Sally Beauty Supply 2011 Annual Report Download - page 122

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Sally Beauty Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Fiscal Years ended September 30, 2011, 2010 and 2009
During fiscal year 2011, all RSUs vested. Therefore, there are no remaining unrecognized compensation
costs to be expensed as of September 30, 2011.
9. Allowance for Doubtful Accounts
The change in the allowance for doubtful accounts was as follows (in thousands):
Year Ended September 30,
2011 2010 2009
Balance at beginning of period .................. $2,756 $ 2,266 $ 2,702
Bad debt expense ............................ 1,631 1,578 1,859
Uncollected accounts written off, net of recoveries .... (2,423) (1,431) (2,648)
Allowance for doubtful accounts of acquired companies 122 343 353
Balance at end of period ....................... $2,086 $ 2,756 $ 2,266
10. Property and Equipment, Net
Property and equipment, net consists of the following (in thousands):
September 30,
2011 2010
Land......................................... $ 11,187 $ 11,124
Buildings and building improvements .................. 59,248 58,594
Leasehold improvements ........................... 171,916 155,476
Furniture, fixtures and equipment .................... 257,815 234,111
Total property and equipment, gross ................. 500,166 459,305
Less accumulated depreciation and amortization ......... (317,677) (291,186)
Total property and equipment, net .................. $182,489 $ 168,119
Depreciation expense for the fiscal years 2011, 2010 and 2009 was $47.3 million, $42.4 million and
$40.9 million, respectively. As further described in Note 14, borrowings under the term loan facilities and
the ABL credit facility are secured by substantially all of our assets, those of Sally Investment, a wholly-
owned subsidiary of Sally Beauty and the direct parent of Sally Holdings, those of our domestic
subsidiaries and, in the case of the ABL credit facility, those of our Canadian subsidiaries and a pledge of
certain intercompany notes.
Depreciation of property and equipment is calculated using the straight-line method based on the
estimated useful lives of the respective classes of assets and is reflected in depreciation and amortization
expense in our consolidated statements of earnings. Buildings and building improvements are depreciated
over periods ranging from five to 40 years. Leasehold improvements are amortized over the lesser of the
estimated useful lives of the assets or the term of the related lease, including renewals determined to be
reasonably assured. Furniture, fixtures and equipment are depreciated over periods ranging from three to
ten years. Expenditures for maintenance and repairs are expensed as incurred, while expenditures for
major renewals and improvements are capitalized.
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