Supercuts 2002 Annual Report Download - page 165

Future Minimum Lease Payments:
As of June 30, 2002, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancellable operating
leases with remaining terms of greater than one year are as follows:
In addition to the amounts listed in the table above, the Company is guarantor on a maximum of $8.9 million remaining payments in lease
agreements between its franchisees and leasing companies.
The Company entered into a five-year operating lease agreement in June 2000 related to its distribution center and various equipment in Salt
Lake City, Utah. The future minimum lease payments, which are included in the table above, are estimated to be $1.8 million based on the cost
of the distribution center and the related equipment. Under the agreement, the Company is obligated to pay the deficiency between the residual
value guarantee and the fair market value at the termination of the agreement. The Company expects the fair market value of the distribution
center and related equipment, subject to the purchase or remarket options, to eliminate or substantially reduce the Company's maximum
potential liability of $10.2 million under the residual value guarantee. Thus, the impact of the guarantee is not included in the table of future
minimum lease payments.
Salon Development Program:
As a part of its salon development program, the Company continues to negotiate and enter into leases and commitments for the acquisition of
equipment and leasehold improvements related to future salon locations, and continues to enter into transactions to acquire established hair care
salons and businesses.
Contingencies:
The Company is a defendant in various lawsuits and claims arising out of the normal course of business. As of June 30, 2002, in the opinion of
the company counsel, the ultimate liabilities resulting from such lawsuits and claims are not anticipated to have a material adverse effect on the
consolidated financial position, the results of operations or the liquidity of the Company.
The Company is self-insured for most workers' compensation and general liability losses subject to per occurrence and aggregate annual
liability limitations. The Company is insured for losses in excess of these limitations. The Company is also self-insured for health care claims
for eligible participating employees subject to certain deductibles and limitations. The Company determines its liability for claims incurred but
not reported on an actuarial basis.
7. INCOME TAXES:
The provision for income taxes consists of:
37
Corporate Reimbursable
Fiscal Year Leases Franchisee Leases
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(Dollars in thousands)
2003 ............................................. $138,595 $ 32,032
2004 ............................................. 120,797 27,627
2005 ............................................. 98,778 21,159
2006 ............................................. 76,279 13,788
2007 ............................................. 56,417 6,791
Thereafter ....................................... 118,781 8,453
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Total minimum lease payments ..................... $609,647 $109,850
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(Dollars in thousands) 2002 2001 2000
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Current:
United States ....................... $ 27,815 $ 31,272 $ 32,176
Nonrecurring federal benefit ........ (1,750)
International ....................... 2,891 2,228 2,407
Deferred:
United States ....................... 14,640 2,291 (885)
International ....................... (118)
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$ 43,596 $ 35,791 $ 33,580
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