UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JANUARY 24, 1997
THE BARBERS HAIRSTYLING
FOR MEN & WOMEN, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
0-24466 41-0945858
(Commission File Number) (IRS Employer Identification Number)
300 INDUSTRIAL BOULEVARD N.E., MINNEAPOLIS, MINNESOTA 55413
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (612) 331-8500
The undersigned registrant amends the following items, financial
statements, pro forma financial information and exhibits, if any, or other
portions of its Form 8-K Report dated February 6, 1997, as set forth in the
pages attached hereto:
ITEM 7. FINANCIAL REPORTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Financial statements of We Care Hair Development Inc. and We
Care Realty Inc. required to be filed pursuant to Item 7 of
Form 8-K.
(b) Pro Forma Financial Information
Pro forma financial information for the Registrant required to
be filed pursuant to Item 7 of Form 8-K.
(c) Exhibits:
23 Consent of Citron Cooperman & Company, LLP
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
thereunto duly authorized.
THE BARBERS HAIRSTYLING FOR
MEN & WOMEN, INC.
Dated: April 7, 1997 By: /s/ J. Brent Hanson
J. Brent Hanson
Its Chief Financial Officer
WE CARE HAIR DEVELOPMENT, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
[LETTERHEAD]
[LOGO]
To the Board of Directors
We Care Hair Development, Inc.
INDEPENDENT AUDITOR'S REPORT
We have audited the balance sheet of We Care Hair Development, Inc. as
at December 31, 1995 and 1994 and the related statements of operations and
retained earnings (deficit) and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly,
in all material respects, the financial position of We Care Hair Development,
Inc. as at December 31, 1995 and 1994 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ Robbins, Greene, Horowitz, Lester & Co., LLP
ROBBINS, GREENE, HOROWITZ, LESTER & CO., LLP
March 18, 1996
New York, New York
<TABLE>
<CAPTION>
WE CARE HAIR DEVELOPMENT, INC.
BALANCE SHEET
AS AT DECEMBER 31,
1995 1994
-------- --------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $208,316 $250,979
Inventories 128,186 76,731
Accounts receivable - net 78,266 85,661
Shareholders loans 60,000 60,000
Prepaid expenses and other current assets 75,056 71,697
-------- --------
Total Current Assets 549,824 545,068
PROPERTY AND EQUIPMENT - NET 185,768 201,728
INTANGIBLES, NET OF ACCUMULATED
AMORTIZATION OF $116,667 AND $96,675, RESPECTIVELY 83,333 103,325
OTHER ASSETS 162,985 100,280
-------- --------
TOTAL ASSETS $981,910 950,401
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $225,112 $235,027
Current portion of long-term debt 7,742 7,184
-------- --------
Total Current Liabilities 232,854 242,211
-------- --------
DEFERRED REVENUES 583 11,250
-------- --------
LONG-TERM DEBT 2,027 9,769
-------- --------
OTHER LIABILITIES 58,663 44,745
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, par value $.01, authorized 10,000 shares,
issued and outstanding 4,000 shares 40 40
Paid-in capital 599,960 599,960
Retained earnings 87,783 42,426
-------- --------
Total Stockholders' Equity 687,783 642,426
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $981,910 950,401
======== ========
See accompanying notes to the financial statements.
</TABLE>
WE CARE HAIR DEVELOPMENT, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
REVENUES $3,596,756 $3,299,798 $ 2,454,808
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,529,007 3,187,713 2,382,706
---------- ---------- -----------
OPERATING INCOME 67,749 112,085 72,102
INTEREST EXPENSE 1,452 2,528 1,772
---------- ---------- -----------
NET INCOME 66,297 109,557 70,330
RETAINED EARNINGS (DEFICIT)
- BEGINNING 42,426 (67,131) (137,461)
LESS: DISTRIBUTIONS
TO SHAREHOLDERS (20,940)
---------- ---------- -----------
RETAINED EARNINGS (DEFICIT)
- ENDING $ 87,783 $ 42,426 $ (67,131)
========== ========== ===========
See accompanying notes to the financial statements.
WE CARE HAIR DEVELOPMENT, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
OPERATING ACTIVITIES:
Net income $66,297 $109,557 $70,330
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Provisions for
doubtful accounts 30,298 25,721 71,554
Loss on sale of equipment 53,312
Depreciation and amortization 80,126 87,279 71,890
Changes in assets and
liabilities:
Inventories (51,455) (32,859) (31,427)
Receivables (22,903) (59,973) (16,895)
Prepaid expenses and other
current assets (3,359) (44,568) (12,143)
Other assets (62,705) 6,452 (62,898)
Accounts payable (10,725) 119,497 25,690
Deferred revenues (10,667) (20,147) 3,439
Other liabilities 13,918 5,590 (14,576)
-------- -------- --------
NET CASH PROVIDED
BY OPERATING ACTIVITIES 28,825 249,861 104,964
-------- -------- --------
INVESTING ACTIVITIES:
Purchase of equipment (43,364) (95,531) (8,369)
-------- -------- --------
FINANCING ACTIVITIES:
Payments of debt (7,184) (11,356) (13,854)
Loans to shareholders (60,000)
Distributions to shareholders (20,940)
-------- -------- --------
NET CASH USED
BY FINANCING ACTIVITIES (28,124) (71,356) (13,854)
-------- -------- --------
Net increase (decrease) in cash (42,663) 82,974 82,741
Cash - beginning 250,979 168,005 85,264
-------- -------- --------
CASH - ENDING $208,316 $250,979 $168,005
======== ======== ========
Supplemental Cash Flow Information:
Interest paid $ 1,452 $ 2,528 $ 5,711
Non cash investing and financing
activities:
Other assets acquired through
assumption of debt 22,000
See accompanying notes to the financial statements.
WE CARE HAIR DEVELOPMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on March 22, 1990 for the purpose of
franchising We Care Hair Salons.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
Revenue Recognition
The Company sells franchises with a 20 year term. The franchise fee is
not refundable. Such revenue is referred and taken into income legally
over a six month period from date of receipt. All other revenue is
recognized as earned.
Inventories
Inventories are valued at the lower of cost (first-in, first-out) or
market.
Property and Equipment
Property and equipment are stated at cost and are being depreciated
using the straight-line basis over their estimated useful lives.
Organization Costs
Costs of incorporation and organization have been capitalized and are
being amortized on a straight-line basis over sixty months.
Intangibles
Various trademarks and license agreements that were purchased from
related parties for $200,000 at inception are being amortized on a
straight-line basis over ten years.
Income Taxes
The Company has elected to be taxed as a Sub-Chapter S Corporation,
whereby the taxable income or loss of the Company is recognized by the
shareholders.
NOTE 2 - ACCOUNTS RECEIVABLE
Consist of:
1995 1994
---- ----
Accounts receivable $234,528 $127,117
Allowance for
doubtful accounts 156,262 41,456
------- ------
$ 78,266 $ 85,661
======== ========
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1995 and 1994 consist of the
following:
1995 1994
---- ----
Equipment and leaseholds $284,896 $252,418
Leasehold improvements 108,920 103,900
Furniture and fixtures 12,357 6,491
-------- --------
406,173 362,809
Less: accumulated
depreciation 220,405 161,081
-------- --------
TOTAL $185,768 $201,728
======== ========
NOTE 4 - OTHER ASSETS
Other assets represent the book value of salons owned and operated by
the Company. The Company intends to sell such salons.
NOTE 5 - LONG-TERM DEBT
During 1994, the Company acquired a salon in exchange for the
assumption of debt of $22,000. The installment notes at December 31,
1995 and 1994 related to the debt are payable in monthly installments
of $684, including interest at 7.5%. The notes are secured by other
assets with a net book value of $12,500 at December 31, 1995 and 1994.
NOTE 6 - RELATED PARTY TRANSACTIONS
The other liabilities at December 31, 1995 and 1994 represent advances
of $58,663 and $44,745, respectively, from other corporations owned by
shareholders of the Company which are non-interest bearing and have no
fixed maturities.
Included in other current assets are amounts due from affiliated
companies for expenses of the affiliates paid by the Company. As of
December 31, 1995 and 1994, the amounts due from affiliates were
$31,002 and $29,449, respectively.
WE CARE HAIR REALTY INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
Citrin Cooperman & Company, LLP
- -------------------------------------------------------------------------[LOGO]
including the practice of ROBBINS, GREENE, HOROWITZ, LESTER & Co., LLP
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
We Care Hair Realty Inc.
Independent Auditor's Report
We have audited the balance sheet of We Care Hair Realty Inc. as at December 31,
1995 and the related statements of operations and accumulated deficit and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of We Care Hair Realty Inc. as at
December 31, 1995 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
As discussed in Note 4 to the financial statements, the Company is a party to
various store leases for which the operations have ceased. The Company has made
provision for settlement on these leases, however, the ultimate settlement
cannot be determined at this time. Accordingly, no provision for any additional
liability that may result from settlement of these leases has been made to the
accompanying financial statements.
/S/ Citrin Cooperman & Company, LLP
-------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
March 13, 1997
New York, New York
529 FIFTH AVENUE, NEW YORK, NY 10017 * (212) 697-1000 * FAX (212) 697-1004
e-mail: [email protected]
WE CARE HAIR REALTY INC.
BALANCE SHEET
AS AT DECEMBER 31, 1995
ASSETS
Current Assets:
Cash $ 800
Accounts receivable 3,386
Due from affiliated company 45,670
---------
Total Assets $ 49,856
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable $ 1,593
Deposits payable 47,670
Accrued settlements 395,909
---------
Total current liabilities 445,172
---------
Stockholders' Equity (Deficiency):
Capital stock - $.01 par value,
10,000 shares authorized, 4,000
shares issued and outstanding 40
Additional paid-in-capital 360
Accumulated deficit (395,716)
---------
Total stockholders' equity (deficiency) (395,316)
---------
Total Liabilities and Stockholders'
Equity (Deficiency) $ 49,856
=========
See accompanying notes to financial statements.
WE CARE HAIR REALTY INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
Operating expenses:
Settlement expense $ 194,567
Miscellaneous expense 598
---------
Total operating expenses 195,165
---------
Net loss (195,165)
Accumulated Deficit - Beginning (200,551)
---------
Accumulated Deficit - Ending $(395,716)
=========
See accompanying notes to financial statements.
WE CARE HAIR REALTY INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
Operating Activities:
Net loss $(195,165)
Adjustment to reconcile net loss to net
cash used by operating activities:
Changes in Assets and Liabilities:
Accounts payable 1,593
Accounts receivable 1,327
Due from affiliated company (22,622)
Deposits payable 11,606
Accrued settlements 197,660
---------
Net cash used by operating activities (5,601)
Cash - Beginning 6,401
---------
Cash - Ending $ 800
=========
Supplemental Cash Flow Information:
State taxes paid $ 250
See accompanying notes to financial statements.
WE CARE HAIR REALTY INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
We Care Hair Realty Inc. (the "Company") leases space from various landlords
and sublets the space to "We Care Hair" franchisees. All expenses of the
leased space are passed through to the franchisees.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Effective March 22, 1990, the election to tax the income of the Company
directly to the stockholders pursuant to Section 1371 (Subchapter S) of the
Internal Revenue Code was made. The Company maintains its financial records
and prepares financial statements on the accrual basis of accounting. However,
for income tax purposes, they report on the cash basis.
NOTE 2 - RELATED PARTY TRANSACTION
The Company conducts business with a company owned by the shareholders. The
affiliate advances funds to the Company to secure speculative leases and has
funded various settlement expenses incurred with regard to closed franchises.
At December 31, 1995, the Company was owed $45,670 by the affiliate.
NOTE 3 - SETTLEMENT EXPENSE
During the year ended December 31, 1995, the Company provided for $194,567 in
expense for settlements paid subsequent to December 31, 1995 and estimated
settlements to be paid on lease obligations on stores which closed during
1995 or prior.
NOTE 4 - CONTINGENT LIABILITY
The Company is contingently liable under leases it has entered into and
sublet to others. When a sublet operation closes, the Company frequently is
required to make settlements with the landlord for unpaid lease obligations.
The Company has leases with approximately 150 stores that extend generally
for five years. Minimum rentals under such leases aggregate approximately
$4,658,000. The potential liability for settlement on lease obligations for
stores that close subsequent to December 31, 1995 cannot be estimated and,
accordingly, no provision for any liability that may result from settlement
of these leases has been made to the accompanying financial statements.
NOTE 5 - SUBSEQUENT EVENT
Subsequent to December 31, 1995, the shareholders of the Company sold their
shares to another party.
The Barbers, Hairstyling for Men & Women, Inc.
Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition by The Barbers, Hairstyling for Men & Women, Inc.
("The Barbers") of the We Care Hair franchise contract rights from We Care Hair
Development, Inc. ("WCHD") and the common stock of We Care Hair Realty, Inc.
("WCHR") using the purchase method of accounting. These pro forma statements are
based on estimates and assumptions set forth below and in the notes to such
statements, which include pro forma adjustments. The pro forma financial
statements are based upon the historical financial statements of The Barbers,
adjusted to give effect to the acquisition of the We Care Hair business which
was consummated January 24, 1997. The purchase price of the We Care Hair
franchise contract rights was $2,000,000 plus 40% of future royalty revenue from
approximately 90 of the 140 salon contracts acquired This additional amount is
payable based on royalties collected over the next six years.
The pro forma condensed consolidated statements of income for the year ended
September 26, 1996, give effect to the acquisition as if it had occurred at the
beginning of fiscal 1996. Such statements are based on historical statements of
franchise revenues and franchise operating expenses of WCHD and WCHR for the
fiscal year ended December 31, 1995. WCHD and WCHR unaudited results for the
twelve month period ended September 30, 1996 have been used to conform with The
Barbers' fiscal year. The actual operating results of this acquisition are
accounted for by The Barbers through a new subsidiary, WCH, Inc., and are
included in The Barbers' financial statements from the date of acquisition,
January 24, 1997.
The pro forma condensed consolidated balance sheet at September 26, 1996
combines the respective balance sheets of The Barbers at September 26, 1996 with
the balance sheet of WCHD and WCHR at September 30, 1996. The Barbers did not
acquire any of the general assets of WCHD except for the franchise contract
rights, therefore the balance sheet of WCHD is eliminated in the pro forma
adjustments to the balance sheet.
The pro forma adjustments are based upon estimates, available information and
certain assumptions that management deemed appropriate. Final purchase
accounting adjustments may differ from pro forma adjustments presented herein.
The unaudited pro forma consolidated financial information does not profess to
represent The Barbers' results of operations had the above transaction, in fact,
occurred on these dates, or to project The Barbers' combined results of
operations for any date or period. The pro forma consolidated financial
information should be read in conjunction with The Barbers' annual report and
form 10-K as well as the WCHD and WCHR historical financial statements and notes
thereto.
<TABLE>
<CAPTION>
The Barbers, Hairstyling for Men & Women, Inc.
Pro Forma Condensed Consolidated Balance Sheet
September 26, 1996
(Unaudited)
September 26, 1996
--------------------------------------------------------------------------------------
The Barbers WCHD WCRI Pro Forma Adjustments Consolidated
----------- -------- -------- ---------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $1,317,448 $ 41,046 $ (1,350) $ (41,046) (b) $ 500,000 (c) $ 1,815,998
(100) (g)
Trade receivables, net of
allowance for doubtful accounts 2,163,968 317,751 16,800 (317,751) (b) (5,569) (e) 2,175,199
Notes receivable 235,206 235,206
Inventories held for resale 1,199,939 1,199,939
Prepaid expenses 74,372 122,840 (122,840) (b) 74,372
Deferred income taxes 287,000 287,000
---------- --------- -------- ----------- ---------- -----------
Total current assets 5,277,933 481,637 15,450 (481,637) 494,331 5,787,714
Notes receivable, net of current portion
and allowance for doubtful accounts 733,924 125,184 (125,184) (b) 733,924
Net equipment and leasehold improvements 954,640 276,237 (276,237) (b) 954,640
Investment in franchise contracts 733,419 2,000,000 (c) 2,733,419
Deferred income taxes 338,000 338,000
Other assets 210,287 74,735 (74,735) (b) 2,806 (g) 238,093
25,000 (d)
---------- --------- -------- ----------- ---------- -----------
Total assets 8,248,203 957,793 15,450 (957,793) 2,522,137 10,785,790
========== ======== ======== =========== ========== ===========
Liabilities
Current maturities of long term debt
and capital lease obligations 86,675 86,675
Accounts payable 481,897 198,593 (198,593) (b) 481,897
Deferred franchise fees 113,750 113,750
Committed advertising 521,208 521,208
Accrued compensation and payroll taxes 741,704 741,704
Other accrued expenses 287,011 3,767 414,065 (3,767) (b) (5,569) (e) 324,598
(395,909) (f)
25,000 (d)
Income taxes payable 82,943 82,943
---------- --------- -------- ----------- ---------- -----------
Total current liabilities 2,315,188 202,360 414,065 (202,360) (376,478) 2,352,775
Long term debt and capital lease obligations 56,250 56,750 (56,750) (b) 2,500,000 (c) 2,556,250
Deferred franchise fees 226,000 226,000
Deferred compensation 204,278 204,278
Shareholders' equity
Common stock 256,827 40 400 (40) (b) (400) (g) 256,827
Additional paid in capital 375,733 599,960 (599,960) (b) 375,733
Retained earnings 4,813,927 98,683 (399,015) (98,683) (b) 395,909 (f) 4,813,927
3,106 (g)
---------- --------- -------- ----------- ---------- -----------
Total shareholders' equity 5,446,487 698,683 (398,615) (698,683) 398,615 5,446,487
---------- --------- -------- ----------- ---------- -----------
Total liabilities & shareholders' equity $8,248,203 $957,793 $ 15,450 $ (957,793) $2,522,137 $10,785,790
========== ======== ======== =========== ========== ===========
The accompanying notes are an integral part of the unaudited pro forma condensed
combined balance sheet.
</TABLE>
<TABLE>
<CAPTION>
The Barbers, Hairstyling for Men & Women, Inc.
Pro Forma Condensed Consolidated Statement of Income
For the Year Ended September 26, 1996
(Unaudited)
Pro Forma
The Barbers WCHD WCRI Adjustments Consolidated
----------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $18,565,751 $ 3,385,030 $ - $ (1,614,725)(h) $20,336,056
Costs and expenses:
Franchise operations 2,725,188 1,506,585 195,165 (195,165)(i) 4,231,773
Company-owned salons 3,124,741 1,749,360 - (1,749,360)(h) 3,124,741
Distribution and general administration 11,043,282 - - 135,000 (j) 11,178,282
----------- ----------- ---------- ------------ -----------
Operating income 1,672,540 129,085 (195,165) 194,800 1,801,260
Other income (expense) 149,814 - - (225,000)(k) (75,186)
----------- ----------- ---------- ------------ -----------
Income (loss) before income taxes 1,822,354 129,085 (195,165) (30,200) 1,726,074
Income taxes 765,000 - - (78,000)(l) 687,000
----------- ----------- ---------- ------------ -----------
Net income (loss) $ 1,057,354 $ 129,085 $ (195,165) $ 47,800 $ 1,039,074
----------- ----------- ---------- ------------ -----------
Earnings per share $ 0.39 $ 0.38
----------- -----------
Weighted average shares outstanding 2,742,134 2,742,134
----------- -----------
</TABLE>
The Barbers, Hairstyling for Men & Women, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements
For the year ended September 26, 1996
(Unaudited)
Pro Forma Adjustments
(a) The combined financial statements for We Care Hair Development, Inc.
("WCHD") and We Care Hair Realty, Inc. ("WCHR") represent only the
net assets acquired and the revenues and direct operating expenses of
the business acquired and are not intended to be a complete
representation of the We Care Hair division's financial position and
results of operations.
(b) Elimination of the assets of WCHD which were not acquired.
(c) The Barbers purchased the rights to We Care Hair franchise contracts
from WCHD and financed the purchase with a bank loan. The balance of
the bank loan was for anticipated increases in accounts receivable and
inventories necessary to support the acquired business.
(d) Estimated legal and administrative costs associated with the
acquisition.
(e) Elimination of amounts due to and due from the seller.
(f) Elimination of liabilities to reflect the sellers indemnification of
lease settlement liabilities incurred prior to the acquisition closing
date.
(g) Purchase of the common stock of WCHR, elimination of subsidiary's
equity accounts and establishment of goodwill upon consolidation.
(h) Elimination of the operating results of Company-owned salons which were
not acquired.
(i) Elimination of lease settlement expenses which are indemnified by the
seller.
(j) Amortization of investment in franchise contracts assuming a 15 year
life.
(k) Interest expense on long term debt used to finance the acquisition
(l) Income tax impact of the business combination.
Independent Auditor's Consent
As independent certified public accountants, we hereby
consent to the use of our report dated March 8, 1996 relating to
the financial statements of We Care Hair Development, Inc. for the
calendar year 1995 to be used, included in, and made part of the
8K filing of The Barbers Inc.
/s/ Robbins, Greene, Horowitz, Lester & Co., LLP
Robbins, Greene, Horowitz, Lester & Co., LLP
CERTIFIED PUBLIC ACCOUNTANTS
April 7, 1997
New York, New York
Independent Auditor's Consent
As independent certified public accountants, we hereby consent to the
use of our report dated March 13, 1997 relating to the financial statements
of We Care Hair Realty, Inc. for the calendar year 1995 to be used, included
in, and made part of the 8K filing of The Barbers Inc.
/s/ Citrin Cooperman & Company, LLP
Citrin Cooperman & Company, LLP
CERTIFIED PUBLIC ACCOUNTANTS
April 7, 1997
New York, New York
