Supercuts 2009 Annual Report Download - page 106

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. GOODWILL
The table below contains details related to the Company's recorded goodwill for the years ended June 30, 2009 and 2008 is as follows:
(1)
Salons
North America
International
Beauty
Schools
Hair
Restoration
Centers
Consolidated
(Dollars in thousands)
Balance at June 30, 2007
$
570,161
$
46,487
$
60,934
$
134,801
$
812,383
Goodwill acquired
82,528
7,652
—
15,073
105,253
Impact of contribution of certain beauty schools(1)
13,829
13,071
(60,960
)
—
(
34,060
)
Impact of contribution of European franchise salon operations(2)
—
(
22,366
)
—
—
(
22,366
)
Translation rate adjustments
2,281
3,617
26
—
5,924
Adoption of FIN No. 48(3)
—
—
—
3,859
3,859
Balance at June 30, 2008
668,799
48,461
—
153,733
870,993
Goodwill acquired(4)
31,531
(1,255
)
—
536
30,812
Translation rate adjustments
(7,149
)
(5,545
)
—
(
43
)
(12,737
)
Resolution to pre
-
acquisition income tax contingency(3)
—
—
—
(
4,859
)
(4,859
)
Goodwill impairment(5)(6)
(78,126
)
(41,661
)
—
—
(
119,787
)
Balance at June 30, 2009
$
615,055
$
—
$
—
$
149,367
$
764,422
On August 1, 2007, the Company contributed its accredited cosmetology schools to Empire Education Group, Inc. The Company
retained ownership of its one North American and four United Kingdom Sassoon schools. Subsequent to August 1, 2007 results of
operations and assets for the Sassoon schools are included in the respective North American and international salon segments.
(2) On January 31, 2008, the Company merged its continental European franchise salon operations with the Franck Provost Salon Group.
(3)
Related to the adoption of FIN No. 48, the Company recorded a $3.9 million adjustment to goodwill to account for preacquisition tax
positions at the Company's hair restoration centers segment. In fiscal 2009, goodwill was reduced related to the resolution of
preacquisition tax contingencies.
(4)
Goodwill acquired includes adjustments to prior year acquisitions, primarily representing the finalization of purchase price allocations.
For the twelve months ended June 30, 2009 the $1.3 million reduction to international goodwill related to the settlement of the escrow
account on an acquisition that closed in September 2007.
(5)
See Note 2 of the Consolidated Financial Statements for discussion of the $78.1 million goodwill impairment of Trade Secret recorded
within discontinued operations.
(6) During the three months ended December 31, 2008 the fair value of the Company's stock declined such that it began trading below book
value per share. 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.
104