Supercuts 2004 Annual Report Download - page 88

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
72
10.
SHAREHOLDERS
’
EQUITY:
In addition to the shareholders
’
equity activities described in Note 9, the following activity has taken place:
Authorized Shares and Designation of Preferred Class:
The Company has 100 million shares of capital stock authorized, par value $.05, of which all outstanding shares, and shares available
under the Stock Option Plans, have been designated as common.
In addition, 250,000 shares of authorized capital stock have been designated as Series A Junior Participating Preferred Stock (preferred
stock). None of the preferred stock has been issued.
Shareholders
’
Rights Plan:
The Company has a shareholders’ rights plan pursuant to which one preferred share purchase right is held by shareholders for each
outstanding share of common stock. The rights become exercisable only following the acquisition by a person or group, without the prior
consent of the Board of Directors, of 20 percent or more of the Company’s voting stock, or following the announcement of a tender offer
or exchange offer to acquire an interest of 20 percent or more. If the rights become exercisable, they entitle all holders, except the takeover
bidder, to purchase one one-hundredth of a share of preferred stock at an exercise price of $120, subject to adjustment, or in lieu of
purchasing the preferred stock, to purchase for the same exercise price common stock of the Company (or in certain cases common stock
of an acquiring company) having a market value of twice the exercise price of a right.
Stock Repurchase Plan:
In May 2000, the Company’s Board of Directors approved a stock repurchase program under which up to $50.0 million can be expended
for the repurchase of the Company’s common stock. In August, 2003, the Board of Directors elected to increase the maximum repurchase
amount to $100.0 million. The timing and amounts of any repurchases will depend on many factors, including the market price of the
common stock and overall market conditions. The repurchases to date have been made primarily to eliminate the dilutive effect of shares
issued in conjunction with acquisitions and stock option exercises. During the year ended June 30 2004, 2003 and 2002, 544,000, 860,301
and 278,700 shares were repurchased for $22.5, $21.7 and $7.7 million, respectively. All repurchased shares are immediately retired. This
repurchase program has no stated expiration date and at June 30, 2004, $46.6 million remains to be repurchased under this program.
11.
SEGMENT INFORMATION:
The Company operates or franchises 8,148 North American salons (located in the United States, Canada and Puerto Rico) and 2,014
international salons. The Company operates its North American operations through five primary concepts: Regis Salons, MasterCuts,
Trade Secret, SmartStyle and Strip Center salons. Each of the concepts offers similar products and services, concentrates on the mass-
market consumer marketplace and has consistent distribution channels. All of the salons within the North American concepts are located
in high traffic, retail shopping locations that attract mass-market consumers, and the individual salons generally display similar economic
characteristics. The salons share interdependencies and a common support base. The Company’s international operations, which are
primarily in Europe, are located in salons operating in malls, leading department stores, mass merchants and high-street locations. Based
on the way the Company manages its business, it has presented its North American and international operations as two reportable
operating segments.
The accounting policies of the reportable operating segments are the same as those described in Note 1 to the Consolidated Financial
Statements. Corporate assets detailed below are primarily comprised of property and equipment associated with the Company’s
headquarters and distribution centers, corporate cash, inventories located at corporate distribution centers, deferred income taxes, franchise
receivables and other corporate assets. Intersegment sales and transfers are not significant.