Supercuts 2007 Annual Report Download - page 91
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Company determined that the effective settlement of the preexisting franchise contracts at the date of the acquisition did not result in a gain or
loss, as the agreements were neither favorable nor unfavorable when compared to similar current market transactions, and no settlement
provisions exist in the preexisting contracts. Therefore, no settlement gain or loss was recognized with respect to the Company’s franchise
buybacks.
Fiscal Year 2005 Acquisition of Hair Club
In December 2004, the Company purchased Hair Club for approximately $210 million, financed with debt. Hair Club offers a
comprehensive menu of hair restoration solutions ranging from Extreme Hair Therapy™ to the non-surgical Bio-Matrix® Process and the
latest advancements in hair transplantation. This industry is highly fragmented, and the Company believes there is an opportunity to consolidate
this industry through acquisition.
Hair Club operations have been included in the operations of the Company since the acquisition was completed on December 1, 2004, and
are reported in Note 11 in the “Hair Restoration Centers” segment. Unaudited pro forma summary information is presented below for the year
ended June 30, 2005, assuming the acquisition of Hair Club had occurred on July 1, 2004 (i.e., the first day of fiscal year 2005). Preparation of
the pro forma summary information was based upon assumptions deemed appropriate by the Company’
s management. The pro forma summary
information presented below is not necessarily indicative of the results that actually would have occurred if the acquisition had been
consummated on the first day of fiscal year 2005, and is not intended to be a projection of future results.
90
2005
(Dollars in thousands)
Components of aggregate purchase prices:
Cash
$
209,652
Stock
—
Liabilities assumed or payable
1,032
$
210,684
Allocation of the purchase prices:
Current assets
$
8,311
Property and equipment
5,928
Other noncurrent assets
4,434
Identifiable intangible assets
126,839
Goodwill
127,373
Accounts payable and accrued expenses
(22,180
)
Deferred income tax liability
(40,021
)
$
210,684
For the Year Ended
June 30, 2005
Actual
ProForma
(Dollars in thousands)
(unaudited)
Revenue
$
2,194,294
$
2,243,290
Net Income
64,631
64,538
EPS
1.39
1.39