Supercuts 2012 Annual Report Download - page 124

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
from AOCI into current earnings during the twelve months ended June 30, 2012 and 2011 within the following line items in the Consolidated
Statement of Operations.
As of June 30, 2012 the Company estimates that it will reclassify into earnings during the next 12 months a gain of less than $0.1 million
from the pretax amount recorded in AOCI as the anticipated cash flows occur.
The table below sets forth the (loss) gain on the Company's derivative instruments for the years ended June 30, 2012, 2011 and 2010
recorded within interest income and other, net in the Consolidated Statement of Operations.
10. COMMITMENTS AND CONTINGENCIES:
Operating Leases:
The Company is committed under long-term operating leases for the rental of most of its company-
owned salon and hair restoration center
locations. The original terms of the leases range from one to 20 years, with many leases renewable for an additional five to ten year term at the
option of the Company, and certain leases include escalation provisions. For certain leases, the Company is required to pay additional rent
based on a percent of sales in excess of a predetermined amount and, in most cases, real estate taxes and other expenses. Rent expense for the
Company's international department store salons is based primarily on a percent of sales.
The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease
arrangements with the franchisees. These leases, generally with terms of approximately five years, are expected to be renewed on expiration.
All additional lease costs are passed through to the franchisees.
During fiscal year 2005, the Company entered into a lease agreement for a 102,448 square foot building, located in Edina, Minnesota. The
Company began to recognize rent expense related to this property during the three months ended September 30, 2005, which was the date that
it obtained the
121
Gain (Loss) Recognized
in Other Comprehensive
(Loss) Income For the
Years Ended June 30,
Gain (Loss) Reclassified from
Accumulated OCI into (Loss)
Income at June 30,
Type
2012 2011 2010 Classification 2012 2011 2010
(Dollars
in thousands)
(Dollars
in thousands)
Designated as hedging
instruments—Cash Flow
Hedges:
Interest rate swaps
$
—
$
(
636
)
$
(2,967
)
$
—
$
—
$
—
Forward foreign currency
contracts
393
456
519
Cost of
sales
—
48
(261
)
Treasury lock contracts
—
—
(
146
)
Interest
income
—
—
388
Total
$
393
$
(180
)
$
(2,594
)
$
—
$
48
$
127
Derivatives Impact on (Loss) Income at June 30,
Type
Classification 2012 2011 2010
(Dollars in thousands)
Freestanding derivative
contracts—not designated as
hedging instruments:
Forward foreign currency contracts
Interest income and other, net
$
(105
)
$
613
$
(811
)