Supercuts 2012 Annual Report Download - page 101

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. DISCONTINUED OPERATIONS (Continued)
The Company utilized the consolidation of variable interest entities guidance to determine whether or not Trade Secret was a VIE, and if
so, whether the Company was the primary beneficiary of Trade Secret. The Company concluded that Trade Secret is a VIE based on the fact
that the equity investment at risk in Trade Secret is insufficient. The Company determined that the purchaser of Trade Secret has met the power
criterion due to the purchaser of Trade Secret having the authority to direct the activities that most significantly impact Trade Secret's economic
performance. The Company concluded based on the consideration above that the primary beneficiary of Trade Secret is the purchaser of Trade
Secret. The exposure to loss related to the Company's involvement with Trade Secret is the guarantee of approximately 20 operating leases.
The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial
statements. See Note 10 to the Consolidated Financial Statements for further information on the guaranteed leases.
The income from discontinued operations is summarized below:
During the twelve months ended June 30, 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the
release of tax reserves associated with the disposition of the Trade Secret salon concept.
During the first quarter of fiscal year 2010, the Company recorded a $3.0 million tax benefit in discontinued operations to correct the prior
year calculation of the income tax benefit related to the disposition of the Trade Secret salon concept. The Company does not believe the
adjustment is material to its results of operations for the twelve months ended June 30, 2010 or its financial position or results of operations of
any prior periods.
98
For the Years Ended
June 30,
2012 2011 2010
(Dollars in thousands)
Revenues
$
—
$
—
$
—
Income from discontinued operations, before income
taxes
—
—
154
Income tax benefit on discontinued operations
1,099
—
3,007
Income from discontinued operations, net of income
taxes
$
1,099
$
—
$
3,161