Sally Beauty Supply 2007 Annual Report Download - page 99

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5. Net Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Year ended
September 30, 2007
Net earnings: $ 44,492
Total weighted average basic shares(a) 180,392
Dilutive securities:
Stock option and stock award programs 1,983
Total weighted average diluted shares 182,375
Earnings per share:
Basic $ 0.25
Diluted $ 0.24
(a)
Weighted average shares was calculated from November 16, 2006 through September 30, 2007, which represents the actual number of days
that shares of the Company's common stock were publicly traded.
Net earnings per share was not calculated for fiscal years 2006 and 2005 since the Company was a wholly-owned subsidiary of Alberto-Culver until
November 16, 2006. See Note 3 for additional information about the separation from Alberto-Culver.
At September 30, 2007, options to purchase 4,677,894 shares of the Company's common stock were outstanding but not included in the computation of diluted
earnings per share, as these options' exercise prices, ranging from $9.45 to $9.66, were greater than the average market price per share of the Company's common
stock.
6. Share-Based Payments
The Company accounts for stock option and stock award, which include share-based payment plans in accordance with SFAS 123(R). Accordingly, the
Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and
recognizes compensation expense on a straight-line basis over the vesting period or to the date a participant becomes eligible for retirement, if earlier. For fiscal
years 2007 and 2006, total compensation cost charged against income and included in selling, general and administrative expenses, for share-based compensation
arrangements was $13.1 million and $5.2 million, respectively, which included for fiscal year 2007, $5.3 million of accelerated expense related to the separation
of Alberto-Culver and $2.6 million of accelerated expense related to certain retirement eligible employees who are eligible to continue vesting awards upon
retirement under the terms of the 2007 Omnibus Incentive Plan (the "2007 Plan"). For fiscal years 2007 and 2006, the total income tax benefit recognized in the
statements of earnings from these plans was $5.1 and $1.8 million, respectively.
During fiscal year 2007, the Company adopted the 2007 Plan, a new share-based compensation plan, which allows for the issuance of up to 10.0 million shares of
the Company's common stock. During fiscal year 2007, the Company granted approximately 2.4 million stock options to employees and directors. Upon issuance
of such grants, the Company recognized accelerated share-based compensation expense of
F-17
Source: Sally Beauty Holding, 10-K, November 29, 2007