Supercuts 2005 Annual Report Download - page 60

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procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded certain elements
of the internal control over financial reporting of Hair Club for Men and Women (Hair Club) from its assessment of the Company’s internal
control over financial reporting as of June 30, 2005 because Hair Club was acquired by the Company in a purchase business combination
during fiscal year 2005. Subsequent to the acquisition, certain elements of the acquired businesses’ internal control over financial reporting and
related processes were integrated into the Company’s existing systems and internal control over financial reporting. Those controls that were
not integrated have been excluded from management’
s assessment of the effectiveness of internal control over financial reporting as of June 30,
2005. We have also excluded these elements of the internal control over financial reporting of Hair Club from our audit of the Company’s
internal control over financial reporting. Hair Club is a wholly-owned subsidiary of Regis Corporation. The excluded elements represent
controls over accounts of approximately 14.4 percent of consolidated assets, 6.5 percent of consolidated liabilities, 2.7 percent of the
consolidated revenues, 2.3 percent of the consolidated operating expenses and 8.9 percent of consolidated operating income.
59
/s/ PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
September 9, 2005