Filed by Bowne Pure Compliance
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, 2008
Commission File Number 1-31643
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
Registrants telephone number, including area code
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 þ No o
Indicated by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
|
|
|
|
|
|
|
Large accelerated filer o |
|
Accelerated filer o |
|
Non-accelerated filer o
(Do not check if a smaller reporting company) |
|
Smaller reporting company þ |
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).
Yes o Noþ
Common Stock, $.01 Par Value 6,086,740 shares as of August 31, 2008
Class A Common Stock, $.01 Par Value 967,702 shares as of August 31, 2008
CCA INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
1
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
November 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,121,420 |
|
|
$ |
6,743,960 |
|
Short-term investments and marketable
securities |
|
|
9,444,177 |
|
|
|
8,003,824 |
|
Accounts receivable, net of allowances of
$918,296 and $874,302, respectively |
|
|
8,280,323 |
|
|
|
9,119,179 |
|
Inventories |
|
|
8,845,081 |
|
|
|
7,857,322 |
|
Prepaid expenses and sundry receivables |
|
|
666,483 |
|
|
|
630,893 |
|
Prepaid income taxes and refunds due |
|
|
1,193,257 |
|
|
|
839,693 |
|
Deferred income taxes |
|
|
859,180 |
|
|
|
765,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
34,409,921 |
|
|
|
33,960,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment, net of accumulated
depreciation and amortization |
|
|
604,610 |
|
|
|
562,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible Assets, net of accumulated
amortization |
|
|
479,381 |
|
|
|
484,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
|
|
|
Marketable securities |
|
|
3,675,000 |
|
|
|
4,801,504 |
|
Deferred taxes |
|
|
29,623 |
|
|
|
29,475 |
|
Other |
|
|
65,300 |
|
|
|
65,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Assets |
|
|
3,769,923 |
|
|
|
4,896,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
39,263,835 |
|
|
$ |
39,903,876 |
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
2
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
November 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
7,825,152 |
|
|
$ |
8,354,458 |
|
Capitalized lease obligation current portion |
|
|
56,452 |
|
|
|
49,318 |
|
Dividends payable |
|
|
775,989 |
|
|
|
634,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
8,657,593 |
|
|
|
9,038,676 |
|
|
|
|
|
|
|
|
|
|
Capitalized lease obligations-long term |
|
|
90,686 |
|
|
|
114,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
8,748,279 |
|
|
|
9,153,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity |
|
|
|
|
|
|
|
|
Preferred stock, $1.00 par; authorized
20,000,000 shares; none issued |
|
|
|
|
|
|
|
|
Common stock, $.01 par; authorized
15,000,000 shares; 6,086,740 shares issued and outstanding |
|
|
60,867 |
|
|
|
60,867 |
|
|
|
|
|
|
|
|
|
|
Class A common stock, $.01 par; authorized
5,000,000 shares; 967,702 shares issued and outstanding |
|
|
9,677 |
|
|
|
9,677 |
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
2,329,049 |
|
|
|
2,329,049 |
|
Retained earnings |
|
|
28,519,460 |
|
|
|
28,541,086 |
|
Unrealized (losses) on marketable
securities |
|
|
(403,497 |
) |
|
|
(190,361 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity |
|
|
30,515,556 |
|
|
|
30,750,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
39,263,835 |
|
|
$ |
39,903,876 |
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
3
CCA
INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of health and beauty
aid products Net |
|
$ |
13,939,214 |
|
|
$ |
13,939,369 |
|
|
$ |
44,836,420 |
|
|
$ |
45,746,254 |
|
Other income |
|
|
209,515 |
|
|
|
326,714 |
|
|
|
573,335 |
|
|
|
804,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
|
14,148,729 |
|
|
|
14,266,083 |
|
|
|
45,409,755 |
|
|
|
46,551,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales |
|
|
5,252,704 |
|
|
|
4,933,134 |
|
|
|
16,481,264 |
|
|
|
16,679,316 |
|
Selling, general and
administrative expenses |
|
|
5,648,115 |
|
|
|
5,522,600 |
|
|
|
16,914,888 |
|
|
|
15,250,296 |
|
Advertising, cooperative
and promotions |
|
|
1,299,435 |
|
|
|
154,376 |
|
|
|
7,710,677 |
|
|
|
6,823,807 |
|
Research and development |
|
|
147,229 |
|
|
|
143,034 |
|
|
|
438,558 |
|
|
|
427,115 |
|
Provision for doubtful
Accounts |
|
|
(42,363 |
) |
|
|
30,296 |
|
|
|
7,733 |
|
|
|
9,313 |
|
Interest expense |
|
|
4,456 |
|
|
|
3,569 |
|
|
|
12,084 |
|
|
|
23,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,309,576 |
|
|
|
10,787,009 |
|
|
|
41,565,204 |
|
|
|
39,213,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
717,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Costs and Expenses |
|
|
12,309,576 |
|
|
|
10,787,009 |
|
|
|
41,565,204 |
|
|
|
39,931,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Provision for
Income Taxes |
|
|
1,839,153 |
|
|
|
3,479,074 |
|
|
|
3,844,551 |
|
|
|
6,620,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes |
|
|
737,733 |
|
|
|
1,409,470 |
|
|
|
1,608,756 |
|
|
|
2,784,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,101,420 |
|
|
$ |
2,069,604 |
|
|
$ |
2,235,795 |
|
|
$ |
3,835,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.16 |
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.16 |
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Common Shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding Basic |
|
|
7,054,442 |
|
|
|
7,054,442 |
|
|
|
7,054,442 |
|
|
|
7,021,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average and
potential dilutive
outstanding |
|
|
7,061,151 |
|
|
|
7,074,796 |
|
|
|
7,065,869 |
|
|
|
7,052,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
4
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,101,420 |
|
|
$ |
2,069,604 |
|
|
$ |
2,235,795 |
|
|
$ |
3,835,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
Unrealized holding gains (losses)
on investments |
|
|
(246,103 |
) |
|
|
(40,650 |
) |
|
|
(213,136 |
) |
|
|
(40,916 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
$ |
855,317 |
|
|
$ |
2,028,954 |
|
|
$ |
2,022,659 |
|
|
$ |
3,794,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.12 |
|
|
$ |
0.29 |
|
|
$ |
0.29 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.12 |
|
|
$ |
0.29 |
|
|
$ |
0.29 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Common Shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding Basic |
|
|
7,054,442 |
|
|
|
7,054,442 |
|
|
|
7,054,442 |
|
|
|
7,021,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average and
potential dilutive outstanding |
|
|
7,061,151 |
|
|
|
7,074,796 |
|
|
|
7,065,869 |
|
|
|
7,052,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
5
CCA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
|
2008 |
|
|
2007 |
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
2,235,795 |
|
|
$ |
3,835,276 |
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
181,846 |
|
|
|
198,089 |
|
Loss on write off of fixed assets |
|
|
1,247 |
|
|
|
4,949 |
|
(Gain) on sale of securities |
|
|
(69,842 |
) |
|
|
(34,076 |
) |
(Increase) Decrease in deferred income taxes |
|
|
(93,508 |
) |
|
|
198,424 |
|
Decrease in accounts receivable |
|
|
838,856 |
|
|
|
98,409 |
|
(Increase) in inventory |
|
|
(987,759 |
) |
|
|
(1,296,467 |
) |
(Increase) decrease in prepaid expenses
and miscellaneous receivables |
|
|
(35,590 |
) |
|
|
119,400 |
|
(Increase) in prepaid income
taxes and refunds due |
|
|
(353,564 |
) |
|
|
(747,087 |
) |
(Decrease) in accounts payable and accrued
liabilities |
|
|
(529,306 |
) |
|
|
(306,031 |
) |
(Decrease) in income taxes payable |
|
|
( |
) |
|
|
(413,869 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
|
1,188,175 |
|
|
|
1,657,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(220,178 |
) |
|
|
(212,985 |
) |
Acquisition of intangible assets |
|
|
|
|
|
|
(522 |
) |
Purchase of marketable securities |
|
|
(20,272,142 |
) |
|
|
(12,644,422 |
) |
Proceeds from sale and maturity of
investments |
|
|
19,815,000 |
|
|
|
12,469,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used in) Investing Activities |
|
|
(677,320 |
) |
|
|
(388,244 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Increase in capital lease obligation |
|
|
20,814 |
|
|
|
80,036 |
|
Payments in capital lease obligation |
|
|
(37,876 |
) |
|
|
(26,689 |
) |
Dividends paid |
|
|
(2,116,333 |
) |
|
|
(1,471,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used in) Financing Activities |
|
|
(2,133,395 |
) |
|
|
(1,417,953 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) in Cash |
|
|
(1,622,540 |
) |
|
|
(149,180 |
) |
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at Beginning of Period |
|
|
6,743,960 |
|
|
|
4,385,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Period |
|
$ |
5,121,420 |
|
|
$ |
4,236,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow
Information: |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
12,084 |
|
|
$ |
23,442 |
|
Income taxes |
|
|
2,053,225 |
|
|
|
3,731,618 |
|
|
|
|
|
|
|
|
|
|
Schedule of Non Cash Financing Activities: |
|
|
|
|
|
|
|
|
Acquisition of assets through capital leases |
|
$ |
20,814 |
|
|
$ |
|
|
Dividends declared and accrued |
|
|
2,257,422 |
|
|
|
1,474,141 |
|
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
recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended August 31, 2008 are not necessarily
indicative of the results that may be expected for the year ended November 30, 2008.
For further information, refer to the consolidated financial statements and footnotes
thereto included in the Companys annual report on Form 10-K for the year ended
November 30, 2007. The accompanying unaudited condensed consolidated financial
statements, in the opinion of management, include all adjustments necessary for a fair
presentation. All such adjustments are of a normal recurring nature.
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. CCA has an active wholly-owned subsidiary, CCA IND., S.A. DE
C.V., a Variable Capital Corporation organized pursuant to the laws of Mexico.
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 significant 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)
Estimates and Assumptions:
The consolidated financial statements include the use of estimates, which management
believes are reasonable. The process of preparing financial statements in conformity
with accounting principles generally accepted in the United States of America 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.
Other Comprehensive Income:
Total comprehensive income includes changes in equity that are excluded from the
consolidated statement of operations and are recorded directly into a separate section
of consolidated statements of comprehensive income. The Companys accumulated other
comprehensive income shown on the consolidated balance sheet consist of unrealized
gains and losses on investment holdings net of any tax consequence.
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 shareholders equity, and on the Statement of Comprehensive Income.
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.
For the nine months ended August 31, 2008, dividends declared were $2,257,422 and
dividends paid were in the amount of $2,116,333.
8
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable:
Accounts receivable consist of trade receivables recorded at original invoice amount,
less an estimated allowance for uncollectible amounts. The accounts receivable balance
is further reduced by allowances for coop advertising and reserves for returns which
are anticipated to be taken as credits against the balances as of August 31, 2008. The
allowances and reserves which are anticipated to be deducted from future invoices are
included in accrued liabilities. Trade credit is generally extended on a short term
basis; thus trade receivables do not bear interest, although a finance charge may be
applied to receivables that are past due. Trade receivables are periodically
evaluated for collectibility based on past credit history with customers and their
current financial condition. Changes in the estimated collectibility of trade
receivables are recorded in the results of operations for the period in which the
estimate is revised. Trade receivables that are deemed uncollectible are offset
against the allowance for uncollectible accounts. The Company generally does not
require collateral for trade receivables.
Inventories:
Inventories are stated at the lower of cost (first-in, first-out) or market.
Product returns that are resaleable 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.
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. Assets that are subject to depreciation and
amortization are reviewed for potential impairment whenever events or circumstances
indicate that carrying amounts may not be recoverable.
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
|
|
5-7 Years |
Furniture and fixtures
|
|
3-10 Years |
Tools, dies and masters
|
|
3 Years |
Transportation equipment
|
|
5 Years |
Leasehold improvements
|
|
Remaining life of the lease
(approximately four years) |
9
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangible Assets:
Intangible assets are stated at cost. Patents are amortized on the straight-line
method over a period of 17 years. Such intangible assets are reviewed for potential
impairment whenever events or circumstances indicate that carrying amounts may not be
recoverable.
Web Site Costs:
Certain costs incurred in creating the graphics and content of the Companys web site
has been capitalized in accordance with the Financial Accounting Standards Emerging
Issue Task Force (EITF) No. 0-02, Accounting for Web Site Development Costs. The
Company has determined that these costs will be amortized over a two year period.
Web site design and conceptual costs are expensed as incurred.
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.
Earnings Per Common Share:
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 128,
Earning Per Share in 1998. Basic earning per share is calculated using the average
number of shares of common stock outstanding during the period. Diluted earnings per
share is computed on the basis of the average number of common shares outstanding plus
the effect of outstanding common stock equivalents using the treasury stock method
and convertible debentures using the if-converted method. Common stock equivalents
consist of stock options.
Reclassifications
Certain prior years amounts have been reclassified to conform with the current years
presentation.
10
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition:
The Company recognizes sales upon shipment of merchandise. Net sales comprise gross
revenues less expected 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 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. Those returns which
are anticipated to be taken as credits against the balances as of August 31, 2008 are
offset against the accounts receivable. The reserves which are anticipated to be
deducted from future invoices are included in accrued liabilities.
Sales Incentives:
In accordance with EITF 01-9, the Company has accounted for certain sales incentives
offered to customers by charging them directly to sales as opposed to advertising and
promotional expense. Had EITF 01-9 not been adopted, net sales for the three months
ended August 31, 2008 and 2007 would have been $14,950,582 and $15,364,335,
respectively. Net sales for the nine months ended August 31, 2008 and 2007 would have
been $48,661,945 and $49,678,830, respectively.
Advertising Costs:
The Companys policy for fiscal financial reporting is to charge advertising cost to
operations as incurred.
Shipping and Handling Costs:
The Companys policy for fiscal financial reporting is to charge shipping costs as
part of selling, general and administrative expense as incurred. Freight costs
included were $827,589 and $761,667 for the three months ended August 31, 2008 and
2007, respectively. Freight costs included were $2,484,148 and $2,182,829 for the
nine months ended August 31, 2008 and 2007, respectively.
Stock Options:
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 123R, Accounting for Share-Based
Compensation which is a revision of SFAS No. 123. Effective for annual or interim
periods beginning after December 15, 2005, SFAS No. 123R requires stock grants to
employees to be recognized in the income statement based on their fair values. The
adoption of SFAS No. 123R did not have any impact on the Companys financial position,
results of operations or cash flow.
Recent Accounting Pronouncements:
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48 (FIN No. 48) Accounting for Uncertainty in Income Taxes an
Interpretation of FASB No. 109. FIN No. No. 48 established a recognition threshold
and measurement for income tax positions recognizes in an enterprises financial
statements in accordance with FASB No. 109, Accounting for Income Taxes. FIN No. 48
also prescribes a two-step evaluation process for tax positions. The first step is
recognition and the second is measurement. FIN No. 48 is effective for fiscal years
beginning after December 15, 2006. Accordingly, the Company adopted FIN No. 48 on
December 1, 2007. The adoption of FIN No. 48 will have no material impact on the
Companys financial position or results of operation.
11
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements (Continued)
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157,
Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value,
established a framework for measuring fair value in generally accepted accounting
principles and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value measurements,
the FASB previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods in those
fiscal years. Accordingly, the Company adopted SFAS No. 157 on December 1, 2007. The
adoption of SFAS No. 157 will have no material impact on the Companys financial
position or results of operation.
In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of SFAS Statements Nos.
87, 88,106 and 132R. SFAS No. 158, requires an employer to recognize the over-funded
or under-funded status of a defined benefit postretirement plan as an asset or
liability in its statement of financial position , measure a plans assets and
obligations as of the end of the employers fiscal year-end and recognize changes in
the funded status in the year in which the changes occur through comprehensive income.
SFAS No. 158 is effective as of the end of the fiscal year ending after December 15,
2007. Since the Company does not have a defined benefit pension or post retirement
plan, the adoption will not have an impact on the Companys financial statements.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159
(SFAS No. 159). SFAS No. 159 which amends SFAS No. 115 allows certain financial
assets and liabilities to be recognized, at the Companys election, at fair market
value, with any gains or losses for the period recorded in the statement of income.
SFAS No. 159 included available-for-sale securities in the assets eligible for this
treatment. Currently, the Company records the gains or losses for the period in the
statement of comprehensive income and in the equity section of the balance sheet. SFAS
No. 159 is effective for fiscal years beginning after November 15, 2007, and interim
periods in those fiscal years. The Company, at this time, has not elected to recognize
any gains or losses for its available-for-sale securities in the statement of income,
and accordingly there will be no impact on the Companys financial position or results
of operations.
In November 2007, the SEC issued Staff Accounting Bulletin No. 109 (SAB 109) which
provides interpretive guidance regarding written derivative loan commitments that are
accounted for at fair value through earnings. SAB 109 is effective for fiscal quarters
beginning after December 15, 2007, and accordingly was adopted by the Company on
December 1, 2007. The adoption of this statement will have no material impact on the
Companys financial position or results of operation.
In December 2007, the SEC issued Staff Accounting Bulletin No. 110 (SAB 110) which
provides interpretive guidance regarding the use of a simplified method in estimating
the expected term of plain vanilla share options in accordance with FASB No. 123.
SAB 110 is effective as of January 1, 2007, and accordingly was adopted by the Company
on that date. The adoption of this statement will have no material impact on the
Companys financial position or results of operation.
12
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements (Continued)
In December 2007, the FASB issued a revised Statement of Financial Accounting Standards
No. 141 (SFAS No. 141 (revised)) which establishes the methods for accounting for
business combinations. SFAS No. 141 (revised) defines the acquirer and the acquisition
date. SFAS No. 141 revised is effective for acquisition dates on or after December 15,
2008. The adoption of this statement will have no material impact on the Companys
financial position or results of operation.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160
(SFAS No. 160) which establishes accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary.
SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The
Company has not determined the impact, if any, of the adoption of SFAS No. 160.
In May 2008, the FASB issued SFAS No. 162 The
Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources
of accounting principles generally accepted in the United States. SFAS 162 is effective sixty days following the SECs
approval of PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Principles.
We expect that the adoption of this standard would have no impact on our condensed consolidated financial position and results of operations.
Management does not believe that there are any other recently issued,
but not yet effective, accounting standards that if currently adopted would have a material affect on the accompanying financial statements.
13
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 INVENTORIES
The components of inventory consist of the following:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
November 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
Raw materials |
|
$ |
4,953,245 |
|
|
$ |
4,717,225 |
|
Finished goods |
|
|
3,891,836 |
|
|
|
3,140,097 |
|
|
|
|
|
|
|
|
|
|
$ |
8,845,081 |
|
|
$ |
7,857,322 |
|
|
|
|
|
|
|
|
At August 31, 2008 and November 30, 2007, the Company had a reserve for obsolescence
of $ 370,751 and $604,746, respectively.
NOTE 5 PROPERTY AND EQUIPMENT
The components of property and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
November 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
Machinery and equipment |
|
$ |
188,583 |
|
|
$ |
130,346 |
|
Furniture and equipment |
|
|
795,647 |
|
|
|
795,714 |
|
Transportation equipment |
|
|
10,918 |
|
|
|
10,918 |
|
Tools, dies, and masters |
|
|
357,601 |
|
|
|
379,171 |
|
Capitalized lease obligations |
|
|
263,067 |
|
|
|
242,254 |
|
Web Site |
|
|
20,000 |
|
|
|
|
|
Leasehold improvements |
|
|
311,309 |
|
|
|
281,582 |
|
|
|
|
|
|
|
|
|
|
|
1,947,125 |
|
|
|
1,839,985 |
|
Less: Accumulated depreciation
and amortization |
|
|
1,342,515 |
|
|
|
1,277,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment Net |
|
$ |
604,610 |
|
|
$ |
562,528 |
|
|
|
|
|
|
|
|
Depreciation expense for the nine months ended August 31, 2008 and 2007 amounted to
$176,850 and $192,644, respectively.
14
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 INTANGIBLE ASSETS
Intangible assets consist of owned trademarks and patents for ten product lines:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
November 30, |
|
|
|
2008 |
|
|
2007 |
|
|
Patents and trademarks |
|
$ |
636,608 |
|
|
$ |
636,608 |
|
Less: Accumulated amortization |
|
|
157,227 |
|
|
|
152,231 |
|
|
|
|
|
|
|
|
Intangible Assets Net |
|
$ |
479,381 |
|
|
$ |
484,377 |
|
|
|
|
|
|
|
|
Patents are amortized on a straight-line basis over their legal life of 17 years and
trademarks are adjusted to realizable value for each quarterly reporting period.
Amortization expense for the nine months ended August 31, 2008 and 2007 amounted to
$4,996 and $5,445, respectively. Estimated amortization expense for November 30,
2008, 2009, 2010, 2011 and 2012 will be $6,661, $6,661, $6,661, $6,396 and $6,134
respectively.
NOTE 7 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, 2008 and November 30, 2007 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2008 |
|
|
November 30, 2007 |
|
|
|
COST |
|
|
MARKET |
|
|
COST |
|
|
MARKET |
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
obligations |
|
$ |
200,000 |
|
|
$ |
200,958 |
|
|
$ |
5,552,779 |
|
|
$ |
5,555,917 |
|
Government
obligations
(including mortgage
backed securities) |
|
|
8,937,330 |
|
|
|
8,961,120 |
|
|
|
2,335,358 |
|
|
|
2,140,921 |
|
Preferred stock |
|
|
50,000 |
|
|
|
34,560 |
|
|
|
50,000 |
|
|
|
38,760 |
|
Common stock |
|
|
51,649 |
|
|
|
50,592 |
|
|
|
51,649 |
|
|
|
58,860 |
|
Mutual funds |
|
|
215,274 |
|
|
|
151,009 |
|
|
|
215,274 |
|
|
|
151,989 |
|
Other equity
investments |
|
|
70,206 |
|
|
|
45,938 |
|
|
|
70,206 |
|
|
|
57,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current |
|
|
9,524,459 |
|
|
|
9,444,177 |
|
|
|
8,275,266 |
|
|
|
8,003,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
NOTE 7 |
|
SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES (CONTINUED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST |
|
|
MARKET |
|
|
COST |
|
|
MARKET |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate obligations |
|
|
598,370 |
|
|
|
591,888 |
|
|
|
400,000 |
|
|
|
400,000 |
|
Government obligations |
|
|
625,000 |
|
|
|
585,000 |
|
|
|
3,445,576 |
|
|
|
3,626,508 |
|
Preferred stock |
|
|
2,774,845 |
|
|
|
2,498,112 |
|
|
|
774,845 |
|
|
|
674,996 |
|
Other equity investments |
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Current |
|
|
3,998,215 |
|
|
|
3,675,000 |
|
|
|
4,720,421 |
|
|
|
4,801,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
13,522,674 |
|
|
$ |
13,119,177 |
|
|
$ |
12,995,687 |
|
|
$ |
12,805,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company had at August 31, 2008 two auction rate bonds, two issued by the New
Jersey Economic Development Authority (NJEDA), and one issued by the New Jersey
State Higher Education Assistance Authority (NJHE). The bonds are recorded as
non-current marketable securities. The NJEDA bond had an original par value of
$150,000 and a maturity date of May 1, 2019. The company sold $25,000 of the bond on
August 26, 2008 at par value, leaving a remaining balance of $125,000 as of August
31, 2008. On September 4, 2008, the Company sold an additional $25,000 at par value,
and on September 17, 2008 the Company sold the remaining balance of $100,000 at par
value. The NJHE bond has an original par value of $500,000, a maturity date of
December 1, 2040, a rating of AA by S&P, and has been placed on negative watch.
Fitch has withdrawn their rating. The current interest rate is 3.238% as of
September 18, 2008. Beginning in February 2008, more shares for sale were submitted
in the regularly scheduled auctions for the NJEDA and NJHE auction rate bonds than
there were offers to buy. This meant that these auctions failed to clear and that
many or all auction bond holders who wanted to sell their shares in these auctions
were unable to do so. The Company believes that no permanent impairment has occurred
as of August 31, 2008, as the Company has the ability and intent to hold these
investments long enough to avoid realizing any significant loss. The Company has
recognized a temporary impairment charge of $40,000 against the $500,000 par value of
the bond. If uncertainties in the credit and capital markets continue, these markets
may deteriorate further, or if there are any further ratings downgrades, or if the
Company no longer has the ability to hold these investments, the Company may be
required to recognize further impairment charges.
16
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
|
a) Media Advertising |
|
$ |
644 |
|
|
$ |
* |
|
b) Coop Advertising |
|
|
1,208 |
|
|
|
1,214 |
|
c) Accrued Returns |
|
|
1,156 |
|
|
|
964 |
|
d) Accrued Bonuses |
|
|
696 |
|
|
|
841 |
|
e) Vacation Accrual |
|
|
465 |
|
|
|
485 |
|
|
|
|
|
|
|
|
|
|
$ |
4,169 |
|
|
$ |
3,504 |
|
|
|
|
|
|
|
|
All other liabilities were for trade payables or individually did not exceed 5% of
total current liabilities.
NOTE 9 OTHER INCOME
Other income consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ending August 31, |
|
|
Nine Months Ending August 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
Interest and dividend income |
|
$ |
130,068 |
|
|
$ |
253,230 |
|
|
$ |
421,254 |
|
|
$ |
628,715 |
|
Royalty income |
|
|
79,447 |
|
|
|
24,000 |
|
|
|
132,490 |
|
|
|
94,467 |
|
Realized gain
(loss) on sale of
bonds |
|
|
|
|
|
|
(1,151 |
) |
|
|
(4,073 |
) |
|
|
17,512 |
|
Miscellaneous |
|
|
|
|
|
|
50,635 |
|
|
|
23,664 |
|
|
|
64,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
209,515 |
|
|
$ |
326,714 |
|
|
$ |
573,335 |
|
|
$ |
804,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 10 NOTES PAYABLE
The Company has an available line of credit of $20,000,000. Interest is calculated at
the Companys option, either on the outstanding balance at the prime rate plus 0.5% or
Libor plus 175 basis points at the Companys option. The line of credit is unsecured
as of August 31, 2008 and must adhere to certain financial covenants pertaining to net
worth and debt coverage. The Company was not utilizing their available credit line at
August 31, 2008 and November 30, 2007.
17
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 11 COMMITMENTS AND CONTINGENCIES
Dividends and Capital Transactions
On December 5, 2007, the board of directors declared a $0.10 per share dividend for
the first quarter ending February 29, 2008. The dividend was payable to all
shareholders of record as of February 1, 2008, and was paid on March 1, 2008.
On February 25, 2008, the board of directors declared an $0.11 per share dividend for
the second quarter ending May 31, 2008. The dividend was payable to all shareholders
of record as of May 1, 2008, and payable on June 1, 2008.
On July 7, 2008, the board of directors declared an $0.11 per share dividend for the
third quarter ending August 31, 2008. The dividend was payable to all shareholders of
record as of August 1, 2008, and payable on September 1, 2008.
Collective Bargaining Agreement
On July 8, 2008, the Company signed a new collective bargaining agreement with Local
108, L.I.U. of N.A., AFL-CIO with similar provisions of the one that expired on
January 1, 2008. The new agreement is effective January 1, 2008. Other than standard
wage, holiday, vacation and sick day provisions, the agreement calls for CCA to
contribute to the Recycling and General Industrial Union Local 108 Welfare Fund
(Welfare Fund) certain benefits costs. The Welfare Fund will be providing medical,
dental and life insurance for the Companys employees covered under the collective
bargaining agreement. Previously, the Company provided the covered employees medical,
dental and life insurance benefits directly. The new collective bargaining agreement
is in effect through December 31, 2010. This agreement pertains to 29% of the CCA
labor force.
NOTE 12 401(K) PLAN
The Company has adopted a 401(K) Profit Sharing Plan that all employees with over one
year of service and attained age 21 are eligible to join. Employees may make salary
reduction contributions up to twenty-five percent of compensation not to exceed the
federal government limits. The Plan allows for the Company to make discretionary
contributions. For all fiscal periods to date, the Company did not make any
contributions.
18
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 13 INCOME TAXES
CCA and its subsidiaries file a consolidated federal income tax return.
At August 31, 2008 and November 30, 2007, respectively, the Company had temporary
differences arising from the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2008 |
|
|
|
|
|
|
|
|
|
|
|
Classified As |
|
|
|
|
|
|
|
Deferred |
|
|
Short-Term |
|
|
Long-Term |
|
Type |
|
Amount |
|
|
Tax |
|
|
Asset |
|
|
(Liability) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
$ |
74,244 |
|
|
$ |
29,623 |
|
|
$ |
|
|
|
$ |
29,623 |
|
Reserve for bad debts |
|
|
149,136 |
|
|
|
59,505 |
|
|
|
59,505 |
|
|
|
|
|
Reserve for returns |
|
|
489,159 |
|
|
|
195,175 |
|
|
|
195,175 |
|
|
|
|
|
Reserve for obsolete
inventory |
|
|
370,751 |
|
|
|
147,930 |
|
|
|
147,930 |
|
|
|
|
|
Vacation accrual |
|
|
465,643 |
|
|
|
185,791 |
|
|
|
185,791 |
|
|
|
|
|
Charitable Contributions |
|
|
428,645 |
|
|
|
171,029 |
|
|
|
171,029 |
|
|
|
|
|
Section 263A costs |
|
|
250,000 |
|
|
|
99,750 |
|
|
|
99,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax |
|
|
|
|
|
$ |
888,803 |
|
|
$ |
859,180 |
|
|
$ |
29,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2007 |
|
|
|
|
|
|
|
|
|
|
|
Classified As |
|
|
|
|
|
|
|
Deferred |
|
|
Short-Term |
|
|
Long-Term |
|
Type |
|
Amount |
|
|
Tax |
|
|
Asset |
|
|
(Liability) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
$ |
74,244 |
|
|
$ |
29,475 |
|
|
$ |
|
|
|
$ |
29,475 |
|
Reserve for bad debts |
|
|
141,607 |
|
|
|
56,218 |
|
|
|
56,218 |
|
|
|
|
|
Reserve for returns |
|
|
452,695 |
|
|
|
179,720 |
|
|
|
179,720 |
|
|
|
|
|
Reserve for obsolete
inventory |
|
|
604,746 |
|
|
|
240,084 |
|
|
|
240,084 |
|
|
|
|
|
Vacation accrual |
|
|
484,971 |
|
|
|
192,534 |
|
|
|
192,534 |
|
|
|
|
|
Section 263A costs |
|
|
245,000 |
|
|
|
97,265 |
|
|
|
97,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax |
|
|
|
|
|
$ |
795,296 |
|
|
$ |
765,821 |
|
|
$ |
29,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 13 INCOME TAXES (CONTINUED)
Income tax expense is made up of the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended August 31, 2008 |
|
|
|
Federal |
|
|
State & Local |
|
|
Total |
|
Current tax expense |
|
$ |
523,722 |
|
|
$ |
152,344 |
|
|
$ |
676,066 |
|
Tax credits |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Deferred tax expense |
|
|
44,771 |
|
|
|
16,896 |
|
|
|
61,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
568,493 |
|
|
$ |
169,240 |
|
|
$ |
737,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended August 31, 2007 |
|
|
|
Federal |
|
|
State & Local |
|
|
Total |
|
Current tax expense |
|
$ |
896,927 |
|
|
$ |
260,904 |
|
|
$ |
1,157,831 |
|
Tax credits |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Deferred tax expense |
|
|
194,935 |
|
|
|
55,704 |
|
|
|
251,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,092,862 |
|
|
$ |
316,608 |
|
|
$ |
1,409,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended August 31, 2008 |
|
|
|
Federal |
|
|
State & Local |
|
|
Total |
|
Current tax expense |
|
$ |
1,231,007 |
|
|
$ |
360,143 |
|
|
$ |
1,591,150 |
|
Tax credits |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Deferred tax expense |
|
|
13,621 |
|
|
|
3,985 |
|
|
|
17,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,244,628 |
|
|
$ |
364,128 |
|
|
$ |
1,608,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended August 31, 2007 |
|
|
|
Federal |
|
|
State & Local |
|
|
Total |
|
Current tax expense |
|
$ |
1,977,249 |
|
|
$ |
577,214 |
|
|
$ |
2,554,463 |
|
Tax credits |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Deferred tax expense |
|
|
178,296 |
|
|
|
52,050 |
|
|
|
230,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,155,545 |
|
|
$ |
629,264 |
|
|
$ |
2,784,809 |
|
|
|
|
|
|
|
|
|
|
|
20
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 13 INCOME TAXES (CONTINUED)
Prepaid income taxes and refund due are made up of the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State & |
|
|
|
|
|
|
Federal |
|
|
Local |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2008 |
|
$ |
766,994 |
|
|
$ |
426,263 |
|
|
$ |
1,193,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2007 |
|
$ |
625,350 |
|
|
$ |
214,343 |
|
|
$ |
839,693 |
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of income tax expense computed at the statutory rate to income tax
expense at the effective rate for the three months ended August 31, 2008 and August
31, 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
August 31, 2008 |
|
|
August 31, 2007 |
|
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
|
Of Pretax |
|
|
|
|
|
|
Of Pretax |
|
|
|
Amount |
|
|
Income |
|
|
Amount |
|
|
Income |
|
Income tax expense
at federal statutory rate |
|
$ |
625,312 |
|
|
|
34.00 |
% |
|
$ |
1,182,885 |
|
|
|
34.00 |
% |
Increases in taxes
resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of federal
income tax benefit |
|
|
109,246 |
|
|
|
5.94 |
|
|
|
206,657 |
|
|
|
5.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-deductible expenses and
other adjustments |
|
|
3,175 |
|
|
|
0.17 |
|
|
|
19,928 |
|
|
|
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
at effective rate |
|
$ |
737,733 |
|
|
|
40.11 |
% |
|
$ |
1,409,470 |
|
|
|
40.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
21
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 13 INCOME TAXES (CONTINUED)
A reconciliation of income tax expense computed at the statutory rate to income tax
expense at the effective rate for the nine months ended August 31, 2008 and August 31,
2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
|
August 31, 2008 |
|
|
August 31, 2007 |
|
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
|
Of Pretax |
|
|
|
|
|
|
Of Pretax |
|
|
|
Amount |
|
|
Income |
|
|
Amount |
|
|
Income |
|
Income tax expense
at federal statutory rate |
|
$ |
1,307,147 |
|
|
|
34.00 |
% |
|
$ |
2,250,829 |
|
|
|
34.00 |
% |
Increases in taxes
resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of federal
income tax benefit |
|
|
228,366 |
|
|
|
5.94 |
|
|
|
393,233 |
|
|
|
5.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-deductible expenses and
other adjustments |
|
|
73,243 |
|
|
|
1.91 |
|
|
|
140,747 |
|
|
|
2.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
at effective rate |
|
$ |
1,608,756 |
|
|
|
41.85 |
% |
|
$ |
2,784,809 |
|
|
|
42.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
22
CCA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 14 TRANSACTION EXPENSES
On November 1, 2006 the Company entered into a letter of intent with Dubilier and
Company relating to a proposed acquisition of the Company by Dubilier. A copy of the
letter of intent was included as an exhibit to the Companys 8K filed Report with the
Securities and Exchange Commission on November 2, 2006. On April 2, 2007, the Company
received an opinion from an investment banking company that from a financial point of
view, the proposed transaction is fair to all shareholders. On April 10, 2007 the
Company was advised by Dubilier that it was unable to obtain its financing, despite
the fact that the Company had met all of its financial requirements of earnings before
income tax, depreciation, and amortization, as well as net working capital. The board
of directors terminated all negotiations with Dubilier. For the three and nine month
periods ended August 31, 2007, costs associated with the proposed acquisition amounted
to $0 and $717,850 respectively, and are included as transaction costs in the
statement of income.
NOTE 15 ANTI-DILUTIVE STOCK OPTIONS
For the three and nine month period ended August 31, 2008, the following stock options
were considered anti-dilutive and accordingly not calculated into the weighted average
and potential dilutive shares outstanding or the diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Three months |
|
|
Nine months |
|
|
|
ended |
|
|
ended |
|
|
|
August 31, 2008 |
|
|
August 31, 2008 |
|
|
|
|
|
|
|
|
|
|
Stock options granted March 9, 2004
at $9.00 per share |
|
|
50,000 |
|
|
|
50,000 |
|
Stock options granted March 9, 2004
at $8.25 per share |
|
|
50,000 |
|
|
|
- 0 - |
|
|
|
|
|
|
|
|
Total anti-dilutive shares |
|
|
100,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
NOTE 16- SUBSEQUENT EVENTS
On October 13, 2008, the board of directors declared a $0.11 dividend for the
fourth quarter of 2008. The dividend is payable to shareholders of record as of
November 1, 2008 and payable on December 1, 2008.
23
|
|
ITEM 2. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (UNAUDITED) |
Except for historical information contained herein, this Managements Discussion and Analysis
of Financial Condition and Results of Operations contains forward-looking statements. These
statements involve known and unknown risks and uncertainties that may cause actual results or
outcomes to be materially different from any future results, performances or achievements expressed
or implied by such forward-looking statements, and statements which explicitly describe such
issues. Investors are urged to consider any statement labeled with the terms believes,
expects, intends or anticipates to be uncertain and forward-looking.
For the three-month period ended August 31, 2008, the Company had revenues of $14,148,729 and
net income of $1,101,240 after provision for taxes of $737,733. For the same quarter in 2007,
revenues were $14,266,083 and net income was $2,069,604 after a provision for taxes of $1,409,470.
Earnings per share were $0.16 (diluted) for the third quarter 2008 as compared to earnings of $0.29
(diluted) for the third quarter 2007. In accordance with EITF 01-9, the Company has accounted for
certain sales incentives offered to customers by charging them directly to sales as opposed to
advertising and promotional expenses. Net sales for the third quarter of 2008 were reduced by
$856,218 and offset by an equal reduction of trade promotional expenses, which were included in the
Companys advertising expense budget. In the same period of the prior year, gross sales were
reduced by $1,424,966 and trade promotion was credited by that amount. These accounting
adjustments under EIFT 01-9 do not affect net income.
The Companys net sales decreased slightly from $13,939,369 for the three-month period ended
August 31, 2007 to $13,939,214 for the three-month period ended August 31, 2008. Sales incentives
for the third quarter of 2008 decreased $568,748 from the third quarter of 2007. Sales of the
Mega-T diet product were lower than expected. The Company attributes the sales decline to the
heavily advertised former prescriptive diet aid by a leading pharmaceutical company. The Company
will be introducing several new unique diet aids in the fourth quarter in order to offset the
recent sales decline in the Mega-T diet aid sales. In addition, the Company will also be introducing a
number of new SKUs to their other brands in the upcoming fourth quarter. Sales returns and
allowances were 16.1% of gross sales for the three-month period ended August 31, 2008 versus 16.7%
for the same period last year. Sales returns were higher, with $1,605,344 or 9.5% of gross sales
for the third quarter of 2008, versus $1,131,848 or 6.7% for the third quarter of 2007. Gross
profit margins decreased to 62.3% from 64.6% for the three months ended August 31, 2008 and August
31, 2007 respectively. The gross margin was affected by the higher level of returns in the third
quarter of 2008 versus the same period in 2007.
The Companys gross sales net of returns and allowances by category for the third quarter of
2008 were: Dietary Supplement $5,076,025, 33.9%; Skin Care $4,293,548, 28.7%; Oral Care
$3,688,602, 24.7%; Nail Care $1,612,984, 10.8%; Fragrance $274,798, 1.8%; and Miscellaneous $4,626,
0.1%; for a total of $14,950,583. The Company makes every effort to control the cost of
manufacturing and has had no substantial cost increases. Income before taxes is $1,839,153 as
compared to $3,479,074 for the same quarter in 2007. Returns and accounts receivable reserves
accounted for $1,698,459 that was expensed against earnings for the third quarter of 2008 as
opposed to $1,247,048 that was expensed for the same period in 2007.
24
|
|
ITEM 2. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (UNAUDITED)
(CONTINUED) |
Advertising media expenditures were $1,299,435 in the third quarter of 2008 versus $154,376 in
the same period in 2007, or an increase of $1,145,059. A major portion of the Companys
co-operative advertising is reclassified as a reduction of net sales. Included in advertising
media expense is the cost of newspaper inserts. The Company, as part of its advertising strategy,
redesigned portions of its consumer web site and advertised on the internet. Most of the
advertising expense in the third quarter of 2008 was for web advertising for the Bikini Zone brand.
The selling, general and administrative expense for the third quarter of 2008 was $5,648,115
versus $5,522,600 in the third quarter 2007. The increase was primarily due to increased
charitable donations of inventory, shipping costs, sales commissions, and legal and accounting fees
for the registration of the Companys international trademarks. As part of its efforts to enhance
its marketing strategy, the Company has invested in the increase of its marketing staff. This has
resulted in increased personnel and related support costs. It is anticipated that the positive
results of this marketing investment will be seen in future periods.
The effective tax rate for the third quarter of 2008 was 40.1% versus 40.5% for the third
quarter of 2007. The decrease in the tax rate was primarily due to an increase in the amount of
deferred tax deductions during the third quarter of 2008 versus the same period in 2007.
For the nine month period ended August 31, 2008, the Company had revenues of $45,409,755 and
net income of $2,235,795 after provision for taxes of $1,608,756. For the nine month period ended
August 31, 2007, revenues were $46,551,224 and net income was $3,835,276 after a provision for
taxes of $2,784,809. Earnings per share were $0.32 (diluted) for the first three quarters of 2008
as compared to earnings of $0.54 (diluted) for the first three quarters of 2007. In accordance
with EITF 01-9, the Company has accounted for certain sales incentives offered to customers by
charging them directly to sales as opposed to advertising and promotional expenses. Net sales for
the first three quarters of 2008 were reduced by $3,825,525 and offset by an equal reduction of
trade promotional expenses, which were included in the Companys advertising expense budget. In the
same period of the prior year, gross sales were reduced by $4,308,867 and trade promotion was
credited by that amount. These accounting adjustments under EIFT 01-9 do not affect net income.
The Companys net sales decreased from $45,746,254 for the nine month period ended August 31,
2007 to $44,836,421 for the nine month period ended August 31, 2008. Gross sales were lower in the
first three quarters of 2008 versus the same period in 2007 due to less promotional events then
last year. In addition, sales of the Mega-T diet product were down. The Company attributes the
sales decline to the heavily advertised former prescriptive diet aid by a leading pharmaceutical
company. The Company will be introducing several new unique diet aids in the fourth quarter in
order to offset the recent sales decline in their Mega-T diet aid sales. In addition, the Company
will also be introducing a number of new SKUs to their other brands in the upcoming fourth quarter.
Sales returns and allowances were 15.8% of gross sales for the nine month period ended August 31,
2008 versus 16.4% for the same period last year. Sales returns were higher, with $4,172,570 or
7.8% of gross sales for the first three quarters of 2008, versus $4,075,204 or 7.4% for the same
three quarters of 2007. Gross profit margins decreased slightly to 63.2% from 63.5% for the nine
months ended August 31, 2008 and August 31, 2007 respectively.
25
|
|
ITEM 2. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (UNAUDITED)
(CONTINUED) |
The Companys gross sales net of returns by category for the first three quarters of 2008
were: Skin Care $15,628,657, 32.1%; Dietary Supplement $14,806,617, 30.4%; Oral Care $12,229,870
25.1%; Nail Care $5,577,687, 11.5%; Fragrance $717,508, 1.5%; and Miscellaneous $(298,389) -0.6%;
for a total of $48,661,950. The Company makes every effort to control the cost of manufacturing
and has had no substantial cost increases. Income before taxes for the first three quarters of
2008 was $3,844,551 as compared to $6,620,085 for the first three quarters of 2007. Returns and
accounts receivable reserves accounted for $4,664,892 that was expensed against earnings for the
nine month period ended August 31, 2008 versus $4,527,961 for the same period in 2007.
Advertising media expenditures were $7,710,677 for the nine month period ended August 31, 2008
versus $6,823,807 for the nine month period ended August 31, 2007, or an increase of $886,870. The
increase in advertising expense was due to the Company continuing to work to adjust its business
model by advertising on internet web sites. The increased amount was spent on Bikini Zone web
advertising. A major portion of the Companys co-operative advertising is reclassified as a
reduction of net sales. Included in advertising media expense is the cost of newspaper inserts.
In addition to an increased focus on co-operative advertising, the Company has strategically
allocated increased funding for the newspaper inserts. This expense increased from $207,625 in the
first three quarters of 2007 to $542,441 in the first three quarters of 2008. The Company, as part
of its new strategy, has redesigned portions of its web site. Web design costs that were expensed
as part of advertising media expenditures for the first three quarters of 2008 were $133,615. The
Company did not have any web design expenses for the first three quarters of 2007.
The selling, general and administrative expenses for the nine month period ended August 31,
2008 were $16,914,888 versus $15,250,296 for the same period in 2007. The increase was primarily
due to increased charitable donations of inventory of $396,062, increased shipping costs of
$301,319, increased sales commissions and selling expenses of $170,357, increased royalties of
$99,576, increased computer costs of $61,348, decrease in costs allocated to costs of goods sold of
$241,124, increased legal and accounting of $89,619 primarily for the registration of the Companys
international trademarks and increased personnel costs of $242,299. As part of its efforts to
enhance its marketing strategy, the Company has invested in the increase of its marketing staff.
This has resulted in increased personnel and related support costs. It is anticipated that the
positive results of this marketing investment will be seen in future periods. Earnings were
impacted during the first half of 2007 by transaction expenses related to the proposed acquisition
of the Company by Dubilier as disclosed in Note 14. Transaction expenses incurred during the nine
month period ended August 31, 2007 were $717,850.
The effective tax rate for the first nine months of 2008 was 41.8% versus 42.1% for the first
nine months of 2007. Changes to the tax rate are due in part to changes in the deferred tax
assets.
The Companys financial position as of August 31, 2008 consisted of current assets of
$34,409,921 and current liabilities of $8,657,593, or a current ratio of 4.0 to 1. Shareholders
equity decreased from $30,750,318 as of November 30, 2007 to $30,515,556 as of August 31, 2008.
The decrease was due to dividends declared of $2,257,422 during the nine months of 2008, while net
income increased $2,235,795 and unrealized income decreased $213,136.
26
|
|
ITEM 2. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (UNAUDITED)
(CONTINUED) |
The Companys cash and cash equivalents were $5,121,420 as of August 31, 2008, a decrease of
$1,622,540 from November 30, 2007. The decrease was mainly due to the Company purchasing
marketable securities, capital expenditures and the payment of dividends. As of August 31, 2008,
the Company had $9,444,177 of short term marketable securities and $3,675,000 of non-current
securities. The Companys cash and cash equivalents together with both short and long term
marketable securities, net of current liabilities were $9,583,008 as of August 31, 2008.
The Companys cash flow from operations provided net cash of $1,188,175 for the nine months
ended August 31, 2008. For the nine months ended August 31, 2007, net cash of $1,657,016 was
provided by the Companys operations.
The Companys long term investments as of August 31, 2008 were $3,675,000. Please refer to
footnote No. 7 of the financial statements for further information regarding the Companys
investments.
Accounts receivable, net of reserves, were $8,280,323 as compared to $9,119,179 for August
31, 2008 and November 30, 2007, respectively. Inventories, net of reserves, were $8,845,081 for
August 31, 2008 as compared to $7,857,322 for November 30, 2007. Inventory is higher to satisfy
sales and customer requirements for the fourth quarter of 2008. Accounts payable and accrued
expenses decreased to $7,825,152 for August 31, 2008 from $8,354,458 for November 30, 2007.
The Company was not utilizing any of the funds available under its $20,000,000 unsecured credit
line as of August 31, 2008.
27
|
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
The Companys financial statements record the Companys investments under the mark to market
method (i.e., at date-of-statement market value). The investments are, categorically
listed, in Common Stock, Mutual Funds, Other Equity, Preferred Stock, Government
Obligations and Corporate Obligations. $96,530 of the Companys $13,119,177 portfolio of
investments (approximate, as at August 31, 2008) is invested in the Common Stock and Other
Equity categories, and approximately $2,532,672 in that category are Preferred Stock holdings.
The Company invests in various investment securities. Investment securities are exposed to various
risks such as interest rates, market and credit risks. Due to the level of risk associates with
certain investment securities, it is at least reasonably possible that changes in the values of
investment securities will incur in the near term. The Company does not take positions or engage in
transactions in risk-sensitive market instruments in any substantial degree, nor as defined by SEC
rules and instructions; therefore, the Company does not believe that its investment-market risk is
material.
ITEM 4. CONTROLS AND PROCEDURES
With the participation of our Chief Executive Officer and Chief Financial Officer, management
has carried out an evaluation of the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of August 31, 2008.
There were no changes in our internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934) subsequent to the date the controls were
evaluated that materially affect, or are reasonably likely to materially affect, our internal
control over financial reporting.
28
CCA
INDUSTRIES, INC.
PART II OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 4. Submission of Matters to a Vote of Security Holders:
Our annual meeting of shareholders was held on June 25, 2008 in New York, New York.
At the meeting the following persons were elected directors: Dunnan Edell (4,933,405
votes for and 573,117 votes withheld), Seth Hamot (5,232,469 votes for and 274,053
votes withheld) and Robert Lage (5,229,071 votes for and 277,051 votes withheld).
The shareholders approved the appointment of KGS LLP as the Companys independent
certified public accountants for the fiscal year ending November 30, 2008 (5,165,495
votes for, 301,990 votes against and 39,035 votes abstained).
Item 5. Other Information:
Owners of Common Stock and owners of Class A Common Stock are entitled to one vote for each
share of stock held, and the voting and other rights of each class are equivalent except in
respect to the election of directors.
In respect to the election of directors, the Class A Common Stock shareholders
have the right to elect four directors and the Common Stock shareholders have the right
to elect three. (In consequence, no proposal to alter or change the right of Class A
Common Stock shareholders to elect a majority of directors could be effectively voted
unless a separate majority of Class A Common Stock shares were voted therefor.)
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
The following reports were filed with the Securities and Exchange Commission during the
three months ended August 31, 2008:
|
(1) |
|
Form 10-Q, filed on July 10, 2008 for the quarter ended May 31, 2008 |
|
|
(11) |
|
Computation of Earnings Per Share* |
|
|
(31.1) |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)* |
|
|
(31.2) |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)* |
|
|
(32.1) |
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350* |
|
|
(32.2) |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350* |
29
CCA INDUSTRIES, INC.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (Continued):
(b) Reports on Form 8-K.
None.
30
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.
Date: October 14, 2008
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CCA INDUSTRIES, INC. |
|
|
|
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|
|
|
|
By:
|
|
/s/ DAVID EDELL |
|
|
|
|
|
|
|
|
|
|
|
|
|
David Edell, Chief Executive Officer |
|
|
|
|
|
|
|
|
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|
|
By:
|
|
/s/ STEPHEN A. HEIT |
|
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|
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|
|
Stephen A. Heit, Chief Financial Officer |
|
|
31
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
No. |
|
Description |
(11)
|
|
Computation of Earnings Per Share* |
(31.1)
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)* |
(31.2)
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)* |
(32.1)
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350* |
32