Company: SBH
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001193125-25-280122
Chunk: 69

Company: Sally Beauty Holdings, Inc.
Filing Date: 2025-11-13
Form: 10-K
Item: Item 6
Chunk 69
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payment of certain indebtedness, and other matters and customary events of default, including customary cross-default and/or cross-acceleration provisions.12.Derivative InstrumentsAs of September 30, 2025, we did not purchase or hold any derivative instruments for trading or speculative purposes. See Note 3 for the classification and fair value of our derivative instruments.Designated Cash Flow HedgesForeign Currency ForwardsDuring fiscal year 2025, we entered into foreign currency forwards to mitigate the exposure to exchange rate changes on inventory purchases in USD by our foreign subsidiaries. As of September 30, 2025, we held forwards, which expire ratably through September 30, 2026, with a notional amount, based upon exchange rates at September 30, 2025, as follows (in thousands):

         Notional Currency
          
         Notional Amount

         Canadian Dollar
          
         $
         9,292

         Euro

         5,323

         Mexican Peso

         17,936

         Total
          
         $
         32,551

       We record, net of income tax, the changes in fair value related to the foreign currency forwards into AOCL and recognize realized gain or loss into cost of goods sold based on inventory turns. During fiscal year 2025, 2024 and 2023, we reclassified a net gain of $0.5 million, a net loss of $2.9 million, and a net loss of $1.9 million, respectively, into cost of goods sold. As of September 30, 2025, we expect to reclassify approximately $0.5 million in net losses into cost of goods sold over the next 12 months.Interest Rate SwapIn April 2023, we entered into a three-year interest rate swap with an initial notional amount of $200 million (the “interest rate swap”) to mitigate the exposure to higher interest rates in connection with our TLB 2030. The interest rate swap involves fixed monthly payments at the contract rate of 3.705%, and in return, we receive floating interest payments based on the 1-month Adjusted Term SOFR Rate. The interest rate swap will mature in April 2026 and is designated as a cash flow hedge. Changes in the fair value of the interest rate swap are recorded quarterly, net of income tax, and included in AOCL.For fiscal years 2025, 2024, and 2023, we recognized income of $1