Supercuts 2006 Annual Report Download - page 53

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exercise of stock options was presented as an operating activity (included within accrued expenses) and totaled $9.1 and $8.3 million for the
years ended June 30, 2005 and 2004, respectively.
During fiscal year 2005, accounts payable and accrued expenses increased primarily due to an increase in inventory, as well as the timing
of advertising expenses and income tax payments. Inventories increased due to growth in the number of salons, as well as lower than expected
same-store product sales. The asset and goodwill impairment was primarily comprised of a goodwill impairment charge of $38.3 million
resulting from a write-off related to the international salon segment. During fiscal year 2004, deferred income taxes increased primarily due to
differences in the book and tax treatment of depreciation and amortization methodologies associated with property and equipment and
goodwill.
Investing Activities
Net cash used in investing activities was the result of the following:
During fiscal year 2006, we entered into a credit agreement with a third party, under which we lent $6.0 million. Refer to Note 3,
“Acquisitions and Investments,” of Notes to Consolidated Financial Statements for further details surrounding this arrangement.
Exclusive of franchise buybacks (discussed immediately following the table below), we constructed and acquired the following number of
company-owned salons (in each concept), beauty schools and hair restoration centers during fiscal years 2006, 2005 and 2004:
52
Investing Cash Flows
For the Years Ended June 30,
2006
2005
2004
(Dollars in thousands)
Salon and school acquisitions
$
(141,047
)
$
(118,915
)
$
(99,734
)
Hair restoration center acquisition
(6,362
)
(209,652
)
—
Acquisition of equity method investment
(4,442
)
—
—
Payment of contingent purchase price
(3,630
)
—
—
Asset acquisitions
(155,481
)
(328,567
)
(99,734
)
Capital expenditures for new salon construction
(44,583
)
(48,322
)
(28,542
)
Capital expenditures for remodels or other additions
(41,246
)
(34,737
)
(36,192
)
Capital expenditures for the corporate office (including all
technology related expenditures)
(34,085
)
(18,038
)
(9,342
)
Capital expenditures
(119,914
)
(101,097
)
(74,076
)
Disbursement for long
-
term note receivable
(6,000
)
—
—
Proceeds from the sale of assets
730
846
432
$
(280,665
)
$
(428,818
)
$
(173,378
)
Years Ended June 30,
2006
2005
2004
Constructed
Acquired
Constructed
Acquired
Constructed
Acquired
Regis
38
14
39
13
33
4
MasterCuts
32
—
47
2
34
3
Trade Secret
33
2
56
23
26
12
SmartStyle
215
—
194
—
174
—
Strip Center
180
122
167
248
166
162
International
33
10
22
19
19
18
Beauty schools
2
30
—
13
—
6
Hair restoration centers
1
1
—
42
—
—
534
179
525
360
452
205