Supercuts 2010 Annual Report Download - page 38

Table of Contents
The term "reasonably likely" refers to an occurrence that is more than remote but less than probable in the judgment of the Company. Because
some of the inherent assumptions and estimates used in determining the fair value of the reportable segments are outside the control of
management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying
value of the Regis salon concept and Promenade salon concept goodwill is dependent on many factors and cannot be predicted with certainty.
As of June 30, 2010, the Company's estimated fair value, as determined by the sum of our reporting units' fair value reconciled to within a
reasonable range of our market capitalization which included an assumed control premium. The Company concluded there were no triggering
events that would require the Company to perform an interim goodwill impairment test between the annual impairment testing and June 30,
2010.
A summary of the Company's goodwill balance as of June 30, 2010 by reporting unit is as follows:
Prior to the annual goodwill impairment analysis for fiscal year 2009, the fair value of the Company's stock declined such that it began
trading below book value per share. Due to the adverse changes in operating results and the continuation of the Company's stock trading below
book value per share, the Company performed an interim impairment test of goodwill during the three months ended December 31, 2008.
As a result of the Company's interim impairment test of goodwill during the three months ended December 31, 2008, a $41.7 million
impairment charge for the full carrying amount of goodwill within the salon concepts in the United Kingdom was recorded within continuing
operations. The recent performance challenges of the international salon operations indicated that the estimated fair value was less than the
current carrying of this reporting units net assets, including goodwill.
During the three months ended March 31 of fiscal year 2008, we performed our annual goodwill impairment analysis on our reporting
units. No impairment charges were recorded during fiscal year 2008.
Long
-Lived Assets, Excluding Goodwill
We assess the impairment of long-lived assets annually or when events or changes in circumstances indicate that the carrying value of the
assets or the asset grouping may not be recoverable. Our impairment analysis on salon property and equipment is performed on a salon by
salon basis. The Company's test for impairment is performed at a salon level as this is the lowest level for which identifiable cash flows are
largely independent of the cash flows of other groups of assets and liabilities. Factors considered in deciding when to perform an impairment
review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and
significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future
cash flows expected to result from use of the
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Reporting Unit As of June 30, 2010
(Dollars in thousands)
Regis
$
102,180
MasterCuts
4,652
SmartStyle
48,280
Supercuts
121,693
Promenade
309,804
Total North America Salons
586,609
Hair Restoration Centers
150,380
Consolidated Goodwill
$
736,989