Highlights of Floyd’s 99’s Item 19 Financial Performance Representations (2013 FDD) – Part 2

Explanatory Notes for Chart I (Continued from Part 1)

• “Cost of Goods Sold” represents the cost of hair care and skin care products sold at retail to clients.

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  “Employee Expenses” includes expenses associated with training employees, employee meetings, and management-sponsored employee outings.

• “Shop Expenses” includes cleaning services, equipment rentals, security systems, office supplies, dues (if applicable), magazine subscriptions, and equipment associated with Barbershop services (hand massagers, brushes/combs, towels, razors, and hand mirrors). This item does not include royalties or other fees paid under a franchise agreement.

• “Consumables” includes all products needed for hair styling, coloring, and barbering services (shampoo/conditioner, hair color, and hair sprays).

• “Professional Services” includes payroll processing fees.

• “Other” includes bank charges, licenses and permits, fines and penalties, postage, cash over/short, and gifts and donations.

• “Net Profit” is the average profit/loss after deducting all expenses listed, including depreciation. Three of the eight Barbershops in the Low category showed a net loss for 2012. Two of these Barbershops operated in markets where the Floyd’s 99 brand was not established, meaning fewer than three Barbershops had been open in 2011 and 2012.

Chart II – Clients and Sales of Thirty Affiliate-Owned Barbershops in 2012

• The prices charged for services vary from Barbershop to Barbershop depending on the prices charged by local competitors, characteristics of the geographic area in which the Barbershop is located, and other factors.

High Shop #1

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