Supercuts 2011 Annual Report Download - page 119

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. FAIR VALUE MEASUREMENTS (Continued)
At June 30, 2011, the fair value of the equity put option was $22.7 million and is classified within other noncurrent liabilities on the balance
sheet.
Preferred Shares. The Company has preferred shares in Yamano Holding Corporation. The preferred shares are classified as Level 3 as
there are no quoted market prices and minimal market participant data for preferred shares of similar rating. The preferred shares are classified
within investment in and loans to affiliates on the Consolidated Balance Sheet. The fair value of the preferred shares is based on the financial
health of Yamano Holding Corporation and terms within the preferred share agreement which allow the Company to convert the subscription
amount of the preferred shares into equity of MY Style, a wholly owned subsidiary of Yamano Holding Corporation. The Company recorded an
other than temporary impairment for the full carrying value of the preferred shares during the twelve months ended June 30, 2011. See further
discussion within Note 6 to the Consolidated Financial Statements.
Financial Instruments. In addition to the financial instruments listed above, the Company's financial instruments also include cash, cash
equivalents, receivables, accounts payable and debt.
The fair value of cash and cash equivalents, receivables and accounts payable approximated the carrying values as of June 30, 2011 and
2010. At June 30, 2011, the estimated fair values and carrying amounts of debt were $335.4 and $313.4 million, respectively. At June 30, 2010,
the estimated fair values and carrying amounts of debt were $458.6 and $440.0 million, respectively. The estimated fair value of debt was
determined based on internal valuation models, which utilize quoted market prices and interest rates for the same or similar instruments.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
We measure certain assets, including the Company's equity method investments, tangible fixed assets and goodwill, at fair value on a
nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of our investments are determined based on
valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow
projections.
The following tables present the fair value in our assets measured at fair value on a nonrecurring basis during the twelve months ended
June 30, 2011 and 2010, respectively:
114
June 30,
2011
Level 1
Level 2
Level 3
Total Losses
(Dollars in thousands)
Assets
Goodwill—
Promenade
(1)
$
240,910
$
—
$
—
$
240,910
$
(74,100
)
Total
$
240,910
$
—
$
—
$
240,910
$
(74,100
)
(1) Goodwill of the Promenade salon concept with a carrying value of $315.0 million was written down to its
implied fair value, resulting in an impairment charge of $74.1 million, which was recorded during fiscal
year 2011. The Company recorded $0.3 million of