Supercuts 2011 Annual Report Download - page 51

Download and view the complete annual report

Please find page 51 of the 2011 Supercuts annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 178

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178

Table of Contents
adjustment were offset by a planned increase in advertising expense within the Company's Promenade concept and an increase in self insurance
accruals.
The basis point increase in site operating expenses as a percent of consolidated revenues during fiscal year 2010 was primarily due to higher
self insurance expense. The Company recorded a reduction in self insurance accruals of $1.7 million in fiscal year 2010 compared to a
$9.9 million reduction in fiscal year 2009. In addition the Company settled two legal claims related to customer and employee matters resulting
in a $5.2 million charge during fiscal year 2010.
The basis point increase in site operating expenses as a percent of consolidated revenues during fiscal year 2009 was primarily due to the
reclassification of rubbish removal and utilities that we pay our landlords as part of our operating lease agreements from rent into site operating
expense. Partially offsetting the basis point increase was an incremental $3.0 million benefit due to the reduction in self insurance accruals
compared to the fiscal year 2008 reduction in self insurance accruals. The reduction was primarily related to prior years' workers' compensation
reserves as a result of successful safety and return-to-work programs implemented over the past few years.
General and Administrative
General and administrative (G&A) includes costs associated with our field supervision, salon training and promotions, product distribution
centers and corporate offices (such as salaries and professional fees), including costs incurred to support franchise and hair restoration center
operations. G&A expenses were as follows:
The basis point increase in G&A costs as a percentage of consolidated revenues during fiscal year 2011 was primarily due to the
$31.2 million valuation reserve on the note receivable with the purchaser of Trade Secret, incremental costs associated with the Company's
senior management restructure, expenditures associated with the Regis salon concept re-
imaging project, professional fees incurred related to the
exploration of strategic alternatives and information technology projects, legal claims expense and negative leverage on fixed costs within this
category due to negative same-store sales.
The basis point increase in G&A costs as a percentage of consolidated revenues during fiscal year 2010 was primarily due to negative
leverage from the decrease in same-store sales, partially offset by the continuation of cost savings initiatives implemented by the Company.
The basis point improvement in G&A costs as a percentage of consolidated revenues during fiscal year 2009 was primarily due to cost
savings initiatives implemented by the Company during the first half of fiscal year 2009 including the reduction of field supervisory staff and the
reduction of the fiscal year 2009 marketing budget. The basis point improvement was also related to the deconsolidation of the European
franchise salon operations.
49
Increase (Decrease)
Over Prior Fiscal Year
Years Ended June 30,
G&A
Expense as
%
of
Consolidated
Revenues
Dollar
Percentage
Basis
Point
(1)
(Dollars in thousands)
2011
$
339,857
14.6
%
$
47,866
16.4
%
220
2010
291,991
12.4
330
0.1
40
2009
291,661
12.0
(29,902
)
(9.3
)
(100
)
(1) Represents the basis point change in G&A as a percent of consolidated revenues as compared to the
corresponding period of the prior fiscal year.