Supercuts 2005 Annual Report Download - page 44

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International Salon Operating Income (Loss). Operating income (loss) for the international salons was as follows:
*
Represents the basis point change in international salon operating income (loss) as a percent of total international salon revenues as
compared to the corresponding periods of the prior fiscal year.
The decrease in international salon operating income during the years ended June 30, 2005 was primarily due to the goodwill impairment
charge of $38.3 million during the third quarter of the current fiscal year. The primary factor that led to the impairment charge was slower than
expected growth of the European economy. Exclusive of the goodwill impairment charge, international salon operating income decreased as a
percent of international revenues compared to the prior fiscal year primarily due to higher payroll costs (including severance payments related
to the franchise operations in France), as well as the fixed cost components of G&A increasing at a faster rate than the same-store sales in the
international salons. The decrease in international salon operating income as a percent of total revenues during the year ended June 30, 2004
was primarily due to an upward adjustment in the cost of goods usage percentage primarily based on a change in the mix of products carried
and sold.
Beauty Schools
Beauty School Revenues. Total beauty schools revenues were as follows:
(a)
We did not own or operate any beauty schools until December of 2002 (i.e., the second quarter of fiscal year 2003).
The percentage increases during the years ended June 30, 2005 and 2004 were due to the following factors:
We acquired 13 and six beauty schools during the twelve months ended June 30, 2005 and 2004, respectively. The foreign currency
impact during the year ended June 30, 2005 and 2004 was driven by the weakening of the United States dollar against the British pound as
compared to the prior periods’ exchange rates.
43
Operating
Operating Income (Loss) as
Increase (Decrease) Over Prior Fiscal Year
Years Ended June 30,
Income (Loss)
% of Total Revenues
Dollar
Percentage
Basis Point*
(Dollars in thousands)
2005
$
(18,133
)
(8.0
)%
$
(40,612
)
(180.7
)%
(1,910
)
2004
22,479
11.1
785
3.6
(170
)
2003
21,694
12.8
25,367
690.6
1,590
Increase Over Prior
Fiscal Year
Years Ended June 30,
Revenues
Dollar
Percentage
(Dollars in thousands)
2005
$
33,911
$
18,768
123.9
%
2004
15,143
10,858
253.4
2003
4,285
N/A
(a)
N/A
(a)
Percentage Increase (Decrease)
in Revenues
For the Periods Ended June 30,
2005
2004
Acquisitions (previous twelve months)
114.2
%
166.9
%
Organic growth
5.8
68.0
Foreign currency
3.9
18.5
123.9
%
253.4
%