Supercuts 2011 Annual Report Download - page 93

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A summary of the Company's goodwill balance as of June 30, 2011 and 2010 by reporting unit is as follows:
As a result of the Company's annual impairment analysis of goodwill during the third quarter of fiscal year 2010, a $35.3 million
impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of
goodwill for the Regis salon concept.
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 unit's net assets, including goodwill.
Long-Lived Asset Impairment Assessments, Excluding Goodwill:
The Company reviews long-lived assets for impairment at the salon level annually or if events or circumstances indicate that the carrying
value of such assets may not be recoverable. The Company's test for impairment of property and equipment 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. Impairment
is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets that does not recover the
carrying value of the related salon assets. When the sum of a salon's undiscounted estimated future cash flow is zero or negative, impairment is
measured as the full carrying value of the related salon's equipment and leasehold improvements. When the sum of a salon's undiscounted cash
flows is greater than zero but less than the carrying value of the related salon's equipment and leasehold improvements, a discounted cash flow
analysis is performed to estimate the fair value of the salon assets and impairment is measured as the difference between the carrying value of
the salon assets and the estimated fair value. The fair value estimate is based on the best information available, including market data.
89
Reporting Unit
As of June 30,
2011
As of June 30,
2010
(Dollars in thousands)
Regis
$
103,761
$
102,180
MasterCuts
4,652
4,652
SmartStyle
48,916
48,280
Supercuts
129,477
121,693
Promenade
240,910
309,804
Total North America Salons
527,716
586,609
Hair Restoration Centers
152,796
150,380
Consolidated Goodwill
$
680,512
$
736,989