Supercuts 2007 Annual Report Download - page 75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Business Description:
Regis Corporation (the Company) owns, operates and franchises hairstyling and hair care salons throughout the United States, the United
Kingdom (U.K.), France, Canada, Puerto Rico and several other countries. In addition, the Company owns and operates beauty schools in the
United States and the U.K. and hair restoration centers in the United States and Canada. Substantially all of the hairstyling and hair care salons
owned and operated by the Company in the United States are located in leased space in enclosed mall shopping centers, strip shopping centers
or Wal-Mart Supercenters. Franchise salons throughout the United States are primarily located in strip shopping centers. The company-owned
and franchise salons in the U.K., France and several other countries are owned and operated in malls, leading department stores, mass
merchants and high-street locations. Beauty schools are typically located within leased space. The hair restoration centers, including both
company-owned and franchise locations, are typically located in leased space within office buildings.
Consolidation:
The Consolidated Financial Statements include the accounts of the Company and all of its wholly-
owned subsidiaries. In consolidation, all
material intercompany accounts and transactions are eliminated.
Use of Estimates:
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of
America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation:
Financial position, results of operations and cash flows of the Company’s international subsidiaries are measured using local currency as
the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each fiscal year end.
Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other
comprehensive income within shareholders’
equity. Statement of Operations accounts are translated at the average rates of exchange prevailing
during the year. The different exchange rates from period to period impact the amount of reported income from the Company’s international
operations.
Cash and Cash Equivalents:
Cash equivalents consist of investments in short-
term, highly liquid securities having original maturities of three months or less, which are
made as a part of the Company’s cash management activity. The carrying values of these assets approximate their fair market values. The
Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash,
concentration accounts that funds are moved to, and several “zero balance”
disbursement accounts for funding of payroll and accounts payable.
As a result of the Company’s cash management system, checks issued, but not presented to the banks for payment, may create negative book
cash balances. Checks outstanding in excess of related book cash balances totaling approximately $6.5 and $12.9 million at
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