Supercuts 2003 Annual Report Download - page 66

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Based upon purchase price allocations, which may have components representing preliminary allocations with respect to recent fiscal year
2003 acquisitions, the components of the aggregate purchase prices of the acquisitions made during fiscal years 2003, 2002 and 2001, and the
allocation of the purchase prices, were as follows:
Approximately $1.1 and $1.1 million of employee termination and other exit costs were incurred in connection with acquisitions in fiscal years
2003 and 2002, respectively. These costs consisted primarily of employee termination costs and were treated as a liability assumed at the
acquisition date. As of June 30, 2003 and 2002, approximately $0.2 and $0.8 million of these costs were accrued, respectively.
Based upon the actual and preliminary purchase price allocations, the change in the carrying amount of the goodwill for the years ended
June 30, 2003 and 2002 is as follows:
Generally, the goodwill recognized in the domestic transactions is expected to be fully deductible for tax purposes and the goodwill recognized
in the international transactions is non-deductible for tax purposes. The majority of the purchase price is accounted for as residual goodwill
rather than identifiable intangible assets. This stems from the value associated with the walk-in customer base of the acquired hair salon brand.
Residual goodwill further represents the Company’s opportunity to strategically combine the acquired business with the Company’s existing
structure to serve a greater number of customers through its expansion strategies. Internationally, the acquisition purchase price goodwill
residual primarily represents the growth prospects that are not captured as part of acquired tangible or identified intangible assets.
62
Table of Contents
(Dollars in thousands)
2003
2002
2001
Components of aggregate purchase prices:
Cash
$
66,880
$
59,925
$
45,165
Stock
21,501
26,301
11,896
Liabilities assumed or payable
3,246
13,608
7,383
$
91,627
$
99,834
$
64,444
Allocation of the purchase prices:
Net tangible assets (liabilities) acquired
$
16,828
$
(1,952
)
$
11,677
Identifiable intangible assets
9,172
41,181
8,672
Goodwill
65,627
60,605
44,095
$
91,627
$
99,834
$
64,444
2003
2002
(Dollars in thousands)
Domestic
International
Domestic
International
Balance at beginning of year
$
252,055
$
52,474
$
230,716
$
5,401
Goodwill acquired
45,963
19,664
18,763
41,842
Finalization of purchase accounting
(1,407
)
(8,496
)
2,534
Translation rate adjustments
2,991
9,374
42
5,231
Balance at end of year
$
299,602
$
73,016
$
252,055
$
52,474