Sally Beauty Supply 2013 Annual Report Download - page 84

Contractual Obligations
The following table is a summary of our contractual cash obligations and commitments outstanding by
future payment dates at September 30, 2013 (in thousands):
Payments Due by Period
Less than 1 More than 5
year 1-3 years 3-5 years years Total
Long-term debt obligations,
including interest
obligations(a) ......... $180,736 $202,646 $202,386 $1,837,871 $2,423,639
Obligations under operating
leases(b) ............. 156,415 237,360 122,298 68,405 584,478
Purchase obligations(c) .... 15,245 20,560 19,000 37,208 92,013
Other long-term
obligations(d)(e) ....... 9,374 10,905 5,180 8,201 33,660
Total ................. $361,770 $471,471 $348,864 $1,951,685 $3,133,790
(a) Long-term debt includes capital leases and future interest payments on debt facilities, based upon
outstanding principal amounts and interest rates as of September 30, 2013.
(b) In accordance with GAAP, these obligations are not reflected in the accompanying consolidated
balance sheets. The amounts reported for operating leases do not include common area
maintenance (CAM), property taxes or other executory costs. Please see Note 12 of the ‘‘Notes to
Consolidated Financial Statements’’ in Item 8—‘‘Financial Statements and Supplementary Data’’
contained elsewhere in this Annual Report for additional information about the Company’s
operating leases. The amounts reported above, do not include obligations of the Company’s
franchisees under operating leases of approximately $0.8 million for which the Company is
contingently liable in the event of payment default by the franchisee.
(c) Purchase obligations reflect legally binding agreements entered into by us to purchase goods or
services, that specify minimum quantities to be purchased and with fixed or variable price
provisions. In accordance with GAAP, these obligations are not reflected in the accompanying
consolidated balance sheets. Amounts shown do not, however, reflect open purchase orders,
mainly for merchandise, to be fulfilled within one year, which are generally cancellable.
(d) Other long-term obligations, including current portion, principally represent obligations under
insurance and self-insurance programs, certain liabilities related to uncertain income tax benefits
and commitments under various acquisition-related agreements including non-compete,
consulting and severance agreements and deferred compensation arrangements. These
obligations are included in accrued liabilities and other liabilities in the accompanying
consolidated balance sheets.
(e) The table above does not include $4.8 million of unrecognized tax benefits due to uncertainty
regarding the realization and timing of the related future cash flows, if any.
The table above excludes amounts included in current liabilities (other than the current portion of
long-term debt and current portion of other liabilities) as these items will be paid within one year.
Our assumptions with respect to the interest rates applicable to borrowings under the ABL facility are
subject to changes that may be material. Interest obligations under the ABL facility are based on variable
interest rates. We have made no attempt to project those rates for purposes of the table above. In addition,
other future events could cause actual payments to differ materially from these amounts.
The majority of our operating leases are for Sally Beauty Supply and BSG stores, which typically are
located in strip shopping centers. The use of operating leases allows us to expand our business to new
locations without making significant up-front cash outlays for the purchase of land and buildings.
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