Supercuts 2008 Annual Report Download - page 56

Cash Flows
Operating Activities
Net cash provided by operating activities during the twelve months ended June 30, 2008, 2007 and 2006 were a result of the following:
During fiscal year 2008, cash provided by operating activities was lower than in the twelve months ended June 30, 2007 primarily due to a
decrease in working capital cash flow.
During fiscal year 2007, cash provided by operating activities was lower than in the twelve months ended June 30, 2006 due to accounts
payable and accrued expenses generating less cash in fiscal 2007 than fiscal 2006, which is primarily related to the timing of income tax
payments. Depreciation and amortization increased primarily due to the amortization of acquired intangible assets and increased fixed assets.
The goodwill impairment charge of $23.0 million ($19.6 million net of tax) related to our beauty school business. Inventories increased slightly
during the twelve months ended June 30, 2007 and 2006 due to growth in the number of salons, partially offset by the Company's planned
initiatives to reduce inventory levels in fiscal year 2007. Receivables increased during the twelve months ended June 30, 2007 primarily due to
credit card receivables and increased student enrollment in the beauty school segment as compared to June 30, 2006.
During fiscal year 2006, depreciation and amortization increased primarily due to the amortization of intangible assets that we acquired in
the acquisition of the hair restoration centers during December 2004 and the amortization of intangibles acquired in conjunction with recent
beauty school acquisitions. Also, losses on the disposal of property and equipment (which is included in depreciation and amortization) from
salons which were closed during the fourth quarter contributed to the increase. The asset impairment charge was primarily due to impairment
charges for underperforming salons and the impairment of a minority investment in a privately held company. SFAS No. 123R requires that the
cash retained as a result of the tax deductibility of increases in the value of stock-based arrangements be presented as a cash outflow from
operating activities and a cash inflow from financing activities in the Consolidated Statement of Cash Flows (shown as Excess tax benefit from
stock-based compensation plans). In periods prior to the three months ended September 30, 2005, and the Company's adoption of SFAS
No. 123R, the tax benefit realized upon exercise of stock options was presented as an operating activity (included within accrued expenses) and
totaled $9.1 million for the year ended June 30, 2005.
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Operating Cash Flows
For the Years Ended June 30,
2008 2007 2006
(Dollars in thousands)
Net income
$
85,204
$
83,170
$
109,578
Depreciation and amortization
119,977
117,327
107,470
Deferred income taxes
(3,789
)
(6,243
)
7,409
Goodwill and asset impairments
10,471
29,813
12,740
Receivables
(709
)
(4,092
)
(4,918
)
Inventories
(5,232
)
2,709
(6,068
)
Other current assets
2,554
(15,818
)
(7,551
)
Accounts payable and accrued expenses
9,249
26,436
46,924
Other noncurrent liabilities
(14,083
)
15,067
16,463
Other
18,741
(6,509
)
(362
)
$
222,383
$
241,860
$
281,685