Supercuts 2010 Annual Report Download - page 72

Table of Contents
written material, press releases and oral statements issued by or on behalf of the Company contains or may contain "forward-looking
statements" within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that
are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements in this document reflect management's best judgment at the time they are made, but all
such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or
implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to,
"may," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." In addition, the following factors could affect the
Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include
the results and impact of the Company's announcement to explore strategic alternatives, competition within the personal hair care industry,
which remains strong, both domestically and internationally, price sensitivity; changes in economic conditions and in particular, continued
weakness in the U.S. and global economies; changes in consumer tastes and fashion trends; the ability of the Company to implement its
planned spending and cost reduction plan and to continue to maintain compliance with financial covenants in its credit agreements; labor and
benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company
and its franchisees to obtain suitable locations and financing for new salon development and to maintain satisfactory relationships with
landlords and other licensors with respect to existing locations; governmental initiatives such as minimum wage rates, taxes and possible
franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons that support its growth objectives; the
ability of the Company to maintain satisfactory relationships with suppliers; the ability of the Company to consummate the planned closure of
salons and the related realization of the anticipated costs, benefits and time frame; or other factors not listed above. The ability of the Company
to meet its expected revenue growth is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are
affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set
forth under Item 1A of this Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent
annual and periodic reports filed or furnished with the SEC on Forms 10-Q and 8-K and Proxy Statements on Schedule 14A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The primary market risk exposure of the Company relates to changes in interest rates in connection with its debt, some of which bears
interest at variable rates based on LIBOR plus an applicable borrowing margin. Additionally, the Company is exposed to foreign currency
translation risk related to its net investments in its foreign subsidiaries and, to a lesser extent, changes in the Canadian dollar exchange rate. The
Company has established policies and procedures that govern the management of these exposures through the use of derivative financial
instrument contracts. By policy, the Company does not enter into such contracts for the purpose of speculation. The following details the
Company's policies and use of financial instruments.
Interest Rate Risk:
The Company has established an interest rate management policy that attempts to minimize its overall cost of debt, while taking into
consideration the earnings implications associated with the volatility of short-term interest rates. As part of this policy, the Company has
elected to maintain a combination of variable and fixed rate debt. A one percent change in interest rates (including the impact of existing
interest rate swap contracts) could impact the Company's interest expense by approximately $0.5 million. During fiscal year 2008, the National
Association of Insurance
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