Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Nov. 08, 2013 | Mar. 31, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'Sally Beauty Holdings, Inc. | ' | ' |
Entity Central Index Key | '0001368458 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--09-30 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $4,966,629,000 |
Entity Common Stock, Shares Outstanding | ' | 163,888,813 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $47,115 | $240,220 |
Trade accounts receivable, net | 57,049 | 59,496 |
Accounts receivable, other | 39,196 | 42,260 |
Income taxes receivable | 4,931 | 23,734 |
Inventory | 808,313 | 735,356 |
Prepaid expenses | 26,727 | 29,376 |
Deferred income tax assets, net | 32,486 | 33,465 |
Total current assets | 1,015,817 | 1,163,907 |
Property and equipment, net | 229,540 | 202,661 |
Goodwill | 538,278 | 532,331 |
Intangible assets, excluding goodwill, net | 130,097 | 128,437 |
Other assets | 36,354 | 38,464 |
Total assets | 1,950,086 | 2,065,800 |
Current liabilities: | ' | ' |
Current maturities of long-term debt | 78,018 | 1,908 |
Accounts payable | 273,456 | 262,209 |
Accrued liabilities | 184,762 | 200,267 |
Income taxes payable | 6,417 | 13,004 |
Total current liabilities | 542,653 | 477,388 |
Long-term debt | 1,612,685 | 1,615,322 |
Other liabilities | 24,286 | 24,232 |
Deferred income tax liabilities, net | 73,941 | 63,943 |
Total liabilities | 2,253,565 | 2,180,885 |
Stockholders' deficit: | ' | ' |
Common stock, $0.01 par value. Authorized 500,000 shares; 164,762 and 180,548 shares issued and 164,425 and 180,241 shares outstanding at September 30, 2013 and 2012, respectively | 1,644 | 1,802 |
Preferred stock, $0.01 par value. Authorized 50,000 shares; none issued | ' | ' |
Additional paid-in capital | 91,022 | 540,007 |
Accumulated deficit | -385,090 | -646,241 |
Treasury Stock, 47 shares, at cost | -1,237 | ' |
Accumulated other comprehensive loss, net of tax | -9,818 | -10,653 |
Total stockholders' deficit | -303,479 | -115,085 |
Total liabilities and stockholders' deficit | $1,950,086 | $2,065,800 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 |
In Thousands, except Per Share data, unless otherwise specified | |
Consolidated Balance Sheets | ' |
Common stock, par value (in dollars per share) | $0.01 |
Common stock, Authorized shares | 500,000 |
Common stock, shares issued | 164,762 |
Common stock, shares outstanding | 164,425 |
Preferred stock, par value (in dollars per share) | $0.01 |
Preferred stock, Authorized shares | 50,000 |
Preferred stock, shares issued | 0 |
Treasury stock shares, at cost | 47 |
Consolidated_Statements_of_Ear
Consolidated Statements of Earnings (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Consolidated Statements of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | $906,435 | $912,101 | $898,239 | $905,441 | $882,557 | $886,991 | $889,281 | $864,815 | $3,622,216 | $3,523,644 | $3,269,131 |
Cost of products sold and distribution expenses | ' | ' | ' | ' | ' | ' | ' | ' | 1,826,953 | 1,780,385 | 1,674,526 |
Gross profit | 449,358 | 457,083 | 444,454 | 444,368 | 440,236 | 444,379 | 436,786 | 421,857 | 1,795,263 | 1,743,259 | 1,594,605 |
Selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | 1,202,709 | 1,179,206 | 1,086,414 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 72,192 | 64,698 | 59,722 |
Operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | 520,362 | 499,355 | 448,469 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 107,695 | 138,412 | 112,530 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 412,667 | 360,943 | 335,939 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 151,516 | 127,879 | 122,214 |
Net earnings | $64,812 | $72,466 | $64,889 | $58,983 | $65,630 | $69,487 | $67,813 | $30,134 | $261,151 | $233,064 | $213,725 |
Basic earnings per share (in dollars per share) | $0.39 | $0.43 | $0.37 | $0.33 | $0.36 | $0.38 | $0.36 | $0.16 | $1.52 | $1.27 | $1.17 |
Diluted earnings per share (in dollars per share) | $0.38 | $0.42 | $0.36 | $0.32 | $0.35 | $0.37 | $0.35 | $0.16 | $1.48 | $1.24 | $1.14 |
Weighted average shares: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 171,682 | 183,420 | 183,020 |
Diluted (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 176,159 | 188,610 | 188,093 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Net earnings | $261,151 | $233,064 | $213,725 |
Other comprehensive income (loss): | ' | ' | ' |
Foreign currency translation adjustments | 835 | 8,272 | -7,952 |
Deferred gain on interest rate swaps | ' | 6,450 | 9,080 |
Total other comprehensive income (loss), before tax | 835 | 14,722 | 1,128 |
Income taxes related to other comprehensive income (loss) | ' | -2,704 | -3,523 |
Other comprehensive income (loss), net of tax | 835 | 12,018 | -2,395 |
Total comprehensive income | $261,986 | $245,082 | $211,330 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Cash Flows from Operating Activities: | ' | ' | ' | |
Net earnings | $261,151 | $233,064 | $213,725 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' | ' | |
Depreciation and amortization | 72,192 | 64,698 | 59,722 | |
Share-based compensation expense | 19,201 | 16,852 | 15,560 | |
Amortization of deferred financing costs | 3,587 | 5,202 | 6,846 | |
Excess tax benefit from share-based compensation | -15,385 | -14,390 | -3,712 | |
Net loss on disposal of property and equipment | 72 | 89 | 327 | |
Net loss on extinguishment of debt | 220 | 38,376 | 2,765 | |
Deferred income taxes | 10,480 | 2,388 | 459 | |
Changes in (exclusive of effects of acquisitions): | ' | ' | ' | |
Trade accounts receivable | 3,053 | 4,288 | -4,163 | |
Accounts receivable, other | 3,306 | -8,018 | -3,971 | |
Income taxes receivable | 18,803 | -23,734 | ' | |
Inventory | -70,282 | -55,815 | -47,930 | |
Prepaid expenses | 2,855 | -2,559 | -3,262 | |
Other assets | -581 | 5,176 | 2,145 | |
Accounts payable and accrued liabilities | -7,059 | 16,725 | 51,332 | |
Income taxes payable | 8,786 | 17,254 | 1,041 | |
Other liabilities | 55 | -2,014 | 957 | |
Net cash provided by operating activities | 310,454 | 297,582 | 291,841 | |
Cash Flows from Investing Activities: | ' | ' | ' | |
Capital expenditures | -84,879 | -69,086 | -59,955 | |
Proceeds from sales of property and equipment | 120 | 108 | 384 | |
Acquisitions, net of cash acquired | -22,218 | -43,535 | -87,164 | |
Net cash used by investing activities | -106,977 | -112,513 | -146,735 | |
Cash Flows from Financing Activities: | ' | ' | ' | |
Proceeds from issuances of long-term debt | 365,500 | 2,101,489 | 428,605 | |
Repayments of long-term debt | -291,451 | -1,921,284 | -577,911 | |
Repurchases of common stock | -509,704 | -200,000 | ' | |
Debt issuance costs | -1,998 | -31,297 | -5,397 | |
Proceeds from exercises of stock options | 25,493 | 28,020 | 10,942 | |
Excess tax benefit from share-based compensation | 15,385 | 14,390 | 3,712 | |
Net cash used by financing activities | -396,775 | -8,682 | -140,049 | |
Effect of foreign exchange rate changes on cash and cash equivalents | 193 | 352 | -1,070 | |
Net (decrease) increase in cash and cash equivalents | -193,105 | 176,739 | 3,987 | |
Cash and cash equivalents, beginning of year | 240,220 | 63,481 | 59,494 | |
Cash and cash equivalents, end of year | 47,115 | 240,220 | 63,481 | |
Supplemental Cash Flow Information: | ' | ' | ' | |
Interest paid | 105,638 | 110,005 | [1] | 102,059 |
Income taxes paid | $111,422 | $135,591 | $123,749 | |
[1] | For the fiscal year ended September 30, 2012, interest paid includes $24.4 million in call premiums paid upon the redemption of outstanding notes. |
Consolidated_Statements_of_Cas1
Consolidated Statements of Cash Flows (Parenthetical) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2012 |
Consolidated Statements of Cash Flows | ' |
Call premiums paid upon the redemption of certain notes | $24.40 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (Deficit) (USD $) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Loss |
In Thousands, unless otherwise specified | ||||||
Balance at Sep. 30, 2010 | ($461,272) | $1,822 | $650,315 | ($1,093,030) | ($103) | ($20,276) |
Balance (in shares) at Sep. 30, 2010 | ' | 182,230 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net earnings | 213,725 | ' | ' | 213,725 | ' | ' |
Other comprehensive income (loss) | -2,395 | ' | ' | ' | ' | -2,395 |
Stock options subject to redemption | 946 | ' | 946 | ' | ' | ' |
Share-based compensation | 15,560 | 1 | 15,559 | ' | ' | ' |
Share-based compensation (in shares) | ' | 96 | ' | ' | ' | ' |
Stock issued for stock options | 14,454 | 18 | 14,436 | ' | ' | ' |
Stock issued for stock options (in shares) | ' | 1,731 | ' | ' | ' | ' |
Balance at Sep. 30, 2011 | -218,982 | 1,841 | 681,256 | -879,305 | -103 | -22,671 |
Balance (in shares) at Sep. 30, 2011 | 184,057 | 184,057 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net earnings | 233,064 | ' | ' | 233,064 | ' | ' |
Other comprehensive income (loss) | 12,018 | ' | ' | ' | ' | 12,018 |
Repurchases and cancellations of common stock | -200,000 | -76 | -200,027 | ' | 103 | ' |
Repurchase and cancellations of common stock (in shares) | ' | -7,567 | ' | ' | ' | ' |
Share-based compensation | 16,852 | 1 | 16,851 | ' | ' | ' |
Share-based compensation (in shares) | ' | 126 | ' | ' | ' | ' |
Stock issued for stock options | 41,963 | 36 | 41,927 | ' | ' | ' |
Stock issued for stock options (in shares) | ' | 3,625 | ' | ' | ' | ' |
Balance at Sep. 30, 2012 | -115,085 | 1,802 | 540,007 | -646,241 | ' | -10,653 |
Balance (in shares) at Sep. 30, 2012 | 180,241 | 180,241 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Net earnings | 261,151 | ' | ' | 261,151 | ' | ' |
Other comprehensive income (loss) | 835 | ' | ' | ' | ' | 835 |
Repurchases and cancellations of common stock | -509,704 | -189 | -508,278 | ' | -1,237 | ' |
Repurchase and cancellations of common stock (in shares) | ' | -18,894 | ' | ' | ' | ' |
Share-based compensation | 19,201 | 1 | 19,200 | ' | ' | ' |
Share-based compensation (in shares) | ' | 126 | ' | ' | ' | ' |
Stock issued for stock options | 40,123 | 30 | 40,093 | ' | ' | ' |
Stock issued for stock options (in shares) | ' | 2,952 | ' | ' | ' | ' |
Balance at Sep. 30, 2013 | ($303,479) | $1,644 | $91,022 | ($385,090) | ($1,237) | ($9,818) |
Balance (in shares) at Sep. 30, 2013 | 164,425 | 164,425 | ' | ' | ' | ' |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 12 Months Ended |
Sep. 30, 2013 | |
Description of Business and Basis of Presentation | ' |
Description of Business and Basis of Presentation | ' |
1. Description of Business and Basis of Presentation | |
Description of Business | |
Sally Beauty Holdings, Inc. and its consolidated subsidiaries ("Sally Beauty" or "the Company") sell professional beauty supplies, through its Sally Beauty Supply retail stores primarily in the U.S., Puerto Rico, Canada, Mexico, Chile, the United Kingdom, Ireland, Belgium, France, Germany, the Netherlands and Spain. Additionally, the Company distributes professional beauty products to salons and salon professionals through its Beauty Systems Group ("BSG") store operations and a commissioned direct sales force that calls on salons primarily in the U.S., Puerto Rico, Canada, the United Kingdom and certain other countries in Europe, and to franchises in the southern and southwestern regions of the U.S., and in Mexico through the operations of its subsidiary Armstrong McCall, L.P. ("Armstrong McCall"). Certain beauty products sold by BSG and Armstrong McCall are sold under exclusive territory agreements with the manufacturers of the products. | |
Sally Beauty Supply began operations with a single store in New Orleans in 1964 and was acquired in 1969 by our former parent company, The Alberto-Culver Company, which we refer to as Alberto-Culver. BSG became a subsidiary of Sally Beauty in 1995. In November 2006, Sally Beauty separated from Alberto-Culver and became an independent company listed on the New York Stock Exchange. In November 2006, Sally Beauty incurred approximately $1,850.0 million of long-term debt in connection with its separation into an independent company. | |
Basis of Presentation | |
The consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These consolidated financial statements include the operations of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. | |
All references in these notes to "management" are to the management of Sally Beauty. | |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2013 | |
Significant Accounting Policies | ' |
Significant Accounting Policies | ' |
2. Significant Accounting Policies | |
The preparation of financial statements in conformity with GAAP requires us to interpret and apply accounting standards and to develop and follow accounting policies consistent with such standards. The following is a summary of the significant accounting policies used in preparing the Company's consolidated financial statements. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent liabilities in the financial statements. Our most significant estimates relate to: the valuation of inventory, vendor concessions, retention of risk, income taxes, the assessment of long-lived assets and intangible assets for impairment, and share-based payments. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results may differ from these estimates in amounts that may be material to the financial statements. Management believes that the estimates and assumptions used in the preparation of the Company's consolidated financial statements are reasonable. | |
Cash and Cash Equivalents | |
All highly liquid investments purchased by the Company from time to time which have an original maturity of three months or less are considered to be cash equivalents. These investments are stated at cost, which approximates fair value. Also included in cash equivalents are proceeds due from customer credit and debit cards and PayPal transactions, which generally settle within one to three days, and were $10.6 million and $20.0 million at September 30, 2013 and 2012, respectively. | |
Concentration of Credit Risk | |
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of investments in cash equivalents, accounts receivable and derivative instruments. | |
The Company invests from time to time in securities of financial institutions it deems to be of high creditworthiness. Accounts receivable are deemed by the Company to be highly diversified due to the high number of individual customers comprising the Company's customer base and their dispersion across diverse geographical regions. The counterparties to our derivative instruments are deemed by the Company to be of substantial resources and strong creditworthiness. The Company believes that no significant concentration of credit risk exists with respect to its investments in cash equivalents, its accounts receivable and its derivative instruments at September 30, 2013 and 2012. | |
Trade Accounts Receivable and Accounts Receivable, Other | |
Trade accounts receivable are recorded at the values invoiced to customers and do not bear interest. Trade accounts receivable are stated net of the allowance for doubtful accounts. The allowance for doubtful accounts requires management to estimate the future collectability of amounts receivable at the balance sheet date. The Company records allowances for doubtful accounts on the basis of historical collection data and current customer information. Customer account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. In the Company's consolidated statements of earnings, bad debt expense is included in selling, general and administrative expenses. The Company's exposure to credit risk with respect to trade receivables is mitigated by the Company's broad customer base and their dispersion across diverse geographical regions. | |
Accounts receivable, other, consist primarily of amounts expected to be received from vendors under various contractual agreements and are recorded at the amount management estimates will be collected. | |
Inventory | |
Inventory consists primarily of beauty supplies and related accessories, and salon equipment for sale in the normal course of our business. Inventory is stated at the lower of cost, determined using the first-in, first-out ("FIFO") method, or market (net realizable value). Inventory cost reflects actual product costs, the cost of transportation to the Company's distribution centers and certain shipping and handling costs, such as freight from the distribution centers to the stores and handling costs incurred at the distribution centers. When necessary, the Company adjusts the carrying value of inventory to the lower of cost or market, including anticipated disposal costs and for estimated inventory shrinkage. Estimates of the future demand for the Company's products, historical turn-over rates, the age and sales history of the inventory, and historic as well as anticipated changes in stock keeping units ("SKUs") are some of the key factors used by management in assessing the net realizable value of inventory. | |
The Company estimates inventory shrinkage between physical counts based on its historical experience. Physical inventory counts are performed at substantially all stores and significant distribution centers at least annually, and sooner when management has reason to believe that the risk of inventory shrinkage at a particular location is heightened. Upon completion of physical inventory counts, the Company's consolidated financial statements are adjusted to reflect actual quantities on hand. The Company has policies and processes in place that are intended to minimize inventory shrinkage. Inventory shrinkage expense has averaged approximately 1% of our consolidated net sales during each of the past three fiscal years. | |
Lease Accounting | |
The Company's lease agreements for office space, company-operated stores and warehouse/distribution facilities are generally accounted for as operating leases, consistent with applicable GAAP. Rent expense (including any rent abatements or escalation charges) is recognized on a straight-line basis from the date the Company takes possession of the property to begin preparation of the site for occupancy to the end of the lease term, including renewal options determined to be reasonably assured. Certain lease agreements to which the Company is a party provide for contingent rents that are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability, along with the corresponding rent expense, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. | |
Certain lease agreements to which the Company is a party provide for tenant improvement allowances. Such allowances are recorded as deferred lease credits, included in accrued liabilities and other liabilities, as appropriate, on our consolidated balance sheets, and amortized on a straight-line basis over the lease term (including renewal options determined to be reasonably assured) as a reduction of rent expense. The amortization period used for deferred lease credits is generally consistent with the amortization period used for the constructed leasehold improvement asset for a given location. | |
Valuation of Long-Lived Assets and Intangible Assets with Definite Lives | |
Long-lived assets, such as property and equipment, including store equipment, and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The recoverability of long-lived assets and intangible assets subject to amortization is assessed by comparing the net carrying amount of each asset to its total estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. There were no significant impairment losses recognized in our consolidated financial statements in the current or prior fiscal years presented in connection with long-lived assets and intangible assets subject to amortization. | |
Intangible assets subject to amortization include customer relationships, certain distribution rights and non-competition agreements, and are amortized, on a straight-line basis, over periods of one to twelve years. Such amortization periods are based on the estimated useful lives of the assets and take into account the terms of any underlying agreements, but do not generally reflect all renewal terms contractually available to the Company. | |
Goodwill and Intangible Assets with Indefinite Lives | |
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Intangible assets with indefinite lives consist of trade names acquired in business combinations. Goodwill and intangible assets with indefinite lives are reviewed for impairment at least annually, during our second fiscal quarter, and whenever events or changes in circumstances indicate it is more likely than not that the value of the asset may be impaired. When assessing goodwill and intangible assets with indefinite lives for potential impairment, management considers whether the value of the asset has been impaired by evaluating if various factors (including current operating results, anticipated future results and cash flows, and relevant market and economic conditions) indicate a possible impairment and, if appropriate, compares the carrying amount of the asset to its fair value. | |
In July 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amended Accounting Standards Codification ("ASC") Topic 350, Intangibles-Goodwill and Other ("ASC 350"). This amendment allows an entity to first assess relevant qualitative factors in order to determine whether it is necessary to perform the quantitative impairment test for indefinite-lived intangible assets otherwise required under ASC 350. In effect, the amendment eliminates the need to calculate the fair value of an indefinite-lived intangible asset in connection with the impairment test unless the entity determines, based on the qualitative assessment, that it is more likely than not that the asset is impaired. As permitted, the Company adopted this amendment during the second quarter of its fiscal year 2013 and its adoption did not have a material effect on the Company's consolidated financial position, results of operations or cash flows. | |
Based on the reviews performed, after taking into account the economic downturn experienced during the past several years in certain geographic areas in which we operate, there was no impairment of goodwill or intangible assets with indefinite lives recognized in our financial statements in the current or prior fiscal years presented. | |
Deferred Financing Costs | |
Certain costs incurred in connection with the issuance of debt are capitalized when incurred and are amortized over the estimated term of the related debt agreements generally using the effective interest method. Such capitalized costs are included in other assets in our consolidated balance sheets. Unamortized deferred financing costs are expensed proportionally when certain debt is prepaid or notes are redeemed. | |
Self-Insurance Programs | |
The Company retains a substantial portion of the risk related to certain of its workers' compensation, general and auto liability and property damage insurable loss exposure. Predetermined loss limits have been arranged with insurance companies to limit the Company's exposure per occurrence and aggregate cash outlay. Certain of our employees and their dependents are also covered by a self-insurance program for healthcare benefit purposes. Currently these self-insurance costs, less amounts recovered through payroll deductions and certain out-of-pocket amounts incurred in connection with the employee healthcare program, are funded by the Company. The Company maintains an annual stop-loss insurance policy for the healthcare benefits plan. | |
The Company records an estimated liability for the ultimate cost of claims incurred and unpaid as of the balance sheet date, which includes both claims filed and estimated losses incurred but not yet reported. The Company estimates the ultimate cost based on an analysis of historical data and actuarial estimates. Workers' compensation, general and auto liability and property damage insurable loss liabilities are recorded at the estimate of their net present value, while healthcare plan liabilities are not discounted. These estimates are reviewed on a regular basis to ensure that the recorded liability is adequate. The Company believes the amounts accrued at September 30, 2013 and 2012 are adequate. | |
Revenue Recognition | |
The Company recognizes sales revenue when a customer consummates a point-of-sale transaction at a store. The cost of sales incentive programs, including customer and consumer coupons, is recognized as a reduction of revenue at the time of sale. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis and are excluded from revenue. The Company also recognizes revenue on merchandise shipped to customers when title and risk of loss pass to the customer (generally upon shipment). Appropriate provisions for sales returns and cash discounts are made at the time the sales are recognized. Sales returns and allowances averaged approximately 2.0% of net sales during each of the past three fiscal years. | |
Cost of Products Sold and Distribution Expenses | |
Cost of products sold and distribution expenses include actual product costs, the cost of transportation to the Company's distribution centers, vendor rebates and allowances, inventory shrinkage and certain shipping and handling costs, such as freight from the distribution centers to the stores and handling costs incurred at the distribution centers. All other shipping and handling costs are included in selling, general and administrative expenses when incurred. | |
Shipping and Handling | |
Shipping and handling costs (including freight and distribution expenses) related to delivery to customers are included in selling, general and administrative expenses in our consolidated statements of earnings when incurred and amounted to $48.5 million, $41.3 million and $41.2 million for the fiscal years 2013, 2012 and 2011, respectively. | |
Advertising Costs | |
Advertising costs relate mainly to print advertisements, digital marketing, trade shows and product education for salon professionals. Advertising costs incurred in connection with print advertisements are expensed the first time the advertisement is run. Other advertising costs are expensed when incurred. Advertising costs of $83.9 million, $79.8 million and $70.9 million for the fiscal years 2013, 2012 and 2011, respectively, are included in selling, general and administrative expenses in our consolidated statements of earnings. | |
Vendor Rebates and Concessions | |
The Company deems a cash consideration received from a supplier to be a reduction of the cost of products sold unless it is in exchange for an asset or service or a reimbursement of a specific, incremental, identifiable cost incurred by the Company in selling the vendor's products. The majority of cash consideration received by the Company is considered to be a reduction of the cost of the related products and is reflected in cost of products sold and distribution expenses in our consolidated statements of earnings as the related products are sold. Any portion of such cash consideration received that is attributable to inventory on hand is reflected as a reduction of inventory. | |
Income Taxes | |
The Company recognizes deferred income taxes for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are estimated to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of earnings in the period of enactment. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets to the amount expected to be realized unless it is more-likely-than-not that such assets will be realized in full. The estimated tax benefit of an uncertain tax position is recorded in our financial statements only after determining a more-likely-than-not probability that the uncertain tax position will withstand challenge, if any, from applicable taxing authorities. | |
Foreign Currency | |
The functional currency of each of the Company's foreign operations is generally the respective local currency. Balance sheet accounts are translated into U.S. dollars (the Company's reporting currency) at the rates of exchange in effect at the balance sheet date, while the results of operations are translated using the average exchange rates during the period presented. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income ("AOCI") in our consolidated balance sheets. Foreign currency transaction gains or losses are included in our consolidated statements of earnings when incurred and were not significant in any of the periods presented in the accompanying financial statements. | |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements and Accounting Changes | 12 Months Ended |
Sep. 30, 2013 | |
Recent Accounting Pronouncements and Accounting Changes | ' |
Recent Accounting Pronouncements and Accounting Changes | ' |
3. Recent Accounting Pronouncements and Accounting Changes | |
Recent Accounting Pronouncements | |
In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the reporting of reclassifications out of AOCI. This amendment requires an entity to present the changes in each component of AOCI for the periods presented, to separately report significant amounts reclassified from each component of AOCI and to disclose among other things the components, if any, of net income affected by such reclassifications. The disclosures about such reclassifications must be presented either parenthetically on the face of the financial statements or disclosed in the notes to the financial statements. As permitted, the Company adopted the provisions of ASU No. 2013-02 effective January 1, 2013 and its adoption did not have a material effect on the Company's consolidated financial position, results of operations or cash flows. | |
In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amended ASC Topic 350, Intangibles-Goodwill and Other ("ASC 350"). This amendment allows an entity to first assess relevant qualitative factors in order to determine whether it is necessary to perform the quantitative impairment test for indefinite-lived intangible assets otherwise required under ASC 350. In effect, the amendment eliminates the need to calculate the fair value of an indefinite-lived intangible asset in connection with the impairment test unless the entity determines, based on the qualitative assessment, that it is more likely than not that the asset is impaired. As permitted, the Company adopted the provisions of ASU No. 2012-02 effective January 1, 2013 and its adoption did not have a material effect on the Company's consolidated financial position, results of operations or cash flows. | |
In June 2011, the FASB issued ASU No. 2011-05 which amended ASC Topic 220, Comprehensive Income ("ASC 220"). This amendment, which must be applied retrospectively, allows an entity the option to present the components of net income, as well as total comprehensive income and the components of other comprehensive income, either in a single continuous statement of comprehensive income or in two separate consecutive statements. This amendment also eliminates the option to present the components of other comprehensive income in the statement of stockholders' equity but does not change the items that must be reported. As permitted, the Company adopted the provisions of ASU No. 2011-05 effective January 1, 2013 and its adoption did not have a material effect on the Company's consolidated financial position, results of operations or cash flows. | |
Accounting Changes | |
The Company made no accounting changes during the fiscal year 2013. | |
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Fair Value Measurements | ' | |||||||||||||
4. Fair Value Measurements | ||||||||||||||
The Company's financial instruments consist of cash equivalents, trade and other accounts receivable, accounts payable, foreign currency derivative instruments and debt. The carrying amounts of cash equivalents, trade and other accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these financial instruments. | ||||||||||||||
The Company measures on a recurring basis and discloses the fair value of its financial instruments under the provisions of ASC Topic 820, Fair Value Measurements, as amended ("ASC 820"). The Company defines "fair value" as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of that hierarchy are defined as follows: | ||||||||||||||
Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities; | ||||||||||||||
Level 2— Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data; and | ||||||||||||||
Level 3— Unobservable inputs for the asset or liability. | ||||||||||||||
Consistent with this hierarchy, the Company categorized certain of its financial assets and liabilities as follows at September 30, 2013 and 2012 (in thousands): | ||||||||||||||
As of September 30, 2013 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash equivalents(a) | $ | — | $ | — | $ | — | — | |||||||
Foreign exchange contracts(b) | 152 | — | 152 | — | ||||||||||
Total assets | $ | 152 | $ | — | $ | 152 | — | |||||||
Liabilities | ||||||||||||||
Long-term debt(c) | $ | 1,753,822 | $ | 1,671,500 | $ | 82,322 | — | |||||||
Foreign exchange contracts(b) | 36 | — | 36 | — | ||||||||||
Total liabilities | $ | 1,753,858 | $ | 1,671,500 | $ | 82,358 | — | |||||||
As of September 30, 2012 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash equivalents(a) | $ | 155,000 | $ | 155,000 | $ | — | — | |||||||
Foreign exchange contracts(b) | 4 | — | 4 | — | ||||||||||
Total assets | $ | 155,004 | $ | 155,000 | $ | 4 | — | |||||||
Liabilities | ||||||||||||||
Long-term debt(c) | $ | 1,739,547 | $ | 1,731,625 | $ | 7,922 | — | |||||||
Foreign exchange contracts(b) | 132 | — | 132 | — | ||||||||||
Total liabilities | $ | 1,739,679 | $ | 1,731,625 | $ | 8,054 | — | |||||||
(a) | ||||||||||||||
Cash equivalents, at September 30, 2012, consist of highly liquid investments which have no maturity and are valued using unadjusted quoted market prices for such securities. The Company may from time to time invest in securities with maturities of three months or less (consisting primarily of investment-grade corporate or government bonds), with the primary investment objective of minimizing the potential risk of loss of principal. | ||||||||||||||
(b) | ||||||||||||||
Foreign exchange contracts (including foreign currency forwards and options) are valued for purposes of this disclosure using widely accepted valuation techniques, such as discounted cash flow analyses, and reasonable estimates, such as market foreign currency exchange rates. Please see Note 14 for more information about the Company's foreign exchange contracts. | ||||||||||||||
(c) | ||||||||||||||
Long-term debt (including current maturities and borrowings under the ABL facility) is carried in the Company's consolidated financial statements at amortized cost of $1,690.7 million at September 30, 2013 and $1,617.2 million at September 30, 2012. The senior notes due 2019 and senior notes due 2022 are valued for purposes of this disclosure using unadjusted quoted market prices for such debt securities. Other long-term debt (consisting primarily of borrowings under the ABL facility and capital lease obligations), is generally valued for purposes of this disclosure using widely accepted valuation techniques, such as discounted cash flow analyses, and observable inputs such as market interest rates. Please see Note 13 for more information about the Company's debt. | ||||||||||||||
Accumulated_Stockholders_Equit
Accumulated Stockholders' Equity (Deficit) | 12 Months Ended |
Sep. 30, 2013 | |
Accumulated Stockholders' Equity (Deficit) | ' |
Accumulated Stockholders' Equity (Deficit) | ' |
5. Accumulated Stockholders' Equity (Deficit) | |
The Company is authorized to issue up to 500.0 million shares of common stock with a par value of $0.01 per share and up to 50.0 million shares of preferred stock with a par value of $0.01 per share. As of September 30, 2013, the Company had approximately 164.8 million shares of its common stock issued and approximately 164.4 million shares outstanding. There have been no shares of the Company's preferred stock issued. | |
In August 2012, the Company announced that its Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $300.0 million of its common stock (the "2012 Share Repurchase Program"). In addition, on March 5, 2013, the Company announced that its Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $700.0 million of its common stock over the eight quarters commencing on such date (the "2013 Share Repurchase Program"). In connection with the authorization of the 2013 Share Repurchase Program, the Company's Board of Directors terminated the 2012 Share Repurchase Program. | |
Prior to such termination, the Company had repurchased approximately 10.4 million shares of its common stock at a cost of $266.4 million under the 2012 Share Repurchase Program. In addition, during the period from March 5, 2013 through September 30, 2013, the Company repurchased approximately 8.5 million shares of its common stock at a cost of $243.3 million under the 2013 Share Repurchase Program. | |
During the fiscal year ended September 30, 2013, the Company repurchased and retired approximately 18.9 million shares of its common stock (under the 2012 Share Repurchase Program and 2013 Share Repurchase Program) at a cost of $509.7 million. The Company reduced common stock and additional paid-in capital, in the aggregate, by these amounts. In addition, during the fiscal year ended September 30, 2012, the Company repurchased and retired approximately 7.6 million shares of our common stock from two venture capital investment funds associated with Clayton, Dubilier & Rice, LLC (the "CDR Investors") at a cost of $200.0 million and reduced common stock and additional paid-in capital, in the aggregate, by that amount. Please see our Annual Report on Form 10-K for the fiscal year ended September 30, 2012, for more information about the CD&R Investors. | |
At September 30, 2013 and 2012, accumulated other comprehensive loss consists of cumulative foreign currency translation adjustments of $9.8 million and $10.7 million, respectively, and is net of income taxes of $2.9 million at each date. Comprehensive income reflects changes in accumulated stockholders' equity (deficit) from sources other than transactions with stockholders and, as such, includes net earnings and certain other specified components. The Company's only components of comprehensive income, other than net earnings, are foreign currency translation adjustments, net of income tax, and deferred gains (losses) on certain interest rate swap agreements, net of income tax, until the expiration of such swaps in May 2012. Please see Note 14 for more information about the Company's interest rate swap agreements. | |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Earnings Per Share | ' | ||||||||||
Earnings Per Share | ' | ||||||||||
6. Earnings Per Share | |||||||||||
Basic earnings per share, is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share, is calculated similarly but includes the potential dilution from the exercise of all outstanding stock options and stock awards, except when the effect would be anti-dilutive. | |||||||||||
The following table sets forth the computations of basic and diluted earnings per share (in thousands, except per share data): | |||||||||||
Year ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Net earnings | $ | 261,151 | $ | 233,064 | $ | 213,725 | |||||
Weighted average basic shares | 171,682 | 183,420 | 183,020 | ||||||||
Dilutive securities: | |||||||||||
Stock option and stock award programs | 4,477 | 5,190 | 5,073 | ||||||||
Weighted average diluted shares | 176,159 | 188,610 | 188,093 | ||||||||
Earnings per share: | |||||||||||
Basic | $ | 1.52 | $ | 1.27 | $ | 1.17 | |||||
Diluted | $ | 1.48 | $ | 1.24 | $ | 1.14 | |||||
At September 30, 2012, options to purchase 44,340 shares of the Company's common stock were outstanding but not included in the computation of diluted earnings per share, since these options were anti-dilutive. Anti-dilutive options are: (a) out-of-the-money options (options the exercise price of which is greater than the average price per share of the Company's common stock during the period), and (b) in-the-money options (options the exercise price of which is less than the average price per share of the Company's common stock during the period) for which the sum of assumed proceeds, including any unrecognized compensation expense related to such options, exceeds the average price per share for the period. At September 30, 2013 and 2011, all outstanding options to purchase shares of the Company's common stock were dilutive. | |||||||||||
ShareBased_Payments
Share-Based Payments | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-Based Payments | ' | ||||||||||||||||
Share-Based Payments | ' | ||||||||||||||||
7. Share-Based Payments | |||||||||||||||||
The Company from time to time grants share-based awards to its employees and consultants under the Sally Beauty Holdings, Inc. 2010 Omnibus Incentive Plan (the "2010 Plan"), a stockholder-approved share-based compensation plan which allows for the issuance of up to 29.8 million shares of the Company's common stock. As such, during the fiscal years ended September 30, 2013, 2012 and 2011, the Company granted approximately 1.6 million, 2.0 million and 3.0 million stock options, respectively, and 139,454, 31,805 and 199,500 restricted share awards, respectively, to its employees and consultants under the 2010 Plan. In addition, during the fiscal years ended September 30, 2013, 2012 and 2011, the Company granted 36,076, 25,501 and 43,015 restricted stock units, respectively, to its non-employee directors under the 2010 Plan. | |||||||||||||||||
The Company measures the cost of services received from employees, directors and consultants in exchange for an award of equity instruments based on the fair value of the award on the date of grant, and recognizes compensation expense on a straight-line basis over the vesting period or over the period ending on the date a participant becomes eligible for retirement, if earlier. For the fiscal years 2013, 2012 and 2011, total compensation cost charged against income and included in selling, general and administrative expenses in the Company's consolidated statements of earnings for all share-based compensation arrangements was $19.2 million, $16.9 million and $15.6 million, respectively, and resulted in an increase in additional paid-in capital by the same amounts. These amounts include, for the fiscal years 2013, 2012 and 2011, $5.9 million, $5.3 million and $5.0 million, respectively, of accelerated expense related to certain retirement eligible employees who continue vesting awards upon retirement, under the provisions of the 2010 Plan and certain predecessor share-based plans such as the Sally Beauty Holdings, Inc. 2007 Omnibus Incentive Plan (the "2007 Plan"). For fiscal years 2013, 2012 and 2011, the total income tax benefit recognized in our consolidated statements of earnings in connection with all share-based compensation awards was $7.1 million, $6.2 million and $6.0 million, respectively. | |||||||||||||||||
Stock Option Awards | |||||||||||||||||
Each option has an exercise price equal to the closing market price of the Company's common stock on the date of grant and generally has a maximum term of 10 years. Options generally vest ratably over a four year period and are generally subject to forfeiture until the vesting period is complete, subject to certain retirement provisions contained in the 2010 Plan and certain predecessor share-based compensation plans such as the 2007 Plan. | |||||||||||||||||
The following table presents a summary of the activity for the Company's stock option awards for the fiscal year ended September 30, 2013: | |||||||||||||||||
Number of | Weighted | Weighted | Aggregate | ||||||||||||||
Outstanding | Average | Average | Intrinsic | ||||||||||||||
Options (in | Exercise | Remaining | Value (in | ||||||||||||||
Thousands) | Price | Contractual | Thousands) | ||||||||||||||
Term (in | |||||||||||||||||
Years) | |||||||||||||||||
Outstanding at September 30, 2012 | 11,861 | $ | 10.45 | 6.5 | $ | 173,601 | |||||||||||
Granted | 1,578 | 23.49 | |||||||||||||||
Exercised | (2,952 | ) | 8.64 | ||||||||||||||
Forfeited or expired | (79 | ) | 18.04 | ||||||||||||||
Outstanding at September 30, 2013 | 10,408 | $ | 12.89 | 6.2 | $ | 138,139 | |||||||||||
Exercisable at September 30, 2013 | 5,409 | $ | 9.24 | 4.9 | $ | 91,545 | |||||||||||
The following table summarizes additional information about stock options outstanding under the Company's share-based compensation plans: | |||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||
Range of Exercise Prices | Number | Weighted | Weighted | Number | Weighted | ||||||||||||
Outstanding at | Average | Average | Exercisable at | Average | |||||||||||||
September 30, | Remaining | Exercise | September 30, | Exercise | |||||||||||||
2013 (in | Contractual | Price | 2013 (in | Price | |||||||||||||
Thousands) | Term (in | Thousands) | |||||||||||||||
Years) | |||||||||||||||||
$2.00 - 9.66 | 4,836 | 4.5 | $ | 7.85 | 4,180 | $ | 7.91 | ||||||||||
$11.39 - 23.49 | 5,572 | 7.7 | 17.26 | 1,229 | 13.74 | ||||||||||||
Total | 10,408 | 6.2 | $ | 12.89 | 5,409 | $ | 9.24 | ||||||||||
The Company uses the Black-Scholes option pricing model to value the Company's stock options for each stock option award. Using this option pricing model, the fair value of each stock option award is estimated on the date of grant. The fair value of the Company's stock option awards is expensed on a straight-line basis over the vesting period (generally four years) of the stock options or to the date a participant becomes eligible for retirement, if earlier. | |||||||||||||||||
The weighted average assumptions relating to the valuation of the Company's stock options are as follows: | |||||||||||||||||
Year Ended | |||||||||||||||||
September 30, | |||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||
Expected life (in years) | 5 | 5 | 5 | ||||||||||||||
Expected volatility | 56.3 | % | 58.4 | % | 59 | % | |||||||||||
Risk-free interest rate | 0.8 | % | 1.1 | % | 1.1 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | |||||||||||
The expected life of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience of employees of the Company who have been granted stock options. The expected volatility used for awards made during the fiscal years 2013 and 2012, reflects the average volatility for the Company's common stock. For awards made prior to the fiscal year 2012, the expected volatility used was derived using the average volatility of both the Company and similar companies (based on industry sector) since it was not practicable to estimate the Company's expected volatility on a stand-alone basis due to a lack of sufficient trading history. The risk-free interest rate is based on the zero-coupon U.S. treasury notes with a comparable term as of the date of the grant. Since the Company does not currently expect to pay dividends, the dividend yield used is 0%. | |||||||||||||||||
The weighted average fair value of the stock options issued to the Company's grantees at the date of grant during the fiscal years 2013, 2012 and 2011 was $11.29, $9.60 and $5.74, respectively. The total fair value of stock options issued to the Company's grantees that vested during the fiscal years 2013, 2012 and 2011 was $12.7 million, $10.4 million and $8.5 million, respectively. | |||||||||||||||||
The total intrinsic value of options exercised during the fiscal years 2013, 2012 and 2011 was $55.4 million, $53.2 million and $15.9 million, and the tax benefit realized for the tax deductions from these option exercises was $18.7 million, $18.9 million and $6.2 million, respectively. The total cash received during the fiscal years 2013, 2012 and 2011 from these option exercises was $25.5 million, $28.0 million and $10.9 million, respectively. | |||||||||||||||||
At September 30, 2013, approximately $15.1 million of total unrecognized compensation costs related to unvested stock option awards are expected to be recognized over the weighted average period of 2.3 years. | |||||||||||||||||
Stock Awards | |||||||||||||||||
Restricted Stock Awards | |||||||||||||||||
The Company from time to time grants restricted stock awards to employees and consultants under the 2010 Plan. A restricted stock award is an award of shares of the Company's common stock (which have full voting and dividend rights but are restricted with regard to sale or transfer) the restrictions over which lapse ratably over a specified period of time (generally five years). Restricted stock awards are independent of stock option grants and are generally subject to forfeiture if employment terminates prior to these restrictions lapsing, subject to certain retirement provisions of the 2010 Plan and certain predecessor share-based compensation plans such as the 2007 Plan. | |||||||||||||||||
The fair value of the Company's restricted stock awards is expensed on a straight-line basis over the period (generally five years) in which the restrictions on these stock awards lapse ("vesting") or over the period ending on the date a participant becomes eligible for retirement, if earlier. For these purposes, the fair value of the restricted stock award is determined based on the closing market price of the Company's common stock on the date of grant. | |||||||||||||||||
The following table presents a summary of the activity for the Company's restricted stock awards for the fiscal year ended September 30, 2013: | |||||||||||||||||
Restricted Stock Awards | Number of | Weighted | Weighted | ||||||||||||||
Shares (in | Average Fair | Average | |||||||||||||||
Thousands) | Value Per Share | Remaining | |||||||||||||||
Vesting Term | |||||||||||||||||
(in Years) | |||||||||||||||||
Unvested at September 30, 2012 | 307 | $ | 10.42 | 2.5 | |||||||||||||
Granted | 139 | 23.79 | |||||||||||||||
Vested | (109 | ) | 9.37 | ||||||||||||||
Forfeited | — | — | |||||||||||||||
Unvested at September 30, 2013 | 337 | $ | 16.3 | 3.1 | |||||||||||||
At September 30, 2013, approximately $2.5 million of total unrecognized compensation costs related to unvested restricted stock awards are expected to be recognized over the weighted average period of 3.1 years. | |||||||||||||||||
Restricted Stock Units | |||||||||||||||||
The Company currently grants restricted stock unit ("RSU" or "RSUs") awards, which generally vest less than one year from the date of grant, pursuant to the 2010 Plan. To date, the Company has only granted RSU awards to its non-employee directors. RSUs represent an unsecured promise of the Company to issue shares of common stock of the Company. Upon vesting, RSUs are generally retained by the Company as deferred stock units that are not distributed until nine months after the independent director's service as a director terminates. With respect to awards made by the Company after September 30, 2012, an independent director who receives an RSU award may elect, upon receipt of such award, to defer until a later date delivery of the shares of common stock of the Company that would otherwise be issued to such director on the vesting date. RSUs are independent of stock option grants and are generally subject to forfeiture if service terminates prior to the vesting of the units. Participants have no voting rights with respect to unvested RSUs. Under the 2010 Plan, the Company may settle the vested deferred stock units with shares of the Company's common stock or in cash. | |||||||||||||||||
The Company expenses the cost of the RSUs, which is determined to be the fair value of the RSUs at the date of grant, on a straight-line basis over the vesting period (generally one year). For these purposes, the fair value of the RSU is determined based on the closing market price of the Company's common stock on the date of grant. | |||||||||||||||||
The following table presents a summary of the activity for the Company's RSUs for the fiscal year ended September 30, 2013: | |||||||||||||||||
Restricted Stock Units | Number of | Weighted | Weighted | ||||||||||||||
Shares (in | Average Fair | Average | |||||||||||||||
Thousands) | Value Per Share | Remaining | |||||||||||||||
Vesting Term | |||||||||||||||||
(In Years) | |||||||||||||||||
Unvested at September 30, 2012 | — | $ | — | — | |||||||||||||
Granted | 36 | 23.84 | |||||||||||||||
Vested | (32 | ) | 23.89 | ||||||||||||||
Forfeited | (4 | ) | 23.49 | ||||||||||||||
Unvested at September 30, 2013 | — | $ | — | — | |||||||||||||
During fiscal year 2013, all RSUs vested or were forfeited. Therefore, there are no unrecognized compensation costs as of September 30, 2013 in connection with past RSU awards. | |||||||||||||||||
Allowance_for_Doubtful_Account
Allowance for Doubtful Accounts | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Allowance for Doubtful Accounts | ' | ||||||||||
Allowance for Doubtful Accounts | ' | ||||||||||
8. Allowance for Doubtful Accounts | |||||||||||
The change in the allowance for doubtful accounts was as follows (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Balance at beginning of period | $ | 2,583 | $ | 2,086 | $ | 2,756 | |||||
Bad debt expense | 1,671 | 1,764 | 1,631 | ||||||||
Uncollected accounts written off, net of recoveries | (1,698 | ) | (1,336 | ) | (2,423 | ) | |||||
Allowance for doubtful accounts of acquired companies | — | 69 | 122 | ||||||||
Balance at end of period | $ | 2,556 | $ | 2,583 | $ | 2,086 | |||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Property and Equipment | ' | |||||||
Property and Equipment | ' | |||||||
9. Property and Equipment | ||||||||
Property and equipment, net consists of the following (in thousands): | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Land | $ | 11,277 | $ | 11,197 | ||||
Buildings and building improvements | 60,100 | 59,656 | ||||||
Leasehold improvements | 211,736 | 188,844 | ||||||
Furniture, fixtures and equipment | 321,659 | 295,128 | ||||||
Total property and equipment, gross | 604,772 | 554,825 | ||||||
Less accumulated depreciation and amortization | (375,232 | ) | (352,164 | ) | ||||
Total property and equipment, net | $ | 229,540 | $ | 202,661 | ||||
Depreciation expense for the fiscal years 2013, 2012 and 2011 was $59.4 million, $51.0 million and $47.3 million, respectively. As further described in Note 13, borrowings under our asset-based senior secured loan (or ABL) facility (the "ABL facility") are secured by substantially all of our assets, those of our domestic subsidiaries, those of our Canadian subsidiaries (in the case of borrowings under the Canadian sub-facility) and a pledge of certain intercompany notes. | ||||||||
Depreciation of property and equipment is calculated using the straight-line method based on the estimated useful lives of the respective classes of assets and is reflected in depreciation and amortization expense in our consolidated statements of earnings. Buildings and building improvements are depreciated over periods ranging from five to 40 years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the term of the related lease, including renewals determined to be reasonably assured. Furniture, fixtures and equipment are depreciated over periods ranging from three to ten years. Expenditures for maintenance and repairs are expensed when incurred, while expenditures for major renewals and improvements are capitalized. | ||||||||
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Goodwill and Intangible Assets | ' | ||||||||||
Goodwill and Intangible Assets | ' | ||||||||||
10. Goodwill and Intangible Assets | |||||||||||
The changes in the carrying amounts of goodwill by operating segment for the fiscal years 2012 and 2013 are as follows (in thousands): | |||||||||||
Sally Beauty | Beauty Systems | Total | |||||||||
Supply | Group | ||||||||||
Balance at September 30, 2011 | 75,536 | 430,337 | 505,873 | ||||||||
Acquisitions | 15,200 | 9,189 | 24,389 | ||||||||
Foreign currency translation | (881 | ) | 2,950 | 2,069 | |||||||
Balance at September 30, 2012 | $ | 89,855 | $ | 442,476 | $ | 532,331 | |||||
Acquisitions | 501 | 5,047 | 5,548 | ||||||||
Foreign currency translation | 2,298 | (1,899 | ) | 399 | |||||||
Balance at September 30, 2013 | $ | 92,654 | $ | 445,624 | $ | 538,278 | |||||
As described in Note 17, during the fiscal year 2012, $15.0 million of the increase in Sally Beauty Supply's goodwill was attributable to the Company's acquisition of Kappersservice Floral B.V. and two related companies (together, the "Floral Group") in November 2011. The remaining increase in consolidated goodwill in the amount of $9.4 million was attributable to acquisitions which were not individually material and to purchase price adjustments. | |||||||||||
As described in Note 17, during the fiscal year 2013, $3.5 million of the increase in BSG's goodwill was attributable to the Company's acquisition of certain assets and business operations of Essential Salon Products, Inc. ("Essential Salon"), a professional-only distributor of beauty products operating in the northeastern region of the United States. The remaining increase in consolidated goodwill in the amount of $2.0 million was attributable to acquisitions which were not individually material and to purchase price adjustments. | |||||||||||
The Company completed its annual assessment of goodwill for impairment during the quarter ended March 31, 2013. No impairment losses were recognized in the current or prior periods presented in connection with the Company's goodwill. | |||||||||||
In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amended ASC 350. This amendment allows an entity to first assess relevant qualitative factors in order to determine whether it is necessary to perform the quantitative impairment test for indefinite-lived intangible assets otherwise required under ASC 350. In effect, the amendment eliminates the need to calculate the fair value of an indefinite-lived intangible asset in connection with the impairment test unless the entity determines, based on the qualitative assessment, that it is more likely than not that the asset is impaired. As permitted, the Company adopted the provisions of ASU No. 2012-02 effective January 1, 2013. | |||||||||||
The Company completed its annual assessment of intangible assets, other than goodwill and including indefinite-lived intangible assets, for impairment during the quarter ended March 31, 2013. No impairment losses were recognized in the current or prior periods presented in connection with the Company's intangible assets. | |||||||||||
The following table provides the carrying value for intangible assets with indefinite lives, excluding goodwill, and the gross carrying value and accumulated amortization for intangible assets subject to amortization by operating segment at September 30, 2013 and 2012 (in thousands): | |||||||||||
Sally Beauty | Beauty Systems | Total | |||||||||
Supply | Group | ||||||||||
Balance at September 30, 2013: | |||||||||||
Intangible assets with indefinite lives: | |||||||||||
Trade names | $ | 27,968 | $ | 27,465 | $ | 55,433 | |||||
Intangible assets subject to amortization: | |||||||||||
Gross carrying amount | 26,809 | 119,614 | 146,423 | ||||||||
Accumulated amortization | (12,177 | ) | (59,582 | ) | (71,759 | ) | |||||
Net value | 14,632 | 60,032 | 74,664 | ||||||||
Total intangible assets, excluding goodwill, net | $ | 42,600 | $ | 87,497 | $ | 130,097 | |||||
Balance at September 30, 2012: | |||||||||||
Intangible assets with indefinite lives: | |||||||||||
Trade names | $ | 27,258 | $ | 27,455 | $ | 54,713 | |||||
Intangible assets subject to amortization: | |||||||||||
Gross carrying amount | 26,430 | 106,486 | 132,916 | ||||||||
Accumulated amortization | (9,856 | ) | (49,336 | ) | (59,192 | ) | |||||
Net value | 16,574 | 57,150 | 73,724 | ||||||||
Total intangible assets, excluding goodwill, net | $ | 43,832 | $ | 84,605 | $ | 128,437 | |||||
As described in Note 17, during the fiscal year ended September 30, 2013, intangible assets subject to amortization in the amount of $9.1 million were recorded by BSG in connection with the Company's acquisition of certain assets and business operations of Essential Salon and $4.0 million in connection with individually immaterial acquisitions completed in the year. As described in Note 17, during the fiscal year ended September 30, 2012, intangible assets subject to amortization in the amount of $11.8 million were recorded by Sally Beauty Supply in connection with the Company's acquisition of the Floral Group in November 2011. | |||||||||||
Amortization expense totaled $12.8 million, $13.7 million and $12.4 million for the fiscal years ended September 30, 2013, 2012 and 2011, respectively. As of September 30, 2013, future amortization expense related to intangible assets subject to amortization is estimated to be as follows (in thousands): | |||||||||||
Fiscal Year: | |||||||||||
2014 | $ | 13,998 | |||||||||
2015 | 13,553 | ||||||||||
2016 | 12,163 | ||||||||||
2017 | 10,047 | ||||||||||
2018 | 8,810 | ||||||||||
Thereafter | 16,093 | ||||||||||
$ | 74,664 | ||||||||||
The weighted average amortization period remaining for intangible assets subject to amortization is approximately 6.4 years. | |||||||||||
Accrued_Liabilities
Accrued Liabilities | 12 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accrued Liabilities | ' | |||||||
Accrued Liabilities | ' | |||||||
11. Accrued Liabilities | ||||||||
Accrued liabilities consist of the following (in thousands): | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Compensation and benefits | $ | 70,802 | $ | 79,935 | ||||
Interest payable | 36,311 | 38,376 | ||||||
Deferred revenue | 20,890 | 19,000 | ||||||
Rental obligations | 11,340 | 11,540 | ||||||
Loss contingency obligation | — | 10,194 | ||||||
Property and other taxes | 4,373 | 4,124 | ||||||
Insurance reserves | 11,109 | 9,626 | ||||||
Operating accruals and other | 29,937 | 27,472 | ||||||
Total accrued liabilities | $ | 184,762 | $ | 200,267 | ||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Sep. 30, 2013 | |||||
Commitments and Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
12. Commitments and Contingencies | |||||
Lease Commitments | |||||
The Company's principal leases relate to retail stores and warehousing properties. At September 30, 2013, future minimum payments under non-cancelable operating leases, net of sublease income, are as follows (in thousands): | |||||
Fiscal Year: | |||||
2014 | $ | 156,415 | |||
2015 | 131,540 | ||||
2016 | 105,820 | ||||
2017 | 75,858 | ||||
2018 | 46,440 | ||||
Thereafter | 68,405 | ||||
$ | 584,478 | ||||
Certain of the Company's leases require the Company to pay a portion of real estate taxes, insurance, maintenance and special assessments assessed by the lessor. Also, certain of the Company's leases include renewal options and escalation clauses. Aggregate rental expense for all operating leases amounted to $206.2 million, $194.9 million and $192.6 million for the fiscal years 2013, 2012 and 2011, respectively, and is included in selling, general and administrative expenses in our consolidated statements of earnings. | |||||
Contingencies | |||||
Legal Proceedings | |||||
The Company is, from time to time, involved in various claims and lawsuits incidental to the conduct of its business in the ordinary course. The Company does not believe that the ultimate resolution of these matters will have a material adverse impact on its consolidated financial position, statements of earnings or cash flows. | |||||
Based upon an unfavorable verdict rendered in November 2012 in certain actions brought against the Company in March 2011, we recorded $10.2 million in legal settlement costs as of September 30, 2012, which we believed to be our best estimate of the potential loss. During the fiscal year ended September 30, 2013, the parties continued to engage in negotiations aimed at resolving the matter and, in November 2012, entered into a settlement agreement whereby the Company agreed to pay the plaintiff the one-time cash sum of $8.5 million and agreed to certain other terms of settlement in exchange for a full release of claims. | |||||
Other Contingencies | |||||
The Company provides healthcare benefits to most of its full-time employees. The Company is largely self-funded for the cost of the healthcare plan (including healthcare claims), other than certain fees and out-of-pocket amounts paid by the employees. In addition, the Company retains a substantial portion of the risk related to certain workers' compensation, general liability, and automobile and property insurance. The Company records an estimated liability for the ultimate cost of claims incurred and unpaid as of the balance sheet date. The estimated liability is included in accrued liabilities (current portion) and other liabilities (long-term portion) in our consolidated balance sheets. The Company carries insurance coverage in such amounts in excess of its self-insured retention which management believes to be reasonable. | |||||
Liabilities for loss contingencies, arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. The Company has no significant liabilities for loss contingencies at September 30, 2013 and 2012, except as discussed in the second preceding paragraph. | |||||
Shortterm_Borrowings_and_LongT
Short-term Borrowings and Long-Term Debt | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Short-term Borrowings and Long-Term Debt | ' | ||||||||
Short-term Borrowings and Long-Term Debt | ' | ||||||||
13. Short-term Borrowings and Long-Term Debt | |||||||||
Details of long-term debt are as follows (in thousands): | |||||||||
As of September 30, | |||||||||
2013 | 2012 | Interest Rates | |||||||
ABL facility(a) | $ | 76,000 | $ | — | (i) Prime plus (0.50% to 0.75%) or; | ||||
(ii) LIBOR(a) plus (1.50% to 1.75%) | |||||||||
Senior notes due Nov. 2019 | 750,000 | 750,000 | 6.88% | ||||||
Senior notes due Jun. 2022(b) | 858,381 | 859,308 | 5.750%(b) | ||||||
Other, due 2014-2015(c) | 1,310 | 2,407 | 4.93% to 5.79% | ||||||
Total | $ | 1,685,691 | $ | 1,611,715 | |||||
Capital leases and other | 5,012 | 5,515 | |||||||
Less: current portion | 78,018 | 1,908 | |||||||
Total long-term debt | $ | 1,612,685 | $ | 1,615,322 | |||||
(a) | |||||||||
At September 30, 2013, borrowings outstanding under the ABL facility bear interest at the weighted average rate of 2.0%. When used in this Annual Report, LIBOR means the London Interbank Offered Rate. | |||||||||
(b) | |||||||||
Includes unamortized premium of $8.4 million and $9.3 million as of September 30, 2013 and 2012, respectively, related to notes issued in September 2012 with an aggregate principal amount of $150.0 million. The 5.75% interest rate relates to notes in the aggregate principal amount of $850.0 million. | |||||||||
(c) | |||||||||
Represents pre-acquisition debt of Pro-Duo NV and Sinelco Group BVBA ("Sinelco"). | |||||||||
In November 2006, the Company, through its subsidiaries (Sally Investment Holdings LLC and Sally Holdings LLC, which we refer to as "Sally Investment" and "Sally Holdings," respectively) incurred $1,850.0 million of indebtedness in connection with the Company's separation from its former parent, Alberto-Culver. Please see Note 1 for more information about the Company's separation from Alberto-Culver. | |||||||||
In the fiscal year ended September 30, 2011, Sally Holdings entered into a new $400 million, five-year asset-based senior secured loan facility (the "ABL facility") and terminated its prior $400 million ABL credit facility. The availability of funds under the ABL facility, as amended on June 8, 2012, is subject to a customary borrowing base comprised of: (i) a specified percentage of our eligible credit card and trade accounts receivable (as defined therein) and (ii) a specified percentage of our eligible inventory (as defined therein), and reduced by (iii) certain customary reserves and adjustments and by certain outstanding letters of credit. The ABL facility includes a $25.0 million Canadian sub-facility for our Canadian operations. | |||||||||
On July 26, 2013, the Company, Sally Holdings and other parties to the ABL facility entered into a second amendment to the ABL facility which, among other things, increased the maximum availability under the ABL Facility to $500.0 million (subject to borrowing base limitations), reduced pricing, relaxed the restrictions regarding the making of Restricted Payments, extended the maturity to July 26, 2018 and improved certain other covenant terms. At September 30, 2013, borrowings outstanding under the ABL facility were $76.0 million (which we intend to repay in the foreseeable future with cash from operations) and the Company had $382.3 million available for borrowing under the ABL facility, including the Canadian sub-facility. Borrowings under the ABL facility are secured by substantially all of our assets, those of Sally Investment, those of our domestic subsidiaries, those of our Canadian subsidiaries (in the case of borrowings under the Canadian sub-facility) and a pledge of certain intercompany notes. In addition, the terms of the ABL facility contain a commitment fee of 0.25% on the unused portion of the facility. | |||||||||
In the fiscal year ended September 30, 2012, the Company issued $750.0 million aggregate principal amount of its 6.875% Senior Notes due 2019 (the "senior notes due 2019") and $850.0 million aggregate principal amount of its 5.75% Senior Notes due 2022 (the "senior notes due 2022"), including notes in the aggregate principal amount of $150.0 million which were issued at par plus a premium. Such premium is being amortized over the term of the notes using the effective interest method. The net proceeds from such debt issuances were used to retire outstanding indebtedness in the aggregate principal amount of approximately $1,391.9 million and for general corporate purposes. | |||||||||
The senior notes due 2019 and the senior notes due 2022 (together, the "senior notes due 2019-2022") are unsecured obligations of Sally Holdings and Sally Capital Inc. (together, the "Issuers") and are jointly and severally guaranteed by the Company and Sally Investment, and by each material domestic subsidiary of the Company. Interest on the senior notes due 2019-2022 is payable semi-annually. Please see Note 19 for certain condensed financial statement data pertaining to Sally Beauty, the Issuers, the guarantor subsidiaries and the non-guarantor subsidiaries. | |||||||||
The senior notes due 2019 carry optional redemption features whereby the Company has the option to redeem the notes, in whole or in part, on or after November 15, 2017 at par, plus accrued and unpaid interest, if any, and on or after November 15, 2015 at par plus a premium declining ratably to par, plus accrued and unpaid interest, if any. Prior to November 15, 2015, the notes may be redeemed, in whole or in part, at a redemption price equal to par plus a make-whole premium as provided in the indenture, plus accrued and unpaid interest, if any. In addition, on or prior to November 15, 2014, the Company has the right to redeem at par plus a specified premium, plus accrued and unpaid interest, if any, up to 35% of the aggregate principal amount of notes originally issued, subject to certain limitations, with the proceeds from certain kinds of equity offerings, as defined in the indenture. | |||||||||
The senior notes due 2022 carry optional redemption features whereby the Company has the option to redeem the notes, in whole or in part, on or after June 1, 2020 at par, plus accrued and unpaid interest, if any, and on or after June 1, 2017 at par plus a premium declining ratably to par, plus accrued and unpaid interest, if any. Prior to June 1, 2017, the notes may be redeemed, in whole or in part, at a redemption price equal to par plus a make-whole premium as provided in the indenture, plus accrued and unpaid interest, if any. In addition, on or prior to June 1, 2015, the Company has the right to redeem at par plus a specified premium, plus accrued and unpaid interest, if any, up to 35% of the aggregate principal amount of notes originally issued, subject to certain limitations, with the proceeds from certain kinds of equity offerings, as defined in the indenture. | |||||||||
Maturities of the Company's long-term debt are as follows at September 30, 2013 (in thousands): | |||||||||
Fiscal Year: | |||||||||
2014 | $ | 77,203 | |||||||
2015 | 107 | ||||||||
2016-2018 | — | ||||||||
Thereafter | 1,608,381 | ||||||||
$ | 1,685,691 | ||||||||
Capital lease obligations | 5,012 | ||||||||
Less: current portion | 78,018 | ||||||||
Total | $ | 1,612,685 | |||||||
We are a holding company and do not have any material assets or operations other than ownership of equity interests of our subsidiaries. The agreements and instruments governing the debt of Sally Holdings and its subsidiaries contain material limitations on their ability to pay dividends and other restricted payments to us which, in turn, constitute material limitations on our ability to pay dividends and other payments to our stockholders. | |||||||||
The ABL facility does not contain any restriction against the incurrence of unsecured indebtedness. However, the ABL facility restricts the incurrence of secured indebtedness if, after giving effect to the incurrence of such secured indebtedness, the Company's Secured Leverage Ratio exceeds 4.0 to 1.0. At September 30, 2013, the Company's Secured Leverage Ratio was approximately 0.2 to 1.0. Secured Leverage Ratio is defined as the ratio of (i) Secured Funded Indebtedness (as defined in the ABL facility) to (ii) Consolidated EBITDA, as defined in the ABL facility. | |||||||||
The ABL facility is pre-payable, and the commitments thereunder may be terminated, in whole or in part at any time without penalty or premium. | |||||||||
The indentures governing the senior notes due 2019-2022 contain terms which restrict the ability of Sally Beauty's subsidiaries to incur additional indebtedness. However, in addition to certain other material exceptions, the Company may incur additional indebtedness under the indentures if its Consolidated Coverage Ratio, after giving pro forma effect to the incurrence of such indebtedness, exceeds 2.0 to 1.0 ("Incurrence Test"). At September 30, 2013, the Company's Consolidated Coverage Ratio was approximately 6.0 to 1.0. Consolidated Coverage Ratio is defined as the ratio of (i) Consolidated EBITDA, as defined in the indentures, for the period containing the most recent four consecutive fiscal quarters, to (ii) Consolidated Interest Expense, as defined in the indentures, for such period. | |||||||||
The indentures governing the senior notes due 2019-2022 restrict Sally Holdings and its subsidiaries from making certain dividends and distributions to equity holders and certain other restricted payments (hereafter, a "Restricted Payment" or "Restricted Payments") to us. However, the indentures permit the making of such Restricted Payments if, at the time of the making of such Restricted Payment, the Company satisfies the Incurrence Test as described above and the cumulative amount of all Restricted Payments made since the issue date of the applicable senior notes does not exceed the sum of: (i) 50% of Sally Holdings' and its subsidiaries' cumulative consolidated net earnings since July 1, 2006, plus (ii) the proceeds from the issuance of certain equity securities or conversions of indebtedness to equity, in each case, since the issue date of the applicable senior notes plus (iii) the net reduction in investments in unrestricted subsidiaries since the issue date of the applicable senior notes plus (iv) the return of capital with respect to any sales or dispositions of certain minority investments since the issue date of the applicable senior notes. Further, in addition to certain other baskets, the indentures permit the Company to make additional Restricted Payments in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such Restricted Payment, the Company's Consolidated Total Leverage Ratio (as defined in the indentures) is less than 3.25 to 1.00. At September 30, 2013, the Company's Consolidated Total Leverage Ratio was approximately 2.7 to 1.0. Consolidated Total Leverage Ratio is defined as the ratio of (i) Consolidated Total Indebtedness, as defined in the indentures, minus cash and cash equivalents on-hand up to $100.0 million, in each case, as of the end of the most recently-ended fiscal quarter to (ii) Consolidated EBITDA, as defined in the indentures, for the period containing the most recent four consecutive fiscal quarters. | |||||||||
The ABL facility also restricts the making of Restricted Payments. More specifically, under the ABL facility, Sally Holdings may make Restricted Payments if availability under the ABL facility equals or exceeds certain thresholds, and no default then exists under the facility. For Restricted Payments up to $30.0 million during each fiscal year, borrowing availability must equal or exceed the lesser of $75.0 million or 15% of the borrowing base for 45 days prior to such Restricted Payment. For Restricted Payments in excess of that amount, borrowing availability must equal or exceed the lesser of $100.0 million or 20% of the borrowing base for 45 days prior to such Restricted Payment and the Consolidated Fixed Charge Coverage Ratio (as defined below) must equal or exceed 1.1 to 1.0. Further, if borrowing availability equals or exceeds the lesser of $150.0 million or 30% of the borrowing base, Restricted Payments are not limited by the Consolidated Fixed Charge Coverage Ratio test. The Consolidated Fixed Charge Coverage Ratio is defined as the ratio of (i) Consolidated EBITDA (as defined in the ABL facility) during the trailing twelve-month period preceding such proposed Restricted Payment minus certain unfinanced capital expenditures made during such period and income tax payments paid in cash during such period to (ii) fixed charges (as defined in the ABL facility). In addition, during any period that borrowing availability under the ABL facility is less than the greater of $40.0 million or 10% of the borrowing base, the level of the Consolidated Fixed Charge Coverage Ratio that the Company must satisfy is 1.0 to 1.0. As of September 30, 2013, the Consolidated Fixed Charge Coverage Ratio was approximately 3.9 to 1.0. | |||||||||
When used in this Annual Report, the phrase "Consolidated EBITDA" is intended to have the meaning ascribed to such phrase in the ABL facility or the indentures governing the senior notes due 2019-2022, as appropriate. EBITDA is not a recognized measurement under GAAP and should not be considered a substitute for financial performance and liquidity measures determined in accordance with GAAP, such as net earnings, operating earnings and operating cash flows. | |||||||||
The ABL facility and the indentures governing the senior notes due 2019-2022 contain other covenants regarding restrictions on the disposition of assets, the granting of liens and security interests, the prepayment of certain indebtedness, and other matters and customary events of default, including customary cross-default and/or cross-acceleration provisions. As of September 30, 2013, all the net assets of our consolidated subsidiaries were unrestricted from transfer under our credit arrangements. | |||||||||
At September 30, 2013 and 2012, the Company had no off-balance sheet financing arrangements other than operating leases incurred in the ordinary course of business as disclosed in Note 12 and outstanding letters of credit related to inventory purchases and self-insurance programs which totaled $23.9 million and $22.2 million at September 30, 2013 and 2012, respectively. | |||||||||
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 12 Months Ended | |||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||
Derivative Instruments and Hedging Activities | ' | |||||||||||||||||||||
Derivative Instruments and Hedging Activities | ' | |||||||||||||||||||||
14. Derivative Instruments and Hedging Activities | ||||||||||||||||||||||
Risk Management Objectives of Using Derivative Instruments | ||||||||||||||||||||||
The Company is exposed to a wide variety of risks, including risks arising from changing economic conditions. The Company manages its exposure to certain economic risks (including liquidity, credit risk, and changes in foreign currency exchange rates and in interest rates) primarily: (a) by closely managing its cash flows from operating and investing activities and the amounts and sources of its debt obligations; (b) by assessing periodically the creditworthiness of its business partners; and (c) through the use of derivative instruments from time to time (including, foreign exchange contracts and interest rate swaps) by Sally Holdings. | ||||||||||||||||||||||
The Company from time to time uses foreign exchange contracts (including foreign currency forwards and options), as part of its overall economic risk management strategy, to fix the amount of certain foreign assets and obligations relative to its functional and reporting currency (the U.S. dollar) or relative to the functional currency of certain of its consolidated subsidiaries, or to add stability to cash flows resulting from its net investments (including intercompany notes not permanently invested) and earnings denominated in foreign currencies. The Company's foreign currency exposures at times offset each other, sometimes providing a natural hedge against its foreign currency risk. In connection with the remaining foreign currency risk, the Company uses foreign exchange contracts to effectively fix the foreign currency exchange rate applicable to specific anticipated foreign currency-denominated cash flows thus limiting the potential fluctuations in such cash flows as a result of foreign currency market movements. | ||||||||||||||||||||||
The Company from time to time has used interest rate swaps, as part of its overall economic risk management strategy, to add stability to the interest payments due in connection with its debt obligations. At September 30, 2013, our exposure to interest rate fluctuations relates to interest payments under the ABL facility and the Company held no derivatives instruments in connection therewith. | ||||||||||||||||||||||
As of September 30, 2013, the Company did not purchase or hold any derivative instruments for trading or speculative purposes. | ||||||||||||||||||||||
Designated Cash Flow Hedges | ||||||||||||||||||||||
In 2008, Sally Holdings entered into certain interest rate swap agreements with an aggregate notional amount of $300 million which enabled it to convert a portion of its then variable interest rate obligation under the term loan B, to a fixed-interest rate obligation. These agreements were designated and qualified as effective cash flow hedges. Accordingly, changes in the fair value of these derivative instruments (which were adjusted quarterly) were recorded, net of income tax, in accumulated other comprehensive (loss) income ("AOCI") until the swap agreements expired in May 2012. Amounts previously reported in AOCI which were related to such interest rate swaps were reclassified into interest expense, as a yield adjustment, in the same period in which interest on the hedged variable-rate debt obligations affected earnings. As such, for the fiscal years ended September 30, 2012 and 2011, the Company's other comprehensive income included deferred gains on these interest swaps of $3.9 million and $5.6 million, respectively, net of income tax of $2.5 million and $3.5 million, respectively. | ||||||||||||||||||||||
Non-designated Cash Flow Hedges | ||||||||||||||||||||||
The Company may use from time to time derivative instruments (such as foreign exchange contracts and interest rate swaps) not designated as hedges or that do not meet the requirements for hedge accounting, to manage its exposure to interest rate or foreign currency exchange rate movements, as appropriate. | ||||||||||||||||||||||
The Company uses foreign exchange contracts including, at September 30, 2013, foreign currency options with an aggregate notional amount of $12.0 million to manage the exposure to the U.S. dollar resulting from certain of our Sinelco Group subsidiaries' purchases of merchandise from third-party suppliers. Sinelco's functional currency is the Euro. These foreign currency options enable Sinelco to buy U.S. dollars at a contractual exchange rate of 1.32, are with a single counterparty and expire ratably through September 15, 2014. | ||||||||||||||||||||||
The Company also uses foreign exchange contracts to mitigate its exposure to changes in foreign currency exchange rates in connection with certain intercompany balances not permanently invested. As such, at September 30, 2013, we held: (a) a foreign currency forward which enables us to sell approximately €13.9 million ($18.9 million, at the September 30, 2013 exchange rate) at the contractual exchange rate of 1.3526, (b) a foreign currency forward which enables us to sell approximately $5.5 million Canadian dollars ($5.3 million, at the September 30, 2013 exchange rate) at the contractual exchange rate of 1.03115, (c) a foreign currency forward which enables us to buy approximately $8.0 million Canadian dollars ($7.8 million, at the September 30, 2013 exchange rate) at the contractual exchange rate of 1.0329, (d) a foreign currency forward which enables us to sell approximately 8.6 million Mexican pesos ($0.7 million, at the September 30, 2013 exchange rate) at the contractual exchange rate of 13.1806 and (e) a foreign currency forward which enables us to sell approximately £4.2 million ($6.8 million, at the September 30, 2013 exchange rate) at the contractual exchange rate of 1.6129. All the foreign currency forwards discussed in this paragraph are with a single counterparty (not the same counterparty as that on the options discussed in the preceding paragraph) and expire on or before December 31, 2013. | ||||||||||||||||||||||
In addition, the Company uses foreign exchange contracts including, at September 30, 2013, foreign currency forwards with an aggregate notional amount of €3.6 million ($4.9 million, at the September 30, 2013 exchange rate) to mitigate the exposure to the British pound sterling resulting from the sale of products and services among certain European subsidiaries of the Company. The foreign currency forwards discussed in this paragraph enable the Company to buy British pound sterling in exchange for Euro currency at the weighted average contractual exchange rate of 0.8425, are with a single counterparty (the same counterparty as that on the forwards discussed in the immediately preceding paragraph) and expire ratably through September 30, 2014. | ||||||||||||||||||||||
The Company's foreign currency derivatives are not designated as hedges and do not currently meet the hedge accounting requirements of ASC 815. Accordingly, the changes in fair value of these derivative instruments (which are adjusted quarterly) are recorded in our consolidated statements of earnings. As such, selling, general and administrative expenses include net losses of $2.8 million in the fiscal years ended September 30, 2013, and net gains of $2.0 million and $0.2 million in the fiscal years ended September 30, 2012 and 2011, respectively, in connection with all of the Company's foreign currency derivative instruments, including marked-to-market adjustments. | ||||||||||||||||||||||
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Company's consolidated balance sheet as of September 30, 2013 and 2012 (in thousands): | ||||||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||||||
As of | As of | |||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||
Classification | 2013 | 2012 | Classification | 2013 | 2012 | |||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||
Interest Rate Swaps | Other assets | — | — | Accrued liabilities | — | — | ||||||||||||||||
— | — | — | — | |||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||
Foreign Exchange Contracts | Prepaid expenses | $ | 152 | $ | 4 | Accrued liabilities | $ | 36 | $ | 132 | ||||||||||||
$ | 152 | $ | 4 | $ | 36 | $ | 132 | |||||||||||||||
The table below presents the effect of the Company's derivative financial instruments on the Company's consolidated statements of earnings for the fiscal years ended September 30, 2013, 2012 and 2011 (in thousands): | ||||||||||||||||||||||
Amount of Gain or | Amount of Gain or (Loss) Reclassified from | |||||||||||||||||||||
(Loss) Recognized in | Accumulated OCI | |||||||||||||||||||||
OCI on Derivative | into Income (Effective Portion) | |||||||||||||||||||||
(Effective Portion), net | ||||||||||||||||||||||
of tax | ||||||||||||||||||||||
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||
Derivatives | September 30, | September 30, | ||||||||||||||||||||
Designated as | ||||||||||||||||||||||
Hedging | ||||||||||||||||||||||
Instruments | 2013 | 2012 | 2011 | Classification | 2013 | 2012 | 2011 | |||||||||||||||
Interest Rate Swaps | $ | — | $ | 3,947 | $ | 5,557 | Interest expense | $ | — | $ | (6,731 | ) | $ | (10,174 | ) | |||||||
Amount of Gain or | ||||||||||||||||||||||
(Loss) Recognized in | ||||||||||||||||||||||
Income on | ||||||||||||||||||||||
Derivatives | ||||||||||||||||||||||
Fiscal Year Ended | ||||||||||||||||||||||
Classification of Gain or | September 30, | |||||||||||||||||||||
(Loss) Recognized into | ||||||||||||||||||||||
Derivatives Not Designated as | Income | 2013 | 2012 | 2011 | ||||||||||||||||||
Hedging Instruments | ||||||||||||||||||||||
Foreign Exchange Contracts | Selling, general and administrative expenses | $ | (2,846 | ) | $ | 2,003 | $ | 194 | ||||||||||||||
Total derivatives not designated as hedging instruments | $ | (2,846 | ) | $ | 2,003 | $ | 194 | |||||||||||||||
There were no gains or losses recognized in income on derivatives designated as hedging instruments as a result of ineffectiveness or the exclusion of such derivatives from effectiveness testing during the fiscal years ended September 30, 2013, 2012 and 2011. | ||||||||||||||||||||||
Credit-risk-related Contingent Features | ||||||||||||||||||||||
The counterparties to all our derivative instruments are deemed by the Company to be of substantial resources and strong creditworthiness. However, these transactions result in exposure to credit risk in the event of default by a counterparty. The financial crisis that has affected the banking systems and financial markets in recent years resulted in many well-known financial institutions becoming less creditworthy or having diminished liquidity which could expose us to an increased level of counterparty credit risk. In the event that a counterparty defaults in its obligation under our derivative instruments, we could incur substantial financial losses. However, at the present time, no such losses are deemed probable. | ||||||||||||||||||||||
401k_and_Profit_Sharing_Plan
401(k) and Profit Sharing Plan | 12 Months Ended |
Sep. 30, 2013 | |
401(k) and Profit Sharing Plan | ' |
401(k) and Profit Sharing Plan | ' |
15. 401(k) and Profit Sharing Plan | |
The Company sponsors the Sally Beauty 401(k) and Profit Sharing Plan (the "401k Plan"), which is a qualified defined contribution plan. The 401k Plan covers employees of the Company who meet certain eligibility requirements and who are not members of a collective bargaining unit. Under the terms of the 401k Plan, employees may contribute a percentage of their annual compensation to the 401k Plan up to certain maximums, as defined by the 401k Plan and by the U.S. Internal Revenue Code. The Company currently matches a portion of employee contributions to the plan. The Company recognized expense of $6.7 million, $6.2 million and $5.9 million in the fiscal years ended September 30, 2013, 2012 and 2011, respectively, related to such employer matching contributions and these amounts are included in selling, general and administrative expenses. | |
In addition, pursuant to the 401k Plan, the Company may make profit sharing contributions to the accounts of employees who meet certain eligibility requirements and who are not members of a collective bargaining unit. The Company's profit sharing contributions to the 401k Plan are determined by the Compensation Committee of the Company's Board of Directors. The Company recognized expense of $3.2 million, $3.3 million and $3.1 million in the fiscal years ended September 30, 2013, 2012 and 2011, respectively, related to such profit sharing contributions and these amounts are included in selling, general and administrative expenses. | |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Income Taxes | ' | ||||||||||
Income Taxes | ' | ||||||||||
16. Income Taxes | |||||||||||
The provision for income taxes for the fiscal years 2013, 2012 and 2011 consists of the following (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Current: | |||||||||||
Federal | $ | 113,057 | $ | 97,866 | $ | 97,172 | |||||
Foreign | 9,997 | 10,925 | 11,081 | ||||||||
State | 17,727 | 16,692 | 13,629 | ||||||||
Total current portion | 140,781 | 125,483 | 121,882 | ||||||||
Deferred: | |||||||||||
Federal | 13,932 | 4,920 | 2,615 | ||||||||
Foreign | (2,822 | ) | (2,888 | ) | (2,525 | ) | |||||
State | (375 | ) | 364 | 242 | |||||||
Total deferred portion | 10,735 | 2,396 | 332 | ||||||||
Total provision for income tax | $ | 151,516 | $ | 127,879 | $ | 122,214 | |||||
The difference between the U.S. statutory federal income tax rate and the effective income tax rate is summarized below: | |||||||||||
Year Ended | |||||||||||
September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Statutory tax rate | 35 | % | 35 | % | 35 | % | |||||
State income taxes, net of federal tax benefit | 2.8 | 3.4 | 2.8 | ||||||||
Effect of foreign operations | (0.6 | ) | (0.4 | ) | (1.3 | ) | |||||
Effect of limited restructuring | — | (2.8 | ) | — | |||||||
Other, net | (0.5 | ) | 0.2 | (0.1 | ) | ||||||
Effective tax rate | 36.7 | % | 35.4 | % | 36.4 | % | |||||
The tax effects of temporary differences that give rise to the Company's deferred tax assets and liabilities are as follows (in thousands): | |||||||||||
September 30, | |||||||||||
2013 | 2012 | ||||||||||
Deferred tax assets attributable to: | |||||||||||
Share-based compensation expense | $ | 20,668 | $ | 18,771 | |||||||
Accrued liabilities | 26,817 | 33,495 | |||||||||
Inventory adjustments | 3,771 | 5,208 | |||||||||
Foreign loss carryforwards | 28,776 | 23,405 | |||||||||
Unrecognized tax benefits | 437 | 605 | |||||||||
Other | 3,408 | 2,011 | |||||||||
Total deferred tax assets | 83,877 | 83,495 | |||||||||
Valuation allowance | (26,073 | ) | (21,681 | ) | |||||||
Total deferred tax assets, net | 57,804 | 61,814 | |||||||||
Deferred tax liabilities attributable to: | |||||||||||
Depreciation and amortization | 99,259 | 92,292 | |||||||||
Total deferred tax liabilities | 99,259 | 92,292 | |||||||||
Net deferred tax liability | $ | 41,455 | $ | 30,478 | |||||||
Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets, net of the valuation allowance. The Company has recorded a valuation allowance to account for uncertainties regarding recoverability of certain deferred tax assets, primarily foreign loss carryforwards. | |||||||||||
Domestic earnings before provision for income taxes were $386.6 million, $334.5 million and $300.1 million in the fiscal years 2013, 2012 and 2011, respectively. Foreign operations had earnings before provision for income taxes of $26.1 million, $26.4 million and $35.8 million in the fiscal years 2013, 2012 and 2011, respectively. | |||||||||||
Tax reserves are evaluated and adjusted as appropriate, while taking into account the progress of audits by various taxing jurisdictions and other changes in relevant facts and circumstances evident at each balance sheet date. Management does not expect the outcome of tax audits to have a material adverse effect on the Company's financial condition, results of operations or cash flow. | |||||||||||
At September 30, 2013, undistributed earnings of the Company's foreign operations are intended to remain permanently invested to finance anticipated future growth and expansion. Accordingly, federal and state income taxes have not been provided on accumulated but undistributed earnings of $170.9 million and $140.8 million as of September 30, 2013 and 2012, respectively, as such earnings have been permanently reinvested in the business. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable. | |||||||||||
At September 30, 2013 and 2012, the Company had total operating loss carry-forwards of $96.4 million and $80.1 million, respectively, of which $79.4 million and $65.1 million, respectively, are subject to a valuation allowance. At September 30, 2013, operating loss carry-forwards of $25.3 million expire between 2014 and 2031 and operating loss carry-forwards of $71.1 million have no expiration date. At September 30, 2013 and 2012, the Company had tax credit carry-forwards of $2.0 million and $1.1 million, respectively, which expire in 2024 and of which $0.5 million, at September 30, 2012, were subject to a valuation allowance. | |||||||||||
The changes in the amount of unrecognized tax benefits for the fiscal years ended September 30, 2013 and 2012 are as follows (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Balance at beginning of the fiscal year | $ | 7,941 | $ | 10,836 | |||||||
Increases related to prior year tax positions | 26 | 90 | |||||||||
Decreases related to prior year tax positions | (1 | ) | (119 | ) | |||||||
Increases related to current year tax positions | 218 | 171 | |||||||||
Settlements | — | (127 | ) | ||||||||
Lapse of statute | (3,361 | ) | (2,910 | ) | |||||||
Balance at end of fiscal year | $ | 4,823 | $ | 7,941 | |||||||
If recognized, these positions would affect the Company's effective tax rate. | |||||||||||
The Company classifies and recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The total amount of accrued interest and penalties as of September 30, 2013 and 2012 was $1.4 million and $3.6 million, respectively. | |||||||||||
Because existing tax positions will continue to generate increased liabilities for unrecognized tax benefits over the next 12 months, and the fact that from time to time we are routinely under audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. An estimate of the amount or range of such change cannot be made at this time. However, we do not expect the change, if any, to have a material effect on our consolidated financial condition or results of operations within the next 12 months. | |||||||||||
In January 2012, the IRS concluded the field work associated with their examination of the Company's consolidated federal income tax returns for the fiscal years ended September 30, 2007 and 2008 and issued their examination report. The Company is appealing certain disputed items and it does not anticipate the ultimate resolution of these items to have a material impact on the Company's financial statements. | |||||||||||
The IRS is currently conducting an examination of the Company's consolidated federal income tax returns for the fiscal years ended September 30, 2009, 2010 and 2011. The IRS had previously audited the Company's consolidated federal income tax returns through the tax year ended September 30, 2006, thus our statute remains open from the year ended September 30, 2007 forward. Our foreign subsidiaries are impacted by various statutes of limitations, which are generally open from 2008 forward. Generally, states' statutes in the United States are open for tax reviews from 2007 forward. | |||||||||||
Acquisitions
Acquisitions | 12 Months Ended |
Sep. 30, 2013 | |
Acquisitions | ' |
Acquisitions | ' |
17. Acquisitions | |
In May 2013, the Company acquired certain assets and business operations of Essential Salon, a professional-only distributor of beauty products operating in the northeastern region of the United States, for approximately $15.7 million, subject to certain adjustments. The assets acquired and liabilities assumed, including intangible assets subject to amortization of $9.1 million, were recorded based on their preliminary estimated fair values at the acquisition date. In addition, goodwill of $3.5 million (which is expected to be deductible for tax purposes) was recorded as a result of this acquisition. The final valuation of the assets acquired and liabilities assumed will be completed within twelve months from the acquisition date. In addition, during the fiscal year 2013, the Company completed several other individually immaterial acquisitions at an aggregate cost of approximately $6.8 million and recorded additional intangible assets subject to amortization of $4.0 million in connection with these acquisitions. We funded the acquisitions completed in the fiscal year 2013 with cash from operations and borrowing under the ABL facility. | |
In November 2011, the Company acquired the Floral Group for approximately €22.8 million (approximately $31.2 million). The Floral Group is a distributor of professional beauty products then with 19 stores located in the Netherlands. The results of operations of the Floral Group are included in the Company's consolidated financial statements subsequent to the acquisition date. The assets acquired and liabilities assumed were recorded at their respective fair values at the acquisition date. Goodwill of $15.0 million (which is not expected to be deductible for tax purposes) and intangible assets subject to amortization of $11.8 million were recorded as a result of this acquisition based on their estimated fair values. The acquisition was funded with cash from operations and with borrowings on our ABL facility in the amount of approximately $17.0 million. In addition, during the fiscal year 2012, the Company completed several other individually immaterial acquisitions at an aggregate cost of approximately $12.8 million and recorded additional goodwill in the amount of $9.4 million (the majority of which is expected to be deductible for tax purposes) in connection with these acquisitions. Generally, we funded these acquisitions with cash from operations. The assets acquired and liabilities assumed in connection with these acquisitions were recorded based on their respective fair values at the acquisition date. | |
In October 2010, the Company acquired Aerial, an 82-store professional-only distributor of beauty products operating in 11 states in the midwestern region of the United States, for approximately $81.8 million. The assets acquired and liabilities assumed, including intangible assets subject to amortization of $34.7 million, were recorded at their respective fair values at the acquisition date. In addition, goodwill of $25.3 million (which is expected to be deductible for tax purposes) was recorded as a result of this acquisition. The acquisition of Aerial was funded with borrowings in the amount of $78.0 million under the ABL facility (which were later paid in full) and with cash from operations. In addition, during the fiscal year 2011, the Company completed several other individually immaterial acquisitions at an aggregate cost of approximately $5.0 million and recorded additional goodwill in the amount of $4.3 million (the majority of which is expected to be deductible for tax purposes) in connection with such acquisitions. Generally, we funded these acquisitions with cash from operations. The valuation of the assets acquired and liabilities assumed in connection with these acquisitions was based on their fair values at the acquisition date. | |
These business combinations have been accounted for using the purchase method of accounting and, accordingly, the results of operations of the entities acquired have been included in the Company's consolidated financial statements since their respective dates of acquisition. | |
Business_Segments_and_Geograph
Business Segments and Geographic Area Information | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Business Segments and Geographic Area Information | ' | ||||||||||
Business Segments and Geographic Area Information | ' | ||||||||||
18. Business Segments and Geographic Area Information | |||||||||||
The Company's business is organized into two separate segments: (i) Sally Beauty Supply, a domestic and international chain of cash and carry retail stores which offers professional beauty supplies to both salon professionals and retail customers primarily in North America, Puerto Rico, and parts of South America and Europe and (ii) BSG, including its franchise-based business Armstrong McCall, a full service beauty supply distributor which offers professional brands of beauty products directly to salons and salon professionals through its own sales force and professional-only stores (including franchise stores) in partially exclusive geographical territories in North America, Puerto Rico and parts of Europe. | |||||||||||
The accounting policies of both of our business segments are the same as described in the summary of significant accounting policies contained in Note 2. Sales between segments, which were eliminated in consolidation, were not material for the fiscal years ended September 30, 2013, 2012 and 2011. | |||||||||||
Business Segments Information | |||||||||||
Segment data for the fiscal years ended September 30, 2013, 2012 and 2011 is as follows (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Net sales: | |||||||||||
Sally Beauty Supply | $ | 2,230,028 | $ | 2,198,468 | $ | 2,012,407 | |||||
BSG | 1,392,188 | 1,325,176 | 1,256,724 | ||||||||
Total | $ | 3,622,216 | $ | 3,523,644 | $ | 3,269,131 | |||||
Earnings before provision for income taxes: | |||||||||||
Segment operating profit: | |||||||||||
Sally Beauty Supply(a) | $ | 437,018 | $ | 429,520 | $ | 380,963 | |||||
BSG(a) | 200,492 | 182,699 | 164,660 | ||||||||
Segment operating profit | 637,510 | 612,219 | 545,623 | ||||||||
Unallocated expenses(a)(b) | (97,947 | ) | (96,012 | ) | (81,594 | ) | |||||
Share-based compensation expense | (19,201 | ) | (16,852 | ) | (15,560 | ) | |||||
Interest expense(c) | (107,695 | ) | (138,412 | ) | (112,530 | ) | |||||
Total | $ | 412,667 | $ | 360,943 | $ | 335,939 | |||||
Identifiable assets: | |||||||||||
Sally Beauty Supply | $ | 913,395 | $ | 864,598 | $ | 766,896 | |||||
BSG | 973,764 | 959,784 | 908,093 | ||||||||
Sub-total | 1,887,159 | 1,824,382 | 1,674,989 | ||||||||
Corporate | 62,927 | 241,418 | 53,611 | ||||||||
Total | $ | 1,950,086 | $ | 2,065,800 | $ | 1,728,600 | |||||
Depreciation and amortization: | |||||||||||
Sally Beauty Supply | $ | 37,077 | $ | 31,397 | $ | 28,763 | |||||
BSG | 24,964 | 25,984 | 25,099 | ||||||||
Corporate | 10,151 | 7,317 | 5,860 | ||||||||
Total | $ | 72,192 | $ | 64,698 | $ | 59,722 | |||||
Capital expenditures: | |||||||||||
Sally Beauty Supply | $ | 60,565 | $ | 42,158 | $ | 34,946 | |||||
BSG | 15,744 | 11,977 | 14,145 | ||||||||
Corporate | 8,570 | 14,951 | 10,864 | ||||||||
Total | $ | 84,879 | $ | 69,086 | $ | 59,955 | |||||
(a) | |||||||||||
For the fiscal year ended September 30, 2012, Sally Beauty Supply's operating profit reflects a $10.2 million charge resulting from a loss contingency. For the fiscal year ended September 30, 2011, consolidated operating earnings reflect a net favorable impact of $21.3 million; including a $27.0 million credit from a litigation settlement and certain non-recurring charges of $5.7 million. This net benefit of $21.3 million is reflected in the BSG segment and in unallocated expenses in the amount of $19.0 million and $2.3 million, respectively. | |||||||||||
(b) | |||||||||||
Unallocated expenses consist of corporate and shared costs. | |||||||||||
(c) | |||||||||||
For the fiscal year ended September 30, 2012, interest expense includes losses on extinguishment of debt in the aggregate amount of $37.8 million in connection with the Company's redemption of outstanding notes and repayment of the term B loan. | |||||||||||
Geographic Area Information | |||||||||||
Geographic data for the fiscal years ended September 30, 2013, 2012 and 2011 is as follows (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Net sales:(a) | |||||||||||
United States | $ | 2,943,959 | $ | 2,885,958 | $ | 2,688,062 | |||||
Foreign | 678,257 | 637,686 | 581,069 | ||||||||
Total | $ | 3,622,216 | $ | 3,523,644 | $ | 3,269,131 | |||||
Identifiable assets: | |||||||||||
United States | $ | 1,356,969 | $ | 1,325,787 | $ | 1,240,894 | |||||
Foreign | 530,190 | 498,595 | 434,095 | ||||||||
Corporate | 62,927 | 241,418 | 53,611 | ||||||||
Total | $ | 1,950,086 | $ | 2,065,800 | $ | 1,728,600 | |||||
(a) | |||||||||||
Net sales are attributable to individual countries based on the location of the customer. | |||||||||||
Parent_Issuers_Guarantor_and_N
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements | 12 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements | ' | |||||||||||||||||||
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements | ' | |||||||||||||||||||
19. Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements | ||||||||||||||||||||
The following consolidating financial information presents the condensed consolidating balance sheets as of September 30, 2013 and 2012, the related condensed consolidating statements of earnings and comprehensive income, and the condensed consolidating statements of cash flows for each of the three fiscal years in the period ended September 30, 2013 of: (i) Sally Beauty Holdings, Inc., or the "Parent;" (ii) Sally Holdings LLC and Sally Capital Inc., or the "Issuers;" (iii) the guarantor subsidiaries; (iv) the non-guarantor subsidiaries; (v) elimination entries necessary for consolidation purposes; and (vi) Sally Beauty on a consolidated basis. | ||||||||||||||||||||
Investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the subsidiary guarantors have not been provided as management believes the following information is sufficient, as guarantor subsidiaries are 100% indirectly owned by the Parent and all guarantees are full and unconditional. Additionally, substantially all of the assets of the guarantor subsidiaries are pledged under the ABL facility and consequently may not be available to satisfy the claims of general creditors. | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||
September 30, 2013 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
Holdings | Subsidiaries | Guarantor | Eliminations | Holdings, | ||||||||||||||||
LLC and | Subsidiaries | Inc. and | ||||||||||||||||||
Sally Capital | Subsidiaries | |||||||||||||||||||
Inc. | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 16,337 | $ | 30,778 | $ | — | $ | 47,115 | ||||||||
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 2,317 | — | 56,432 | 42,427 | — | 101,176 | ||||||||||||||
Due from affiliates | — | — | 1,215,625 | 813 | (1,216,438 | ) | — | |||||||||||||
Inventory | — | — | 605,727 | 202,586 | — | 808,313 | ||||||||||||||
Prepaid expenses | 1,195 | 380 | 13,253 | 11,899 | — | 26,727 | ||||||||||||||
Deferred income tax assets, net | (391 | ) | (379 | ) | 31,504 | 1,752 | — | 32,486 | ||||||||||||
Property and equipment, net | 2 | — | 152,982 | 76,556 | — | 229,540 | ||||||||||||||
Investment in subsidiaries | 237,696 | 2,530,825 | 388,569 | — | (3,157,090 | ) | — | |||||||||||||
Goodwill and other intangible assets, net | — | — | 483,583 | 184,792 | — | 668,375 | ||||||||||||||
Other assets | — | 29,725 | 1,254 | 5,375 | — | 36,354 | ||||||||||||||
Total assets | $ | 240,819 | $ | 2,560,551 | $ | 2,965,266 | $ | 556,978 | $ | (4,373,528 | ) | $ | 1,950,086 | |||||||
Liabilities and Stockholders' (Deficit) Equity | ||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | 210,661 | $ | 62,795 | $ | — | $ | 273,456 | ||||||||
Due to affiliates | 545,658 | 599,246 | 813 | 70,721 | (1,216,438 | ) | — | |||||||||||||
Accrued liabilities | 191 | 36,341 | 121,426 | 26,804 | — | 184,762 | ||||||||||||||
Income taxes payable | — | 3,319 | 1 | 3,097 | — | 6,417 | ||||||||||||||
Long-term debt | — | 1,684,381 | 181 | 6,141 | — | 1,690,703 | ||||||||||||||
Other liabilities | — | — | 22,043 | 2,243 | — | 24,286 | ||||||||||||||
Deferred income tax liabilities, net | (1,551 | ) | (432 | ) | 79,316 | (3,392 | ) | — | 73,941 | |||||||||||
Total liabilities | 544,298 | 2,322,855 | 434,441 | 168,409 | (1,216,438 | ) | 2,253,565 | |||||||||||||
Total stockholders' (deficit) equity | (303,479 | ) | 237,696 | 2,530,825 | 388,569 | (3,157,090 | ) | (303,479 | ) | |||||||||||
Total liabilities and stockholders' (deficit) equity | $ | 240,819 | $ | 2,560,551 | $ | 2,965,266 | $ | 556,978 | $ | (4,373,528 | ) | $ | 1,950,086 | |||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||
September 30, 2012 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
Holdings | Subsidiaries | Guarantor | Eliminations | Holdings, | ||||||||||||||||
LLC and | Subsidiaries | Inc. and | ||||||||||||||||||
Sally Capital | Subsidiaries | |||||||||||||||||||
Inc. | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 155,000 | $ | 48,582 | $ | 36,638 | $ | — | $ | 240,220 | ||||||||
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 23,734 | — | 63,964 | 37,792 | — | 125,490 | ||||||||||||||
Due from affiliates | — | 2 | 934,268 | 3,637 | (937,907 | ) | — | |||||||||||||
Inventory | — | — | 551,017 | 184,339 | — | 735,356 | ||||||||||||||
Prepaid expenses | 1,181 | 24 | 12,189 | 15,982 | — | 29,376 | ||||||||||||||
Deferred income tax assets, net | (408 | ) | (423 | ) | 38,805 | (4,509 | ) | — | 33,465 | |||||||||||
Property and equipment, net | — | — | 140,238 | 62,423 | — | 202,661 | ||||||||||||||
Investment in subsidiaries | (30,403 | ) | 2,194,771 | 367,435 | — | (2,531,803 | ) | — | ||||||||||||
Goodwill and other intangible assets, net | — | — | 475,623 | 185,145 | — | 660,768 | ||||||||||||||
Other assets | — | 32,445 | 1,069 | 4,950 | — | 38,464 | ||||||||||||||
Total assets | $ | (5,896 | ) | $ | 2,381,819 | $ | 2,633,190 | $ | 526,397 | $ | (3,469,710 | ) | $ | 2,065,800 | ||||||
Liabilities and Stockholders' (Deficit) Equity | ||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | 202,560 | $ | 59,649 | $ | — | $ | 262,209 | ||||||||
Due to affiliates | 110,512 | 761,262 | 3,637 | 62,496 | (937,907 | ) | — | |||||||||||||
Accrued liabilities | 141 | 38,171 | 134,387 | 27,568 | — | 200,267 | ||||||||||||||
Income taxes payable | — | 4,136 | 4,596 | 4,272 | — | 13,004 | ||||||||||||||
Long-term debt | — | 1,609,308 | 265 | 7,657 | — | 1,617,230 | ||||||||||||||
Other liabilities | — | — | 21,060 | 3,172 | — | 24,232 | ||||||||||||||
Deferred income tax liabilities, net | (1,464 | ) | (655 | ) | 71,914 | (5,852 | ) | — | 63,943 | |||||||||||
Total liabilities | 109,189 | 2,412,222 | 438,419 | 158,962 | (937,907 | ) | 2,180,885 | |||||||||||||
Total stockholders' (deficit) equity | (115,085 | ) | (30,403 | ) | 2,194,771 | 367,435 | (2,531,803 | ) | (115,085 | ) | ||||||||||
Total liabilities and stockholders' (deficit) equity | $ | (5,896 | ) | $ | 2,381,819 | $ | 2,633,190 | $ | 526,397 | $ | (3,469,710 | ) | $ | 2,065,800 | ||||||
Condensed Consolidating Statement of Earnings | ||||||||||||||||||||
Fiscal Year Ended September 30, 2013 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,896,990 | $ | 725,226 | $ | — | $ | 3,622,216 | ||||||||
Related party sales | — | — | 2,890 | — | (2,890 | ) | — | |||||||||||||
Cost of products sold and distribution expenses | — | — | 1,437,620 | 392,223 | (2,890 | ) | 1,826,953 | |||||||||||||
Gross profit | — | — | 1,462,260 | 333,003 | — | 1,795,263 | ||||||||||||||
Selling, general and administrative expenses | 9,951 | 434 | 912,262 | 280,062 | — | 1,202,709 | ||||||||||||||
Depreciation and amortization | — | — | 52,284 | 19,908 | — | 72,192 | ||||||||||||||
Operating earnings (loss) | (9,951 | ) | (434 | ) | 497,714 | 33,033 | — | 520,362 | ||||||||||||
Interest expense | — | 107,265 | 32 | 398 | — | 107,695 | ||||||||||||||
Earnings (loss) before provision for income taxes | (9,951 | ) | (107,699 | ) | 497,682 | 32,635 | — | 412,667 | ||||||||||||
Provision (benefit) for income taxes | (3,838 | ) | (41,832 | ) | 190,753 | 6,433 | — | 151,516 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 267,264 | 333,131 | 26,202 | — | (626,597 | ) | — | |||||||||||||
Net earnings | 261,151 | 267,264 | 333,131 | 26,202 | (626,597 | ) | 261,151 | |||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | 835 | — | 835 | ||||||||||||||
Total comprehensive income (loss) | $ | 261,151 | $ | 267,264 | $ | 333,131 | $ | 27,037 | $ | (626,597 | ) | $ | 261,986 | |||||||
Condensed Consolidating Statement of Earnings | ||||||||||||||||||||
Fiscal Year Ended September 30, 2012 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,837,214 | $ | 686,430 | $ | — | $ | 3,523,644 | ||||||||
Related party sales | — | — | 2,899 | — | (2,899 | ) | — | |||||||||||||
Cost of products sold and distribution expenses | — | — | 1,406,817 | 376,467 | (2,899 | ) | 1,780,385 | |||||||||||||
Gross profit | — | — | 1,433,296 | 309,963 | — | 1,743,259 | ||||||||||||||
Selling, general and administrative expenses | 10,391 | 674 | 908,964 | 259,177 | — | 1,179,206 | ||||||||||||||
Depreciation and amortization | 1 | — | 46,159 | 18,538 | — | 64,698 | ||||||||||||||
Operating earnings (loss) | (10,392 | ) | (674 | ) | 478,173 | 32,248 | — | 499,355 | ||||||||||||
Interest expense | — | 137,876 | 66 | 470 | — | 138,412 | ||||||||||||||
Earnings (loss) before provision for income taxes | (10,392 | ) | (138,550 | ) | 478,107 | 31,778 | — | 360,943 | ||||||||||||
Provision (benefit) for income taxes | (4,186 | ) | (53,802 | ) | 187,788 | (1,921 | ) | — | 127,879 | |||||||||||
Equity in earnings of subsidiaries, net of tax | 239,270 | 324,018 | 33,699 | — | (596,987 | ) | — | |||||||||||||
Net earnings | 233,064 | 239,270 | 324,018 | 33,699 | (596,987 | ) | 233,064 | |||||||||||||
Other comprehensive income, net of tax | — | 3,947 | — | 8,071 | — | 12,018 | ||||||||||||||
Total comprehensive income (loss) | $ | 233,064 | $ | 243,217 | $ | 324,018 | $ | 41,770 | $ | (596,987 | ) | $ | 245,082 | |||||||
Condensed Consolidating Statement of Earnings | ||||||||||||||||||||
Fiscal Year Ended September 30, 2011 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,639,741 | $ | 629,390 | $ | — | $ | 3,269,131 | ||||||||
Related party sales | — | — | 2,894 | — | (2,894 | ) | — | |||||||||||||
Cost of products sold and distribution expenses | — | — | 1,335,030 | 342,390 | (2,894 | ) | 1,674,526 | |||||||||||||
Gross profit | — | — | 1,307,605 | 287,000 | — | 1,594,605 | ||||||||||||||
Selling, general and administrative expenses | 7,812 | 560 | 845,732 | 232,310 | — | 1,086,414 | ||||||||||||||
Depreciation and amortization | 1 | — | 43,111 | 16,610 | — | 59,722 | ||||||||||||||
Operating earnings (loss) | (7,813 | ) | (560 | ) | 418,762 | 38,080 | — | 448,469 | ||||||||||||
Interest expense, net | — | 111,894 | (12 | ) | 648 | — | 112,530 | |||||||||||||
Earnings (loss) before provision for income taxes | (7,813 | ) | (112,454 | ) | 418,774 | 37,432 | — | 335,939 | ||||||||||||
Provision (benefit) for income taxes | (2,945 | ) | (43,613 | ) | 161,647 | 7,125 | — | 122,214 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 218,593 | 287,434 | 30,307 | — | (536,334 | ) | — | |||||||||||||
Net earnings | 213,725 | 218,593 | 287,434 | 30,307 | (536,334 | ) | 213,725 | |||||||||||||
Other comprehensive income (loss), net of tax | — | 5,557 | — | (7,952 | ) | — | (2,395 | ) | ||||||||||||
Total comprehensive income (loss) | $ | 213,725 | $ | 224,150 | $ | 287,434 | $ | 22,355 | $ | (536,334 | ) | $ | 211,330 | |||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||
Fiscal Year Ended September 30, 2013 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net cash provided (used) by operating activities | $ | 483,720 | $ | (229,002 | ) | $ | 30,386 | $ | 25,350 | $ | — | $ | 310,454 | |||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Capital expenditures, net of proceeds from sale of property and equipment | (2 | ) | — | (54,358 | ) | (30,399 | ) | — | (84,759 | ) | ||||||||||
Acquisitions, net of cash acquired | — | — | (21,594 | ) | (624 | ) | — | (22,218 | ) | |||||||||||
Net cash used by investing activities | (2 | ) | — | (75,952 | ) | (31,023 | ) | — | (106,977 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 365,500 | — | — | — | 365,500 | ||||||||||||||
Repayments of long-term debt | — | (289,500 | ) | (83 | ) | (1,868 | ) | — | (291,451 | ) | ||||||||||
Debt issuance costs | — | (1,998 | ) | — | — | — | (1,998 | ) | ||||||||||||
Repurchases of common stock | (509,704 | ) | — | — | — | — | (509,704 | ) | ||||||||||||
Proceeds from exercises of stock options | 25,493 | — | — | — | — | 25,493 | ||||||||||||||
Excess tax benefit from share-based compensation | 493 | — | 13,404 | 1,488 | — | 15,385 | ||||||||||||||
Net cash (used) provided by financing activities | (483,718 | ) | 74,002 | 13,321 | (380 | ) | — | (396,775 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | 193 | — | 193 | ||||||||||||||
Net decrease in cash and cash equivalents | — | (155,000 | ) | (32,245 | ) | (5,860 | ) | — | (193,105 | ) | ||||||||||
Cash and cash equivalents, beginning of period | — | 155,000 | 48,582 | 36,638 | — | 240,220 | ||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | 16,337 | $ | 30,778 | $ | — | $ | 47,115 | ||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||
Fiscal Year Ended September 30, 2012 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net cash provided by operating activities | $ | 171,980 | $ | 3,161 | $ | 69,049 | $ | 53,392 | $ | — | $ | 297,582 | ||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Capital expenditures | — | — | (45,942 | ) | (23,036 | ) | — | (68,978 | ) | |||||||||||
Acquisitions, net of cash acquired | — | — | (10,607 | ) | (32,928 | ) | — | (43,535 | ) | |||||||||||
Net cash used by investing activities | — | — | (56,549 | ) | (55,964 | ) | — | (112,513 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 2,101,475 | 14 | — | — | 2,101,489 | ||||||||||||||
Repayments of long-term debt | — | (1,918,339 | ) | (89 | ) | (2,856 | ) | — | (1,921,284 | ) | ||||||||||
Debt issuance costs | — | (31,297 | ) | — | — | — | (31,297 | ) | ||||||||||||
Repurchase of common stock | (200,000 | ) | — | — | — | — | (200,000 | ) | ||||||||||||
Proceeds from exercises of stock options | 28,020 | — | — | — | — | 28,020 | ||||||||||||||
Excess tax benefit from share-based compensation | — | — | 13,574 | 816 | — | 14,390 | ||||||||||||||
Net cash (used) provided by financing activities | (171,980 | ) | 151,839 | 13,499 | (2,040 | ) | — | (8,682 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | 352 | — | 352 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | 155,000 | 25,999 | (4,260 | ) | — | 176,739 | |||||||||||||
Cash and cash equivalents, beginning of period | — | — | 22,583 | 40,898 | — | 63,481 | ||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | 155,000 | $ | 48,582 | $ | 36,638 | $ | — | $ | 240,220 | ||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||
Fiscal Year Ended September 30, 2011 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non-Guarantor | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Subsidiaries | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | and Subsidiaries | |||||||||||||||||||
Net cash (used) provided by operating activities | $ | (10,942 | ) | $ | 152,377 | $ | 112,035 | $ | 38,371 | $ | — | $ | 291,841 | |||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Capital expenditures | — | — | (41,478 | ) | (18,093 | ) | — | (59,571 | ) | |||||||||||
Acquisitions, net of cash acquired | — | — | (84,924 | ) | (2,240 | ) | — | (87,164 | ) | |||||||||||
Net cash used by investing activities | — | — | (126,402 | ) | (20,333 | ) | — | (146,735 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 421,300 | 404 | 6,901 | — | 428,605 | ||||||||||||||
Repayments of long-term debt | — | (568,300 | ) | (141 | ) | (9,470 | ) | — | (577,911 | ) | ||||||||||
Debt issuance costs | — | (5,397 | ) | — | — | — | (5,397 | ) | ||||||||||||
Proceeds from exercises of stock options | 10,942 | — | — | — | — | 10,942 | ||||||||||||||
Excess tax benefit from share-based compensation | — | — | 3,712 | — | — | 3,712 | ||||||||||||||
Net cash provided (used) by financing activities | 10,942 | (152,397 | ) | 3,975 | (2,569 | ) | — | (140,049 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | (1,070 | ) | — | (1,070 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | — | (20 | ) | (10,392 | ) | 14,399 | — | 3,987 | ||||||||||||
Cash and cash equivalents, beginning of period | — | 20 | 32,975 | 26,499 | — | 59,494 | ||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | 22,583 | $ | 40,898 | $ | — | $ | 63,481 | ||||||||
Subsequent_Event
Subsequent Event | 12 Months Ended |
Sep. 30, 2013 | |
Subsequent Event | ' |
Subsequent Event | ' |
20. Subsequent Event | |
On October 24, 2013, Sally Holdings and Sally Capital Inc. (collectively, the "Issuers"), both indirect wholly-owned subsidiaries of the Company, the Company and certain domestic subsidiaries of the Company entered into an underwriting agreement pursuant to which the Issuers sold $200.0 million aggregate principal amount of the Issuers' 5.5% Senior Notes due 2023 (the "senior notes due 2023"). The senior notes due 2023 bear interest at an annual rate of 5.5%, were issued at par, and are guaranteed by the Company and certain domestic subsidiaries of the Company. Interest on the senior notes due 2023 is payable semi-annually. The Company used the net proceeds from this debt issuance, approximately $196.3 million, to repay borrowings outstanding under the ABL facility of $88.5 million and intends to use the remaining amount for general corporate purposes. | |
Quarterly_Financial_Data_Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Quarterly Financial Data (Unaudited) | ' | |||||||||||||
Quarterly Financial Data (Unaudited) | ' | |||||||||||||
21. Quarterly Financial Data (Unaudited) | ||||||||||||||
Certain unaudited quarterly consolidated statement of earnings information for the fiscal years ended September 30, 2013 and 2012 is summarized below (in thousands, except per share data): | ||||||||||||||
Fiscal Year | 1st | 2nd | 3rd | 4th | ||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
2013:00:00 | ||||||||||||||
Net sales | $ | 905,441 | $ | 898,239 | $ | 912,101 | $ | 906,435 | ||||||
Gross profit | $ | 444,368 | $ | 444,454 | $ | 457,083 | $ | 449,358 | ||||||
Net earnings | $ | 58,983 | $ | 64,889 | $ | 72,466 | $ | 64,812 | ||||||
Earnings per common share(a) | ||||||||||||||
Basic | $ | 0.33 | $ | 0.37 | $ | 0.43 | $ | 0.39 | ||||||
Diluted | $ | 0.32 | $ | 0.36 | $ | 0.42 | $ | 0.38 | ||||||
2012:00:00 | ||||||||||||||
Net sales | $ | 864,815 | $ | 889,281 | $ | 886,991 | $ | 882,557 | ||||||
Gross profit | $ | 421,857 | $ | 436,786 | $ | 444,379 | $ | 440,236 | ||||||
Net earnings | $ | 30,134 | $ | 67,813 | $ | 69,487 | $ | 65,630 | ||||||
Earnings per common share(a) | ||||||||||||||
Basic | $ | 0.16 | $ | 0.36 | $ | 0.38 | $ | 0.36 | ||||||
Diluted | $ | 0.16 | $ | 0.35 | $ | 0.37 | $ | 0.35 | ||||||
(a) | ||||||||||||||
The sum of the quarterly earnings per share may not equal the full year amount, as the computations of the weighted average number of common shares outstanding for each quarter and for the full year are performed independently. | ||||||||||||||
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Significant Accounting Policies | ' |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent liabilities in the financial statements. Our most significant estimates relate to: the valuation of inventory, vendor concessions, retention of risk, income taxes, the assessment of long-lived assets and intangible assets for impairment, and share-based payments. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results may differ from these estimates in amounts that may be material to the financial statements. Management believes that the estimates and assumptions used in the preparation of the Company's consolidated financial statements are reasonable. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
All highly liquid investments purchased by the Company from time to time which have an original maturity of three months or less are considered to be cash equivalents. These investments are stated at cost, which approximates fair value. Also included in cash equivalents are proceeds due from customer credit and debit cards and PayPal transactions, which generally settle within one to three days, and were $10.6 million and $20.0 million at September 30, 2013 and 2012, respectively. | |
Concentration of Credit Risk | ' |
Concentration of Credit Risk | |
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of investments in cash equivalents, accounts receivable and derivative instruments. | |
The Company invests from time to time in securities of financial institutions it deems to be of high creditworthiness. Accounts receivable are deemed by the Company to be highly diversified due to the high number of individual customers comprising the Company's customer base and their dispersion across diverse geographical regions. The counterparties to our derivative instruments are deemed by the Company to be of substantial resources and strong creditworthiness. The Company believes that no significant concentration of credit risk exists with respect to its investments in cash equivalents, its accounts receivable and its derivative instruments at September 30, 2013 and 2012. | |
Trade Accounts Receivable and Accounts Receivable, Other | ' |
Trade Accounts Receivable and Accounts Receivable, Other | |
Trade accounts receivable are recorded at the values invoiced to customers and do not bear interest. Trade accounts receivable are stated net of the allowance for doubtful accounts. The allowance for doubtful accounts requires management to estimate the future collectability of amounts receivable at the balance sheet date. The Company records allowances for doubtful accounts on the basis of historical collection data and current customer information. Customer account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. In the Company's consolidated statements of earnings, bad debt expense is included in selling, general and administrative expenses. The Company's exposure to credit risk with respect to trade receivables is mitigated by the Company's broad customer base and their dispersion across diverse geographical regions. | |
Accounts receivable, other, consist primarily of amounts expected to be received from vendors under various contractual agreements and are recorded at the amount management estimates will be collected. | |
Inventory | ' |
Inventory | |
Inventory consists primarily of beauty supplies and related accessories, and salon equipment for sale in the normal course of our business. Inventory is stated at the lower of cost, determined using the first-in, first-out ("FIFO") method, or market (net realizable value). Inventory cost reflects actual product costs, the cost of transportation to the Company's distribution centers and certain shipping and handling costs, such as freight from the distribution centers to the stores and handling costs incurred at the distribution centers. When necessary, the Company adjusts the carrying value of inventory to the lower of cost or market, including anticipated disposal costs and for estimated inventory shrinkage. Estimates of the future demand for the Company's products, historical turn-over rates, the age and sales history of the inventory, and historic as well as anticipated changes in stock keeping units ("SKUs") are some of the key factors used by management in assessing the net realizable value of inventory. | |
The Company estimates inventory shrinkage between physical counts based on its historical experience. Physical inventory counts are performed at substantially all stores and significant distribution centers at least annually, and sooner when management has reason to believe that the risk of inventory shrinkage at a particular location is heightened. Upon completion of physical inventory counts, the Company's consolidated financial statements are adjusted to reflect actual quantities on hand. The Company has policies and processes in place that are intended to minimize inventory shrinkage. Inventory shrinkage expense has averaged approximately 1% of our consolidated net sales during each of the past three fiscal years. | |
Lease Accounting | ' |
Lease Accounting | |
The Company's lease agreements for office space, company-operated stores and warehouse/distribution facilities are generally accounted for as operating leases, consistent with applicable GAAP. Rent expense (including any rent abatements or escalation charges) is recognized on a straight-line basis from the date the Company takes possession of the property to begin preparation of the site for occupancy to the end of the lease term, including renewal options determined to be reasonably assured. Certain lease agreements to which the Company is a party provide for contingent rents that are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability, along with the corresponding rent expense, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. | |
Certain lease agreements to which the Company is a party provide for tenant improvement allowances. Such allowances are recorded as deferred lease credits, included in accrued liabilities and other liabilities, as appropriate, on our consolidated balance sheets, and amortized on a straight-line basis over the lease term (including renewal options determined to be reasonably assured) as a reduction of rent expense. The amortization period used for deferred lease credits is generally consistent with the amortization period used for the constructed leasehold improvement asset for a given location. | |
Valuation of Long-Lived Assets and Intangible Assets with Definite Lives | ' |
Valuation of Long-Lived Assets and Intangible Assets with Definite Lives | |
Long-lived assets, such as property and equipment, including store equipment, and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The recoverability of long-lived assets and intangible assets subject to amortization is assessed by comparing the net carrying amount of each asset to its total estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. There were no significant impairment losses recognized in our consolidated financial statements in the current or prior fiscal years presented in connection with long-lived assets and intangible assets subject to amortization. | |
Intangible assets subject to amortization include customer relationships, certain distribution rights and non-competition agreements, and are amortized, on a straight-line basis, over periods of one to twelve years. Such amortization periods are based on the estimated useful lives of the assets and take into account the terms of any underlying agreements, but do not generally reflect all renewal terms contractually available to the Company. | |
Goodwill and Intangible Assets with Indefinite Lives | ' |
Goodwill and Intangible Assets with Indefinite Lives | |
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Intangible assets with indefinite lives consist of trade names acquired in business combinations. Goodwill and intangible assets with indefinite lives are reviewed for impairment at least annually, during our second fiscal quarter, and whenever events or changes in circumstances indicate it is more likely than not that the value of the asset may be impaired. When assessing goodwill and intangible assets with indefinite lives for potential impairment, management considers whether the value of the asset has been impaired by evaluating if various factors (including current operating results, anticipated future results and cash flows, and relevant market and economic conditions) indicate a possible impairment and, if appropriate, compares the carrying amount of the asset to its fair value. | |
In July 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which amended Accounting Standards Codification ("ASC") Topic 350, Intangibles-Goodwill and Other ("ASC 350"). This amendment allows an entity to first assess relevant qualitative factors in order to determine whether it is necessary to perform the quantitative impairment test for indefinite-lived intangible assets otherwise required under ASC 350. In effect, the amendment eliminates the need to calculate the fair value of an indefinite-lived intangible asset in connection with the impairment test unless the entity determines, based on the qualitative assessment, that it is more likely than not that the asset is impaired. As permitted, the Company adopted this amendment during the second quarter of its fiscal year 2013 and its adoption did not have a material effect on the Company's consolidated financial position, results of operations or cash flows. | |
Based on the reviews performed, after taking into account the economic downturn experienced during the past several years in certain geographic areas in which we operate, there was no impairment of goodwill or intangible assets with indefinite lives recognized in our financial statements in the current or prior fiscal years presented. | |
Deferred Financing Costs | ' |
Deferred Financing Costs | |
Certain costs incurred in connection with the issuance of debt are capitalized when incurred and are amortized over the estimated term of the related debt agreements generally using the effective interest method. Such capitalized costs are included in other assets in our consolidated balance sheets. Unamortized deferred financing costs are expensed proportionally when certain debt is prepaid or notes are redeemed. | |
Self-Insurance Programs | ' |
Self-Insurance Programs | |
The Company retains a substantial portion of the risk related to certain of its workers' compensation, general and auto liability and property damage insurable loss exposure. Predetermined loss limits have been arranged with insurance companies to limit the Company's exposure per occurrence and aggregate cash outlay. Certain of our employees and their dependents are also covered by a self-insurance program for healthcare benefit purposes. Currently these self-insurance costs, less amounts recovered through payroll deductions and certain out-of-pocket amounts incurred in connection with the employee healthcare program, are funded by the Company. The Company maintains an annual stop-loss insurance policy for the healthcare benefits plan. | |
The Company records an estimated liability for the ultimate cost of claims incurred and unpaid as of the balance sheet date, which includes both claims filed and estimated losses incurred but not yet reported. The Company estimates the ultimate cost based on an analysis of historical data and actuarial estimates. Workers' compensation, general and auto liability and property damage insurable loss liabilities are recorded at the estimate of their net present value, while healthcare plan liabilities are not discounted. These estimates are reviewed on a regular basis to ensure that the recorded liability is adequate. The Company believes the amounts accrued at September 30, 2013 and 2012 are adequate. | |
Revenue Recognition | ' |
Revenue Recognition | |
The Company recognizes sales revenue when a customer consummates a point-of-sale transaction at a store. The cost of sales incentive programs, including customer and consumer coupons, is recognized as a reduction of revenue at the time of sale. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis and are excluded from revenue. The Company also recognizes revenue on merchandise shipped to customers when title and risk of loss pass to the customer (generally upon shipment). Appropriate provisions for sales returns and cash discounts are made at the time the sales are recognized. Sales returns and allowances averaged approximately 2.0% of net sales during each of the past three fiscal years. | |
Cost of Products Sold and Distribution Expenses | ' |
Cost of Products Sold and Distribution Expenses | |
Cost of products sold and distribution expenses include actual product costs, the cost of transportation to the Company's distribution centers, vendor rebates and allowances, inventory shrinkage and certain shipping and handling costs, such as freight from the distribution centers to the stores and handling costs incurred at the distribution centers. All other shipping and handling costs are included in selling, general and administrative expenses when incurred. | |
Shipping and Handling | ' |
Shipping and Handling | |
Shipping and handling costs (including freight and distribution expenses) related to delivery to customers are included in selling, general and administrative expenses in our consolidated statements of earnings when incurred and amounted to $48.5 million, $41.3 million and $41.2 million for the fiscal years 2013, 2012 and 2011, respectively. | |
Advertising Costs | ' |
Advertising Costs | |
Advertising costs relate mainly to print advertisements, digital marketing, trade shows and product education for salon professionals. Advertising costs incurred in connection with print advertisements are expensed the first time the advertisement is run. Other advertising costs are expensed when incurred. Advertising costs of $83.9 million, $79.8 million and $70.9 million for the fiscal years 2013, 2012 and 2011, respectively, are included in selling, general and administrative expenses in our consolidated statements of earnings. | |
Vendor Rebates and Concessions | ' |
Vendor Rebates and Concessions | |
The Company deems a cash consideration received from a supplier to be a reduction of the cost of products sold unless it is in exchange for an asset or service or a reimbursement of a specific, incremental, identifiable cost incurred by the Company in selling the vendor's products. The majority of cash consideration received by the Company is considered to be a reduction of the cost of the related products and is reflected in cost of products sold and distribution expenses in our consolidated statements of earnings as the related products are sold. Any portion of such cash consideration received that is attributable to inventory on hand is reflected as a reduction of inventory. | |
Income Taxes | ' |
Income Taxes | |
The Company recognizes deferred income taxes for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are estimated to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of earnings in the period of enactment. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets to the amount expected to be realized unless it is more-likely-than-not that such assets will be realized in full. The estimated tax benefit of an uncertain tax position is recorded in our financial statements only after determining a more-likely-than-not probability that the uncertain tax position will withstand challenge, if any, from applicable taxing authorities. | |
Foreign Currency | ' |
Foreign Currency | |
The functional currency of each of the Company's foreign operations is generally the respective local currency. Balance sheet accounts are translated into U.S. dollars (the Company's reporting currency) at the rates of exchange in effect at the balance sheet date, while the results of operations are translated using the average exchange rates during the period presented. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income ("AOCI") in our consolidated balance sheets. Foreign currency transaction gains or losses are included in our consolidated statements of earnings when incurred and were not significant in any of the periods presented in the accompanying financial statements. | |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Schedule of financial assets and liabilities by fair value hierarchy | ' | |||||||||||||
Consistent with this hierarchy, the Company categorized certain of its financial assets and liabilities as follows at September 30, 2013 and 2012 (in thousands): | ||||||||||||||
As of September 30, 2013 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash equivalents(a) | $ | — | $ | — | $ | — | — | |||||||
Foreign exchange contracts(b) | 152 | — | 152 | — | ||||||||||
Total assets | $ | 152 | $ | — | $ | 152 | — | |||||||
Liabilities | ||||||||||||||
Long-term debt(c) | $ | 1,753,822 | $ | 1,671,500 | $ | 82,322 | — | |||||||
Foreign exchange contracts(b) | 36 | — | 36 | — | ||||||||||
Total liabilities | $ | 1,753,858 | $ | 1,671,500 | $ | 82,358 | — | |||||||
As of September 30, 2012 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets | ||||||||||||||
Cash equivalents(a) | $ | 155,000 | $ | 155,000 | $ | — | — | |||||||
Foreign exchange contracts(b) | 4 | — | 4 | — | ||||||||||
Total assets | $ | 155,004 | $ | 155,000 | $ | 4 | — | |||||||
Liabilities | ||||||||||||||
Long-term debt(c) | $ | 1,739,547 | $ | 1,731,625 | $ | 7,922 | — | |||||||
Foreign exchange contracts(b) | 132 | — | 132 | — | ||||||||||
Total liabilities | $ | 1,739,679 | $ | 1,731,625 | $ | 8,054 | — | |||||||
(a) | ||||||||||||||
Cash equivalents, at September 30, 2012, consist of highly liquid investments which have no maturity and are valued using unadjusted quoted market prices for such securities. The Company may from time to time invest in securities with maturities of three months or less (consisting primarily of investment-grade corporate or government bonds), with the primary investment objective of minimizing the potential risk of loss of principal. | ||||||||||||||
(b) | ||||||||||||||
Foreign exchange contracts (including foreign currency forwards and options) are valued for purposes of this disclosure using widely accepted valuation techniques, such as discounted cash flow analyses, and reasonable estimates, such as market foreign currency exchange rates. Please see Note 14 for more information about the Company's foreign exchange contracts. | ||||||||||||||
(c) | ||||||||||||||
Long-term debt (including current maturities and borrowings under the ABL facility) is carried in the Company's consolidated financial statements at amortized cost of $1,690.7 million at September 30, 2013 and $1,617.2 million at September 30, 2012. The senior notes due 2019 and senior notes due 2022 are valued for purposes of this disclosure using unadjusted quoted market prices for such debt securities. Other long-term debt (consisting primarily of borrowings under the ABL facility and capital lease obligations), is generally valued for purposes of this disclosure using widely accepted valuation techniques, such as discounted cash flow analyses, and observable inputs such as market interest rates. Please see Note 13 for more information about the Company's debt. | ||||||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Earnings Per Share | ' | ||||||||||
Schedule of computations of basic and diluted earnings per share | ' | ||||||||||
The following table sets forth the computations of basic and diluted earnings per share (in thousands, except per share data): | |||||||||||
Year ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Net earnings | $ | 261,151 | $ | 233,064 | $ | 213,725 | |||||
Weighted average basic shares | 171,682 | 183,420 | 183,020 | ||||||||
Dilutive securities: | |||||||||||
Stock option and stock award programs | 4,477 | 5,190 | 5,073 | ||||||||
Weighted average diluted shares | 176,159 | 188,610 | 188,093 | ||||||||
Earnings per share: | |||||||||||
Basic | $ | 1.52 | $ | 1.27 | $ | 1.17 | |||||
Diluted | $ | 1.48 | $ | 1.24 | $ | 1.14 | |||||
ShareBased_Payments_Tables
Share-Based Payments (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-Based Payments | ' | ||||||||||||||||
Summary of activity for stock option awards | ' | ||||||||||||||||
Number of | Weighted | Weighted | Aggregate | ||||||||||||||
Outstanding | Average | Average | Intrinsic | ||||||||||||||
Options (in | Exercise | Remaining | Value (in | ||||||||||||||
Thousands) | Price | Contractual | Thousands) | ||||||||||||||
Term (in | |||||||||||||||||
Years) | |||||||||||||||||
Outstanding at September 30, 2012 | 11,861 | $ | 10.45 | 6.5 | $ | 173,601 | |||||||||||
Granted | 1,578 | 23.49 | |||||||||||||||
Exercised | (2,952 | ) | 8.64 | ||||||||||||||
Forfeited or expired | (79 | ) | 18.04 | ||||||||||||||
Outstanding at September 30, 2013 | 10,408 | $ | 12.89 | 6.2 | $ | 138,139 | |||||||||||
Exercisable at September 30, 2013 | 5,409 | $ | 9.24 | 4.9 | $ | 91,545 | |||||||||||
Summary of stock options by range of exercise prices | ' | ||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||
Range of Exercise Prices | Number | Weighted | Weighted | Number | Weighted | ||||||||||||
Outstanding at | Average | Average | Exercisable at | Average | |||||||||||||
September 30, | Remaining | Exercise | September 30, | Exercise | |||||||||||||
2013 (in | Contractual | Price | 2013 (in | Price | |||||||||||||
Thousands) | Term (in | Thousands) | |||||||||||||||
Years) | |||||||||||||||||
$2.00 - 9.66 | 4,836 | 4.5 | $ | 7.85 | 4,180 | $ | 7.91 | ||||||||||
$11.39 - 23.49 | 5,572 | 7.7 | 17.26 | 1,229 | 13.74 | ||||||||||||
Total | 10,408 | 6.2 | $ | 12.89 | 5,409 | $ | 9.24 | ||||||||||
Schedule of weighted average assumptions for valuation of stock options | ' | ||||||||||||||||
Year Ended | |||||||||||||||||
September 30, | |||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||
Expected life (in years) | 5 | 5 | 5 | ||||||||||||||
Expected volatility | 56.3 | % | 58.4 | % | 59 | % | |||||||||||
Risk-free interest rate | 0.8 | % | 1.1 | % | 1.1 | % | |||||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | |||||||||||
Restricted Stock Awards | ' | ||||||||||||||||
Share-Based Payments | ' | ||||||||||||||||
Summary of the activity for restricted stock awards/units | ' | ||||||||||||||||
Restricted Stock Awards | Number of | Weighted | Weighted | ||||||||||||||
Shares (in | Average Fair | Average | |||||||||||||||
Thousands) | Value Per Share | Remaining | |||||||||||||||
Vesting Term | |||||||||||||||||
(in Years) | |||||||||||||||||
Unvested at September 30, 2012 | 307 | $ | 10.42 | 2.5 | |||||||||||||
Granted | 139 | 23.79 | |||||||||||||||
Vested | (109 | ) | 9.37 | ||||||||||||||
Forfeited | — | — | |||||||||||||||
Unvested at September 30, 2013 | 337 | $ | 16.3 | 3.1 | |||||||||||||
Restricted Stock Units | ' | ||||||||||||||||
Share-Based Payments | ' | ||||||||||||||||
Summary of the activity for restricted stock awards/units | ' | ||||||||||||||||
Restricted Stock Units | Number of | Weighted | Weighted | ||||||||||||||
Shares (in | Average Fair | Average | |||||||||||||||
Thousands) | Value Per Share | Remaining | |||||||||||||||
Vesting Term | |||||||||||||||||
(In Years) | |||||||||||||||||
Unvested at September 30, 2012 | — | $ | — | — | |||||||||||||
Granted | 36 | 23.84 | |||||||||||||||
Vested | (32 | ) | 23.89 | ||||||||||||||
Forfeited | (4 | ) | 23.49 | ||||||||||||||
Unvested at September 30, 2013 | — | $ | — | — | |||||||||||||
Allowance_for_Doubtful_Account1
Allowance for Doubtful Accounts (Tables) | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Allowance for Doubtful Accounts | ' | ||||||||||
Schedule of change in the allowance for doubtful accounts | ' | ||||||||||
The change in the allowance for doubtful accounts was as follows (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Balance at beginning of period | $ | 2,583 | $ | 2,086 | $ | 2,756 | |||||
Bad debt expense | 1,671 | 1,764 | 1,631 | ||||||||
Uncollected accounts written off, net of recoveries | (1,698 | ) | (1,336 | ) | (2,423 | ) | |||||
Allowance for doubtful accounts of acquired companies | — | 69 | 122 | ||||||||
Balance at end of period | $ | 2,556 | $ | 2,583 | $ | 2,086 | |||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Property and Equipment | ' | |||||||
Schedule of property and equipment | ' | |||||||
Property and equipment, net consists of the following (in thousands): | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Land | $ | 11,277 | $ | 11,197 | ||||
Buildings and building improvements | 60,100 | 59,656 | ||||||
Leasehold improvements | 211,736 | 188,844 | ||||||
Furniture, fixtures and equipment | 321,659 | 295,128 | ||||||
Total property and equipment, gross | 604,772 | 554,825 | ||||||
Less accumulated depreciation and amortization | (375,232 | ) | (352,164 | ) | ||||
Total property and equipment, net | $ | 229,540 | $ | 202,661 | ||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Goodwill and Intangible Assets | ' | ||||||||||
Schedule of changes in carrying amounts of goodwill by operating segment | ' | ||||||||||
The changes in the carrying amounts of goodwill by operating segment for the fiscal years 2012 and 2013 are as follows (in thousands): | |||||||||||
Sally Beauty | Beauty Systems | Total | |||||||||
Supply | Group | ||||||||||
Balance at September 30, 2011 | 75,536 | 430,337 | 505,873 | ||||||||
Acquisitions | 15,200 | 9,189 | 24,389 | ||||||||
Foreign currency translation | (881 | ) | 2,950 | 2,069 | |||||||
Balance at September 30, 2012 | $ | 89,855 | $ | 442,476 | $ | 532,331 | |||||
Acquisitions | 501 | 5,047 | 5,548 | ||||||||
Foreign currency translation | 2,298 | (1,899 | ) | 399 | |||||||
Balance at September 30, 2013 | $ | 92,654 | $ | 445,624 | $ | 538,278 | |||||
Schedule of carrying value for intangible assets by operating segment | ' | ||||||||||
The following table provides the carrying value for intangible assets with indefinite lives, excluding goodwill, and the gross carrying value and accumulated amortization for intangible assets subject to amortization by operating segment at September 30, 2013 and 2012 (in thousands): | |||||||||||
Sally Beauty | Beauty Systems | Total | |||||||||
Supply | Group | ||||||||||
Balance at September 30, 2013: | |||||||||||
Intangible assets with indefinite lives: | |||||||||||
Trade names | $ | 27,968 | $ | 27,465 | $ | 55,433 | |||||
Intangible assets subject to amortization: | |||||||||||
Gross carrying amount | 26,809 | 119,614 | 146,423 | ||||||||
Accumulated amortization | (12,177 | ) | (59,582 | ) | (71,759 | ) | |||||
Net value | 14,632 | 60,032 | 74,664 | ||||||||
Total intangible assets, excluding goodwill, net | $ | 42,600 | $ | 87,497 | $ | 130,097 | |||||
Balance at September 30, 2012: | |||||||||||
Intangible assets with indefinite lives: | |||||||||||
Trade names | $ | 27,258 | $ | 27,455 | $ | 54,713 | |||||
Intangible assets subject to amortization: | |||||||||||
Gross carrying amount | 26,430 | 106,486 | 132,916 | ||||||||
Accumulated amortization | (9,856 | ) | (49,336 | ) | (59,192 | ) | |||||
Net value | 16,574 | 57,150 | 73,724 | ||||||||
Total intangible assets, excluding goodwill, net | $ | 43,832 | $ | 84,605 | $ | 128,437 | |||||
Schedule of estimated future amortization expense related to intangible assets subject to amortization | ' | ||||||||||
As of September 30, 2013, future amortization expense related to intangible assets subject to amortization is estimated to be as follows (in thousands): | |||||||||||
Fiscal Year: | |||||||||||
2014 | $ | 13,998 | |||||||||
2015 | 13,553 | ||||||||||
2016 | 12,163 | ||||||||||
2017 | 10,047 | ||||||||||
2018 | 8,810 | ||||||||||
Thereafter | 16,093 | ||||||||||
$ | 74,664 | ||||||||||
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 12 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accrued Liabilities | ' | |||||||
Schedule of accrued liabilities | ' | |||||||
Accrued liabilities consist of the following (in thousands): | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Compensation and benefits | $ | 70,802 | $ | 79,935 | ||||
Interest payable | 36,311 | 38,376 | ||||||
Deferred revenue | 20,890 | 19,000 | ||||||
Rental obligations | 11,340 | 11,540 | ||||||
Loss contingency obligation | — | 10,194 | ||||||
Property and other taxes | 4,373 | 4,124 | ||||||
Insurance reserves | 11,109 | 9,626 | ||||||
Operating accruals and other | 29,937 | 27,472 | ||||||
Total accrued liabilities | $ | 184,762 | $ | 200,267 | ||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Sep. 30, 2013 | |||||
Commitments and Contingencies | ' | ||||
Schedule of future minimum payments under non-cancelable operating leases, net of sublease income | ' | ||||
At September 30, 2013, future minimum payments under non-cancelable operating leases, net of sublease income, are as follows (in thousands): | |||||
Fiscal Year: | |||||
2014 | $ | 156,415 | |||
2015 | 131,540 | ||||
2016 | 105,820 | ||||
2017 | 75,858 | ||||
2018 | 46,440 | ||||
Thereafter | 68,405 | ||||
$ | 584,478 | ||||
Shortterm_Borrowings_and_LongT1
Short-term Borrowings and Long-Term Debt (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Short-term Borrowings and Long-Term Debt | ' | ||||||||
Summary of long-term debt | ' | ||||||||
Details of long-term debt are as follows (in thousands): | |||||||||
As of September 30, | |||||||||
2013 | 2012 | Interest Rates | |||||||
ABL facility(a) | $ | 76,000 | $ | — | (i) Prime plus (0.50% to 0.75%) or; | ||||
(ii) LIBOR(a) plus (1.50% to 1.75%) | |||||||||
Senior notes due Nov. 2019 | 750,000 | 750,000 | 6.88% | ||||||
Senior notes due Jun. 2022(b) | 858,381 | 859,308 | 5.750%(b) | ||||||
Other, due 2014-2015(c) | 1,310 | 2,407 | 4.93% to 5.79% | ||||||
Total | $ | 1,685,691 | $ | 1,611,715 | |||||
Capital leases and other | 5,012 | 5,515 | |||||||
Less: current portion | 78,018 | 1,908 | |||||||
Total long-term debt | $ | 1,612,685 | $ | 1,615,322 | |||||
(a) | |||||||||
At September 30, 2013, borrowings outstanding under the ABL facility bear interest at the weighted average rate of 2.0%. When used in this Annual Report, LIBOR means the London Interbank Offered Rate. | |||||||||
(b) | |||||||||
Includes unamortized premium of $8.4 million and $9.3 million as of September 30, 2013 and 2012, respectively, related to notes issued in September 2012 with an aggregate principal amount of $150.0 million. The 5.75% interest rate relates to notes in the aggregate principal amount of $850.0 million. | |||||||||
(c) | |||||||||
Represents pre-acquisition debt of Pro-Duo NV and Sinelco Group BVBA ("Sinelco"). | |||||||||
Schedule of maturities of long-term debt | ' | ||||||||
Maturities of the Company's long-term debt are as follows at September 30, 2013 (in thousands): | |||||||||
Fiscal Year: | |||||||||
2014 | $ | 77,203 | |||||||
2015 | 107 | ||||||||
2016-2018 | — | ||||||||
Thereafter | 1,608,381 | ||||||||
$ | 1,685,691 | ||||||||
Capital lease obligations | 5,012 | ||||||||
Less: current portion | 78,018 | ||||||||
Total | $ | 1,612,685 | |||||||
Derivative_Instruments_and_Hed1
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended | |||||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||||
Derivative Instruments and Hedging Activities | ' | |||||||||||||||||||||
Tabular disclosure of fair values of derivative instruments | ' | |||||||||||||||||||||
The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Company's consolidated balance sheet as of September 30, 2013 and 2012 (in thousands): | ||||||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||||||
As of | As of | |||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||
Classification | 2013 | 2012 | Classification | 2013 | 2012 | |||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||
Interest Rate Swaps | Other assets | — | — | Accrued liabilities | — | — | ||||||||||||||||
— | — | — | — | |||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||
Foreign Exchange Contracts | Prepaid expenses | $ | 152 | $ | 4 | Accrued liabilities | $ | 36 | $ | 132 | ||||||||||||
$ | 152 | $ | 4 | $ | 36 | $ | 132 | |||||||||||||||
Tabular disclosure of the effect of derivative instruments on the statement of earnings | ' | |||||||||||||||||||||
The table below presents the effect of the Company's derivative financial instruments on the Company's consolidated statements of earnings for the fiscal years ended September 30, 2013, 2012 and 2011 (in thousands): | ||||||||||||||||||||||
Amount of Gain or | Amount of Gain or (Loss) Reclassified from | |||||||||||||||||||||
(Loss) Recognized in | Accumulated OCI | |||||||||||||||||||||
OCI on Derivative | into Income (Effective Portion) | |||||||||||||||||||||
(Effective Portion), net | ||||||||||||||||||||||
of tax | ||||||||||||||||||||||
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||||||||||
Derivatives | September 30, | September 30, | ||||||||||||||||||||
Designated as | ||||||||||||||||||||||
Hedging | ||||||||||||||||||||||
Instruments | 2013 | 2012 | 2011 | Classification | 2013 | 2012 | 2011 | |||||||||||||||
Interest Rate Swaps | $ | — | $ | 3,947 | $ | 5,557 | Interest expense | $ | — | $ | (6,731 | ) | $ | (10,174 | ) | |||||||
Amount of Gain or | ||||||||||||||||||||||
(Loss) Recognized in | ||||||||||||||||||||||
Income on | ||||||||||||||||||||||
Derivatives | ||||||||||||||||||||||
Fiscal Year Ended | ||||||||||||||||||||||
Classification of Gain or | September 30, | |||||||||||||||||||||
(Loss) Recognized into | ||||||||||||||||||||||
Derivatives Not Designated as | Income | 2013 | 2012 | 2011 | ||||||||||||||||||
Hedging Instruments | ||||||||||||||||||||||
Foreign Exchange Contracts | Selling, general and administrative expenses | $ | (2,846 | ) | $ | 2,003 | $ | 194 | ||||||||||||||
Total derivatives not designated as hedging instruments | $ | (2,846 | ) | $ | 2,003 | $ | 194 | |||||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Income Taxes | ' | ||||||||||
Schedule of provision for income taxes | ' | ||||||||||
The provision for income taxes for the fiscal years 2013, 2012 and 2011 consists of the following (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Current: | |||||||||||
Federal | $ | 113,057 | $ | 97,866 | $ | 97,172 | |||||
Foreign | 9,997 | 10,925 | 11,081 | ||||||||
State | 17,727 | 16,692 | 13,629 | ||||||||
Total current portion | 140,781 | 125,483 | 121,882 | ||||||||
Deferred: | |||||||||||
Federal | 13,932 | 4,920 | 2,615 | ||||||||
Foreign | (2,822 | ) | (2,888 | ) | (2,525 | ) | |||||
State | (375 | ) | 364 | 242 | |||||||
Total deferred portion | 10,735 | 2,396 | 332 | ||||||||
Total provision for income tax | $ | 151,516 | $ | 127,879 | $ | 122,214 | |||||
Schedule of the difference between U.S. statutory federal income tax rate and the effective income tax rate | ' | ||||||||||
Year Ended | |||||||||||
September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Statutory tax rate | 35 | % | 35 | % | 35 | % | |||||
State income taxes, net of federal tax benefit | 2.8 | 3.4 | 2.8 | ||||||||
Effect of foreign operations | (0.6 | ) | (0.4 | ) | (1.3 | ) | |||||
Effect of limited restructuring | — | (2.8 | ) | — | |||||||
Other, net | (0.5 | ) | 0.2 | (0.1 | ) | ||||||
Effective tax rate | 36.7 | % | 35.4 | % | 36.4 | % | |||||
Schedule of the tax effects of temporary differences that give rise to the Company's deferred tax assets and liabilities | ' | ||||||||||
The tax effects of temporary differences that give rise to the Company's deferred tax assets and liabilities are as follows (in thousands): | |||||||||||
September 30, | |||||||||||
2013 | 2012 | ||||||||||
Deferred tax assets attributable to: | |||||||||||
Share-based compensation expense | $ | 20,668 | $ | 18,771 | |||||||
Accrued liabilities | 26,817 | 33,495 | |||||||||
Inventory adjustments | 3,771 | 5,208 | |||||||||
Foreign loss carryforwards | 28,776 | 23,405 | |||||||||
Unrecognized tax benefits | 437 | 605 | |||||||||
Other | 3,408 | 2,011 | |||||||||
Total deferred tax assets | 83,877 | 83,495 | |||||||||
Valuation allowance | (26,073 | ) | (21,681 | ) | |||||||
Total deferred tax assets, net | 57,804 | 61,814 | |||||||||
Deferred tax liabilities attributable to: | |||||||||||
Depreciation and amortization | 99,259 | 92,292 | |||||||||
Total deferred tax liabilities | 99,259 | 92,292 | |||||||||
Net deferred tax liability | $ | 41,455 | $ | 30,478 | |||||||
Schedule of changes in the amount of unrecognized tax benefits | ' | ||||||||||
The changes in the amount of unrecognized tax benefits for the fiscal years ended September 30, 2013 and 2012 are as follows (in thousands): | |||||||||||
2013 | 2012 | ||||||||||
Balance at beginning of the fiscal year | $ | 7,941 | $ | 10,836 | |||||||
Increases related to prior year tax positions | 26 | 90 | |||||||||
Decreases related to prior year tax positions | (1 | ) | (119 | ) | |||||||
Increases related to current year tax positions | 218 | 171 | |||||||||
Settlements | — | (127 | ) | ||||||||
Lapse of statute | (3,361 | ) | (2,910 | ) | |||||||
Balance at end of fiscal year | $ | 4,823 | $ | 7,941 | |||||||
Business_Segments_and_Geograph1
Business Segments and Geographic Area Information (Tables) | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Business Segments and Geographic Area Information | ' | ||||||||||
Schedule of segment data | ' | ||||||||||
Segment data for the fiscal years ended September 30, 2013, 2012 and 2011 is as follows (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Net sales: | |||||||||||
Sally Beauty Supply | $ | 2,230,028 | $ | 2,198,468 | $ | 2,012,407 | |||||
BSG | 1,392,188 | 1,325,176 | 1,256,724 | ||||||||
Total | $ | 3,622,216 | $ | 3,523,644 | $ | 3,269,131 | |||||
Earnings before provision for income taxes: | |||||||||||
Segment operating profit: | |||||||||||
Sally Beauty Supply(a) | $ | 437,018 | $ | 429,520 | $ | 380,963 | |||||
BSG(a) | 200,492 | 182,699 | 164,660 | ||||||||
Segment operating profit | 637,510 | 612,219 | 545,623 | ||||||||
Unallocated expenses(a)(b) | (97,947 | ) | (96,012 | ) | (81,594 | ) | |||||
Share-based compensation expense | (19,201 | ) | (16,852 | ) | (15,560 | ) | |||||
Interest expense(c) | (107,695 | ) | (138,412 | ) | (112,530 | ) | |||||
Total | $ | 412,667 | $ | 360,943 | $ | 335,939 | |||||
Identifiable assets: | |||||||||||
Sally Beauty Supply | $ | 913,395 | $ | 864,598 | $ | 766,896 | |||||
BSG | 973,764 | 959,784 | 908,093 | ||||||||
Sub-total | 1,887,159 | 1,824,382 | 1,674,989 | ||||||||
Corporate | 62,927 | 241,418 | 53,611 | ||||||||
Total | $ | 1,950,086 | $ | 2,065,800 | $ | 1,728,600 | |||||
Depreciation and amortization: | |||||||||||
Sally Beauty Supply | $ | 37,077 | $ | 31,397 | $ | 28,763 | |||||
BSG | 24,964 | 25,984 | 25,099 | ||||||||
Corporate | 10,151 | 7,317 | 5,860 | ||||||||
Total | $ | 72,192 | $ | 64,698 | $ | 59,722 | |||||
Capital expenditures: | |||||||||||
Sally Beauty Supply | $ | 60,565 | $ | 42,158 | $ | 34,946 | |||||
BSG | 15,744 | 11,977 | 14,145 | ||||||||
Corporate | 8,570 | 14,951 | 10,864 | ||||||||
Total | $ | 84,879 | $ | 69,086 | $ | 59,955 | |||||
(a) | |||||||||||
For the fiscal year ended September 30, 2012, Sally Beauty Supply's operating profit reflects a $10.2 million charge resulting from a loss contingency. For the fiscal year ended September 30, 2011, consolidated operating earnings reflect a net favorable impact of $21.3 million; including a $27.0 million credit from a litigation settlement and certain non-recurring charges of $5.7 million. This net benefit of $21.3 million is reflected in the BSG segment and in unallocated expenses in the amount of $19.0 million and $2.3 million, respectively. | |||||||||||
(b) | |||||||||||
Unallocated expenses consist of corporate and shared costs. | |||||||||||
(c) | |||||||||||
For the fiscal year ended September 30, 2012, interest expense includes losses on extinguishment of debt in the aggregate amount of $37.8 million in connection with the Company's redemption of outstanding notes and repayment of the term B loan. | |||||||||||
Schedule of geographic area information | ' | ||||||||||
Geographic data for the fiscal years ended September 30, 2013, 2012 and 2011 is as follows (in thousands): | |||||||||||
Year Ended September 30, | |||||||||||
2013 | 2012 | 2011 | |||||||||
Net sales:(a) | |||||||||||
United States | $ | 2,943,959 | $ | 2,885,958 | $ | 2,688,062 | |||||
Foreign | 678,257 | 637,686 | 581,069 | ||||||||
Total | $ | 3,622,216 | $ | 3,523,644 | $ | 3,269,131 | |||||
Identifiable assets: | |||||||||||
United States | $ | 1,356,969 | $ | 1,325,787 | $ | 1,240,894 | |||||
Foreign | 530,190 | 498,595 | 434,095 | ||||||||
Corporate | 62,927 | 241,418 | 53,611 | ||||||||
Total | $ | 1,950,086 | $ | 2,065,800 | $ | 1,728,600 | |||||
(a) | |||||||||||
Net sales are attributable to individual countries based on the location of the customer. | |||||||||||
Parent_Issuers_Guarantor_and_N1
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements (Tables) | 12 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements | ' | |||||||||||||||||||
Schedule of Condensed Consolidating Balance Sheet | ' | |||||||||||||||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||
September 30, 2013 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
Holdings | Subsidiaries | Guarantor | Eliminations | Holdings, | ||||||||||||||||
LLC and | Subsidiaries | Inc. and | ||||||||||||||||||
Sally Capital | Subsidiaries | |||||||||||||||||||
Inc. | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 16,337 | $ | 30,778 | $ | — | $ | 47,115 | ||||||||
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 2,317 | — | 56,432 | 42,427 | — | 101,176 | ||||||||||||||
Due from affiliates | — | — | 1,215,625 | 813 | (1,216,438 | ) | — | |||||||||||||
Inventory | — | — | 605,727 | 202,586 | — | 808,313 | ||||||||||||||
Prepaid expenses | 1,195 | 380 | 13,253 | 11,899 | — | 26,727 | ||||||||||||||
Deferred income tax assets, net | (391 | ) | (379 | ) | 31,504 | 1,752 | — | 32,486 | ||||||||||||
Property and equipment, net | 2 | — | 152,982 | 76,556 | — | 229,540 | ||||||||||||||
Investment in subsidiaries | 237,696 | 2,530,825 | 388,569 | — | (3,157,090 | ) | — | |||||||||||||
Goodwill and other intangible assets, net | — | — | 483,583 | 184,792 | — | 668,375 | ||||||||||||||
Other assets | — | 29,725 | 1,254 | 5,375 | — | 36,354 | ||||||||||||||
Total assets | $ | 240,819 | $ | 2,560,551 | $ | 2,965,266 | $ | 556,978 | $ | (4,373,528 | ) | $ | 1,950,086 | |||||||
Liabilities and Stockholders' (Deficit) Equity | ||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | 210,661 | $ | 62,795 | $ | — | $ | 273,456 | ||||||||
Due to affiliates | 545,658 | 599,246 | 813 | 70,721 | (1,216,438 | ) | — | |||||||||||||
Accrued liabilities | 191 | 36,341 | 121,426 | 26,804 | — | 184,762 | ||||||||||||||
Income taxes payable | — | 3,319 | 1 | 3,097 | — | 6,417 | ||||||||||||||
Long-term debt | — | 1,684,381 | 181 | 6,141 | — | 1,690,703 | ||||||||||||||
Other liabilities | — | — | 22,043 | 2,243 | — | 24,286 | ||||||||||||||
Deferred income tax liabilities, net | (1,551 | ) | (432 | ) | 79,316 | (3,392 | ) | — | 73,941 | |||||||||||
Total liabilities | 544,298 | 2,322,855 | 434,441 | 168,409 | (1,216,438 | ) | 2,253,565 | |||||||||||||
Total stockholders' (deficit) equity | (303,479 | ) | 237,696 | 2,530,825 | 388,569 | (3,157,090 | ) | (303,479 | ) | |||||||||||
Total liabilities and stockholders' (deficit) equity | $ | 240,819 | $ | 2,560,551 | $ | 2,965,266 | $ | 556,978 | $ | (4,373,528 | ) | $ | 1,950,086 | |||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||
September 30, 2012 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
Holdings | Subsidiaries | Guarantor | Eliminations | Holdings, | ||||||||||||||||
LLC and | Subsidiaries | Inc. and | ||||||||||||||||||
Sally Capital | Subsidiaries | |||||||||||||||||||
Inc. | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 155,000 | $ | 48,582 | $ | 36,638 | $ | — | $ | 240,220 | ||||||||
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 23,734 | — | 63,964 | 37,792 | — | 125,490 | ||||||||||||||
Due from affiliates | — | 2 | 934,268 | 3,637 | (937,907 | ) | — | |||||||||||||
Inventory | — | — | 551,017 | 184,339 | — | 735,356 | ||||||||||||||
Prepaid expenses | 1,181 | 24 | 12,189 | 15,982 | — | 29,376 | ||||||||||||||
Deferred income tax assets, net | (408 | ) | (423 | ) | 38,805 | (4,509 | ) | — | 33,465 | |||||||||||
Property and equipment, net | — | — | 140,238 | 62,423 | — | 202,661 | ||||||||||||||
Investment in subsidiaries | (30,403 | ) | 2,194,771 | 367,435 | — | (2,531,803 | ) | — | ||||||||||||
Goodwill and other intangible assets, net | — | — | 475,623 | 185,145 | — | 660,768 | ||||||||||||||
Other assets | — | 32,445 | 1,069 | 4,950 | — | 38,464 | ||||||||||||||
Total assets | $ | (5,896 | ) | $ | 2,381,819 | $ | 2,633,190 | $ | 526,397 | $ | (3,469,710 | ) | $ | 2,065,800 | ||||||
Liabilities and Stockholders' (Deficit) Equity | ||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | 202,560 | $ | 59,649 | $ | — | $ | 262,209 | ||||||||
Due to affiliates | 110,512 | 761,262 | 3,637 | 62,496 | (937,907 | ) | — | |||||||||||||
Accrued liabilities | 141 | 38,171 | 134,387 | 27,568 | — | 200,267 | ||||||||||||||
Income taxes payable | — | 4,136 | 4,596 | 4,272 | — | 13,004 | ||||||||||||||
Long-term debt | — | 1,609,308 | 265 | 7,657 | — | 1,617,230 | ||||||||||||||
Other liabilities | — | — | 21,060 | 3,172 | — | 24,232 | ||||||||||||||
Deferred income tax liabilities, net | (1,464 | ) | (655 | ) | 71,914 | (5,852 | ) | — | 63,943 | |||||||||||
Total liabilities | 109,189 | 2,412,222 | 438,419 | 158,962 | (937,907 | ) | 2,180,885 | |||||||||||||
Total stockholders' (deficit) equity | (115,085 | ) | (30,403 | ) | 2,194,771 | 367,435 | (2,531,803 | ) | (115,085 | ) | ||||||||||
Total liabilities and stockholders' (deficit) equity | $ | (5,896 | ) | $ | 2,381,819 | $ | 2,633,190 | $ | 526,397 | $ | (3,469,710 | ) | $ | 2,065,800 | ||||||
Schedule of Condensed Consolidating Statement of Earnings | ' | |||||||||||||||||||
Condensed Consolidating Statement of Earnings | ||||||||||||||||||||
Fiscal Year Ended September 30, 2013 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,896,990 | $ | 725,226 | $ | — | $ | 3,622,216 | ||||||||
Related party sales | — | — | 2,890 | — | (2,890 | ) | — | |||||||||||||
Cost of products sold and distribution expenses | — | — | 1,437,620 | 392,223 | (2,890 | ) | 1,826,953 | |||||||||||||
Gross profit | — | — | 1,462,260 | 333,003 | — | 1,795,263 | ||||||||||||||
Selling, general and administrative expenses | 9,951 | 434 | 912,262 | 280,062 | — | 1,202,709 | ||||||||||||||
Depreciation and amortization | — | — | 52,284 | 19,908 | — | 72,192 | ||||||||||||||
Operating earnings (loss) | (9,951 | ) | (434 | ) | 497,714 | 33,033 | — | 520,362 | ||||||||||||
Interest expense | — | 107,265 | 32 | 398 | — | 107,695 | ||||||||||||||
Earnings (loss) before provision for income taxes | (9,951 | ) | (107,699 | ) | 497,682 | 32,635 | — | 412,667 | ||||||||||||
Provision (benefit) for income taxes | (3,838 | ) | (41,832 | ) | 190,753 | 6,433 | — | 151,516 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 267,264 | 333,131 | 26,202 | — | (626,597 | ) | — | |||||||||||||
Net earnings | 261,151 | 267,264 | 333,131 | 26,202 | (626,597 | ) | 261,151 | |||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | 835 | — | 835 | ||||||||||||||
Total comprehensive income (loss) | $ | 261,151 | $ | 267,264 | $ | 333,131 | $ | 27,037 | $ | (626,597 | ) | $ | 261,986 | |||||||
Condensed Consolidating Statement of Earnings | ||||||||||||||||||||
Fiscal Year Ended September 30, 2012 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,837,214 | $ | 686,430 | $ | — | $ | 3,523,644 | ||||||||
Related party sales | — | — | 2,899 | — | (2,899 | ) | — | |||||||||||||
Cost of products sold and distribution expenses | — | — | 1,406,817 | 376,467 | (2,899 | ) | 1,780,385 | |||||||||||||
Gross profit | — | — | 1,433,296 | 309,963 | — | 1,743,259 | ||||||||||||||
Selling, general and administrative expenses | 10,391 | 674 | 908,964 | 259,177 | — | 1,179,206 | ||||||||||||||
Depreciation and amortization | 1 | — | 46,159 | 18,538 | — | 64,698 | ||||||||||||||
Operating earnings (loss) | (10,392 | ) | (674 | ) | 478,173 | 32,248 | — | 499,355 | ||||||||||||
Interest expense | — | 137,876 | 66 | 470 | — | 138,412 | ||||||||||||||
Earnings (loss) before provision for income taxes | (10,392 | ) | (138,550 | ) | 478,107 | 31,778 | — | 360,943 | ||||||||||||
Provision (benefit) for income taxes | (4,186 | ) | (53,802 | ) | 187,788 | (1,921 | ) | — | 127,879 | |||||||||||
Equity in earnings of subsidiaries, net of tax | 239,270 | 324,018 | 33,699 | — | (596,987 | ) | — | |||||||||||||
Net earnings | 233,064 | 239,270 | 324,018 | 33,699 | (596,987 | ) | 233,064 | |||||||||||||
Other comprehensive income, net of tax | — | 3,947 | — | 8,071 | — | 12,018 | ||||||||||||||
Total comprehensive income (loss) | $ | 233,064 | $ | 243,217 | $ | 324,018 | $ | 41,770 | $ | (596,987 | ) | $ | 245,082 | |||||||
Condensed Consolidating Statement of Earnings | ||||||||||||||||||||
Fiscal Year Ended September 30, 2011 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,639,741 | $ | 629,390 | $ | — | $ | 3,269,131 | ||||||||
Related party sales | — | — | 2,894 | — | (2,894 | ) | — | |||||||||||||
Cost of products sold and distribution expenses | — | — | 1,335,030 | 342,390 | (2,894 | ) | 1,674,526 | |||||||||||||
Gross profit | — | — | 1,307,605 | 287,000 | — | 1,594,605 | ||||||||||||||
Selling, general and administrative expenses | 7,812 | 560 | 845,732 | 232,310 | — | 1,086,414 | ||||||||||||||
Depreciation and amortization | 1 | — | 43,111 | 16,610 | — | 59,722 | ||||||||||||||
Operating earnings (loss) | (7,813 | ) | (560 | ) | 418,762 | 38,080 | — | 448,469 | ||||||||||||
Interest expense, net | — | 111,894 | (12 | ) | 648 | — | 112,530 | |||||||||||||
Earnings (loss) before provision for income taxes | (7,813 | ) | (112,454 | ) | 418,774 | 37,432 | — | 335,939 | ||||||||||||
Provision (benefit) for income taxes | (2,945 | ) | (43,613 | ) | 161,647 | 7,125 | — | 122,214 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 218,593 | 287,434 | 30,307 | — | (536,334 | ) | — | |||||||||||||
Net earnings | 213,725 | 218,593 | 287,434 | 30,307 | (536,334 | ) | 213,725 | |||||||||||||
Other comprehensive income (loss), net of tax | — | 5,557 | — | (7,952 | ) | — | (2,395 | ) | ||||||||||||
Total comprehensive income (loss) | $ | 213,725 | $ | 224,150 | $ | 287,434 | $ | 22,355 | $ | (536,334 | ) | $ | 211,330 | |||||||
Schedule of Condensed Consolidating Statement of Cash Flows | ' | |||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||
Fiscal Year Ended September 30, 2013 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net cash provided (used) by operating activities | $ | 483,720 | $ | (229,002 | ) | $ | 30,386 | $ | 25,350 | $ | — | $ | 310,454 | |||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Capital expenditures, net of proceeds from sale of property and equipment | (2 | ) | — | (54,358 | ) | (30,399 | ) | — | (84,759 | ) | ||||||||||
Acquisitions, net of cash acquired | — | — | (21,594 | ) | (624 | ) | — | (22,218 | ) | |||||||||||
Net cash used by investing activities | (2 | ) | — | (75,952 | ) | (31,023 | ) | — | (106,977 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 365,500 | — | — | — | 365,500 | ||||||||||||||
Repayments of long-term debt | — | (289,500 | ) | (83 | ) | (1,868 | ) | — | (291,451 | ) | ||||||||||
Debt issuance costs | — | (1,998 | ) | — | — | — | (1,998 | ) | ||||||||||||
Repurchases of common stock | (509,704 | ) | — | — | — | — | (509,704 | ) | ||||||||||||
Proceeds from exercises of stock options | 25,493 | — | — | — | — | 25,493 | ||||||||||||||
Excess tax benefit from share-based compensation | 493 | — | 13,404 | 1,488 | — | 15,385 | ||||||||||||||
Net cash (used) provided by financing activities | (483,718 | ) | 74,002 | 13,321 | (380 | ) | — | (396,775 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | 193 | — | 193 | ||||||||||||||
Net decrease in cash and cash equivalents | — | (155,000 | ) | (32,245 | ) | (5,860 | ) | — | (193,105 | ) | ||||||||||
Cash and cash equivalents, beginning of period | — | 155,000 | 48,582 | 36,638 | — | 240,220 | ||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | 16,337 | $ | 30,778 | $ | — | $ | 47,115 | ||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||
Fiscal Year Ended September 30, 2012 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non- | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Guarantor | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | Subsidiaries | and Subsidiaries | ||||||||||||||||||
Net cash provided by operating activities | $ | 171,980 | $ | 3,161 | $ | 69,049 | $ | 53,392 | $ | — | $ | 297,582 | ||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Capital expenditures | — | — | (45,942 | ) | (23,036 | ) | — | (68,978 | ) | |||||||||||
Acquisitions, net of cash acquired | — | — | (10,607 | ) | (32,928 | ) | — | (43,535 | ) | |||||||||||
Net cash used by investing activities | — | — | (56,549 | ) | (55,964 | ) | — | (112,513 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 2,101,475 | 14 | — | — | 2,101,489 | ||||||||||||||
Repayments of long-term debt | — | (1,918,339 | ) | (89 | ) | (2,856 | ) | — | (1,921,284 | ) | ||||||||||
Debt issuance costs | — | (31,297 | ) | — | — | — | (31,297 | ) | ||||||||||||
Repurchase of common stock | (200,000 | ) | — | — | — | — | (200,000 | ) | ||||||||||||
Proceeds from exercises of stock options | 28,020 | — | — | — | — | 28,020 | ||||||||||||||
Excess tax benefit from share-based compensation | — | — | 13,574 | 816 | — | 14,390 | ||||||||||||||
Net cash (used) provided by financing activities | (171,980 | ) | 151,839 | 13,499 | (2,040 | ) | — | (8,682 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | 352 | — | 352 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | 155,000 | 25,999 | (4,260 | ) | — | 176,739 | |||||||||||||
Cash and cash equivalents, beginning of period | — | — | 22,583 | 40,898 | — | 63,481 | ||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | 155,000 | $ | 48,582 | $ | 36,638 | $ | — | $ | 240,220 | ||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||
Fiscal Year Ended September 30, 2011 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Parent | Sally Holdings | Guarantor | Non-Guarantor | Consolidating | Sally Beauty | |||||||||||||||
LLC and Sally | Subsidiaries | Subsidiaries | Eliminations | Holdings, Inc. | ||||||||||||||||
Capital Inc. | and Subsidiaries | |||||||||||||||||||
Net cash (used) provided by operating activities | $ | (10,942 | ) | $ | 152,377 | $ | 112,035 | $ | 38,371 | $ | — | $ | 291,841 | |||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Capital expenditures | — | — | (41,478 | ) | (18,093 | ) | — | (59,571 | ) | |||||||||||
Acquisitions, net of cash acquired | — | — | (84,924 | ) | (2,240 | ) | — | (87,164 | ) | |||||||||||
Net cash used by investing activities | — | — | (126,402 | ) | (20,333 | ) | — | (146,735 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | 421,300 | 404 | 6,901 | — | 428,605 | ||||||||||||||
Repayments of long-term debt | — | (568,300 | ) | (141 | ) | (9,470 | ) | — | (577,911 | ) | ||||||||||
Debt issuance costs | — | (5,397 | ) | — | — | — | (5,397 | ) | ||||||||||||
Proceeds from exercises of stock options | 10,942 | — | — | — | — | 10,942 | ||||||||||||||
Excess tax benefit from share-based compensation | — | — | 3,712 | — | — | 3,712 | ||||||||||||||
Net cash provided (used) by financing activities | 10,942 | (152,397 | ) | 3,975 | (2,569 | ) | — | (140,049 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | (1,070 | ) | — | (1,070 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | — | (20 | ) | (10,392 | ) | 14,399 | — | 3,987 | ||||||||||||
Cash and cash equivalents, beginning of period | — | 20 | 32,975 | 26,499 | — | 59,494 | ||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | 22,583 | $ | 40,898 | $ | — | $ | 63,481 | ||||||||
Quarterly_Financial_Data_Unaud1
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Quarterly Financial Data (Unaudited) | ' | |||||||||||||
Schedule of selected unaudited quarterly consolidated statement of earnings data | ' | |||||||||||||
Certain unaudited quarterly consolidated statement of earnings information for the fiscal years ended September 30, 2013 and 2012 is summarized below (in thousands, except per share data): | ||||||||||||||
Fiscal Year | 1st | 2nd | 3rd | 4th | ||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
2013:00:00 | ||||||||||||||
Net sales | $ | 905,441 | $ | 898,239 | $ | 912,101 | $ | 906,435 | ||||||
Gross profit | $ | 444,368 | $ | 444,454 | $ | 457,083 | $ | 449,358 | ||||||
Net earnings | $ | 58,983 | $ | 64,889 | $ | 72,466 | $ | 64,812 | ||||||
Earnings per common share(a) | ||||||||||||||
Basic | $ | 0.33 | $ | 0.37 | $ | 0.43 | $ | 0.39 | ||||||
Diluted | $ | 0.32 | $ | 0.36 | $ | 0.42 | $ | 0.38 | ||||||
2012:00:00 | ||||||||||||||
Net sales | $ | 864,815 | $ | 889,281 | $ | 886,991 | $ | 882,557 | ||||||
Gross profit | $ | 421,857 | $ | 436,786 | $ | 444,379 | $ | 440,236 | ||||||
Net earnings | $ | 30,134 | $ | 67,813 | $ | 69,487 | $ | 65,630 | ||||||
Earnings per common share(a) | ||||||||||||||
Basic | $ | 0.16 | $ | 0.36 | $ | 0.38 | $ | 0.36 | ||||||
Diluted | $ | 0.16 | $ | 0.35 | $ | 0.37 | $ | 0.35 | ||||||
(a) | ||||||||||||||
The sum of the quarterly earnings per share may not equal the full year amount, as the computations of the weighted average number of common shares outstanding for each quarter and for the full year are performed independently. | ||||||||||||||
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation (Details) (USD $) | Nov. 30, 2006 |
In Millions, unless otherwise specified | |
Description of Business and Basis of Presentation | ' |
Debt Instrument, Face Amount | $1,850 |
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Cash and Cash Equivalents | ' | ' | ' |
Minimum period in which customer credit and debit card transactions are settled | '1 day | ' | ' |
Maximum period in which customer credit and debit card transactions are settled | '3 days | ' | ' |
Proceeds due from customers of credit and debit card and PayPal transactions | $10.60 | $20 | ' |
Inventory | ' | ' | ' |
Average approximate inventory shrinkage, as percentage of consolidated net sales | 1.00% | ' | ' |
Period of net sales considered for inventory shrinkage | '3 years | ' | ' |
Goodwill and Intangible Assets with Indefinite Lives | ' | ' | ' |
Impairment losses in connection with the goodwill | 0 | 0 | 0 |
Impairment of intangible assets with indefinite lives | 0 | 0 | 0 |
Revenue Recognition | ' | ' | ' |
Sales returns and allowance, average of net sales (as a percent) | 2.00% | ' | ' |
Period of sales considered for sales returns and allowances | '3 years | '3 years | '3 years |
Shipping and Handling | ' | ' | ' |
Shipping and handling costs | 48.5 | 41.3 | 41.2 |
Advertising Costs | ' | ' | ' |
Advertising costs | $83.90 | $79.80 | $70.90 |
Intangible assets with definite lives | ' | ' | ' |
Estimated useful life | '6 years 4 months 24 days | ' | ' |
Minimum | ' | ' | ' |
Intangible assets with definite lives | ' | ' | ' |
Estimated useful life | '1 year | ' | ' |
Maximum | ' | ' | ' |
Intangible assets with definite lives | ' | ' | ' |
Estimated useful life | '12 years | ' | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
Liabilities | ' | ' |
Long-term debt, amortized cost | $1,690,703 | $1,617,230 |
Fair value measurement on recurring basis | Total | ' | ' |
Assets | ' | ' |
Cash equivalents | ' | 155,000 |
Total assets | 152 | 155,004 |
Liabilities | ' | ' |
Long-term debt | 1,753,822 | 1,739,547 |
Total liabilities | 1,753,858 | 1,739,679 |
Fair value measurement on recurring basis | Total | Foreign exchange contracts | ' | ' |
Assets | ' | ' |
Foreign exchange derivative | 152 | 4 |
Liabilities | ' | ' |
Foreign exchange derivative | 36 | 132 |
Fair value measurement on recurring basis | Level 1 | ' | ' |
Assets | ' | ' |
Cash equivalents | ' | 155,000 |
Total assets | ' | 155,000 |
Liabilities | ' | ' |
Long-term debt | 1,671,500 | 1,731,625 |
Total liabilities | 1,671,500 | 1,731,625 |
Fair value measurement on recurring basis | Level 2 | ' | ' |
Assets | ' | ' |
Total assets | 152 | 4 |
Liabilities | ' | ' |
Long-term debt | 82,322 | 7,922 |
Total liabilities | 82,358 | 8,054 |
Fair value measurement on recurring basis | Level 2 | Foreign exchange contracts | ' | ' |
Assets | ' | ' |
Foreign exchange derivative | 152 | 4 |
Liabilities | ' | ' |
Foreign exchange derivative | $36 | $132 |
Accumulated_Stockholders_Equit1
Accumulated Stockholders' Equity (Deficit) (Details) (USD $) | 12 Months Ended | 12 Months Ended | 1 Months Ended | 7 Months Ended | 0 Months Ended | 7 Months Ended | |||
Share data in Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 31, 2012 | Mar. 04, 2013 | Mar. 05, 2013 | Sep. 30, 2013 |
Share Repurchase Program | Share Repurchase Program | 2012 Share Repurchase Program | 2012 Share Repurchase Program | 2013 Share Repurchase Program | 2013 Share Repurchase Program | ||||
fund | |||||||||
Accumulated Stockholders' Equity (Deficit) | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized (in shares) | 500,000 | 500,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized (in shares) | 50,000 | 50,000 | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued (in shares) | 164,762 | 180,548 | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares outstanding (in shares) | 164,425 | 180,241 | 184,057 | ' | ' | ' | ' | ' | ' |
Preferred stock issued (in shares) | 0 | 0 | ' | ' | ' | ' | ' | ' | ' |
Share repurchase program | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of shares authorized to be repurchased | ' | ' | ' | ' | ' | $300,000,000 | ' | $700,000,000 | ' |
Term of share repurchase program | ' | ' | ' | ' | ' | ' | ' | '2 years | ' |
Common stock shares repurchased and retired (in shares) | ' | ' | ' | 18,900 | 7,600 | ' | 10,400 | ' | 8,500 |
Cost of repurchase and retirement of common stock | $509,704,000 | $200,000,000 | ' | $509,700,000 | $200,000,000 | ' | $266,400,000 | ' | $243,300,000 |
Number of venture capital investment funds from which common stock repurchased and retired | ' | ' | ' | ' | 2 | ' | ' | ' | ' |
Accumulated_Stockholders_Equit2
Accumulated Stockholders' Equity (Deficit) (Details 2) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Accumulated Stockholders' Equity (Deficit) | ' | ' |
Accumulated other comprehensive loss | ($9,818,000) | ($10,653,000) |
Foreign currency translation adjustments | ' | ' |
Accumulated Stockholders' Equity (Deficit) | ' | ' |
Accumulated other comprehensive loss | 9,800,000 | 10,700,000 |
Income taxes on accumulated other comprehensive loss | $2,900,000 | $2,900,000 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Earnings Per Share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net earnings | $64,812 | $72,466 | $64,889 | $58,983 | $65,630 | $69,487 | $67,813 | $30,134 | $261,151 | $233,064 | $213,725 |
Weighted average basic shares | ' | ' | ' | ' | ' | ' | ' | ' | 171,682,000 | 183,420,000 | 183,020,000 |
Dilutive securities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option and stock award programs (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 4,477,000 | 5,190,000 | 5,073,000 |
Weighted average diluted shares | ' | ' | ' | ' | ' | ' | ' | ' | 176,159,000 | 188,610,000 | 188,093,000 |
Earnings per share: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic (in dollars per share) | $0.39 | $0.43 | $0.37 | $0.33 | $0.36 | $0.38 | $0.36 | $0.16 | $1.52 | $1.27 | $1.17 |
Diluted (in dollars per share) | $0.38 | $0.42 | $0.36 | $0.32 | $0.35 | $0.37 | $0.35 | $0.16 | $1.48 | $1.24 | $1.14 |
Common stock potentially outstanding but not included in the computation of diluted earnings per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options to purchase shares not included in the computation of diluted earnings per share since the options were anti-dilutive (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 44,340 | ' |
ShareBased_Payments_Details
Share-Based Payments (Details) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Share-Based Payments | ' | ' | ' |
Common stock approved for issuance under share-based compensation plan (in shares) | 29,800,000 | ' | ' |
Total compensation cost charged against income | $19,201,000 | $16,852,000 | $15,560,000 |
Accelerated expense related to certain retirement eligible employees (in dollars) | 5,900,000 | 5,300,000 | 5,000,000 |
Total income tax benefit recognized (in dollars) | 7,100,000 | 6,200,000 | 6,000,000 |
Stock Option Awards | ' | ' | ' |
Share-Based Payments | ' | ' | ' |
Vesting period | '4 years | ' | ' |
Stock Options, Number of Outstanding Options | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | 11,861,000 | ' | ' |
Granted (in shares) | 1,578,000 | 2,000,000 | 3,000,000 |
Exercised (in shares) | -2,952,000 | ' | ' |
Forfeited or expired (in shares) | -79,000 | ' | ' |
Outstanding at the end of the period (in shares) | 10,408,000 | 11,861,000 | ' |
Exercisable at the end of the period (in shares) | 5,409,000 | ' | ' |
Stock Options, Weighted Average Exercise Price | ' | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $10.45 | ' | ' |
Granted (in dollars per share) | $23.49 | ' | ' |
Exercised (in dollars per share) | $8.64 | ' | ' |
Forfeited or expired (in dollars per share) | $18.04 | ' | ' |
Outstanding at the end of the period (in dollars per share) | $12.89 | $10.45 | ' |
Exercisable at the end of the period (in dollars per share) | $9.24 | ' | ' |
Stock Options, Weighted Average Remaining Contractual Term | ' | ' | ' |
Outstanding at the beginning of the period | '6 years 2 months 12 days | '6 years 6 months | ' |
Outstanding at the end of the period | '6 years 2 months 12 days | '6 years 6 months | ' |
Exercisable at the end of the period | '4 years 10 months 24 days | ' | ' |
Stock Options, Aggregate Intrinsic Value | ' | ' | ' |
Outstanding at the beginning of the period (in dollars) | 173,601,000 | ' | ' |
Outstanding at the end of the period (in dollars) | 138,139,000 | 173,601,000 | ' |
Exercisable at the end of the period (in dollars) | $91,545,000 | ' | ' |
Stock Option Awards | Maximum | ' | ' | ' |
Share-Based Payments | ' | ' | ' |
Term of stock options | '10 years | ' | ' |
ShareBased_Payments_Details_2
Share-Based Payments (Details 2) (USD $) | 12 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 |
Options Outstanding | ' |
Range of Exercise Prices, Number Outstanding (in shares) | 10,408 |
Range of Exercise Prices, Weighted Average Remaining Contractual Term | '6 years 2 months 12 days |
Range of Exercise Prices, Weighted Average Exercise Price (in dollars per share) | $12.89 |
Options Exercisable | ' |
Range of Exercise Prices, Number Exercisable (in shares) | 5,409 |
Range of Exercise Prices, Weighted Average Exercise Price (in dollars per share) | $9.24 |
Range of Exercise Prices $2.00 - 9.66 | ' |
Information about stock options under option plans | ' |
Lower Range of Exercise Prices (in dollars per share) | $2 |
Upper Range of Exercise Prices (in dollars per share) | $9.66 |
Options Outstanding | ' |
Range of Exercise Prices, Number Outstanding (in shares) | 4,836 |
Range of Exercise Prices, Weighted Average Remaining Contractual Term | '4 years 6 months |
Range of Exercise Prices, Weighted Average Exercise Price (in dollars per share) | $7.85 |
Options Exercisable | ' |
Range of Exercise Prices, Number Exercisable (in shares) | 4,180 |
Range of Exercise Prices, Weighted Average Exercise Price (in dollars per share) | $7.91 |
Range of Exercise Prices $11.39 - 23.49 | ' |
Information about stock options under option plans | ' |
Lower Range of Exercise Prices (in dollars per share) | $11.39 |
Upper Range of Exercise Prices (in dollars per share) | $23.49 |
Options Outstanding | ' |
Range of Exercise Prices, Number Outstanding (in shares) | 5,572 |
Range of Exercise Prices, Weighted Average Remaining Contractual Term | '7 years 8 months 12 days |
Range of Exercise Prices, Weighted Average Exercise Price (in dollars per share) | $17.26 |
Options Exercisable | ' |
Range of Exercise Prices, Number Exercisable (in shares) | 1,229 |
Range of Exercise Prices, Weighted Average Exercise Price (in dollars per share) | $13.74 |
ShareBased_Payments_Details_3
Share-Based Payments (Details 3) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Stock option disclosures | ' | ' | ' |
Cash received from option exercised | $25,493,000 | $28,020,000 | $10,942,000 |
Stock Options | ' | ' | ' |
Weighted average assumptions relating to the valuation of stock options | ' | ' | ' |
Expected life | '5 years | '5 years | '5 years |
Expected volatility (as a percent) | 56.30% | 58.40% | 59.00% |
Risk-free interest rate (as a percent) | 0.80% | 1.10% | 1.10% |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Stock option disclosures | ' | ' | ' |
Weighted average fair value of the stock options issued (in dollars per share) | $11.29 | $9.60 | $5.74 |
Total fair value of stock options | 12,700,000 | 10,400,000 | 8,500,000 |
Total intrinsic value of options exercised | 55,400,000 | 53,200,000 | 15,900,000 |
Tax benefit realized for the tax deductions of stock option exercises | 18,700,000 | 18,900,000 | 6,200,000 |
Cash received from option exercised | 25,500,000 | 28,000,000 | 10,900,000 |
Total unrecognized compensation costs related to unvested stock option awards | $15,100,000 | ' | ' |
Weighted average period for recognition of unvested awards | '2 years 3 months 18 days | ' | ' |
ShareBased_Payments_Details_4
Share-Based Payments (Details 4) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Restricted Stock Awards | ' | ' | ' |
Stock Awards | ' | ' | ' |
Vesting period | '5 years | ' | ' |
Summary of the activity for restricted stock awards/restricted stock units, Number of Shares | ' | ' | ' |
Unvested at the beginning of the period (in shares) | 307,000 | ' | ' |
Granted (in shares) | 139,454 | 31,805 | 199,500 |
Vested (in shares) | -109,000 | ' | ' |
Unvested at the end of the period (in shares) | 337,000 | 307,000 | ' |
Restricted stock awards/restricted stock units | ' | ' | ' |
Unvested at the beginning of the period (in dollars per share) | $10.42 | ' | ' |
Granted (in dollars per share) | $23.79 | ' | ' |
Vested (in dollars per share) | $9.37 | ' | ' |
Unvested at the end of the period (in dollars per share) | $16.30 | $10.42 | ' |
Weighted average remaining vesting term | '3 years 1 month 6 days | '2 years 6 months | ' |
Total unrecognized compensation costs | $2.50 | ' | ' |
Weighted average period for recognition of unvested restricted awards | '3 years 1 month 6 days | ' | ' |
Restricted Stock Units | ' | ' | ' |
Stock Awards | ' | ' | ' |
Vesting period | '1 year | ' | ' |
Summary of the activity for restricted stock awards/restricted stock units, Number of Shares | ' | ' | ' |
Granted (in shares) | 36,076 | 25,501 | 43,015 |
Vested (in shares) | -32,000 | ' | ' |
Forfeited (in shares) | -4,000 | ' | ' |
Restricted stock awards/restricted stock units | ' | ' | ' |
Granted (in dollars per share) | $23.84 | ' | ' |
Vested (in dollars per share) | $23.89 | ' | ' |
Forfeited (in dollars per share) | $23.49 | ' | ' |
Total unrecognized compensation costs | $0 | ' | ' |
Restricted Stock Units | Maximum | ' | ' | ' |
Stock Awards | ' | ' | ' |
Vesting period | '1 year | ' | ' |
Allowance_for_Doubtful_Account2
Allowance for Doubtful Accounts (Details) (Allowance for Doubtful Accounts, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Allowance for Doubtful Accounts | ' | ' | ' |
Change in the allowance for doubtful accounts | ' | ' | ' |
Balance at the beginning of the period | $2,583 | $2,086 | $2,756 |
Bad debt expense | 1,671 | 1,764 | 1,631 |
Uncollected accounts written off, net of recoveries | -1,698 | -1,336 | -2,423 |
Allowance for doubtful accounts of acquired companies | ' | 69 | 122 |
Balance at the end of the period | $2,556 | $2,583 | $2,086 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Property and Equipment, Net | ' | ' | ' |
Total property and equipment, gross | $604,772,000 | $554,825,000 | ' |
Less accumulated depreciation and amortization | -375,232,000 | -352,164,000 | ' |
Total property and equipment, net | 229,540,000 | 202,661,000 | ' |
Depreciation expense | 59,400,000 | 51,000,000 | 47,300,000 |
Land | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Total property and equipment, gross | 11,277,000 | 11,197,000 | ' |
Buildings and building improvements | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Total property and equipment, gross | 60,100,000 | 59,656,000 | ' |
Buildings and building improvements | Minimum | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Useful lives | '5 years | ' | ' |
Buildings and building improvements | Maximum | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Useful lives | '40 years | ' | ' |
Leasehold improvements | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Total property and equipment, gross | 211,736,000 | 188,844,000 | ' |
Furniture, fixtures and equipment | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Total property and equipment, gross | $321,659,000 | $295,128,000 | ' |
Furniture, fixtures and equipment | Minimum | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Useful lives | '3 years | ' | ' |
Furniture, fixtures and equipment | Maximum | ' | ' | ' |
Property and Equipment, Net | ' | ' | ' |
Useful lives | '10 years | ' | ' |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details) (USD $) | 12 Months Ended | 12 Months Ended | |||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2012 | Nov. 30, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Floral Group | Floral Group | Not individually material acquisitions | Not individually material acquisitions | Sally Beauty Supply | Sally Beauty Supply | Sally Beauty Supply | Beauty Systems Group | Beauty Systems Group | Beauty Systems Group | ||||
Affiliate | Floral Group | Essential Salon Products, Inc. | |||||||||||
Change in the carrying amounts of goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | $532,331,000 | $505,873,000 | ' | ' | $15,000,000 | ' | ' | $89,855,000 | $75,536,000 | ' | $442,476,000 | $430,337,000 | ' |
Acquisitions | 5,548,000 | 24,389,000 | ' | ' | ' | 2,000,000 | 9,400,000 | 501,000 | 15,200,000 | 15,000,000 | 5,047,000 | 9,189,000 | 3,500,000 |
Foreign currency translation | 399,000 | 2,069,000 | ' | ' | ' | ' | ' | 2,298,000 | -881,000 | ' | -1,899,000 | 2,950,000 | ' |
Balance at the end of the period | 538,278,000 | 532,331,000 | 505,873,000 | ' | 15,000,000 | ' | ' | 92,654,000 | 89,855,000 | ' | 445,624,000 | 442,476,000 | ' |
Number of affiliates of acquiree | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment losses in connection with the goodwill | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment losses in connection with the intangible assets | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details 2) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Intangible assets with indefinite lives: | ' | ' | ' |
Trade names | $55,433,000 | $54,713,000 | ' |
Intangible assets subject to amortization: | ' | ' | ' |
Gross carrying amount | 146,423,000 | 132,916,000 | ' |
Accumulated amortization | -71,759,000 | -59,192,000 | ' |
Net value | 74,664,000 | 73,724,000 | ' |
Total intangible assets, excluding goodwill, net | 130,097,000 | 128,437,000 | ' |
Amortization expense | 12,800,000 | 13,700,000 | 12,400,000 |
Estimated future amortization expense related to intangible assets subject to amortization: | ' | ' | ' |
2014 | 13,998,000 | ' | ' |
2015 | 13,553,000 | ' | ' |
2016 | 12,163,000 | ' | ' |
2017 | 10,047,000 | ' | ' |
2018 | 8,810,000 | ' | ' |
Thereafter | 16,093,000 | ' | ' |
Net value | 74,664,000 | 73,724,000 | ' |
Intangible assets weighted average amortization period | '6 years 4 months 24 days | ' | ' |
Floral Group | ' | ' | ' |
Intangible assets subject to amortization: | ' | ' | ' |
Intangible assets subject to amortization recorded in connection with acquisitions | ' | 11,800,000 | ' |
Essential Salon Products, Inc. | ' | ' | ' |
Intangible assets subject to amortization: | ' | ' | ' |
Intangible assets subject to amortization recorded in connection with acquisitions | 9,100,000 | ' | ' |
Not individually material acquisitions | ' | ' | ' |
Intangible assets subject to amortization: | ' | ' | ' |
Intangible assets subject to amortization recorded in connection with acquisitions | 4,000,000 | ' | ' |
Sally Beauty Supply | ' | ' | ' |
Intangible assets with indefinite lives: | ' | ' | ' |
Trade names | 27,968,000 | 27,258,000 | ' |
Intangible assets subject to amortization: | ' | ' | ' |
Gross carrying amount | 26,809,000 | 26,430,000 | ' |
Accumulated amortization | -12,177,000 | -9,856,000 | ' |
Net value | 14,632,000 | 16,574,000 | ' |
Total intangible assets, excluding goodwill, net | 42,600,000 | 43,832,000 | ' |
Estimated future amortization expense related to intangible assets subject to amortization: | ' | ' | ' |
Net value | 14,632,000 | 16,574,000 | ' |
Beauty Systems Group | ' | ' | ' |
Intangible assets with indefinite lives: | ' | ' | ' |
Trade names | 27,465,000 | 27,455,000 | ' |
Intangible assets subject to amortization: | ' | ' | ' |
Gross carrying amount | 119,614,000 | 106,486,000 | ' |
Accumulated amortization | -59,582,000 | -49,336,000 | ' |
Net value | 60,032,000 | 57,150,000 | ' |
Total intangible assets, excluding goodwill, net | 87,497,000 | 84,605,000 | ' |
Estimated future amortization expense related to intangible assets subject to amortization: | ' | ' | ' |
Net value | $60,032,000 | $57,150,000 | ' |
Accrued_Liabilities_Details
Accrued Liabilities (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
Accrued liabilities | ' | ' |
Compensation and benefits | $70,802 | $79,935 |
Interest payable | 36,311 | 38,376 |
Deferred revenue | 20,890 | 19,000 |
Rental obligations | 11,340 | 11,540 |
Loss contingency obligation | ' | 10,194 |
Property and other taxes | 4,373 | 4,124 |
Insurance reserves | 11,109 | 9,626 |
Operating accruals and other | 29,937 | 27,472 |
Total accrued liabilities | $184,762 | $200,267 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Fiscal Year: | ' | ' | ' | ' |
2014 | ' | $156,415,000 | ' | ' |
2015 | ' | 131,540,000 | ' | ' |
2016 | ' | 105,820,000 | ' | ' |
2017 | ' | 75,858,000 | ' | ' |
2018 | ' | 46,440,000 | ' | ' |
Thereafter | ' | 68,405,000 | ' | ' |
Total operating lease, future minimum payments due | ' | 584,478,000 | ' | ' |
Total rental expense for operating leases | ' | 206,200,000 | 194,900,000 | 192,600,000 |
Legal Proceedings | ' | ' | ' | ' |
Legal settlement costs | ' | ' | 10,200,000 | ' |
One-time cash sum to be paid to plaintiff | $8,500,000 | ' | ' | ' |
Shortterm_Borrowings_and_LongT2
Short-term Borrowings and Long-Term Debt (Details) (USD $) | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2012 | Sep. 30, 2013 | Nov. 30, 2006 | Nov. 30, 2006 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2011 | Sep. 30, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2011 | Jul. 26, 2013 | |
Sally Investment Holdings LLC and Sally Holdings, LLC | ABL facility | ABL facility | ABL facility | ABL facility | ABL facility | ABL facility | ABL facility | ABL facility | Canadian sub-facility | Senior notes due Nov. 2019 | Senior notes due Nov. 2019 | Senior notes due Nov. 2019 | Senior notes due Jun. 2022 | Senior notes due Jun. 2022 | Senior notes due Jun. 2022 | Senior notes due 2022 issued for $150 million | Senior notes due 2022 issued for $850 million | Other, due 2014-2015 | Other, due 2014-2015 | Other, due 2014-2015 | Other, due 2014-2015 | Prior ABL facility | ABL facility after Second Amendment | ||||
Prime | Prime | Prime | LIBOR | LIBOR | LIBOR | Sally Holdings, LLC | Maximum | Maximum | Minimum | Maximum | Sally Holdings, LLC | ||||||||||||||||
Minimum | Maximum | Minimum | Maximum | ||||||||||||||||||||||||
Debt Instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | $1,611,715,000 | $1,685,691,000 | ' | ' | $76,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | $750,000,000 | $750,000,000 | ' | $858,381,000 | $859,308,000 | ' | ' | ' | $1,310,000 | $2,407,000 | ' | ' | ' | ' |
Capital leases and other | 5,515,000 | 5,012,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: current portion | 1,908,000 | 78,018,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-term debt | 1,615,322,000 | 1,612,685,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate for variable interest rate | ' | ' | ' | ' | ' | 'Prime | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage points added to the reference rate | ' | ' | ' | ' | ' | ' | 0.50% | 0.75% | ' | 1.50% | 1.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.88% | 6.88% | ' | 5.75% | 5.75% | ' | ' | 5.75% | ' | ' | 4.93% | 5.79% | ' | ' |
Unamortized premium | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,400,000 | 9,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | 1,850,000,000 | 1,850,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 750,000,000 | ' | ' | 850,000,000 | ' | 150,000,000 | 850,000,000 | ' | ' | ' | ' | ' | ' |
Revolving credit facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000,000 | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000,000 | 500,000,000 |
Line of Credit Facility Term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average interest rate (as a percent) | ' | ' | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding borrowings | ' | ' | ' | ' | 76,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Remaining credit facility available | ' | ' | ' | ' | 382,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee for line of credit facility (as a percent) | ' | ' | ' | ' | 0.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate principal amount of debt retired | $1,391,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum percentage of original principal amount that can be redeemed from specified proceeds | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35.00% | ' | ' | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Shortterm_Borrowings_and_LongT3
Short-term Borrowings and Long-Term Debt (Details 2) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 26, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
ABL facility | ABL facility after Second Amendment | ABL facility after Second Amendment | ABL facility after Second Amendment | ABL facility after Second Amendment | Senior notes due 2019 and 2022 | Senior notes due 2019 and 2022 | |||||
Restricted payments up to $30.0 million | Restricted payments in excess of $30.0 million | quarter | Maximum | ||||||||
Fiscal Year: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 | $77,203,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | 107,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Thereafter | 1,608,381,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 1,685,691,000 | 1,611,715,000 | ' | ' | 76,000,000 | ' | ' | ' | ' | ' | ' |
Capital lease obligations | 5,012,000 | 5,515,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: current portion | 78,018,000 | 1,908,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-term debt | 1,612,685,000 | 1,615,322,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Secured Leverage Ratio, threshold | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' |
Secured Leverage Ratio | ' | ' | ' | ' | 0.2 | ' | ' | ' | ' | ' | ' |
Consolidated Coverage Ratio, threshold | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' |
Consolidated Coverage Ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6 | ' |
Number of consecutive fiscal quarters | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' |
Percentage of Sally Holdings and its subsidiaries cumulative consolidated net earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' |
Consolidated Total Leverage Ratio, threshold | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.25 | ' |
Consolidated Total Leverage Ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.7 | ' |
Cash and cash equivalents | 47,115,000 | 240,220,000 | 63,481,000 | 59,494,000 | ' | ' | ' | ' | ' | ' | 100,000,000 |
Restricted payments | ' | ' | ' | ' | ' | ' | ' | 30,000,000 | ' | ' | ' |
Minimum borrowing availability | ' | ' | ' | ' | ' | 40,000,000 | ' | 75,000,000 | 100,000,000 | ' | ' |
Percentage of borrowing base | ' | ' | ' | ' | ' | 10.00% | ' | 15.00% | 20.00% | ' | ' |
Period prior to payments of dividends and other equity distributions up to certain thresholds under the terms of the credit facility must be met | ' | ' | ' | ' | ' | ' | ' | '45 days | '45 days | ' | ' |
Consolidated Fixed-Charge Coverage Ratio, threshold | ' | ' | ' | ' | ' | 1 | ' | ' | 1.1 | ' | ' |
Consolidated Fixed-Charge Coverage Ratio | ' | ' | ' | ' | ' | 3.9 | ' | ' | ' | ' | ' |
Revolving credit facility borrowing availability | ' | ' | ' | ' | ' | ' | 500,000,000 | ' | 150,000,000 | ' | ' |
Percentage of lesser of $150.0 million or borrowing base, considered for applicability of Consolidated Fixed Charge Coverage Ratio | ' | ' | ' | ' | ' | ' | ' | ' | 0.3 | ' | ' |
Trailing period preceding proposed Restricted Payment | ' | ' | ' | ' | ' | ' | ' | ' | '12 months | ' | ' |
Outstanding letter of credit related to inventory purchases and self-insurance programs | $23,900,000 | $22,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative_Instruments_and_Hed2
Derivative Instruments and Hedging Activities (Details) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2008 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | USD ($) | USD ($) | Interest rate swaps | USD:EUR | USD:EUR | USD:EUR | USD:CAD | USD:CAD | CAD:USD | CAD:USD | USD:MXN | USD:MXN | USD:UKPounds | USD:UKPounds | UKPounds:EUR | UKPounds:EUR | |
instrument | Derivatives designated as hedging instruments | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | Foreign exchange contracts | |||
Cash flow hedges | Purchase | Sale | Sale | Sale | Sale | Purchase | Purchase | Sale | Sale | Sale | Sale | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | ||||
USD ($) | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | Derivatives not designated as hedging instruments | USD ($) | EUR (€) | ||||
USD ($) | USD ($) | EUR (€) | USD ($) | CAD | USD ($) | CAD | USD ($) | MXN | USD ($) | GBP (£) | |||||||
Derivative Instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amount | ' | ' | ' | $300,000,000 | $12,000,000 | $18,900,000 | € 13,900,000 | $5,300,000 | 5,500,000 | $7,800,000 | 8,000,000 | $700,000 | 8,600,000 | $6,800,000 | £ 4,200,000 | $4,900,000 | € 3,600,000 |
Designated Cash Flow Hedges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of derivative instruments held | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred gains on interest swaps, net of income tax | ' | 3,947,000 | 5,557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred gains (losses) on interest rate swaps, income taxes expense (benefit) | ' | 2,500,000 | 3,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-designated Cash Flow Hedges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative, Average Forward Exchange Rate (as a percent) | ' | ' | ' | ' | 1.32 | 1.3526 | 1.3526 | 1.03115 | 1.03115 | 1.0329 | 1.0329 | 13.1806 | 13.1806 | 1.6129 | 1.6129 | ' | ' |
Net gains (losses) included in selling, general and administrative expenses | ($2,846,000) | $2,003,000 | $194,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average contractual exchange rate for buy contracts (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.8425 | 0.8425 |
Derivative_Instruments_and_Hed3
Derivative Instruments and Hedging Activities (Details 2) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | ||
Derivatives Not Designated as Hedging Instruments | ' | ' |
Total derivatives not designated as hedging instruments, Asset | $152 | $4 |
Total derivatives not designated as hedging instruments, Liability | 36 | 132 |
Prepaid expenses | ' | ' |
Derivatives Not Designated as Hedging Instruments | ' | ' |
Foreign Exchange Contracts, Asset | 152 | 4 |
Accrued liabilities | ' | ' |
Credit-risk-related Contingent Features | ' | ' |
Foreign Exchange Contracts, Liability | $36 | $132 |
Derivative_Instruments_and_Hed4
Derivative Instruments and Hedging Activities (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Derivatives Designated as Hedging Instruments | ' | ' | ' |
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion), net of tax | ' | $3,947 | $5,557 |
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | ' | -6,731 | -10,174 |
Derivatives Not Designated as Hedging Instruments | ' | ' | ' |
Amount of Gain or (Loss) Recognized in Income on Derivatives, Foreign Exchange Contracts | -2,846 | 2,003 | 194 |
Total derivatives not designated as hedging instruments | -2,846 | 2,003 | 194 |
Amount of gain or (loss) recognized in income on derivatives designated as hedging instruments, as a result of ineffectiveness or exclusion of such derivatives from effectiveness testing | 0 | 0 | 0 |
Probable loss on counterparty defaults | $0 | ' | ' |
401k_and_Profit_Sharing_Plan_D
401(k) and Profit Sharing Plan (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
401(k) and Profit Sharing Plan | ' | ' | ' |
Defined contribution plan, expense recognized | $6.70 | $6.20 | $5.90 |
Profit sharing plan, expense recognized | $3.20 | $3.30 | $3.10 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Current: | ' | ' | ' |
Federal | $113,057 | $97,866 | $97,172 |
Foreign | 9,997 | 10,925 | 11,081 |
State | 17,727 | 16,692 | 13,629 |
Total current portion | 140,781 | 125,483 | 121,882 |
Deferred: | ' | ' | ' |
Federal | 13,932 | 4,920 | 2,615 |
Foreign | -2,822 | -2,888 | -2,525 |
State | -375 | 364 | 242 |
Total deferred portion | 10,735 | 2,396 | 332 |
Total provision for income tax | $151,516 | $127,879 | $122,214 |
Reconciliation between the U.S. statutory federal income tax rate and the effective income tax rate | ' | ' | ' |
Statutory tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit (as a percent) | 2.80% | 3.40% | 2.80% |
Effect of foreign operations (as a percent) | -0.60% | -0.40% | -1.30% |
Effect of limited restructuring (as a percent) | ' | -2.80% | ' |
Other, net (as a percent) | -0.50% | 0.20% | -0.10% |
Effective tax rate (as a percent) | 36.70% | 35.40% | 36.40% |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Deferred tax assets attributable to: | ' | ' | ' |
Share-based compensation expense | $20,668,000 | $18,771,000 | ' |
Accrued liabilities | 26,817,000 | 33,495,000 | ' |
Inventory adjustments | 3,771,000 | 5,208,000 | ' |
Foreign loss carryforwards | 28,776,000 | 23,405,000 | ' |
Unrecognized tax benefits | 437,000 | 605,000 | ' |
Other | 3,408,000 | 2,011,000 | ' |
Total deferred tax assets | 83,877,000 | 83,495,000 | ' |
Valuation allowance | -26,073,000 | -21,681,000 | ' |
Total deferred tax assets, net | 57,804,000 | 61,814,000 | ' |
Deferred tax liabilities attributable to: | ' | ' | ' |
Depreciation and amortization | 99,259,000 | 92,292,000 | ' |
Total deferred tax liabilities | 99,259,000 | 92,292,000 | ' |
Net deferred tax liability | 41,455,000 | 30,478,000 | ' |
Domestic earnings before provision for income taxes | 386,600,000 | 334,500,000 | 300,100,000 |
Foreign earnings before provision for income taxes | 26,100,000 | 26,400,000 | 35,800,000 |
Accumulated undistributed earnings of the Company's foreign operations | 170,900,000 | 140,800,000 | ' |
Total operating loss carry-forward | 96,400,000 | 80,100,000 | ' |
Operating loss carry-forward, subject to valuation allowance | 79,400,000 | 65,100,000 | ' |
Amount of operating loss carry-forwards with an expiration date | 25,300,000 | ' | ' |
Amount of operating loss carry-forwards without an expiration date | 71,100,000 | ' | ' |
Tax credit carryforwards | 2,000,000 | 1,100,000 | ' |
Tax credit carryforwards, subject to a valuation allowance | ' | $500,000 | ' |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Reconciliation of the changes in the amount of unrecognized tax benefits | ' | ' |
Balance at beginning of the fiscal year | $7,941,000 | $10,836,000 |
Increases related to prior year tax positions | 26,000 | 90,000 |
Decreases related to prior year tax positions | -1,000 | -119,000 |
Increases related to current year tax positions | 218,000 | 171,000 |
Settlements | ' | -127,000 |
Lapse of statute | -3,361,000 | -2,910,000 |
Balance at end of fiscal year | 4,823,000 | 7,941,000 |
Total unrecognized tax benefits of accrued interest and penalties | $1,400,000 | $3,600,000 |
Acquisitions_Details
Acquisitions (Details) | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | 31-May-13 | Nov. 30, 2011 | Nov. 30, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Oct. 31, 2010 | Oct. 31, 2010 |
USD ($) | USD ($) | USD ($) | Essential Salon Products, Inc. | Floral Group | Floral Group | Not individually material acquisitions | Not individually material acquisitions | Not individually material acquisitions | Aerial Company, Inc. ("Aerial") | Aerial Company, Inc. ("Aerial") | |
USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | Prior ABL facility | ||||
store | store | USD ($) | |||||||||
state | |||||||||||
Acquisitions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of acquisition | ' | ' | ' | $15,700,000 | $31,200,000 | € 22,800,000 | $6,800,000 | $12,800,000 | $5,000,000 | $81,800,000 | ' |
Number of beauty supply stores | ' | ' | ' | ' | 19 | 19 | ' | ' | ' | 82 | ' |
Goodwill not deductible for tax purposes recorded in connection with the acquisitions | 538,278,000 | 532,331,000 | 505,873,000 | ' | 15,000,000 | ' | ' | ' | ' | ' | ' |
Intangible assets subject to amortization | ' | ' | ' | 9,100,000 | 11,800,000 | ' | 4,000,000 | ' | ' | 34,700,000 | ' |
Borrowings on ABL credit facility used to fund acquisition | ' | ' | ' | ' | 17,000,000 | ' | ' | ' | ' | ' | 78,000,000 |
Goodwill expected to be deducted for tax purposes | ' | ' | ' | $3,500,000 | ' | ' | ' | $9,400,000 | $4,300,000 | $25,300,000 | ' |
Period from the acquisition date within which final valuation of the assets acquired and liabilities assumed will be completed | ' | ' | ' | '12 months | ' | ' | ' | ' | ' | ' | ' |
Number of states in which the entity operates | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11 | ' |
Business_Segments_and_Geograph2
Business Segments and Geographic Area Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
segment | |||||||||||
Business Segments and Geographic Area Information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of operating segments | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' |
Net sales: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total net sales | $906,435,000 | $912,101,000 | $898,239,000 | $905,441,000 | $882,557,000 | $886,991,000 | $889,281,000 | $864,815,000 | $3,622,216,000 | $3,523,644,000 | $3,269,131,000 |
Segment operating profit: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total segment operating profit | ' | ' | ' | ' | ' | ' | ' | ' | 520,362,000 | 499,355,000 | 448,469,000 |
Share-based compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | -19,201,000 | -16,852,000 | -15,560,000 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | -107,695,000 | -138,412,000 | -112,530,000 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 412,667,000 | 360,943,000 | 335,939,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 1,950,086,000 | ' | ' | ' | 2,065,800,000 | ' | ' | ' | 1,950,086,000 | 2,065,800,000 | 1,728,600,000 |
Depreciation and amortization: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 72,192,000 | 64,698,000 | 59,722,000 |
Capital expenditures: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total capital expenditures | ' | ' | ' | ' | ' | ' | ' | ' | 84,879,000 | 69,086,000 | 59,955,000 |
Other information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net favorable impact on consolidated operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,300,000 |
Credit from a litigation settlement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 27,000,000 |
Non-recurring charges incurred | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,700,000 |
Loss on extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | 220,000 | 38,376,000 | 2,765,000 |
United States | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total net sales | ' | ' | ' | ' | ' | ' | ' | ' | 2,943,959,000 | 2,885,958,000 | 2,688,062,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 1,356,969,000 | ' | ' | ' | 1,325,787,000 | ' | ' | ' | 1,356,969,000 | 1,325,787,000 | 1,240,894,000 |
Foreign | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total net sales | ' | ' | ' | ' | ' | ' | ' | ' | 678,257,000 | 637,686,000 | 581,069,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 530,190,000 | ' | ' | ' | 498,595,000 | ' | ' | ' | 530,190,000 | 498,595,000 | 434,095,000 |
Prior senior notes and term loan B | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss on extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | 37,800,000 | ' |
Operating segments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment operating profit: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total segment operating profit | ' | ' | ' | ' | ' | ' | ' | ' | 637,510,000 | 612,219,000 | 545,623,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 1,887,159,000 | ' | ' | ' | 1,824,382,000 | ' | ' | ' | 1,887,159,000 | 1,824,382,000 | 1,674,989,000 |
Corporate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment operating profit: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unallocated expenses | ' | ' | ' | ' | ' | ' | ' | ' | -97,947,000 | -96,012,000 | -81,594,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 62,927,000 | ' | ' | ' | 241,418,000 | ' | ' | ' | 62,927,000 | 241,418,000 | 53,611,000 |
Depreciation and amortization: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 10,151,000 | 7,317,000 | 5,860,000 |
Capital expenditures: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total capital expenditures | ' | ' | ' | ' | ' | ' | ' | ' | 8,570,000 | 14,951,000 | 10,864,000 |
Other information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net favorable impact on consolidated operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,300,000 |
Sally Beauty Supply | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total net sales | ' | ' | ' | ' | ' | ' | ' | ' | 2,230,028,000 | 2,198,468,000 | 2,012,407,000 |
Segment operating profit: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total segment operating profit | ' | ' | ' | ' | ' | ' | ' | ' | 437,018,000 | 429,520,000 | 380,963,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 913,395,000 | ' | ' | ' | 864,598,000 | ' | ' | ' | 913,395,000 | 864,598,000 | 766,896,000 |
Depreciation and amortization: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 37,077,000 | 31,397,000 | 28,763,000 |
Capital expenditures: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total capital expenditures | ' | ' | ' | ' | ' | ' | ' | ' | 60,565,000 | 42,158,000 | 34,946,000 |
Other information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Charge resulting from loss contingency | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,200,000 | ' |
BSG | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total net sales | ' | ' | ' | ' | ' | ' | ' | ' | 1,392,188,000 | 1,325,176,000 | 1,256,724,000 |
Segment operating profit: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total segment operating profit | ' | ' | ' | ' | ' | ' | ' | ' | 200,492,000 | 182,699,000 | 164,660,000 |
Identifiable assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total assets | 973,764,000 | ' | ' | ' | 959,784,000 | ' | ' | ' | 973,764,000 | 959,784,000 | 908,093,000 |
Depreciation and amortization: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 24,964,000 | 25,984,000 | 25,099,000 |
Capital expenditures: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total capital expenditures | ' | ' | ' | ' | ' | ' | ' | ' | 15,744,000 | 11,977,000 | 14,145,000 |
Other information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net favorable impact on consolidated operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $19,000,000 |
Parent_Issuers_Guarantor_and_N2
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Sep. 30, 2010 |
In Thousands, unless otherwise specified | ||||
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements | ' | ' | ' | ' |
Percentage of guarantor subsidiaries owned by parent | 100.00% | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash and cash equivalents | $47,115 | $240,220 | $63,481 | $59,494 |
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 101,176 | 125,490 | ' | ' |
Inventory | 808,313 | 735,356 | ' | ' |
Prepaid expenses | 26,727 | 29,376 | ' | ' |
Deferred income tax assets, net | 32,486 | 33,465 | ' | ' |
Property and equipment, net | 229,540 | 202,661 | ' | ' |
Goodwill and other intangible assets, net | 668,375 | 660,768 | ' | ' |
Other assets | 36,354 | 38,464 | ' | ' |
Total assets | 1,950,086 | 2,065,800 | 1,728,600 | ' |
Liabilities and Stockholders' (Deficit) Equity | ' | ' | ' | ' |
Accounts payable | 273,456 | 262,209 | ' | ' |
Accrued liabilities | 184,762 | 200,267 | ' | ' |
Income taxes payable | 6,417 | 13,004 | ' | ' |
Long-term debt | 1,690,703 | 1,617,230 | ' | ' |
Other liabilities | 24,286 | 24,232 | ' | ' |
Deferred income tax liabilities, net | 73,941 | 63,943 | ' | ' |
Total liabilities | 2,253,565 | 2,180,885 | ' | ' |
Total stockholders' (deficit) equity | -303,479 | -115,085 | -218,982 | -461,272 |
Total liabilities and stockholders' deficit | 1,950,086 | 2,065,800 | ' | ' |
Reportable Legal Entities | Parent | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 2,317 | 23,734 | ' | ' |
Prepaid expenses | 1,195 | 1,181 | ' | ' |
Deferred income tax assets, net | -391 | -408 | ' | ' |
Property and equipment, net | 2 | ' | ' | ' |
Investment in subsidiaries | 237,696 | -30,403 | ' | ' |
Total assets | 240,819 | -5,896 | ' | ' |
Liabilities and Stockholders' (Deficit) Equity | ' | ' | ' | ' |
Due to affiliates | 545,658 | 110,512 | ' | ' |
Accrued liabilities | 191 | 141 | ' | ' |
Deferred income tax liabilities, net | -1,551 | -1,464 | ' | ' |
Total liabilities | 544,298 | 109,189 | ' | ' |
Total stockholders' (deficit) equity | -303,479 | -115,085 | ' | ' |
Total liabilities and stockholders' deficit | 240,819 | -5,896 | ' | ' |
Reportable Legal Entities | Sally Holdings LLC and Sally Capital Inc. | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash and cash equivalents | ' | 155,000 | ' | 20 |
Due from affiliates | ' | 2 | ' | ' |
Prepaid expenses | 380 | 24 | ' | ' |
Deferred income tax assets, net | -379 | -423 | ' | ' |
Investment in subsidiaries | 2,530,825 | 2,194,771 | ' | ' |
Other assets | 29,725 | 32,445 | ' | ' |
Total assets | 2,560,551 | 2,381,819 | ' | ' |
Liabilities and Stockholders' (Deficit) Equity | ' | ' | ' | ' |
Due to affiliates | 599,246 | 761,262 | ' | ' |
Accrued liabilities | 36,341 | 38,171 | ' | ' |
Income taxes payable | 3,319 | 4,136 | ' | ' |
Long-term debt | 1,684,381 | 1,609,308 | ' | ' |
Deferred income tax liabilities, net | -432 | -655 | ' | ' |
Total liabilities | 2,322,855 | 2,412,222 | ' | ' |
Total stockholders' (deficit) equity | 237,696 | -30,403 | ' | ' |
Total liabilities and stockholders' deficit | 2,560,551 | 2,381,819 | ' | ' |
Reportable Legal Entities | Guarantor Subsidiaries | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash and cash equivalents | 16,337 | 48,582 | 22,583 | 32,975 |
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 56,432 | 63,964 | ' | ' |
Due from affiliates | 1,215,625 | 934,268 | ' | ' |
Inventory | 605,727 | 551,017 | ' | ' |
Prepaid expenses | 13,253 | 12,189 | ' | ' |
Deferred income tax assets, net | 31,504 | 38,805 | ' | ' |
Property and equipment, net | 152,982 | 140,238 | ' | ' |
Investment in subsidiaries | 388,569 | 367,435 | ' | ' |
Goodwill and other intangible assets, net | 483,583 | 475,623 | ' | ' |
Other assets | 1,254 | 1,069 | ' | ' |
Total assets | 2,965,266 | 2,633,190 | ' | ' |
Liabilities and Stockholders' (Deficit) Equity | ' | ' | ' | ' |
Accounts payable | 210,661 | 202,560 | ' | ' |
Due to affiliates | 813 | 3,637 | ' | ' |
Accrued liabilities | 121,426 | 134,387 | ' | ' |
Income taxes payable | 1 | 4,596 | ' | ' |
Long-term debt | 181 | 265 | ' | ' |
Other liabilities | 22,043 | 21,060 | ' | ' |
Deferred income tax liabilities, net | 79,316 | 71,914 | ' | ' |
Total liabilities | 434,441 | 438,419 | ' | ' |
Total stockholders' (deficit) equity | 2,530,825 | 2,194,771 | ' | ' |
Total liabilities and stockholders' deficit | 2,965,266 | 2,633,190 | ' | ' |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Cash and cash equivalents | 30,778 | 36,638 | 40,898 | 26,499 |
Trade, income taxes and other accounts receivable, less allowance for doubtful accounts | 42,427 | 37,792 | ' | ' |
Due from affiliates | 813 | 3,637 | ' | ' |
Inventory | 202,586 | 184,339 | ' | ' |
Prepaid expenses | 11,899 | 15,982 | ' | ' |
Deferred income tax assets, net | 1,752 | -4,509 | ' | ' |
Property and equipment, net | 76,556 | 62,423 | ' | ' |
Goodwill and other intangible assets, net | 184,792 | 185,145 | ' | ' |
Other assets | 5,375 | 4,950 | ' | ' |
Total assets | 556,978 | 526,397 | ' | ' |
Liabilities and Stockholders' (Deficit) Equity | ' | ' | ' | ' |
Accounts payable | 62,795 | 59,649 | ' | ' |
Due to affiliates | 70,721 | 62,496 | ' | ' |
Accrued liabilities | 26,804 | 27,568 | ' | ' |
Income taxes payable | 3,097 | 4,272 | ' | ' |
Long-term debt | 6,141 | 7,657 | ' | ' |
Other liabilities | 2,243 | 3,172 | ' | ' |
Deferred income tax liabilities, net | -3,392 | -5,852 | ' | ' |
Total liabilities | 168,409 | 158,962 | ' | ' |
Total stockholders' (deficit) equity | 388,569 | 367,435 | ' | ' |
Total liabilities and stockholders' deficit | 556,978 | 526,397 | ' | ' |
Consolidating Eliminations | ' | ' | ' | ' |
Assets | ' | ' | ' | ' |
Due from affiliates | -1,216,438 | -937,907 | ' | ' |
Investment in subsidiaries | -3,157,090 | -2,531,803 | ' | ' |
Total assets | -4,373,528 | -3,469,710 | ' | ' |
Liabilities and Stockholders' (Deficit) Equity | ' | ' | ' | ' |
Due to affiliates | -1,216,438 | -937,907 | ' | ' |
Total liabilities | -1,216,438 | -937,907 | ' | ' |
Total stockholders' (deficit) equity | -3,157,090 | -2,531,803 | ' | ' |
Total liabilities and stockholders' deficit | ($4,373,528) | ($3,469,710) | ' | ' |
Parent_Issuers_Guarantor_and_N3
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Condensed Consolidating Statement of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | $906,435 | $912,101 | $898,239 | $905,441 | $882,557 | $886,991 | $889,281 | $864,815 | $3,622,216 | $3,523,644 | $3,269,131 |
Cost of products sold and distribution expenses | ' | ' | ' | ' | ' | ' | ' | ' | 1,826,953 | 1,780,385 | 1,674,526 |
Gross profit | 449,358 | 457,083 | 444,454 | 444,368 | 440,236 | 444,379 | 436,786 | 421,857 | 1,795,263 | 1,743,259 | 1,594,605 |
Selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | 1,202,709 | 1,179,206 | 1,086,414 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 72,192 | 64,698 | 59,722 |
Operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | 520,362 | 499,355 | 448,469 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 107,695 | 138,412 | 112,530 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 412,667 | 360,943 | 335,939 |
Provision (benefit) for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 151,516 | 127,879 | 122,214 |
Net earnings | 64,812 | 72,466 | 64,889 | 58,983 | 65,630 | 69,487 | 67,813 | 30,134 | 261,151 | 233,064 | 213,725 |
Other comprehensive income (loss), net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 835 | 12,018 | -2,395 |
Total comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 261,986 | 245,082 | 211,330 |
Reportable Legal Entities | Parent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statement of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | 9,951 | 10,391 | 7,812 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | 1 |
Operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | -9,951 | -10,392 | -7,813 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -9,951 | -10,392 | -7,813 |
Provision (benefit) for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -3,838 | -4,186 | -2,945 |
Equity in earnings of subsidiaries, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 267,264 | 239,270 | 218,593 |
Net earnings | ' | ' | ' | ' | ' | ' | ' | ' | 261,151 | 233,064 | 213,725 |
Total comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 261,151 | 233,064 | 213,725 |
Reportable Legal Entities | Sally Holdings LLC and Sally Capital Inc. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statement of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | 434 | 674 | 560 |
Operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | -434 | -674 | -560 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 107,265 | 137,876 | 111,894 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -107,699 | -138,550 | -112,454 |
Provision (benefit) for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -41,832 | -53,802 | -43,613 |
Equity in earnings of subsidiaries, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 333,131 | 324,018 | 287,434 |
Net earnings | ' | ' | ' | ' | ' | ' | ' | ' | 267,264 | 239,270 | 218,593 |
Other comprehensive income (loss), net of tax | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,947 | 5,557 |
Total comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 267,264 | 243,217 | 224,150 |
Reportable Legal Entities | Guarantor Subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statement of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | 2,896,990 | 2,837,214 | 2,639,741 |
Related party sales | ' | ' | ' | ' | ' | ' | ' | ' | 2,890 | 2,899 | 2,894 |
Cost of products sold and distribution expenses | ' | ' | ' | ' | ' | ' | ' | ' | 1,437,620 | 1,406,817 | 1,335,030 |
Gross profit | ' | ' | ' | ' | ' | ' | ' | ' | 1,462,260 | 1,433,296 | 1,307,605 |
Selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | 912,262 | 908,964 | 845,732 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 52,284 | 46,159 | 43,111 |
Operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | 497,714 | 478,173 | 418,762 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 32 | 66 | -12 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 497,682 | 478,107 | 418,774 |
Provision (benefit) for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 190,753 | 187,788 | 161,647 |
Equity in earnings of subsidiaries, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 26,202 | 33,699 | 30,307 |
Net earnings | ' | ' | ' | ' | ' | ' | ' | ' | 333,131 | 324,018 | 287,434 |
Total comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 333,131 | 324,018 | 287,434 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statement of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | 725,226 | 686,430 | 629,390 |
Cost of products sold and distribution expenses | ' | ' | ' | ' | ' | ' | ' | ' | 392,223 | 376,467 | 342,390 |
Gross profit | ' | ' | ' | ' | ' | ' | ' | ' | 333,003 | 309,963 | 287,000 |
Selling, general and administrative expenses | ' | ' | ' | ' | ' | ' | ' | ' | 280,062 | 259,177 | 232,310 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 19,908 | 18,538 | 16,610 |
Operating earnings | ' | ' | ' | ' | ' | ' | ' | ' | 33,033 | 32,248 | 38,080 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 398 | 470 | 648 |
Earnings before provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 32,635 | 31,778 | 37,432 |
Provision (benefit) for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 6,433 | -1,921 | 7,125 |
Net earnings | ' | ' | ' | ' | ' | ' | ' | ' | 26,202 | 33,699 | 30,307 |
Other comprehensive income (loss), net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 835 | 8,071 | -7,952 |
Total comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 27,037 | 41,770 | 22,355 |
Consolidating Eliminations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statement of Earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Related party sales | ' | ' | ' | ' | ' | ' | ' | ' | -2,890 | -2,899 | -2,894 |
Cost of products sold and distribution expenses | ' | ' | ' | ' | ' | ' | ' | ' | -2,890 | -2,899 | -2,894 |
Equity in earnings of subsidiaries, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | -626,597 | -596,987 | -536,334 |
Net earnings | ' | ' | ' | ' | ' | ' | ' | ' | -626,597 | -596,987 | -536,334 |
Total comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | ($626,597) | ($596,987) | ($536,334) |
Parent_Issuers_Guarantor_and_N4
Parent, Issuers, Guarantor and Non-Guarantor Condensed Consolidated Financial Statements (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided (used) by operating activities | $310,454 | $297,582 | $291,841 |
Cash Flows from Investing Activities: | ' | ' | ' |
Capital expenditures, net of proceeds from sale of property and equipment | -84,759 | -68,978 | -59,571 |
Acquisitions, net of cash acquired | -22,218 | -43,535 | -87,164 |
Net cash used by investing activities | -106,977 | -112,513 | -146,735 |
Cash Flows from Financing Activities: | ' | ' | ' |
Proceeds from issuance of long-term debt | 365,500 | 2,101,489 | 428,605 |
Repayments of long-term debt | -291,451 | -1,921,284 | -577,911 |
Debt issuance costs | -1,998 | -31,297 | -5,397 |
Repurchases of common stock | -509,704 | -200,000 | ' |
Proceeds from exercises of stock options | 25,493 | 28,020 | 10,942 |
Excess tax benefit from share-based compensation | 15,385 | 14,390 | 3,712 |
Net cash used by financing activities | -396,775 | -8,682 | -140,049 |
Effect of foreign exchange rate changes on cash and cash equivalents | 193 | 352 | -1,070 |
Net (decrease) increase in cash and cash equivalents | -193,105 | 176,739 | 3,987 |
Cash and cash equivalents, beginning of year | 240,220 | 63,481 | 59,494 |
Cash and cash equivalents, end of year | 47,115 | 240,220 | 63,481 |
Reportable Legal Entities | Parent | ' | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided (used) by operating activities | 483,720 | 171,980 | -10,942 |
Cash Flows from Investing Activities: | ' | ' | ' |
Capital expenditures, net of proceeds from sale of property and equipment | -2 | ' | ' |
Net cash used by investing activities | -2 | ' | ' |
Cash Flows from Financing Activities: | ' | ' | ' |
Repurchases of common stock | -509,704 | -200,000 | ' |
Proceeds from exercises of stock options | 25,493 | 28,020 | 10,942 |
Excess tax benefit from share-based compensation | 493 | ' | ' |
Net cash used by financing activities | -483,718 | -171,980 | 10,942 |
Reportable Legal Entities | Sally Holdings LLC and Sally Capital Inc. | ' | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided (used) by operating activities | -229,002 | 3,161 | 152,377 |
Cash Flows from Financing Activities: | ' | ' | ' |
Proceeds from issuance of long-term debt | 365,500 | 2,101,475 | 421,300 |
Repayments of long-term debt | -289,500 | -1,918,339 | -568,300 |
Debt issuance costs | -1,998 | -31,297 | -5,397 |
Net cash used by financing activities | 74,002 | 151,839 | -152,397 |
Net (decrease) increase in cash and cash equivalents | -155,000 | 155,000 | -20 |
Cash and cash equivalents, beginning of year | 155,000 | ' | 20 |
Cash and cash equivalents, end of year | ' | 155,000 | ' |
Reportable Legal Entities | Guarantor Subsidiaries | ' | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided (used) by operating activities | 30,386 | 69,049 | 112,035 |
Cash Flows from Investing Activities: | ' | ' | ' |
Capital expenditures, net of proceeds from sale of property and equipment | -54,358 | -45,942 | -41,478 |
Acquisitions, net of cash acquired | -21,594 | -10,607 | -84,924 |
Net cash used by investing activities | -75,952 | -56,549 | -126,402 |
Cash Flows from Financing Activities: | ' | ' | ' |
Proceeds from issuance of long-term debt | ' | 14 | 404 |
Repayments of long-term debt | -83 | -89 | -141 |
Excess tax benefit from share-based compensation | 13,404 | 13,574 | 3,712 |
Net cash used by financing activities | 13,321 | 13,499 | 3,975 |
Net (decrease) increase in cash and cash equivalents | -32,245 | 25,999 | -10,392 |
Cash and cash equivalents, beginning of year | 48,582 | 22,583 | 32,975 |
Cash and cash equivalents, end of year | 16,337 | 48,582 | 22,583 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ' | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided (used) by operating activities | 25,350 | 53,392 | 38,371 |
Cash Flows from Investing Activities: | ' | ' | ' |
Capital expenditures, net of proceeds from sale of property and equipment | -30,399 | -23,036 | -18,093 |
Acquisitions, net of cash acquired | -624 | -32,928 | -2,240 |
Net cash used by investing activities | -31,023 | -55,964 | -20,333 |
Cash Flows from Financing Activities: | ' | ' | ' |
Proceeds from issuance of long-term debt | ' | ' | 6,901 |
Repayments of long-term debt | -1,868 | -2,856 | -9,470 |
Excess tax benefit from share-based compensation | 1,488 | 816 | ' |
Net cash used by financing activities | -380 | -2,040 | -2,569 |
Effect of foreign exchange rate changes on cash and cash equivalents | 193 | 352 | -1,070 |
Net (decrease) increase in cash and cash equivalents | -5,860 | -4,260 | 14,399 |
Cash and cash equivalents, beginning of year | 36,638 | 40,898 | 26,499 |
Cash and cash equivalents, end of year | $30,778 | $36,638 | $40,898 |
Subsequent_Event_Details
Subsequent Event (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | Nov. 30, 2006 | Oct. 24, 2013 | Oct. 24, 2013 | |
Subsequent Event | Subsequent Event | |||||
Issuers | Issuers | |||||
Senior notes due 2023 | ABL facility | |||||
Subsequent Event | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | ' | $1,850,000,000 | $200,000,000 | ' |
Interest rate (as a percent) | ' | ' | ' | ' | 5.50% | ' |
Net proceeds from debt issuance | 365,500,000 | 2,101,489,000 | 428,605,000 | ' | 196,300,000 | ' |
Borrowings repaid | $291,451,000 | $1,921,284,000 | $577,911,000 | ' | ' | $88,500,000 |
Quarterly_Financial_Data_Unaud2
Quarterly Financial Data (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 |
Quarterly Financial Data (Unaudited) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | $906,435 | $912,101 | $898,239 | $905,441 | $882,557 | $886,991 | $889,281 | $864,815 | $3,622,216 | $3,523,644 | $3,269,131 |
Gross profit | 449,358 | 457,083 | 444,454 | 444,368 | 440,236 | 444,379 | 436,786 | 421,857 | 1,795,263 | 1,743,259 | 1,594,605 |
Net earnings | $64,812 | $72,466 | $64,889 | $58,983 | $65,630 | $69,487 | $67,813 | $30,134 | $261,151 | $233,064 | $213,725 |
Earnings per common share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic (in dollars per share) | $0.39 | $0.43 | $0.37 | $0.33 | $0.36 | $0.38 | $0.36 | $0.16 | $1.52 | $1.27 | $1.17 |
Diluted (in dollars per share) | $0.38 | $0.42 | $0.36 | $0.32 | $0.35 | $0.37 | $0.35 | $0.16 | $1.48 | $1.24 | $1.14 |