Sally Beauty Supply 2007 Annual Report Download - page 106
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10. Accounts Payable and Accrued Expenses
Accounts payable at September 30, 2006 include book cash overdrafts of $6.5 million. There were no book cash overdrafts at September 30, 2007.
Accrued expenses consist of the following (in thousands):
September 30,
2007
2006
Compensation and benefits $ 53,440 $ 55,886
Interest payable 34,540 —
Deferred revenue 11,209 9,823
Rental obligations 9,575 9,114
Property and other taxes 6,495 7,620
Insurance reserves 3,615 —
Acquisition related payables 3,202 8,714
Operating accruals and other 31,750 22,899
Total accrued expenses $ 153,826 $ 114,056
11. Lease Commitments and Contingencies
Commitments
The Company's principal leases relate to retail stores and warehousing properties. At September 30, 2007, future minimum payments under non-cancelable
operating leases, net of sublease income, are as follows (in thousands):
Fiscal Year:
2008 $ 110,561
2009 94,439
2010 74,884
2011 57,179
2012 35,684
Thereafter 56,881
$ 429,628
Certain leases require the Company to pay its respective portion of real estate taxes, insurance, maintenance and special assessments. Also, certain of the
Company's leases include renewal options and escalation clauses.
During the third quarter of fiscal year 2007, the Company exercised an option to purchase a warehouse building for approximately $7.6 million that was
subsequently sold for approximately $8.0 million. In connection with the sale of the building, the Company entered into a lease agreement under which it will
pay monthly rent for continued use of the building. The lease has an initial term of 24 months and the monthly rent is subject to certain escalation clauses over
the life of the lease.
Total rental expense for operating leases amounted to approximately $147.3 million, $133.5 million and $123.1 million in fiscal years 2007, 2006 and 2005,
respectively, and is included in selling, general and administrative expenses in the consolidated statements of earnings. Included in this amount is $0.8 million,
F-24
Source: Sally Beauty Holding, 10-K, November 29, 2007