UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT 0F
1934
For the fiscal year ended December 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
for the transition period from________ to________
Commission file number 333-70067
---------
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Sally Beauty 401(k) Savings Plan Alberto-Culver 401(k) Savings Plan
3900 Morse Street
Denton, TX 76205
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Alberto-Culver Company
2525 Armitage Ave.
Melrose Park, IL 60160
SIGNATURES
The Plans: Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plans) have
duly caused this annual report to be signed on their behalf by the undersigned
hereunto duly authorized.
SALLY BEAUTY 401(k) SAVINGS PLAN
By: Sally Beauty Company, Inc., Plan Administrator
By:/s/ William J. Cernugel
-----------------------
William J. Cernugel
Plan Administrator
ALBERTO-CULVER 401(k) SAVINGS PLAN
By: Alberto-Culver Company, Inc., Plan Administrator
By:/s/ William J. Cernugel
-----------------------
William J. Cernugel
Plan Administrator
Dated: June 24, 2002
SALLY BEAUTY
401(k) SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
SALLY BEAUTY
401(K) SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Supplemental Schedule
1 Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 9
[LETTERHEAD OF KPMG]
303 East Wacker Drive
Chicago, IL 60601
Independent Auditors' Report
To the Plan Administrator of the
Sally Beauty 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Sally Beauty 401(k) Savings Plan (the Plan) as of December 31, 2001 and
2000, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2001 and 2000, and the changes in net assets available for plan
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
May 24, 2001
SALLY BEAUTY
401(k) SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
--------------- ---------------
Assets:
Cash $ 192,707 98,327
Investments 21,431,058 17,520,818
--------------- ---------------
Total assets held for investment 21,623,765 17,619,145
Employer contribution receivable 1,503,555 1,217,441
--------------- ---------------
Net assets available for plan benefits $ 23,127,320 18,836,586
=============== ===============
See accompanying notes to financial statements.
2
SALLY BEAUTY
401(k) SAVINGS PLAN
Statements of Changes in Net Assets Available
Years ended December 31, 2001 and 2000
2001 2000
------------ ------------
Additions to net assets attributed to:
Investment income (loss):
Net depreciation in fair value of investments $ (1,766,638) (1,363,352)
Dividend and interest income 273,311 213,535
Interest on participant loans 57,191 39,624
------------ ------------
Total investment loss (1,436,136) (1,110,193)
------------ ------------
Contributions:
Employer 1,503,555 1,217,441
Employee 5,993,977 5,224,212
------------ ------------
Total contributions 7,497,532 6,441,653
------------ ------------
Total additions 6,061,39 6,331,460
------------ ------------
Deductions from net assets attributed to:
Benefits paid to participants (1,740,721) (2,169,482)
Administrative fees (29,941) (25,685)
------------ ------------
Total deductions (1,770,662) (2,195,167)
------------ ------------
Net increase 4,290,734 3,136,293
Net assets available for plan benefits at beginning of year 18,836,586 15,700,293
------------ ------------
Net assets available for plan benefits at end of year $ 23,127,320 18,836,586
------------ ------------
See accompanying notes to financial statements.
3
SALLY BEAUTY
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Description of the Plan
General
The Sally Beauty 401(k) Savings Plan (the Plan), established on January
1, 1994, is a defined contribution plan available to eligible employees
of Sally Beauty Company (the Company).
The Plan is administered by the Company with the assistance of
Connecticut General Life Insurance Company, a CIGNA company. The
investment assets of the Plan are held by CIGNA Bank & Trust Company
(the Trustee).
The following description of the Plan provides only general
information. Information about the Plan's provisions is contained in
the plan document, which may be obtained from the Company.
Participation
All eligible employees whose customary employment is for at least 1,000
hours within 12 consecutive months, who are not members of a collective
bargaining unit, and who are at least 21 years of age may participate
in the Plan on the first day of the month coincident with or following
the completion of 12 months of service. On December 31, 2001, there
were 2,607 employees in the Plan.
Contributions
Participants may elect to contribute any amount from 1% to 15% of their
eligible compensation, in whole percentage points, subject to the
limitations of the Internal Revenue Code, as amended (the Code). The
percentage of compensation contributed may be increased or decreased at
the election of the participant any time during the year. All eligible
participant contributions are tax deferred contributions pursuant to a
qualified cash or deferral arrangement subject to the limitations of
the Code. Company contributions to the Plan are based on a
discretionary match on an annual basis. For the plan years 2001 and
2000, the Company matched $.50 of each dollar on 4% of eligible
participant compensation.
Investment Options
Effective January 1, 2001, additional investment fund options were
added to the Plan for the purposes of providing a broader selection of
investment options for the participants to choose from. Effective May
1, 2001, the Fidelity Growth Opportunities Fund was deleted from the
available Plan investment options due to the fund's inability to meet
certain performance criteria established by the Plan's Investment
Policy Statement.
Participants may elect to invest their contributions and any Company
contributions in nineteen investment options within seven different
asset classes and the Company's Class B common stock. Such asset
classes include: (i) fixed income, (ii) balanced, (iii) large
capitalization equity, (iv) mid capitalization equity, (v) small
capitalization equity, (vi) global equity, and (vii) international
equity.
Participants may invest Company and employee contributions in 1%
increments in the Plan's available fund options and may reallocate
their investments among the available fund options any time during the
year.
(Continued)
4
SALLY BEAUTY
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
None of the investment funds, other than the CIGNA Guaranteed Income Fund,
guarantee a positive return to the participant. This fund invests in a
diversified portfolio of high quality, fixed income instruments within
CIGNA's general account. Principal and interest are backed by the
underlying assets of CIGNA. Dividend and interest income received on
investments made by the investment funds are reinvested accordingly in the
same funds.
Vesting
Participants are fully vested in the current value of their contributions
and earnings thereon, and become fully vested in the Company contributions
and related earnings credited to their accounts based upon their years of
vesting service as shown in the following table:
Years of Vested
vesting service percentage
----------
Less than 1 0%
1 but less than 2 20
2 but less than 3 40
3 but less than 4 60
4 but less than 5 80
5 or more 100
Participants who are age 65 or over, die, or become permanently disabled
are automatically 100% vested in the value of Company contributions and
related earnings or losses credited to their account.
Distribution Options
Upon termination of employment, participants generally may elect to receive
the total value of their account attributable to their contributions, as
well as the vested value of their Company contributions in cash, annual
installments, direct rollover, Company stock, or an annuity according to
the provisions of the Plan. Alternatively, participants may elect to defer
the distribution of their account balance until age 65. Such deferred
benefits remain in the Plan and participate in the earnings and losses of
the investments.
Participant Loans
Participants may borrow against their account balances for periods of one
to five years. In the event the loan is used to purchase a primary
residence, an extended period of time for repayment is allowed. Participant
loans are limited to the lesser of $50,000 or 50% of the participants'
vested account balance and bear interest at a rate of prime plus 1% at the
time the loan is made. Outstanding participant loans are considered
investments of the Plan and repayments of principal and interest are
credited to the borrowing participants' account using his or her current
investment election. At December 31, 2001 and December 31, 2000, interest
rates on outstanding loans ranged from 6.00% to 10.5% and 7.0% to 10.5%,
respectively.
(Continued)
5
SALLY BEAUTY
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Forfeitures
Company contributions, and earnings thereon, forfeited by terminating
employees are used to reduce future Company contributions to the Plan.
The Company will reinstate forfeited balances to the accounts of
employees who rejoin the Company within five years of their
termination. In 2001 and 2000, Company contributions were reduced by
forfeiture amounts of $28,145 and $41,428 respectively.
Administrative Expenses
Administrative fees are paid by the Plan. All other Plan-related
expenses are paid by the Company. Investment management fees are
included in the investment fund yields.
(2) Summary of Significant Accounting Policies
Basis of Accounting
The Company maintains the accounts of the Plan on an accrual basis.
Asset Valuation
The investment assets in the trust are valued at the quoted closing
sale price on the last business day of the year. Securities traded in
over-the-counter markets and listed securities for which no sale was
reported on the last business day of the year are valued at their last
reported bid price. Participant loans are stated at contract value
which approximates fair value.
Security Transactions and Investment Income
Purchases and sales of investments in the Plan are recorded on a trade
date basis. When investments are sold, the difference between the
original cost (computed on an average cost basis) and the proceeds
received are recorded as a realized gain or loss. Interest and
dividend income are recorded when earned.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the use of plan administrator estimates and assumptions that affect
the reported amounts of net assets available for plan benefits at the
date of the financial statements and the changes in net assets
available for plan benefits during the reporting period and related
disclosures. Actual results could differ from these estimates.
(Continued)
6
SALLY BEAUTY
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Derivative Instruments and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting
for Derivative Instruments and Certain Derivative Instruments and
Certain Hedging Activity. In June 2000, the FASB issued SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging
Activity, an Amendment to SFAS No. 133. SFAS No. 133 and SFAS No. 138
require that all derivative instruments be recorded on the statement
of net assets available for benefits at their respective fair values.
The Plan adopted SFAS No. 133 and No. 138 on January 1, 2001 and the
adoption had no impact on the Plan's consolidated financial
statements.
(3) Termination of the Plan
It is the intent of the Company that the Plan continue into the future;
however, the Company reserves the right to terminate the Plan. In the event
the Plan is terminated, participants would become fully vested in their
accounts, and the assets of the Plan would be distributed to the
participants in proportion to their respective interests in the Plan.
(4) Tax Status
The Plan has received a favorable determination letter from the Internal
Revenue Service (IRS), dated June 19, 1997, indicating that the Plan is
qualified under Section 401(a) of the Code and exempt from tax under
Section 501(a) of the Code. The plan administrator is not aware of any
activity or transaction that may adversely affect the qualified status of
the Plan.
(5) Reconciliation of Financials Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits
included in the financial statements to the Form 5500:
Year ended
December 31,
2001
------------
Net assets available for plan benefits included in the
financial statements $ 23,127,320
Amounts allocated to withdrawing participants at
December 31, 2001 (28,384)
------------
Net assets available for plan benefits included
in the IRS Form 5500 $ 23,098,936
============
(Continued)
7
SALLY BEAUTY
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year ended
December 31,
2001
------------
Benefits paid to participants per the financial
statements $ 1,740,721
Add amounts allocated to withdrawing participants
at December 31, 2001 28,384
-----------
Benefits paid to participants per IRS Form 5500 $ 1,769,105
===========
(6) Other Investment Information
The fair values of investment fund balances which represent 5% or more of
the Plan's net assets as of December 31, 2001 and 2000 are as follows:
2001 2000
----------- ---------
CIGNA Guaranteed Income Fund $ 5,689,805 4,266,633
Fidelity Advisor Equity Growth Fund 3,079,198 3,211,745
CIGNA Large Cap Growth Fund/Morgan Stanley 2,369,217 443,721
CIGNA S&P 500 Index Fund 1,970,890 1,765,088
Fidelity Advisor Balanced Fund 1,798,270 1,639,722
Alberto-Culver Company Class B Common Stock 1,184,684 543,357
Fidelity Advisor Growth Opportunities Fund -- 1,800,702
========== =========
(7) Subsequent Events
Effective January 1, 2002, the annuity and installment provisions were
eliminated as distribution options for the purposes of administration
efficiency.
Effective May 1, 2002, participants may elect to contribute any amount from
1% to 50% of their eligible compensation in whole percentage points to the
Plan, subject to the limitations of the Internal Revenue Code.
Effective May 1, 2002, participants were allowed to make catch-up
contributions up to $1,000 in the Plan year 2002. Such amounts will
increase by $1,000 per year up to a contribution of $5,000 in 2006 and then
increases in $500 increments thereafter. Employer matching contributions
will not be made on catch-up contributions.
8
Schedule 1
SALLY BEAUTY
401(k) SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Description of investment including
Identity of issues, borrower, maturity date, rate of interest, Fair
lessor, or similar party par value, or number of shares value
-------------------------------------- ---------------------------------------------- -------------
* CIGNA Bank & Trust Company Guaranteed Income Fund $ 5,689,805
Fidelity Advisor Equity Growth Fund 3,079,198
* CIGNA Bank & Trust Company Large Cap Growth Fund/Morgan Stanley 2,369,217
* CIGNA Bank & Trust Company S&P 500 Index Fund 1,970,890
Fidelity Advisor Balanced Fund 1,798,270
* Alberto-Culver Company Class B Common Stock, 26,475 shares 1,184,684
Janus Worldwide Fund 1,018,182
* CIGNA Bank & Trust Company Small Cap Growth/Times Square 632,877
Credit Suisse International Equity Fund 576,381
* CIGNA Bank & Trust Company Small Cap Value/Berger 397,146
* CIGNA Bank & Trust Company Mid Cap Growth Fund/Cadence 338,626
* CIGNA Bank & Trust Company Lifetime 40 321,789
* CIGNA Bank & Trust Company Balanced Fund/Wellington Management 289,033
* CIGNA Bank & Trust Company Lifetime 50 264,970
* CIGNA Bank & Trust Company Lifetime 30 251,767
* CIGNA Bank & Trust Company Lifetime 20 248,906
* CIGNA Bank & Trust Company Large CapValue/John A. Levin & Co. 140,086
Lazard International Equity Fund 68,043
* CIGNA Bank & Trust Company Lifetime 60 37,471
* Plan participants Loans to participants, bearing interest
from 6.0% to 10.5% 753,717
-------------
$ 21,431,058
=============
* Represents a party-in-interest.
See accompanying independent auditors' report.
9
ALBERTO-CULVER
401(k) SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
ALBERTO-CULVER
401(k) SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Supplemental Schedule
1 Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 9
[LETTERHEAD OF KPMG]
Independent Auditors' Report
To the Plan Administrator of the
Alberto-Culver 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Alberto -Culver 401(k) Savings Plan (the Plan) as of December 31, 2001
and 2000, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2001 and 2000, and the changes in net assets available for plan
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
May 24, 2001
ALBERTO-CULVER
401(k) SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
------------ ----------
Assets:
Cash $ -- 45,929
Investments 25,563,595 24,052,038
------------ ----------
Total assets held for investment 25,563,595 24,097,967
Employer contribution receivable 894,637 796,329
------------ ----------
Net assets available for plan benefits $ 26,458,232 24,894,296
============ ==========
See accompanying notes to financial statements.
2
ALBERTO-CULVER
401(k) SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2001 and 2000
2001 2000
------------ ------------
Additions to net assets attributed to:
Investment income (loss):
Net depreciation in fair value of investments $ (2,421,012) (2,037,547)
Dividend and interest income 359,304 294,295
Interest on participant loans 60,540 50,288
------------ ------------
Total investment loss (2,001,168) (1,692,964)
------------ ------------
Contributions:
Employer 894,637 796,329
Employee 4,096,672 4,016,440
Transfers from Pro-Line International, Inc. 401(k) Savings Plan -- 267,414
------------ ------------
Total contributions 4,991,309 5,080,183
------------ ------------
Total additions 2,990,141 3,387,219
------------ ------------
Deductions from net assets attributed to:
Benefits paid to participants (1,415,618) (2,377,346)
Administrative fees (10,587) (10,243)
------------ ------------
Total deductions (1,426,205) (2,387,589)
------------ ------------
Net increase 1,563,936 999,630
Net assets available for benefits at beginning of year 24,894,296 23,894,666
------------ ------------
Net assets available for benefits at end of year $ 26,458,232 24,894,296
============ ============
See accompanying notes to financial statements
3
ALBERTO-CULVER
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Description of the Plan
General
The Alberto-Culver 401(k) Savings Plan (the Plan), established on
January 1, 1994, is a defined contribution plan available to eligible
employees of Alberto-Culver Company (the Company), and certain
subsidiaries of the Company.
On March 23, 2000 the Company acquired Pro-Line Corporation and
subsequently terminated the Pro-Line 401(k) / ESOP Plan (the Pro-Line
Plan). Upon termination, participants were provided the opportunity to
receive a distribution of assets from the ESOP portion of the Pro-Line
Plan or transfer their funds to the Plan. Assets of the 401(k) portion
of the Pro-Line Plan were automatically transferred to the Plan.
Participants in the Pro-Line Plan received service credit for
eligibility and vesting as of the date of acquisition.
The Plan is administered by the Company with the assistance of
Connecticut General Life Insurance Company, a CIGNA company. The
investment assets of the Plan are held by CIGNA Bank & Trust Company
(the Trustee).
The following description of the Plan provides only general
information. Information about the Plan's provisions is contained in
the Plan document, which may be obtained from the Company.
Participation
All eligible employees whose customary employment is for at least
1,000 hours within 12 consecutive months and are at least 21 years of
age may participate in the Plan on the first day of the month
coincident with or following the employee's hire date. Effective
January 1, 2000, eligible employees of the Alberto-Culver Local 9777
Pension Plan were permitted to participate in the Plan. The Plan does
not allow for Company matching contributions to this group. On
December 31, 2001, there were 1,371 employees in the Plan.
Contributions
Participants may elect to contribute any amount from 1% to 15% of
their eligible compensation, in whole percentage points, subject to
the limitations of the Internal Revenue Code, as amended (the Code).
The percentage of compensation contributed may be increased or
decreased at the election of the participant any time during the year.
All eligible participant contributions are tax deferred contributions
pursuant to a qualified cash or deferral arrangement subject to the
limitations of the Code. Company contributions to the Plan are based
on a discretionary match on an annual basis. For the plan years 2001
and 2000, the Company matched $.50 of each dollar on 4% of eligible
participant compensation.
(Continued)
4
ALBERTO-CULVER
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Investment Options
Effective January 1, 2001, additional investment fund options were
added to the Plan for the purposes of providing a broader selection of
investment options for the participants to choose from. Effective May
1, 2001, the Fidelity Growth Opportunities Fund was deleted from the
available plan investment options due to the fund's inability to meet
certain performance criteria established by the Plan's Investment
Policy Statement.
Participants may elect to invest their contributions and any Company
contributions in nineteen investment options within seven different
asset classes and the Company's Class B common stock. Such asset
classes include: (i) fixed income, (ii) balanced, (iii) large
capitalization equity, (iv) mid capitalization equity, (v) small
capitalization equity, (vi) global equity, and (vii) international
equity.
Participants may invest Company and employee contributions in 1%
increments in the Plan's available fund options and may reallocate
their investments among the available fund options any time during the
year.
None of the investment funds, other than the CIGNA Guaranteed Income
Fund, guarantee a positive return to the participant. This fund invests
in a diversified portfolio of high quality, fixed income instruments
within CIGNA's general account. Principal and interest are backed by
the underlying assets of CIGNA. Dividend and interest income received
on investments made by the investment funds are reinvested accordingly
in the same funds.
Vesting
Participants are fully vested in the current value of their
contributions and earnings thereon, and become fully vested in the
Company contributions and related earnings credited to their accounts
based upon their years of vesting service as shown in the following
table:
Years of Vested
vesting service percentage
----------
Less than 1 0%
1 but less than 2 20
2 but less than 3 40
3 but less than 4 60
4 but less than 5 80
5 or more 100
Participants who are age 65 or over, die, or become permanently
disabled are automatically 100% vested in the value of Company
contributions and related earnings or losses credited to their
account.
(Continued)
5
ALBERTO-CULVER
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Distribution Options
Upon termination of employment, participants generally may elect to
receive the total value of their account attributable to their
contributions, as well as the vested value of their Company
contributions in cash, annual installments, direct rollover, Company
stock, or an annuity according to the provisions of the Plan.
Alternatively, participants may elect to defer the distribution of
their account balance until age 65. Such deferred benefits remain in
the Plan and participate in the earnings and losses of the investments.
Participant Loans
Participants may borrow against their account balances for periods of
one to five years. In the event the loan is used to purchase a primary
residence, an extended period of time for repayment is allowed.
Participant loans are limited to the lesser of $50,000 or 50% of the
participants' vested account balance and bear interest at a rate of
prime plus 1% at the time the loan is made. Outstanding participant
loans are considered investments of the Plan and repayments of
principal and interest are credited to the borrowing participants'
account using his or her current investment election. At December 31,
2001 and December 31, 2000, interest rates on outstanding loans ranged
from 5.75% to 10.5% and 7.25% to 10.5%, respectively.
Forfeitures
Company contributions and earnings thereon forfeited by terminating
employees are used to reduce future Company contributions to the Plan.
The Company will reinstate forfeited balances to the accounts of
employees who rejoin the Company within five years of their
termination. In 2001 and 2000, Company contributions were reduced by
forfeiture amounts of $11,111 and $9,275, respectively.
Administrative Expenses
Administrative fees are paid by the Plan. All other Plan-related
expenses are paid by the Company. Investment management fees are
included in the investment fund yield.
(2) Summary of Significant Accounting Policies
Basis of Accounting
The Company maintains the accounts of the Plan on an accrual basis.
Asset Valuation
The investment assets in the Plan are valued at the quoted closing sale
price on the last business day of the year. Securities traded in
over-the-counter markets and listed securities for which no sale was
reported on the last business day of the year are valued at their last
reported bid price. Participant loans are stated at contract value
which approximates fair value.
(Continued)
6
ALBERTO-CULVER
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Security Transactions and Investment Income
Purchases and sales of investments in the Plan are recorded on a trade
date basis. When investments are sold, the difference between the
original cost (computed on an average cost basis) and the proceeds
received is recorded as a realized gain or loss. Interest and dividend
income are recorded when earned.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of plan administrator
estimates and assumptions that affect the reported amounts of net
assets available for plan benefits at the date of the financial
statements and the changes in net assets available for plan benefits
during the reporting period and related disclosures. Actual results
could differ from these estimates.
Derivative Instruments and Hedging Activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting
for Derivative Instruments and Certain Derivative Instruments and
Certain Hedging Activity. In June 2000, the FASB issued SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging
Activity, an Amendment to SFAS No. 133. SFAS No. 133 and SFAS No. 138
require that all derivative instruments be recorded on the statement
of net assets available for benefits at their respective fair values.
The Plan adopted SFAS No. 133 and No. 138 on January 1, 2001 and the
adoption had no impact on the Plan's consolidated financial
statements.
(3) Termination of the Plan
It is the intent of the Company that the Plan continue into the future;
however, the Company reserves the right to terminate the Plan. In the event
the Plan is terminated, participants would become fully vested in their
accounts and the assets of the Plan would be distributed to the
participants in proportion to their respective interests in the Plan.
(4) Tax Status
The Plan has received a favorable determination letter from the Internal
Revenue Service, dated December 16, 1996, indicating that the Plan is
qualified under Section 401(a) of the Code and exempt from tax under
Section 501(a) of the Code.
(Continued)
7
ALBERTO-CULVER
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(5) Other Investment Information
The fair values of investment fund balances which represent 5% or more of
the Plan's net assets as of December 31, 2001 and 2000 are as follows:
2001 2000
------------- -----------
CIGNA Guaranteed Income Fund $ 7,424,263 5,730,412
Fidelity Advisor Equity Growth Fund 3,954,975 4,323,890
CIGNA S&P 500 Index Fund 3,261,946 3,632,861
Fidelity Advisor Balanced Fund 1,952,313 1,939,426
Janus Worldwide Fund 1,173,869 1,254,062
Alberto-Culver Company Class B Common Stock 1,210,425 767,426
Fidelity Advisor Growth Opportunities Fund -- 2,099,446
============= ===========
(6) Subsequent Events
Effective January 1, 2002, the annuity and installment provisions were
eliminated as a distribution options for the purposes of administration
efficiency.
Effective May 1, 2002, participants may elect to contribute any amount from
1% to 50% of their eligible compensation in whole percentage points to the
Plan, subject to the limitations of the Internal Revenue Code.
Effective May 1, 2002, participants were allowed to make catch-up
contributions up to $1,000 in the Plan year 2002. Such amounts will
increase by $1,000 per year up to a contribution of $5,000 in 2006 and then
increases in $500 increments thereafter. Employer matching contributions
will not be made on catch-up contributions.
8
Schedule 1
ALBERTO-CULVER
401(k) SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Description of investment including
Identity of issues, borrower, maturity date, rate of interest, Fair
lessor, or similar party par value, or number of shares value
-------------------------------------------- ------------------------------------------ -------------
* Connecticut General Life Insurance Company CIGNA Guaranteed Income Fund $ 7,424,263
Fidelity Advisor Equity Growth Fund 3,594,975
* Connecticut General Life Insurance Company CIGNA S&P 500 Index Fund 3,261,946
* Connecticut General Life Insurance Company CIGNA Large Cap Growth Fund/Morgan Stanley 2,530,714
Fidelity Advisor Balanced Fund 1,952,313
* Alberto-Culver Company Class B Common Stock, 26,911 shares 1,210,425
Janus Worldwide Fund 1,173,869
* Connecticut General Life Insurance Company CIGNA Small Cap Growth/Times Square 764,881
Credit Suisse International Equity Fund 670,344
* Connecticut General Life Insurance Company CIGNA Small Cap Value/Berger 473,194
* Connecticut General Life Insurance Company CIGNA Mid Cap Growth Fund/Cadence 458,544
* Connecticut General Life Insurance Company CIGNA Lifetime 40 247,812
* Connecticut General Life Insurance Company CIGNA Lifetime 30 230,545
* Connecticut General Life Insurance Company CIGNA Lifetime 50 211,037
* Connecticut General Life Insurance Company CIGNA Large CapValue/John A. Levin & Co. 172,245
* Connecticut General Life Insurance Company CIGNA Lifetime 20 169,782
* Connecticut General Life Insurance Company CIGNA Balanced Fund/Wellington Management 138,696
Lazard International Equity Fund 39,647
* Connecticut General Life Insurance Company CIGNA Lifetime 60 31,601
* Plan participants Loans to participants, bearing interest
from 5.75% to 10.5% 806,763
-------------
$ 25,563,595
=============
* Represents a party-in-interest.
See accompanying independent auditors' report.
9