Supercuts 2010 Annual Report Download - page 91

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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:
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.
During fiscal year 2010, the Company tested its long-lived assets for impairment and recognized impairment charges related primarily to
the carrying value of certain salons' property and equipment of $6.4 million. Of the $6.4 million in total impairment charges recognized in
fiscal year 2010, $6.2 and $0.2 million related to North America and the United Kingdom, respectively. During fiscal year 2009, the Company
tested its long-lived assets for impairment and recognized impairment charges related primarily to the carrying value of certain salons' property
and equipment of $10.2 million. Of the $10.2 million in total impairment charges recognized in fiscal year 2009, $4.3 and $5.9 million related
to North America and the United Kingdom, respectively. The United Kingdom impairment charges in fiscal year 2009 included charges related
to the Company's June 2009 plan to close up to 80 underperforming company-owned salons in fiscal year 2010. During fiscal year 2008, the
Company tested its long-lived assets for impairment and recognized impairment charges related primarily to the
87
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