Company Quick10K Filing
Sally Beauty
Price15.16 EPS2
Shares120 P/E7
MCap1,823 P/FCF6
Net Debt1,538 EBIT471
TEV3,361 TEV/EBIT7
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-04
10-K 2020-09-30 Filed 2020-11-24
10-Q 2020-06-30 Filed 2020-07-31
10-Q 2020-03-31 Filed 2020-05-07
10-Q 2019-12-31 Filed 2020-02-06
10-K 2019-09-30 Filed 2019-11-25
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-05-01
10-Q 2018-12-31 Filed 2019-02-05
10-K 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-03
10-Q 2017-12-31 Filed 2018-02-08
10-K 2017-09-30 Filed 2017-11-15
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-Q 2016-12-31 Filed 2017-02-02
10-K 2016-09-30 Filed 2016-11-15
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-05
10-Q 2015-12-31 Filed 2016-02-04
10-K 2015-09-30 Filed 2015-11-12
10-Q 2015-06-30 Filed 2015-08-06
10-Q 2015-03-31 Filed 2015-05-05
10-Q 2014-12-31 Filed 2015-02-05
10-K 2014-09-30 Filed 2014-11-13
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-05-01
10-Q 2013-12-31 Filed 2014-02-06
10-K 2013-09-30 Filed 2013-11-14
10-Q 2013-06-30 Filed 2013-08-01
10-Q 2013-03-31 Filed 2013-05-02
10-Q 2012-12-31 Filed 2013-02-07
10-K 2012-09-30 Filed 2012-11-15
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-05-03
10-Q 2011-12-31 Filed 2012-02-02
10-K 2011-09-30 Filed 2011-11-16
10-Q 2011-06-30 Filed 2011-08-04
10-Q 2011-03-31 Filed 2011-05-05
10-Q 2010-12-31 Filed 2011-02-03
10-K 2010-09-30 Filed 2010-11-18
10-Q 2010-06-30 Filed 2010-08-04
10-Q 2010-03-31 Filed 2010-05-04
10-Q 2009-12-31 Filed 2010-02-04
8-K 2020-11-13
8-K 2020-11-12
8-K 2020-09-29
8-K 2020-09-02
8-K 2020-07-30
8-K 2020-07-06
8-K 2020-06-02
8-K 2020-05-06
8-K 2020-04-24
8-K 2020-04-20
8-K 2020-04-15
8-K 2020-03-31
8-K 2020-03-23
8-K 2020-02-06
8-K 2020-01-30
8-K 2020-01-30
8-K 2019-12-02
8-K 2019-11-07
8-K 2019-10-03
8-K 2019-09-16
8-K 2019-09-03
8-K 2019-07-31
8-K 2019-05-01
8-K 2019-04-03
8-K 2019-03-19
8-K 2019-03-05
8-K 2019-02-19
8-K 2019-02-05
8-K 2019-01-31
8-K 2019-01-31
8-K 2019-01-31
8-K 2018-11-08
8-K 2018-10-12
8-K 2018-08-29
8-K 2018-08-02
8-K 2018-05-23
8-K 2018-05-03
8-K 2018-04-30
8-K 2018-04-03
8-K 2018-02-08
8-K 2018-02-01
8-K 2018-01-25

SBH 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-22 sbh-ex22_13.htm
EX-31.1 sbh-ex311_6.htm
EX-31.2 sbh-ex312_8.htm
EX-32.1 sbh-ex321_9.htm
EX-32.2 sbh-ex322_7.htm

Sally Beauty Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
2.92.21.60.90.3-0.42012201420172020
Assets, Equity
1.00.80.60.40.20.02012201420172020
Rev, G Profit, Net Income
0.30.20.0-0.1-0.3-0.42012201420172020
Ops, Inv, Fin

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED: DECEMBER 31, 2020

-OR-

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 1-33145

 

SALLY BEAUTY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

36-2257936

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

3001 Colorado Boulevard

 

 

Denton, Texas

 

76210

(Address of principal executive offices)

 

(Zip Code)

 

(940) 898-7500

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report): N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered

Common Stock, $0.01 par valueSBHThe New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 

As of February 1, 2021, there were 112,814,336 shares of the issuer’s common stock outstanding.

 

 

 

 


 

TABLE OF CONTENTS

 

 

Page

PART I — FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

5

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

17

Item 3. Quantitative And Qualitative Disclosures About Market Risk

22

Item 4. Controls And Procedures

22

 

 

PART II — OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

23

Item 1A. Risk Factors

23

Item 6. Exhibits

23

 

 


2


In this Quarterly Report, references to “the Company,” “Sally Beauty,” “our company,” “we,” “our,” “ours” and “us” refer to Sally Beauty Holdings, Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

cautionary notice regarding forward-looking statements

Statements in this Quarterly Report on Form 10-Q and in the documents incorporated by reference herein which are not purely historical facts or which depend upon future events may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or similar expressions may also identify such forward-looking statements. Forward-looking statements may relate to, among other things, the impact on our business, operations and financial results of the novel coronavirus (“COVID-19”) pandemic.

Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Item 1A contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

The events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements.

 

3


 

WHERE YOU CAN FIND MORE INFORMATION

Our quarterly financial results and other important information are available by calling our Investor Relations Department at (940) 297-3877.

We maintain a website at www.sallybeautyholdings.com where investors and other interested parties may obtain, free of charge, press releases and other information as well as gain access to our periodic filings with the Securities and Exchange Commission (“SEC”). The information contained on this website should not be considered to be a part of this or any other report filed with or furnished to the SEC.

 

4


PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

The following condensed consolidated balance sheets as of December 31, 2020, and September 30, 2020, the condensed consolidated statements of earnings, condensed consolidated statements of comprehensive income, the condensed consolidated statements of stockholders’ equity and the condensed consolidated statements of cash flows for the three months ended December 31, 2020 and 2019, are those of Sally Beauty Holdings, Inc. and its subsidiaries.

5


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except par value data)

 

 

 

 

December 31,

2020

 

 

September 30,

2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

537,644

 

 

$

514,151

 

Trade accounts receivable, net

 

 

40,046

 

 

 

35,590

 

Accounts receivable, other

 

 

27,904

 

 

 

20,839

 

Inventory

 

 

895,984

 

 

 

814,503

 

Other current assets

 

 

44,300

 

 

 

48,014

 

Total current assets

 

 

1,545,878

 

 

 

1,433,097

 

Property and equipment, net of accumulated depreciation of $725,437 at

   December 31, 2020, and $694,709 at September 30, 2020

 

 

305,225

 

 

 

315,029

 

Operating lease assets

 

 

519,985

 

 

 

525,634

 

Goodwill

 

 

546,027

 

 

 

540,038

 

Intangible assets, excluding goodwill, net of accumulated amortization of

   $68,590 at December 31, 2020, and $63,491 at September 30, 2020

 

 

58,819

 

 

 

58,283

 

Other assets

 

 

23,714

 

 

 

23,066

 

Total assets

 

$

2,999,648

 

 

$

2,895,147

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

186

 

 

$

180

 

Accounts payable

 

 

285,636

 

 

 

236,333

 

Accrued liabilities

 

 

133,328

 

 

 

170,665

 

Current operating lease liabilities

 

 

154,090

 

 

 

153,267

 

Income taxes payable

 

 

17,096

 

 

 

2,917

 

Total current liabilities

 

 

590,336

 

 

 

563,362

 

Long-term debt

 

 

1,798,154

 

 

 

1,796,897

 

Long-term operating lease liabilities

 

 

390,873

 

 

 

394,375

 

Other liabilities

 

 

29,406

 

 

 

32,976

 

Deferred income tax liabilities, net

 

 

92,013

 

 

 

92,094

 

Total liabilities

 

 

2,900,782

 

 

 

2,879,704

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value. Authorized 500,000 shares; 112,814 and

   112,824 shares issued and 112,538 and 112,405 shares outstanding at

   December 31, 2020, and September 30, 2020, respectively

 

 

1,125

 

 

 

1,124

 

Preferred stock, $0.01 par value. Authorized 50,000 shares; none issued

 

 

 

 

 

 

Additional paid-in capital

 

 

4,556

 

 

 

1,913

 

Accumulated earnings

 

 

174,300

 

 

 

117,109

 

Accumulated other comprehensive loss, net of tax

 

 

(81,115

)

 

 

(104,703

)

Total stockholders’ equity

 

 

98,866

 

 

 

15,443

 

Total liabilities and stockholders’ equity

 

$

2,999,648

 

 

$

2,895,147

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Net sales

 

$

936,022

 

 

$

980,208

 

Cost of goods sold

 

 

465,298

 

 

 

505,360

 

Gross profit

 

 

470,724

 

 

 

474,848

 

Selling, general and administrative expenses

 

 

366,170

 

 

 

377,930

 

Restructuring

 

 

232

 

 

 

2,531

 

Operating earnings

 

 

104,322

 

 

 

94,387

 

Interest expense

 

 

25,978

 

 

 

21,541

 

Earnings before provision for income taxes

 

 

78,344

 

 

 

72,846

 

Provision for income taxes

 

 

21,153

 

 

 

19,631

 

Net earnings

 

$

57,191

 

 

$

53,215

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.51

 

 

$

0.46

 

Diluted

 

$

0.50

 

 

$

0.45

 

Weighted-average shares:

 

 

 

 

 

 

 

 

Basic

 

 

112,475

 

 

 

116,125

 

Diluted

 

 

113,828

 

 

 

117,154

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Net earnings

 

$

57,191

 

 

$

53,215

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

25,007

 

 

 

14,961

 

Interest rate caps, net of tax

 

 

175

 

 

 

109

 

Foreign exchange contracts, net of tax

 

 

(1,594

)

 

 

(200

)

Other comprehensive income, net of tax

 

 

23,588

 

 

 

14,870

 

Total comprehensive income

 

$

80,779

 

 

$

68,085

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

8


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

Balance at September 30, 2020

 

112,405

 

 

$

1,124

 

 

$

1,913

 

 

$

117,109

 

 

$

(104,703

)

 

$

15,443

 

Net earnings

 

 

 

 

 

 

 

 

 

 

57,191

 

 

 

 

 

 

57,191

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

23,588

 

 

 

23,588

 

Share-based compensation

 

 

 

 

 

 

 

2,893

 

 

 

 

 

 

 

 

 

2,893

 

Stock issued for equity awards

 

133

 

 

 

1

 

 

 

(250

)

 

 

 

 

 

 

 

 

(249

)

Balance at December 31, 2020

 

112,538

 

 

$

1,125

 

 

$

4,556

 

 

$

174,300

 

 

$

(81,115

)

 

$

98,866

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated

 

 

Other

 

 

Total

 

 

Common Stock

Paid-in

 

 

(Deficit)

 

 

Comprehensive

 

 

Stockholders’

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity (Deficit)

 

Balance at September 30, 2019

 

116,725

 

 

$

1,167

 

 

$

 

 

$

55,797

 

 

$

(117,287

)

 

$

(60,323

)

Cumulative effect of ASC 842 adoption

 

 

 

 

 

 

 

 

 

 

(445

)

 

 

 

 

 

(445

)

Net earnings

 

 

 

 

 

 

 

 

 

 

53,215

 

 

 

 

 

 

53,215

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

14,870

 

 

 

14,870

 

Repurchases and cancellations of

   common stock

 

(766

)

 

 

(7

)

 

 

(6,237

)

 

 

(5,113

)

 

 

 

 

 

(11,357

)

Share-based compensation

 

 

 

 

 

 

 

3,473

 

 

 

 

 

 

 

 

 

3,473

 

Stock issued for equity awards

 

206

 

 

 

2

 

 

 

2,764

 

 

 

 

 

 

 

 

 

2,766

 

Balance at December 31, 2019

 

116,165

 

 

$

1,162

 

 

$

 

 

$

103,454

 

 

$

(102,417

)

 

$

2,199

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

9


SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

 

 

2020

 

 

2019

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

57,191

 

 

$

53,215

 

Adjustments to reconcile net earnings to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

26,386

 

 

 

27,076

 

Share-based compensation expense

 

 

2,893

 

 

 

3,473

 

Amortization of deferred financing costs

 

 

1,496

 

 

 

887

 

Gain on early extinguishment of debt

 

 

 

 

 

(223

)

Loss on disposal of equipment and other property

 

 

1,589

 

 

 

 

Deferred income taxes

 

 

229

 

 

 

555

 

Changes in (exclusive of effects of acquisitions):

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(3,502

)

 

 

2,457

 

Accounts receivable, other

 

 

(8,643

)

 

 

8,793

 

Inventory

 

 

(67,764

)

 

 

(30,138

)

Other current assets

 

 

3,220

 

 

 

(482

)

Other assets

 

 

(240

)

 

 

(2,480

)

Operating leases, net

 

 

2,996

 

 

 

 

Accounts payable and accrued liabilities

 

 

12,401

 

 

 

(11,930

)

Income taxes payable

 

 

14,307

 

 

 

10,352

 

Other liabilities

 

 

(3,573

)

 

 

770

 

Net cash provided by operating activities

 

 

38,986

 

 

 

62,325

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Payments for property and equipment, net of proceeds

 

 

(15,483

)

 

 

(40,875

)

Acquisitions, net of cash acquired

 

 

(2,025

)

 

 

(1,944

)

Net cash used by investing activities

 

 

(17,508

)

 

 

(42,819

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

232,000

 

Repayments of long-term debt

 

 

(63

)

 

 

(247,830

)

Payments for common stock repurchased

 

 

 

 

 

(11,357

)

Proceeds from equity awards

 

 

 

 

 

2,766

 

Employee withholding taxes paid related to net share settlement of equity awards

 

 

(249

)

 

 

 

Net cash used by financing activities

 

 

(312

)

 

 

(24,421

)

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

2,327

 

 

 

682

 

Net increase (decrease) in cash and cash equivalents

 

 

23,493

 

 

 

(4,233

)

Cash and cash equivalents, beginning of period

 

 

514,151

 

 

 

71,495

 

Cash and cash equivalents, end of period

 

$

537,644

 

 

$

67,262

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid

 

$

43,439

 

 

$

33,297

 

Income taxes paid

 

$

2,609

 

 

$

9,216

 

Capital expenditures incurred but not paid

 

$

6,707

 

 

$

3,491

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 


 

10


 

Sally Beauty Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.   Basis of Presentation

The condensed consolidated interim financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures are adequate to make the information not misleading. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. In the opinion of management, these condensed consolidated interim financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly our consolidated financial position as of December 31, 2020 and September 30, 2020, and our consolidated results of operations, consolidated comprehensive income, and consolidated statements of stockholders’ equity and our consolidated cash flows for the three months ended December 31, 2020 and 2019.

Our operating results for the three months ended December 31, 2020, may not be indicative of the results that may be expected for the full fiscal year ending September 30, 2021, in particular as a result of the uncertainty around the continuing effects of the COVID-19 pandemic on future periods. Due to the uncertainty over the duration and severity of the economic and operational impacts of COVID-19, the adverse impact of the pandemic may continue further into our fiscal year 2021 and possibly beyond, and it may be material.

2.   Significant Accounting Policies

We adhere to the same accounting policies in the preparation of our condensed consolidated interim financial statements as we do in the preparation of our full-year consolidated financial statements. As permitted under GAAP, interim accounting for certain expenses, including income taxes, is based on full-year assumptions. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates.

3.   Recent Accounting Pronouncements 

In December 2019, the FASB issued ASU No. 2019-12 which simplifies the accounting for income taxes by removing an exception related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period with year to date losses and the recognition of deferred tax liabilities for outside basis differences. Additionally, the update clarifies and simplifies other areas of ASC 740, Income Taxes. For public companies, the amendments in the update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, but all amendments must be adopted at once. The amendments in this update have different adoption methods including prospective basis, retrospective basis, and a modified retrospective basis dependent on the specific change. We are currently evaluating the impact of this update, but based on our preliminary assessment we do not believe this will have a material impact to our results of operations or financial position.

4.   Revenue Recognition

Substantially all of our revenue is derived through the sale of merchandise at the point-of-sale. Revenue is recognized net of estimated sales returns and sales taxes. We estimate sales returns based on historical data.

Changes to our contract liabilities for the period were as follows (in thousands):

September 30, 2020

 

 

 

 

 

$

13,947

 

Loyalty points and gift cards issued but not redeemed, net of estimated breakage

 

 

5,709

 

Revenue recognized from beginning liability

 

 

(3,476

)

December 31, 2020

 

 

 

 

 

$

16,180

 

See Note 11, Business Segments, for additional information regarding the disaggregation of our sales revenue.

11


 

5.   Fair Value Measurements

Fair value on recurring basis

Consistent with the three-level hierarchy defined in ASC Topic 820, Fair Value Measurement, as amended, we categorize our financial assets and liabilities as follows (in thousands):

 

 

Classification

 

Fair Value Hierarchy Level

 

December 31,

2020

 

 

September 30,

2020

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

Cash and cash equivalents

 

Level 1

 

$

 

 

$

194,612

 

Interest rate caps

 

Other assets

 

Level 2

 

 

18

 

 

 

27

 

Total assets

 

 

 

 

 

$

18

 

 

$

194,639

 

.

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Accrued liabilities

 

Level 2

 

$

1,587

 

 

$

 

 

Other fair value disclosures

 

 

 

 

December 31, 2020

 

 

September 30, 2020

 

 

 

Fair Value Hierarchy Level

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

Long-term debt, excluding capital leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior notes

 

Level 1

 

$

1,177,380

 

 

$

1,234,206

 

 

$

1,177,380

 

 

$

1,217,707

 

Term loan B

 

Level 2

 

 

635,788

 

 

 

632,623

 

 

 

635,788

 

 

 

619,397

 

Total long-term debt

 

 

 

$

1,813,168

 

 

$

1,866,829

 

 

$

1,813,168

 

 

$

1,837,104

 

 

The table above excludes amounts, if any, related to our ABL facility as the balance approximates fair value due to the short-term nature of our borrowings.

6.   Stockholders’ Equity

Share Repurchases

In August 2017, our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $1.0 billion of its common stock, subject to certain limitations governed by our debt agreements, over an approximate four-year period expiring on September 30, 2021.

Information related to our shares repurchased and subsequently retired were as follows (in thousands):

 

 

Three Months Ended

December 31,

 

 

 

2020

 

 

2019

 

Number of shares repurchased