Sally Beauty Supply 2013 Annual Report Download - page 76

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September 30, 2013, compared to $13.0 million at September 30, 2012, primarily due to the realization of
certain income taxes receivable of $18.8 million, as discussed in the preceding paragraph, partially offset by
the incremental income tax liability related to earnings generated in the fiscal year ended September 30,
2013.
Net property and equipment increased by $26.9 million to $229.5 million at September 30, 2013, compared
to $202.7 million at September 30, 2012, primarily due to capital expenditures of $84.9 million and the
property and equipment of businesses acquired, partially offset by the fiscal year 2013 depreciation
expense of $59.4 million and the effect of foreign currency translation adjustments.
Goodwill increased by $5.9 million to $538.3 million at September 30, 2013, compared to $532.3 million at
September 30, 2012, primarily due to goodwill recorded in connection with businesses acquired during the
fiscal year 2013, including the May 2013 acquisition of certain assets and business operations of Essential
Salon.
Intangible assets, excluding goodwill, increased by $1.7 million to $130.1 million at September 30, 2013,
compared to $128.4 million at September 30, 2012, primarily due to intangible assets recorded in
connection with businesses acquired during the fiscal year 2013, including the May 2013 acquisition of
certain assets and business operations of Essential Salon, partially offset by amortization expense of
$12.8 million recognized in the fiscal year 2013.
Long-term debt, including current portion, increased by $73.5 million to $1,690.7 million at September 30,
2013, compared to $1,617.2 million at September 30, 2012. This increase was primarily due to borrowings
under the ABL facility of $76.0 million, which were used primarily to fund recent share repurchases and
for general working capital purposes. Please see ‘‘Liquidity and Capital Resources’’ below.
Deferred income tax liabilities, net, increased by $10.0 million to $73.9 million at September 30, 2013,
compared to $63.9 million at September 30, 2012 primarily due to the timing of differences between
depreciation and amortization included for tax purposes versus depreciation and amortization included in
our consolidated statements of earnings.
Total stockholders’ deficit increased by $188.4 million to $303.5 million at September 30, 2013 compared to
$115.1 million at September 30, 2012. This increase was primarily as a result of a decrease in additional
paid-in capital of $449.0 million and an increase in treasury stock of $1.2 million, as described below,
partially offset by net earnings of $261.2 million and a decrease in accumulated other comprehensive loss,
net of tax, consisting of foreign currency translation adjustments of $0.8 million. The $449.0 million
decrease in additional paid-in capital reflects our repurchase and subsequent retirement of 18.8 million
shares of our common stock for approximately $508.3 million, partially offset by share-based compensation
expense and the impact of exercises of stock options, in the aggregate, of $59.3 million. In addition, in the
fiscal year ended September 30, 2013, we purchased 46,700 shares of our common stock for approximately
$1.2 million, which are included in treasury stock in our consolidated balance sheets. Please see ‘‘Liquidity
and Capital Resources’’ below.
Liquidity and Capital Resources
We broadly define liquidity as our ability to generate sufficient cash flow from operating activities to meet
our obligations and commitments. In addition, liquidity includes the ability to obtain appropriate debt and
equity financing and to convert into cash those assets that are no longer required to meet existing strategic
and financial objectives. Therefore, liquidity cannot be considered separately from capital resources that
consist of current or potentially available funds for use in achieving long-range business objectives and
meeting debt service commitments.
We are highly leveraged and a substantial portion of our liquidity needs will arise from debt service on our
outstanding indebtedness and from funding the costs of operations, working capital, capital expenditures
and share repurchases. As a holding company, we depend on our subsidiaries, including Sally
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