Supercuts 2009 Annual Report Download - page 40

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Table of Contents
OVERVIEW OF FISCAL YEAR 2009 RESULTS
The following summarizes key aspects of our fiscal year 2009 results:
• Revenues decreased 2.1 percent to $2.4 billion and consolidated same-store sales decreased 3.1 percent during fiscal year 2009.
The Company experienced a decline in customer visitation as a result of the continued global economic decline, partially offset by
an increase in average ticket price, resulted in a decrease in consolidated same-store sales of 3.1 percent. The revenue decrease
was partially offset by $32.2 million of product sold to the purchaser of Trade Secret. The Company expects fiscal year 2010
same-store sales to be in the range of negative 3.0 to positive 1.0 percent.
•
The Trade Secret concept was sold on February 16, 2009 and results have been reported within discontinued operations within the
Consolidated Financial Statements. Reported as part of the loss on discontinued operations was a pre-tax $183.3 million non-cash
write-off consisting primarily of inventories, property and equipment, and goodwill. The Trade Secret concept locations sold
included 655 company-owned salons and 57 franchised salons.
• Goodwill impairment charges of $41.7 million associated with our salon concepts in the United Kingdom were recorded during
fiscal year 2009.
• Other-than-temporary impairment charges of $25.7 million of our investment in Provalliance were recorded during fiscal year
2009.
•
Other
-
than
-
temporary impairment charges of $7.8 million for the full carrying value of our investment in and loans to Intelligent
Nutrients, LLC were recorded during fiscal year 2009.
• Long-lived asset impairment charges of $10.2 million were recorded during fiscal year 2009.
•
Total debt at the end of the fiscal year was $634.3 million and our debt
-
to
-
capitalization ratio, calculated as total debt as a
percentage of total debt and shareholders' equity at fiscal year end, increased 20 basis points to 44.1 percent as compared to
June 30, 2008.
•
The annual effective income tax rate of 53.3 percent was adversely impacted by the pre
-
tax non
-
cash goodwill impairment charge
of $41.7 million and an adjustment to correct our prior year deferred income tax balances of $3.8 million. Offsetting these
amounts were favorable releases of FIN 48 reserves primarily due to the expiration of statutes of limitation resulting in a decrease
in income tax expense of $5.7 million.
• Site operating expenses were positively impacted by a $9.9 million pre-tax change in estimate of the Company's self-insurance
accruals, primarily workers' compensation, due to the continued improvement of our safety and return-to-work programs over the
recent years.
• Lease termination costs of $6.2 million ($5.7 million pre-tax included in continuing operations, with $0.5 million included in loss
from discontinued operations) were incurred as a result of the 76 salons that ceased using the right to use the leased property or
negotiated a lease termination agreement in connection with the Company's planned closure of up to 160 underperforming
company-owned salons.
38