, 1997, which is filed as an exhibit
to this report.
2. Financial statement schedules:
Description Schedule
Valuation and Qualifying Accounts II
Schedules I, III, IV, and V are omitted as the information
required by these schedules is not applicable.
3. Exhibits:
Exhibit
Number Description
3(i)(a) Copy of Restated Certificate of
Incorporation of Alberto-Culver Company
(filed as Exhibit 3(a) and incorporated
herein by reference from the company's
Form 10-K Annual Report for the year ended
September 30, 1988).
3(i)(b) Copy of the amendment to the Restated
Certificate of Incorporation of
Alberto-Culver Company (filed as Exhibit
3(i)(c) and incorporated herein by
reference from the company's Form 10-Q
Quarterly Report for the quarter ended
March 31, 1997).
3(ii) Copy of the By-Laws of Alberto-Culver
Company, as amended and in effect as of
January 17, 1990 (filed as Exhibit 3(b)(1)
and incorporated herein by reference from
the company's Form 10-Q Quarterly Report
for the quarter ended December 31, 1989).
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3. Exhibits: (continued)
Exhibit
Number Description
4 Certain instruments defining the
rights of holders of long-term
obligations of the registrant and
certain of its subsidiaries (the
total amount of securities authorized
under each of which does not exceed
ten percent of the registrant's
consolidated assets) are omitted
pursuant to part 4 (iii) (A) of Item
601 (b) of Regulation S-K. The
registrant agrees to furnish copies
of any such instruments to the
Securities and Exchange Commission
upon request.
4 (a) Copy of Note Agreement dated
September 28, 1993 among Alberto-
Culver Company and Institutional
Investors (filed as Exhibit 4(f) and
incorporated herein by reference from
the company's Form 10-K Annual Report
for the year ended September 30,
1993).
4 (b) Copy of Indenture dated June 30, 1995
by and between Alberto-Culver Company
as Issuer and Bankers Trustee Company
Limited as Trustee of 5 - 1/2%
Convertible Subordinated Debentures
due June 30, 2005 (filed as
Exhibit 4(c) incorporated herein by
reference from the company's Form
10-K Annual Report for the year ended
September 30, 1995).
10 (a) Copy of Alberto-Culver Company
Management Incentive Plan dated
October 27, 1994, as amended *.
10 (b) Copy of Alberto-Culver Company
Employee Stock Option Plan of 1988,
as amended *(filed as Exhibit 10(b)
and incorporated herein by reference
from the company's Form 10-Q
Quarterly Report for the quarter
ended December 31, 1996).
10 (c) Copy of Alberto-Culver Company 1994
Shareholder Value Incentive Plan,
as amended *.
10 (d) Copy of Alberto-Culver Company 1994
Restricted Stock Plan, as amended
*(filed as Exhibit 10(d) and incor-
porated herein by reference from the
company's Form 10-Q Quarterly Report
for the quarter ended December 31,
1996.)
10 (e) Copy of Alberto-Culver Company 1994
Stock Option Plan for Non-
Employee Directors, as amended *.
10 (f) Copy of Split Dollar Life Insurance
Agreement dated September 30, 1993
between Alberto-Culver Company and
the trustee of the Lavin Survivorship
Insurance Trust * (filed as Exhibit
10(e) and incorporated herein by
reference from the company's Form
10-K Annual Report for the year ended
September 30, 1993).
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3. Exhibits: (continued)
Exhibit
Number Description
10 (g) Form of Severance Agreement between
Alberto-Culver Company and certain
executive officers *(filed as Exhibit
10(f) and incorporated herein by ref-
erence from the company's Form 10-Q
Quarterly Report for the quarter
ended December 31, 1996).
10 (h) Copy of Multicurrency Credit Agree-
ment dated as of September 11, 1997
among Alberto-Culver Company, Bank of
America National Trust and Savings
Association as U.S. agent and the
other financial institutions parties
thereto.
11 Computation of net earnings per share
13 Portions of annual report to stock-
holders for the year ended September
30, 1997 incorporated herein by
reference.
21 Subsidiaries of the Registrant
23 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule
* This exhibit is a management contract or compensatory
plan or arrangement of the registrant.
(b) Reports on Form 8-K: None
- 13 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 12th day of
December, 1997.
ALBERTO-CULVER COMPANY
By /s/ Howard B. Bernick
Howard B. Bernick
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Leonard H. Lavin Chairman of the Board December 12, 1997
Leonard H. Lavin and Director
/s/ Howard B. Bernick President, Chief Executive December 12, 1997
Howard B. Bernick Officer and Director
/s/ Bernice E. Lavin Vice Chairman, Secretary, December 12, 1997
Bernice E. Lavin Treasurer and Director
/s/ Carol L. Bernick Executive Vice President, December 12, 1997
Carol L. Bernick Assistant Secretary and Director
/s/ William J. Cernugel Senior Vice President, December 12, 1997
William J. Cernugel Finance & Controller (Principal
Financial & Accounting Officer)
/s/ Robert Abboud Director December 12, 1997
A. Robert Abboud
/s/ A.G. Atwater, Jr. Director December 12, 1997
A. G. Atwater, Jr.
/s/ Robert P. Gwinn Director December 12, 1997
Robert P. Gwinn
/s/ Leander W. Jennings Director December 12, 1997
Leander W. Jennings
/s/ Allan B. Muchin Director December 12, 1997
Allan B. Muchin
/s/ Robert H. Rock Director December 12, 1997
Robert H. Rock
/s/ Dr. Harold M. Visotsky Director December 12, 1997
Dr. Harold M. Visotsky
/s/ William W. Wirtz Director December 12, 1997
William W. Wirtz
- 14 -
Independent Auditors' Report
The Board of Directors and Stockholders
Alberto-Culver Company:
Under date of October 23, 1997, we reported on the consolidated balance
sheets of Alberto-Culver Company and subsidiaries as of September 30,
1997 and 1996 and the related consolidated statements of earnings,
retained earnings, and cash flows for each of the years in the
three-year period ended September 30, 1997, as contained in the 1997
annual report to stockholders. These consolidated financial statements
and our report thereon are incorporated by reference in the annual
report on Form 10-K for the year 1997. In connection with our audits of
the aforementioned consolidated financial statements, we also audited
the related financial statement schedule as listed in Item 14(a)2 of the
annual report on Form 10-K. This financial statement schedule is the
responsibility of the company's management. Our responsibility is to
express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Chicago, Illinois
October 23, 1997
- 15 -
Schedule II
ALBERTO-CULVER COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Thousands)
Year Ended September 30,
1997 1996 1995
Allowance for doubtful accounts:
Balance at beginning of period $8,208 5,663 5,497
Additions (deductions):
Charged to costs and expenses 5,664 6,309 3,277
Uncollectible accounts
written off, net of
recoveries (4,820) (4,326) (3,187)
Allowance for doubtful accounts
of acquired company -- 580 --
Other (10) (18) 76
--- --- --
Balance at end of period $9,042 8,208 5,663
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