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, 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 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 - 6,024,627 shares as of May 31,
2002
Class A Common Stock, $.01 Par Value - 1,020,930 shares as of
May 31, 2002
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
Number
PART I FINANCIAL INFORMATION:
Consolidated Balance Sheets as of
May 31, 2002 and November 30, 2001 . . . . . . . . . . . . . 1-2
Consolidated Statements of Operations
for the three months and six months ended
May 31, 2002 and 2001 . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Comprehensive Income
for the three months and six months ended
May 31, 2002 and 2001. . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for
the six months ended May 31, 2002
and 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 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,
2002 2001
(Unaudited)
Current Assets
Cash and cash equivalents $ 1,903,531 $ 2,555,938
Short-term investments in marketable
securities (Notes 3 and 10) 760,138 355,345
Accounts receivable, net of
allowances of $1,288,032 and
$1,295,085 respectively 6,865,686 4,464,991
Inventories 4,463,369 4,783,530
Prepaid expenses and sundry receivables 552,634 401,403
Deferred income taxes 1,538,487 1,617,403
Prepaid income taxes and refunds due 1,703 221,989
Deferred advertising 1,982,753 -
Total Current Assets 18,068,301 14,400,599
Property and Equipment, net of
accumulated depreciation and
amortization 459,899 482,261
Intangible Assets, net of accumulated
amortization of $155,216 at May 31, 2002
and $131,323 at November 30, 2001 597,986 618,933
Other Assets
Marketable securities (Notes 3 and 10) 7,630,681 4,979,758
Due from officers - Non-current 19,227 20,598
Deferred income taxes 38,514 40,105
Other 56,663 56,663
Total Other Assets 7,745,085 5,097,124
Total Assets $26,871,271 $20,598,917
See Notes Consolidated to Financial Statements.
-1-
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
May 31, November 30,
2002 2001
(Unaudited)
Current Liabilities
Accounts payable and accrued
liabilities $ 8,405,751 $ 4,154,256
Income tax payable 528,625 9,366
Total Current Liabilities 8,934,376 4,163,622
Subordinate Debentures (Due August 1,
2005) 502,656 510,656
Shareholders' Equity
Common stock, $.01 par; authorized
15,000,000 shares; issued and
outstanding 6,242,823 shares 62,428 62,428
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 3,834,296 3,834,296
Retained earnings 13,833,111 12,315,062
Accumulated other comprehensive income ( 58,600) ( 50,151)
17,681,444 16,171,844
Less: Treasury Stock (218,196 shares
at May 31, 2002 and November 30,
2001, respectively) 247,205 247,205
Total Shareholders' Equity 17,434,239 15,924,639
Total Liabilities and Shareholders'
Equity $26,871,271 $20,598,917
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,
2002 2001 2002 2001
Revenues
Sales of Health and
Beauty Aid
Products - Net $13,213,844$12,787,878 $23,372,230 $22,884,407
Other income 98,503 76,605 187,311 158,161
13,312,347 12,864,483 23,559,541 23,042,568
Costs and Expenses
Costs of sales 4,399,740 4,372,263 8,164,644 8,616,410
Selling, general and
administrative
expenses 3,865,127 3,880,089 7,601,451 6,901,420
Advertising,
cooperative
and promotions 2,858,396 2,501,421 5,121,922 4,613,893
Research and
development 138,259 249,272 228,061 340,220
Provision for
doubtful
accounts ( 41,801) 24,155 ( 146,161) 114,673
Interest expense 8,320 10,895 17,235 51,201
11,228,041 11,038,095 20,987,152 20,637,817
Income before
Income Taxes 2,084,306 1,826,388 2,572,389 2,404,751
Provision for Income
Taxes 866,320 688,609 1,054,340 930,126
Net Income $1,217,986$ 1,137,779 $ 1,518,049 $ 1,474,625
Earnings per Share
Basic $.17 $.17 $.22 $.21
Diluted $.16 $.16 $.20 $.20
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,
2002 2001 2002 2001
Net Income $1,217,986 $1,137,779 $1,518,049 $1,474,625
Other Comprehensive
Income Unrealized
holding gains(loss)
on investments 3,566 ( 4,682)( 8,449) 34,835
Provision (Benefit)
for Taxes 1,266 ( 2,527)( 3,362) 13,473
Other Comprehensive
Income (Loss) - Net 2,300 ( 2,155)( 5,087) 21,362
Comprehensive Income $1,220,286 $1,135,624 $1,512,962 $1,495,987
Earnings Per Share:
Basic $.17 $.17 $.21 $.22
Diluted $.16 $.16 $.20 $.21
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,
2002 2001
Cash Flows from Operating Activities:
Net income $1,518,049 $1,474,625
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 183,186 202,615
(Gain) loss on sale of marketable
securities ( 3,025) 1,642
Decrease (increase) in deferred
income taxes 80,507 ( 148,595)
(Increase) in accounts
receivable - Net ( 2,400,695) ( 1,123,604)
Decrease (increase) in inventory 320,161 ( 89,920)
(Increase) in prepaid expenses
and miscellaneous receivables ( 151,231) ( 140,488)
(Increase) in deferred
advertising ( 1,982,753) ( 2,155,380)
Increase in income taxes payable 519,259 265,751
Increase in accounts payable and
accrued liabilities 4,251,495 3,760,271
Decrease in prepaid income
taxes and refunds due 220,286 777,691
(Increase) in security deposits - ( 2,550)
Net Cash Provided by Operating
Activities 2,555,239 2,822,058
Cash Flows from Investing Activities:
Acquisition of property, plant
and equipment ( 136,932) ( 16,431)
Acquisition of intangible
assets ( 2,945) ( 22,756)
Decrease (increase) of money due
from officers 1,371 ( 355)
Purchase of marketable securities ( 3,387,647) ( 3,189,974)
Proceeds from sale and maturity of
investments 324,507 2,938,681
Net Cash (Used in) Investing
Activities ( 3,201,646) ( 290,835)
Cash Flows from Financing Activities:
Payment on debt - ( 1,500,000)
Purchase of treasury stock - ( 55,303)
Repurchase of outstanding
debenture ( 6,000) ( 22,500)
Net Cash (Used in) Financing
Activities ( 6,000) ( 1,577,803)
Net (Decrease) Increase in Cash ( 652,407) 953,420
Cash at Beginning of Period 2,555,938 804,508
Cash at End of Period $1,903,531 $1,757,928
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 17,235 $ 52,271
Income taxes 324,810 51,806
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, 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
consolidated 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 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. 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 ac-
counts of CCA and its wholly-owned subsidiaries (collec -
tively the "Company"). The minority interest in the
discontinued consolidated subsidiary is no longer re-
flected in the financial statements. All significant
inter-company accounts and transactions have been elimi-
nated.
-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 in Marketable Securities:
Short-term investments in 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.
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.
-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 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. In fiscal 2001, the Company
repriced all of the outstanding stock options to $.50.
Revenue Recognition:
The Company recognizes net sales upon shipment of mer-
chandise. Net sales comprise gross revenues less ex-
pected returns, trade discounts, 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 custom
ers. The Company, therefore, records a reserve for re-
turns equal to its gross profit on its historical per-
centage 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 $439,602 and $391,806 as of May 31, 2002 and November
30, 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 $1,057,947 and
$1,271,719 for the six months ended May 31, 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:
May 31, November 30,
2002 2001
Raw materials $3,476,156 $2,225,814
Finished goods 2,134,523 3,610,432
$5,610,679 $5,836,246
At May 31, 2002 and November 30, 2001, the Company had a
reserve for obsolescence of $1,147,310 and $1,052,716,
respectively.
NOTE 5 - PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the
following:
May 31, November 30,
2002 2001
Machinery and equipment $ 171,196 $ 168,421
Furniture and equipment 775,984 741,414
Transportation equipment 10,918 10,918
Tools, dies, and masters 583,004 550,825
Leasehold improvements 229,690 162,283
1,770,792 1,633,861
Less: Accumulated depreciation
and amortization 1,310,893 1,151,600
Property and Equipment - Net $ 459,899 $ 482,261
Depreciation expense for the six months ended May 31,
2002 and 2001 amounted to $159,293 and $179,231, respec-
tively.
NOTE 6 - INTANGIBLE ASSETS
Intangible assets consist of the following:
May 31, November 30,
2002 2001
Patents and trademarks $753,202 $750,256
Less: Accumulated amortization 155,216 131,323
Intangible Assets - Net $597,986 $618,933
Amortization expense for the six months ended May 31,
2002 and 2001 amounted to $23,893 and $23,384, 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 $1,982,753 is accordingly
reflected in the balance sheet for the interim period.
This deferral is the result of the Company's $7,500,000
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
2002 2001
(In Millions) (In Millions)
Media advertising budget for the
fiscal year $7.50 $6.50
Pro-rata portion for six months $3.75 $3.25
Media advertising spent 5.14 4.63
Accrual (deferral) ($1.39) ($1.38)
Anticipated Co-op advertising
commitments $4.00 $4.00
Pro-rata portion for six months $2.00 $2.00
Co-op advertising spent 2.59 2.78
Accrual (deferral) ($ .59) ($0.78)
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,
2002 2001
(In Thousands) (In Thousands)
Vacation accrual $ * $ 254
Media advertising 1,904 424
Coop advertising 1,540 392
Accrued returns 686 301
Accrued bonuses 536 510
$4,666 $1,881
* 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:
2002 2001
Interest income $150,347 $120,393
Dividend income 6,175 8,678
Miscellaneous 30,789 29,090
$187,311 $158,161
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, 2002 and November 30, 2001 were as
follows:
May 31, November 30,
2002 2001
Current: COST MARKET COST MARKET
Corporate
obligations $ 390,000 $ 397,339 $ - $ -
Mutual Funds 164,955 107,286 159,805 107,015
Government
obligations
including
mortgage
backed
securities) 250,179 255,513 247,330 248,330
Total 805,134 760,138 407,135 355,345
Non-Current:
Corporate
obligations 2,701,846 2,713,737 2,416,846 2,434,080
Government obli-
gations 4,184,485 4,163,004 2,311,273 2,294,058
Preferred stock 757,954 753,940 250,000 251,620
Total 7,644,285 7,630,681 4,978,119 4,979,758
Total $8,449,419 $8,390,819 $5,385,254 $5,335,103
The market value at May 31, 2002 was $8,390,819 as compared
to $5,335,103 at November 30, 2001. The gross unrealized
gains and losses as at May 31, 2002 and November 30, 2001
were $40,762 and ($99,362) for May 31, 2002 and $35,542 and
($85,693) for November 30, 2001, respectively. The cost and
market values of the investments at May 31, 2002 were as
follows:
-12-
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
CORPORATE OBLIGATIONS:
GMAC Smartnotes 10/15/03 4.600% 250,000 $ 250,000 $ 251,825 $ 251,825
GMAC Smartnotes 10/15/03 4.750 325,000 325,000 327,831 327,831
GMAC Smartnotes 1/15/03 5.550 250,000 250,000 254,483 254,483
GMAC Smartnotes 2/15/03 5.750 140,000 140,000 142,856 142,856
GMAC Smartnotes 6/15/03 4.750 300,000 300,000 302,895 302,895
GMAC Smartnotes 7/15/03 4.650 200,000 200,000 201,692 201,692
GMAC Smartnotes 8/15/03 4.250 499,000 499,000 500,697 500,697
GMAC Smartnotes 5/15/04 4.250 250,000 250,000 249,245 249,245
GMAC Smartnotes 5/15/05 5.000 175,000 175,000 174,967 174,967
Household Finance Corp.
Internotes 5/15/04 4.250 250,000 250,000 249,260 249,260
International Business
Machines 9/22/03 5.370 100,000 102,040 102,726 102,726
Colgate-Palmolive 12/1/03 5.270 100,000 100,860 102,572 102,572
Ford Motor Credit 3/20/04 6.125 245,000 249,946 250,027 250,027
3,091,846 3,111,076 3,111,076
-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
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% 14,286 $ 13,724 $ 14,563 $ 14,563
FNMA 93-224-D 11/25/2023 6.500 1,676 2,133 1,684 1,684
FHLB 9/15/2003 5.125 255,000 266,200 262,571 262,571
FHLB 11/15/2005 4.250 750,000 753,004 748,245 748,245
US Treasury Note 11/15/2003 4.250 200,000 199,891 202,366 202,366
US Treasury Note 11/15/2003 4.250 250,000 250,169 257,056 257,056
FNMA 11/6/2009 4.250 250,000 250,000 242,243 242,243
FNMA 11/6/2009 4.250 500,000 500,000 485,565 485,565
FHLMC 2/27/12 4.000 225,000 225,000 223,961 223,961
FNMA 9/15/04 3.500 250,000 249,805 250,157 250,157
FHLMC 12/6/05 4.600 225,000 225,000 226,055 226,055
FNMA Global 10/15/06 4.375 200,000 199,559 198,812 198,812
FNMA 11/23/04 4.000 250,000 250,000 250,860 250,860
FNMA 2/24/05 4.100 200,000 200,000 201,062 201,062
FNMA 5/20/05 3.500 200,000 200,000 199,100 199,100
FNMA 11/15/05 4.250 200,000 200,000 199,602 199,602
FNMA 5/16/06 4.000 200,000 200,000 199,102 199,102
Muniyield NJ Insd Frd Inc. 3,500 50,945 52,185 52,185
Muniholdings NJ Insd FD Inc. 3,700 49,502 50,024 50,024
Nuveen NJ Invt Quality Mun Fd 3,300 49,686 50,589 50,589
Nuveen NJ Invt Prem Inc Mun Fd 3,300 49,112 50,325 50,325
Van Kamp Amer Cap Inv Gr NJ 3,100 50,934 52,390 52,390
4,434,664 4,418,517 4,418,517
-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
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 $ 149,760 $ 149,760
Tennessee Valley
Auth Ser A 5/1/29 6.50 8,000 207,954 203,040 203,040
Corporate Backed Trust
Certificates For AIG
Sun America 5/17/07 6.70 6,000 150,000 151,140 151,140
Corporate Backed Trust
Certificates For
Bristol Myers
Squibb 5/23/07 6.80 6,000 150,000 150,000 150,000
Other Equity Investments:
Aberdeen Asia Pacific
Income Fund 100,000 100,000 100,000
Dreyfus Premier Limited
Term High Income CL B 9.96%* 12,824 164,955 107,286 107,286
922,909 861,226 861,226
*as of May 2002 $8,449,419 $8,390,819 $8,390,819
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CCA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
For the three month period ended May 31, 2002, the Company
had revenues of $13,312,347 and net income of $1,217,986 after
a provision for taxes of $866,320. Last year,for the May 31
quarter, the Company had $12,864,483 of revenue and net income
of $1,137,779. This represents a 3% and 7% improvement for
sales and net income, respectively. Gross margins improved
from 65.8% to 66.7%. This was primarily due to economies of
scale derived as a result of the higher sales volume. Selling,
general and administrative (SG&A) expenses remained the same at
$3.9 million.
For the three month period ending May 31, 2002, advertis-
ing, cooperative and promotional allowance expenditures were
$2.86 million. Last year, for the same three month period
ending May 31, 2001, they were $2.5 million. The increase was
due to an estimated increase in advertising. Advertising
expenditures were 21.6% of sales compared to 19.6% last year.
Since both co-op advertising and promotions 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 No. 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 $1.4 million for media expense and
$.6 million for co-op expenditures for the six month period is
reflected in the balance sheet. The Company deferred $2.16
million of media costs in the prior year for the six month
period. The deferral is the result of the Company's current
$7.5 million media budget for the entire year, which is predi-
cated 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 $5.14 million for
media advertising in the six months and $2.6 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, 2002, the Company
had revenue of $23,559,541 and a net income of $1,518,049 after
a provision of income taxes of $1,054,340. In the prior year's
period, the Company had revenues of $23,042,568 and net income
of $1,474,625 after a provision for income taxes of $930,126.
Gross profit margins for the six month period ending May 31,
2002 increased from 62.4% in the prior year to 65%.
For the six month period ended May 31, 2002, advertising
cooperative and promotional allowance expenditures was
$5,121,922 as compared to $4,613,893 for the six month period
ending May 31, 2001. This is primarily due to an estimated
increase in the national advertising budget from $6.5 million
to $7.5 million annually. Advertising expenditures were 21.9%
of sales vs. 20.2% last year.
For the six month period ending May 31, 2002, research and
development expenses were $228,061 compared to $340,200 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, 2002 con-
sists of current assets of $18,068,301 and current liabilities
of $8,934,376. In addition, shareholders' equity increased
from $15,924,639 at November 30, 2001 to $17,434,239 at May 31,
2002 primarily due to net income earned during the period.
The Company generated $2.56 million in cash from operations
due to the six month net income of $1.5 million, a $4.25 mil-
lion increase in accounts payable, a $820,000 net increase in
income taxes due, and an inventory reduction of $320,000. Cash
decreased due to the increase in the Company's accounts receiv-
able of $2.4 million and an increase in deferred advertising of
$2.0 million. Both the increase in deferred advertising and
accounts receivable are "normal" seasonal increases.
The $2.6 million cash generated by operations, however, was
used to invest in liquid marketable securities of $3.1 million
and for the acquisition of computer equipment of $135,000,
leaving the Company with a net decrease in its cash position of
approximately $650,000.
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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,
2002 2001 2002 2001
Item 6.
Weighted average shares
outstanding - Basic 7,045,557 6,877,058 7,045,557 6,893,183
Net effect of dilutive stock
options--based on the
treasury stock method
using average market
price 533,691 399,909 547,560 316,814
Weighted average shares
outstanding - Diluted 7,579,248 7,276,967 7,593,117 7,209,997
Net income $1,217,986 $1,137,779 $1,518,049 $1,474,625
Per share amount
Basic $.17 $.17 $.22 $.21
Diluted $.16 $.16 $.20 $.20
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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 filed a report on Form 8-K on May 23, 2002 which is
hereby incorporated by reference.
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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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