Sally Beauty Supply 2006 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2006 Sally Beauty Supply annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 135

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135

Table of Contents
Sally Holdings, Inc. and Subsidiaries
(A Wholly-Owned Subsidiary of Alberto-Culver Company)
Notes to Consolidated Financial Statements
The change in inventory allowances for the fiscal years ended September 30, 2006, 2005 and 2004 was as follows (in thousands):
2006 2005 2004
Balance at beginning of period $ 17,882 $ 20,500 $ 16,391
Charged to expense 28,368 23,626 28,212
Write-offs (28,325 ) (26,635 ) (24,469 )
Inventory allowances of acquired companies
—
391 366
Balance at end of period $ 17,925 $ 17,882 $ 20,500
4. Property and Equipment, Net
Property and equipment, net consists of the following at September 30, 2006 and 2005 (in thousands):
2006 2005
Land $ 9,632 $ 9,644
Buildings and building improvements 48,510 48,575
Leasehold improvements 96,479 85,549
Furniture, fixtures and equipment 175,203 164,647
Total property and equipment, gross 329,824 308,415
Less accumulated depreciation and amortization 187,089 159,061
Total property and equipment, net $ 142,735 $ 149,354
Depreciation expense totaled $38.0 million, $33.9 million and $24.6 million in fiscal years 2006, 2005 and 2004, respectively.
5. Goodwill and Other Intangibles
The change in the carrying amounts of goodwill by operating segment for the fiscal years ended September 30, 2006 and 2005 is as
follows (in thousands):
Sally Beauty
Beauty
Systems
Supply Group Total
Balance at September 30, 2004 $ 9,275 $ 295,507 $ 304,782
Additions, net of purchase price adjustments 839 45,318 46,157
Foreign currency translation (25 ) 2,611 2,586
Balance at September 30, 2005 10,089 343,436 353,525
Additions, net of purchase price adjustments
—
9,087 9,087
Foreign currency translation 71 2,010 2,081
Balance at September 30, 2006 $ 10,160 $ 354,533 $ 364,693
As described in “note 15,” the $45.3 million increase in Beauty Systems Group’ s goodwill in fiscal year 2005 was primarily due to
the acquisition of CosmoProf in December 2004. The amount was partially offset by a reclassification from goodwill to intangible
assets following the finalization of the valuation of certain intangibles related to West Coast Beauty Supply. The $9.1 million increase
in Beauty Systems Group’ s goodwill in fiscal year 2006 was principally attributable to the acquisition of Salon Success in June 2006,
net of purchase price adjustments for prior years’ acquisitions.
66