Supercuts 2009 Annual Report Download - page 112

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. INVESTMENTS IN AND LOANS TO AFFILIATES (Continued)
As of June 30, 2009, $1.6 and $12.7 million are recorded in the Condensed Consolidated Balance Sheet as current assets and investment in
affiliates and loans, respectively, representing the Company's total investment in MY Style. The exposure to loss related to the Company's
involvement with MY Style is the carrying value of the investment and the outstanding notes.
Hair Club for Men, Ltd.
The Company acquired a 50.0 percent interest in Hair Club for Men, Ltd. through its acquisition of Hair Club in fiscal year 2005. The
Company accounts for its investment in Hair Club for Men, Ltd. under the equity method of accounting. Hair Club for Men, Ltd. operates Hair
Club centers in Illinois and Wisconsin. During the fiscal year 2009 the Company recorded income of $0.6 million and received dividends of
$0.9 million. The exposure to loss related to the Company's involvement with Hair Club for Men, Ltd. is the carrying value of the investment.
Investment in Cool Cuts 4 Kids, Inc.
On February 10, 2009, the Company exercised the right to purchase all of the Cool Cuts 4 Kids, Inc. (Cool Cuts 4 Kids) assets. The results
of operations for Cool Cuts 4 Kids are included in the Consolidated Statement of Operations since the date of acquisition. Prior to acquisition,
the Company held an interest of less than 20 percent in the preferred stock of Cool Cuts 4 Kids which was accounted for under the cost method
of accounting.
7. FAIR VALUE MEASUREMENTS
As discussed in Note 1 to the Consolidated Financial Statements, the Company adopted SFAS No. 157, subject to the deferral provisions of
FSP No. 157-2, on July 1, 2008. This standard defines fair value, establishes a framework for measuring fair value and expands disclosure
requirements about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. The fair value hierarchy prescribed by SFAS No. 157 contains three levels as follows:
Level 1 —Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.
Level 2 —Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or
indirectly, including:
•
Quoted prices for similar assets or liabilities in active markets;
• Quoted prices for identical or similar assets in non-active markets;
• Inputs other than quoted prices that are observable for the asset or liability; and
•
Inputs that are derived principally from or corroborated by other observable market data.
Level 3 —Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management
judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market
participant assumptions.
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