Sally Beauty Supply 2006 Annual Report Download - page 30

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Table of Contents
The voting power of our largest stockholder may discourage third party acquisitions of us at a premium.
CDRS, our largest stockholder, owns approximately 48% of our outstanding common stock on an undiluted basis. Pursuant to the
stockholders agreement entered into by us, the CDR investors and the Lavin family stockholders, which we refer to as the
stockholders agreement, CDRS has designated five of our initial eleven directors, as well as the Chairman of the Board, and CDRS’
rights to nominate certain numbers of directors will continue so long as it owns specified percentages of our common stock. The CDR
investors’ ownership of our common stock may have the effect of discouraging offers to acquire control of us and may preclude
holders of our common stock from receiving any premium above market price for their shares that may otherwise be offered in
connection with any attempt to acquire control of us.
The interests of our largest stockholder may differ from the interests of other holders of our common stock.
CDRS owns approximately 48% of our outstanding common stock on an undiluted basis. The interests of CDRS may differ from
those of other holders of our common stock in material respects. For example, CDRS may have an interest in pursuing acquisitions,
divestitures, financings or other transactions that, in its judgment, could enhance its overall equity portfolio, even though such
transactions might involve risks to holders of our common stock. The manager of CDRS’ ultimate parent is in the business of making
investments in companies, and may from time to time in the future, acquire interests in businesses that directly or indirectly compete
with certain portions of our business or are suppliers of our customers. Additionally, CDRS may determine that the disposition of
some or all of its interests in us would be beneficial to it at a time when such disposition could be detrimental to the other holders of
our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Substantially all of our store and warehouse locations are leased and our corporate headquarters and four warehouses/distribution
centers are owned. The average store lease is for a term of five years with customary renewal options. The following table provides
the number of stores in the U.S. and globally, as of September 30, 2006:
Beauty Systems Group
Location Sally Beauty Supply Com
p
an
y
- Franchise
United States 2,181 588 138
International:
Puerto Rico 32
—
—
United Kingdom 188
—
—
Canada 9 70
—
Japan 32
—
—
Germany 27
—
—
Mexico 40
—
32
Ireland 2
—
—
Total International 330 70 32
Total Store Count 2,511 658 170
25