Sally Beauty Supply 2006 Annual Report Download - page 33

Table of Contents
separation of our business from Alberto-Culver. Our company, Sally Beauty Holdings, Inc., was formed on June 16, 2006 in
connection with the separation of our business from Alberto-Culver Company.
Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
Results of operations information:
Net sales $ 2,373,100 $ 2,254,307 $ 2,097,667 $ 1,824,008 $ 1,667,052
Cost of products sold and distribution
expenses 1,286,329 1,227,307 1,146,814 1,016,941 952,096
Gross profit 1,086,771 1,027,000 950,853 807,067 714,956
Selling, general and administrative
expenses 822,695 789,447 711,208 597,175 527,971
Corporate charges from Alberto-
Culver 42,400 40,921 42,990 39,827 30,896
Non-cash charge related to Alberto-
Culver’ s conversion to one class of
common stock — 4,051 27,036 — —
Transaction expenses 41,475
—
—
— —
Total operating earnings 180,201 192,581 169,619 170,065 156,089
Interest expense, net of interest
income 92 2,966 2,250 347 1,279
Earnings before provision for income
taxes 180,109(a ) 189,615(b ) 167,369(c ) 169,718 154,810
Provision for income taxes 69,916(a ) 73,154(b ) 62,059(c ) 62,205 57,026
Net earnings $ 110,193(a ) $ 116,461(b ) $ 105,310(c ) $ 107,513 $ 97,784
Operating data:
Number of retail stores (end of
period):
Sally Beauty Supply 2,511 2,419 2,355 2,272 2,177
Beauty Systems Group 828 822 692 543 535
Total 3,339 3,241 3,047 2,815 2,712
Professional distributor sales
consultants (end of period) 1,192 1,244 1,167 989 930
Comparable store sales growth(d):
Sally Beauty Supply 2.4% 2.4% 3.8% 2.7% 5.7%
Beauty Systems Group 4.1% (0.6% ) 8.5% 4.6% 4.4%
Consolidated 2.8% 1.8% 4.6% 3.8% 5.5%
Financial condition information (at
period end):
Working capital $ 479,107 $ 382,482 $ 377,708 $ 383,643 $ 300,585
Cash, cash equivalents and short-term
investments 107,571 38,612 68,003 118,214 71,497
Property, plant and equipment, net 142,735 149,354 125,810 93,691 81,497
Total assets 1,338,841 1,225,507 1,102,428 932,163 838,724
Long-term debt, including notes
payable to affiliated companies 621 18,828 34,872 24,173 12,747
Stockholder’ s equity $ 1,005,967 $ 900,296 $ 786,163 $ 678,166 $ 575,868
Earnings per share, book value per share and cash dividends per share are not presented, as Alberto-Culver owned all shares issued and
outstanding as of September 30, 2006.
(a)
Effective October 1, 2005, Sally Holdings adopted SFAS No. 123(R) using the modified prospective method. Under this method,
compensation expense is recognized for new stock option grants beginning in fiscal year 2006 and for the unvested portion of outstanding
stock options that were granted prior to the adoption of SFAS No. 123(R). As a result, Sally Holdings recorded stock option expense for
the twelve months ended September 30, 2006 that reduced earnings before provision for income taxes by $5.2 million, provision for
income taxes by $1.8 million and net earnings by $3.4 million. In accordance with the modified prospective method under
SFAS No. 123(R), the financial statements of Sally Holdings for prior periods have not been restated. Fiscal year 2006 also includes
transaction expenses, which reduced earnings before provision for income taxes by $41.5 million, provision for income taxes by
$14.3 million and net earnings by $27.2 million. In total, these two non-core items reduced earnings before provision for income taxes by
$46.7 million, provision for income taxes by $16.1 million and net earnings by $30.6 million.
(b)
Fiscal year 2005 includes a non-cash charge related to Alberto-Culver’ s conversion to one class of common stock. For the full fiscal year
2005, this non-cash charge reduced earnings before provision for income taxes by $4.1 million, provision for income taxes by $1.5 million
and net earnings by $2.6 million.
(c)
Fiscal year 2004 includes a non-cash charge related to Alberto-Culver’ s conversion to one class of common stock which reduced earnings
before provision for income taxes by $27.0 million, provision for income taxes by $9.4 million and net earnings by $17.6 million.
(d)
Comparable stores are defined as company-owned stores that have been open for at least 14 months as of the last day of a month.