Sally Beauty Supply 2007 Annual Report Download - page 22

To comply with these requirements, we and our subsidiaries are upgrading our systems, including information technology, implementing additional financial and
management controls, reporting systems and procedures, and have hired additional legal, accounting and finance staff. In particular, during fiscal year 2008 we
will be upgrading our financial reporting system. These and any other required upgrades to our financial and management controls, reporting systems,
information technology and procedures under the financial reporting requirements and other rules that apply to reporting companies, now and in the future, will
require that our management and resources be diverted from our core business to assist in compliance with those requirements. There can be no assurance that
the time and resources our management will need to devote to these upgrades, service outages or delays due to the installation of upgrades, or the impact on the
reliability of our data from these upgrades will not have a material adverse effect on our business, financial condition or results of operations.
Our historical consolidated financial information contained in this report does not represent our future financial position, results of operations or cash
flows nor does it reflect what our financial position, results of operations or cash flows would have been as a separate public company during the periods
presented.
Our historical consolidated financial information for the periods prior to the Separation Transactions included in this report is not representative of our future
financial position, results of operations or cash flows nor does it reflect what our financial position, results of operations or cash flows would have been as an
independent public company during the periods presented. This is primarily because:
•
Our historical consolidated financial information for the periods prior to the Separation Transactions reflects allocation of expenses from
Alberto-Culver. Those allocations may be different from the comparable expenses we would have incurred as a separate company.
•
Our working capital requirements for the periods prior to the Separation Transactions historically were satisfied as part of Alberto-Culver's
corporate-wide cash management policies. In connection with the Separation Transactions, we incurred a large amount of indebtedness and
assumed significant debt service costs. As a result, our cost of debt and capitalization are significantly different from that reflected in our
historical consolidated financial information for periods prior to the Separation Transactions.
•
As a result of the Separation Transactions, there have been significant changes in our cost structure, including the costs of establishing an
appropriate accounting and reporting system, debt service obligations and other costs of being a stand-alone company.
We may not be able to realize the anticipated benefits of our separation from Alberto-Culver on a timely basis or at all.
Our success as an independent publicly-traded company depends, in part, on our ability to realize the anticipated benefits of our separation from Alberto-Culver.
These anticipated benefits include increased brand and product recognition as a result of our increased ability to engage in more aggressive marketing and
advertising campaigns following the elimination of difficulties arising from our businesses' competition with the customers and suppliers of Alberto-Culver's
consumer products business, and the potential for increased operating earnings of our business expected to result from allowing us to focus our attention and
resources on our business and customers. We cannot assure you these benefits will occur or that we will be able to achieve growth in the future comparable to our
businesses' recent historical sales and earnings growth.
As a separate entity, we do not enjoy all of the benefits of scale that Alberto-Culver achieved with the combination of the consumer products business and
our business.
Prior to the Separation Transactions, Alberto-Culver benefited from the scope and scale of the consumer products business and our business in certain areas,
including, among other things, risk management, employee benefits, regulatory compliance, administrative services and human resources. Our loss of these
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Source: Sally Beauty Holding, 10-K, November 29, 2007