Sally Beauty Supply 2006 Annual Report Download - page 82

Download and view the complete annual report

Please find page 82 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 following table provides pro forma results for the fiscal year ended September 30, 2005 and 2004 as if CosmoProf had been
acquired on October 1, 2003 (in thousands). Anticipated cost savings and other effects of the planned integration of CosmoProf are not
included in the pro forma results. The pro forma amounts presented are not necessarily indicative of the results that would have
occurred had the acquisition been completed as of October 1, 2003, nor are the pro forma amounts necessarily indicative of future
results.
2005 2004
Pro-forma net sales $ 2,278,690 $ 2,193,444
Pro-forma net earnings 114,373 109,107
The purchase price of CosmoProf has been allocated to assets acquired and liabilities assumed based on their estimated fair values at
the date of acquisition. The components of the purchase price of CosmoProf and the allocation of the purchase price were as follows
(in thousands):
Components of the purchase price:
Cash paid $ 91,206
Allocation of the purchase price:
Current assets 18,255
Noncurrent assets 3,972
Goodwill 54,821
Identifiable intangible assets 24,552
Current liabilities (9,194 )
Noncurrent liabilities (1,200 )
$ 91,206
In addition, during fiscal year 2005 the Company purchased the inventory and other assets of two stores in Ireland, the results of
which are not material to the consolidated financial statements.
On December 1, 2003, the Company acquired substantially all of the assets of West Coast Beauty Supply, a full service distributor of
professional beauty products. The total amount paid for the acquisition as of September 30, 2006 was $134.2 million. In addition,
approximately $5.1 million is expected to be paid in December, 2006 in accordance with the purchase agreement. Goodwill of
$80.2 million, trade names of $6.4 million and other intangible assets of $8.7 million were recorded as a result of the acquisition and
are expected to be deductible for income tax purposes. The Company has determined the registered trade names have indefinite lives
and are not subject to amortization for book purposes. West Coast Beauty Supply is included in the BSG segment.
The following table provides pro-forma results for fiscal year 2004 as if West Coast Beauty Supply had been acquired on October 1,
2003. Anticipated cost savings and other effects of the planned integration of West Coast Beauty Supply are not included in the pro-
forma results. The pro-forma amounts are not necessarily indicative of the results that would have occurred had the acquisition been
completed as of October 1, 2003, not are the pro-forma amounts necessarily indicative of future results. Pro-forma information for the
fiscal years ended September 30, 2006 and 2005 is not provided since West Coast Beauty Supply’ s results of operations are included
for the full year.
2004
Pro-forma net sales $ 2,128,083
Pro-forma net earnings 106,018
The valuation of identifiable intangible assets of Salon Success, CosmoProf and West Coast Beauty Supply was determined using
discounted cash flow methods with the assistance of third party valuation experts. The acquired entities have been accounted for using
the purchase method of accounting and, accordingly, the results of operations of the entities have been included in the consolidated
financial statements since their respective dates of acquisition.
75