Sally Beauty Supply 2011 Annual Report Download - page 115

Sally Beauty Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
Fiscal Years ended September 30, 2011, 2010 and 2009
application of existing fair value measurement and disclosure requirements. For public companies, this
amendment is effective for interim periods and fiscal years beginning after December 15, 2011. Early
application by public companies is not permitted.
In June 2011, the FASB issued ASU No. 2011-05 which amended ASC Topic 220, Comprehensive Income.
This amendment, which must be applied retrospectively, will allow an entity the option to present the
components of net income, as well as total comprehensive income and the components of other
comprehensive income, either in a single continuous statement of comprehensive income or in two
separate consecutive statements. This amendment also eliminates the option to present the components of
other comprehensive income in the statement of stockholders’ equity but does not change the items that
must be reported. For public companies, this amendment is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2011. Early application is permitted.
In September 2011, the FASB issued ASU No. 2011-08 which amended ASC Topic 350, Intangibles-
Goodwill and Other. This amendment will allow an entity to first assess relevant qualitative factors in order
to determine whether it is necessary to perform the two-step quantitative goodwill impairment test under
ASC 350. In effect, the amendment eliminates the need to calculate the fair value of a reporting unit in
connection with the goodwill impairment test unless the entity determines, based on the qualitative
assessment, that it is more likely than not that the reporting unit’s fair value is less than its carrying
amount. This amendment is effective for annual and interim goodwill impairment tests performed in fiscal
years beginning after December 15, 2011. Early application is permitted.
Accounting Changes
The Company made no accounting changes during the fiscal year 2011.
5. Fair Value Measurements
The Company’s financial instruments consist of cash and cash equivalents, trade and other accounts
receivable, accounts payable, interest rate swap agreements, foreign currency option, collar and forward
agreements and debt. The carrying amounts of cash and cash equivalents, trade and other accounts
receivable and accounts payable approximate fair value due to the short-term nature of these financial
instruments.
The Company measures on a recurring basis and discloses its financial instruments under the provisions of
ASC 820, as amended. The Company defines ‘‘fair value’’ as the price that would be received to sell an
asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market
participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value
and requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. This valuation hierarchy is based upon the transparency of inputs to the
valuation of an asset or liability on the measurement date. The three levels of that hierarchy are defined as
follows:
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted
quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other
than quoted prices that are observable for the asset or liability; or inputs that are derived principally
from or corroborated by observable market data; and
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