UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K/A

Amendment No. 1

Commission File Number: 1-33145

SALLY BEAUTY HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		36-2257936
(State of Incorporation)		(I.R.S. Employer
		Identification Number)
3001 Colorado Boulevard
Denton, TX		76210
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (940) 898-7500

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

Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o           Accelerated Filer o           Non-Accelerated Filer þ

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

At December 14, 2006, there were 180,104,975 shares of common stock outstanding.

 

 

EXPLANATORY NOTE

This Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2006, is being filed to (i) correct the Summary Compensation table included in Item 11 of the Form 10-K filed on December 22, 2006 (the “Original Filing”), based upon information discovered by the registrant following the Original Filing, and (ii) to correct the paragraph entitled “Conclusions regarding Disclosure Controls” included in Item 9A to update such Item 9A in light of the amendment to the Summary Compensation table herein. As required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have included the complete text of the revised Item 9A and Item 11. The text in Item 11 under the heading “Executive Officer Severance Agreements” speaks as of the date of the Original Filing and has not been revised or updated in this 10-K/A to reflect events occurring between the date of the Original Filing and the filing of this 10-K/A, including the subsequently revised arrangements disclosed by the registrant in its proxy statement filed with the Securities and Exchange Commission on March 7, 2007.

Except as described above, this amendment does not modify or update disclosure in, or exhibits to, the Original Filing. Furthermore, this amendment does not change any previously reported financial results, nor does it reflect events occurring after the date of the Original Filing.

ITEM 9A. CONTROLS AND PROCEDURES

Controls Evaluation and Related CEO and CFO Certifications. Our management, with the participation of our principal executive officer (“CEO”) and principal financial officer (“CFO”), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The controls evaluation was conducted by our Disclosure Committee, comprised of senior representatives from our finance, accounting, internal audit, and legal departments under the supervision of our CEO and CFO.

Certifications of our CEO and our CFO, which are required in accordance with Rule 13a-14 of the Exchange Act, are attached as exhibits to this report. This “Controls and Procedures” section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.

Limitations on the Effectiveness of Controls. We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Furthermore, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements or omissions due to error or fraud may occur and not be detected.

Scope of the Controls Evaluation. The evaluation of our disclosure controls and procedures included a review of their objectives and design, the Company’s implementation of the controls and procedures and the effect of the controls and procedures on the information generated for use in this report. In the course of the evaluation, we sought to identify whether we had any data errors, control problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, was being undertaken if needed. This type of evaluation is performed on a quarterly basis so that conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our quarterly reports on Form 10-Q and our annual reports on Form 10-K. Many of the components of our disclosure controls and procedures are also evaluated by our internal audit department, our legal department and by personnel in our finance organization. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures on an ongoing basis, and to maintain them as dynamic systems that change as conditions warrant.

In reviewing the Summary Compensation Table included with Item 11 of this report as a result of an existing control process, management discovered that certain perquisites and other compensation received by our named executive officers were not included as compensation for our fiscal years ended September 30, 2006, 2005 and 2004 in the Original Filing. The information which should have been set

forth in the Original Filing is set forth in Item 11 of this 10-K/A. We have taken remedial steps to improve our communication and procedures with respect to capturing this type of compensation information for future periods and are providing appropriate supplemental training to relevant personnel. In addition, our Disclosure Committee will continue to evaluate our disclosure controls and procedures in an effort to improve such disclosure controls and procedures where we deem necessary or advisable.

Conclusions regarding Disclosure Controls. Based on the required evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that, solely as a result of our failure to include certain perquisites and compensation for named executive officers in the Summary Compensation table described in the paragraph below, as of September 30, 2006, our disclosure controls and procedures were not effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. During our last fiscal quarter of 2006, there have been no changes in our internal control over financial reporting identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Executive Officers

The following table contains compensation information for the Company’s Chief Executive Officer and the four other most highly compensated persons (“named executive officers”). The determination of the four most highly compensated persons was based on their employment with Alberto-Culver for the year ended September 30, 2006. All of the information included in this table reflects compensation earned by the named executive officers for services rendered to Alberto-Culver and its subsidiaries for the year ended September 30, 2006. Unless the context suggests otherwise, references to “restricted stock” and “stock options” mean shares of Alberto-Culver common stock and options to purchase Alberto-Culver common stock, respectively, as of September 30, 2006. Amounts shown are for individuals in their last position with Alberto-Culver and do not necessarily reflect the compensation which these individuals will earn in their new capacities as executive officers of the Company.

SUMMARY COMPENSATION TABLE

						Annual Compensation												Long-Term Compensation
														Other				Awards								Payouts				All
														Annual				Restricted				Securities								Other
														Compen-				Stock				Underlying				LTIP				Compen-
Name and						Salary				Bonus				sation				Awards				Options				Payouts				sation
Principal Position		Year				($)				($)				($)				($)(1)				(#)(2)				($)(3)				($)
Gary G. Winterhalter			2006				650,000				493,000				2,673				0				50,000				0				104,905	(4)
President and			2005				556,250				100,000				2,102				0				38,600				0				121,578
Chief Executive Officer			2004				496,250				525,000				803				0				42,000				280,000				116,983
W. Richard Dowd			2006				232,111				138,896				0				0				12,000				0				33,289	(5)
Senior Vice President,			2005				228,713				91,720				0				0				11,200				0				39,987
Distribution and Chief			2004				221,527				176,629				0				0				12,300				100,000				39,240
Information Officer
John R. Golliher			2006				309,662				101,595				91,805	(9)			0				6,400				0				27,508	(6)
President,			2005				304,169				49,939				0				0				6,300				0				28,641
Beauty Systems Group			2004				272,180				72,948				116,821	(10)			44,230				6,900				20,000				28,467
Bennie L. Lowery			2006				316,134				189,017				0				0				16,000				0				60,484	(7)
Senior Vice President and			2005				311,495				220,993				0				0				15,600				0				62,293
General Merchandise Manager,			2004				301,707				232,050				0				0				17,250				140,000				54,484
Beauty Systems Group
Gary T. Robinson			2006				250,968				217,909				0				0				12,000				0				29,602	(8)
Retired Senior Vice President,			2005				245,583				103,421				8,158				0				11,200				0				42,744
Chief Financial Officer and Treasurer			2004				230,378				175,808				0				0				12,300				100,000				41,377

Executive Officer Severance Agreements

The Company entered into Severance Agreements, each dated as of November 16, 2006, with certain Company executives. Each Severance Agreement provides that if, in the 24 months following a Change in Control, the executive’s employment is terminated by a qualifying termination, which includes termination by the Company without Cause or by the executive for Good Reason, then the executive will be entitled to certain benefits. These benefits include (i) a cash payment equal to the executive’s annual bonus, as determined in accordance with the Company’s annual incentive plan, pro-rated to reflect the portion of the year elapsed prior to the executive’s termination, (ii) a lump-sum cash payment equal to a multiple of the executive’s annual base salary at the time of termination plus a multiple of the average dollar amount of the executive’s actual or annualized annual bonus in respect of the five years preceding termination, and (iii) continued medical and welfare benefits, on the same terms as prior to termination, for a period of 24 months following termination.

For purposes of the Severance Agreement:

	•		“Cause” generally includes the executive’s (i) willful and deliberate breach of his or her duties and responsibilities or (ii) commission of a felony involving moral turpitude.
	•		“Good Reason” generally includes (i) an adverse change to the executive’s position, duties or responsibilities, (ii) reduction of the executive’s rate of salary or diminution of employee benefits, or (iii) relocation of the executive of more than 20 miles from the facility where the executive was located at the time of the Change in Control.
	•		“Change of Control” generally includes (i) the acquisition by any person, other than CDRS or its affiliates, of 20% or more of the voting power of the Company’s outstanding common stock, (ii) a change in the majority of the incumbent board of directors, (iii) a reorganization, merger or consolidation of the Company or sale of substantially all of the Company’s assets, or (iv) shareholder approval of the complete liquidation or dissolution of the Company.

The executives party to a Severance Agreement with the Company and their respective payment multiples are set forth in the following table:

Executive Officer		Multiple
Gary G. Winterhalter			2.99
President and CEO
W. Richard Dowd			1.99
Senior Vice President, Distribution and Chief Information Officer
Bennie L. Lowery			2.49
Senior Vice President and General Merchandise Manager, Beauty Systems Group
Gary T. Robinson			1.99
Senior Vice President, Chief Financial Officer and Treasurer
Raal H. Roos			1.49
Senior Vice President, General Counsel and Secretary

Additional information required for this Item is incorporated herein by reference to the sections entitled “Compensation of Executive Officers of New Sally—Stock Option Grants,” “—Stock Option Exercises,” “—Long-Term Incentive Awards” and “—Employment Contracts, Termination of Employment and Change in Control Agreements” as well as “The Transactions—Interests of Certain Persons in the Transactions—Termination Agreements” in the Company’s Final Proxy Statement/Prospectus—Information Statement (File No. 333-136259), filed pursuant to Rule 424(b)(3) on October 13, 2006.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 3. Exhibits: The following exhibits are hereby added to the Exhibits originally filed with the Original Filing.

Exhibit No.		Description
31.1-31.2		Rule 13(a)-14(a)/15(d)-14(a) Certifications

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 9th day of April 2007.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ James G. Berges   James G. Berges		Chairman of the Board and Director		April 9, 2007
/s/ Gary G. Winterhalter   Gary G. Winterhalter		President, Chief Executive Officer and Director (principal executive officer)		April 9, 2007
/s/ David L. Rea   David L. Rea		Senior Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)		April 9, 2007
/s/ Kathleen Affeldt   Kathleen Affeldt		Director		April 9, 2007
/s/ Marshall E. Eisenberg   Marshall E. Eisenberg		Director		April 9, 2007
/s/ Robert R. McMaster   Robert R. McMaster		Director		April 9, 2007
/s/ Walter Metcalfe   Walter Metcalfe		Director		April 9, 2007
/s/ John A. Miller   John A. Miller		Director		April 9, 2007
/s/ Martha Miller de Lombera   Martha Miller de Lombera		Director		April 9, 2007
/s/ Edward W. Rabin   Edward W. Rabin		Director		April 9, 2007
/s/ Richard J. Schnall   Richard J. Schnall		Director		April 9, 2007