Supercuts 2012 Annual Report Download - page 76

Table of Contents
rates or as of June 30, 2012, the table presents principal amounts and related weighted-average interest rates by fiscal year of maturity for fixed
rate debt obligations.
Foreign Currency Exchange Risk:
The majority of the Company's revenue, expense and capital purchasing activities are transacted in United States dollars. However,
because a portion of the Company's operations consists of activities outside of the United States, the Company has transactions in other
currencies, primarily the Canadian dollar, British pound and Euro. In preparing the Consolidated Financial Statements, the Company is
required to translate the financial statements of its foreign subsidiaries from the currency in which they keep their accounting records, generally
the local currency, into United States dollars. Different exchange rates from period to period impact the amounts of reported income and the
amount of foreign currency translation recorded in accumulated other comprehensive income. As part of its risk management strategy, the
Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange
rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and
purchases denominated in foreign currencies. As of June 30, 2012, the Company has entered into the following financial instruments to manage
its foreign currency exchange risk:
Hedge of the Net Investment in Foreign Subsidiaries:
The Company has numerous investments in foreign subsidiaries, and the net assets of these subsidiaries are exposed to exchange rate
volatility. The Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may
influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge
assets, liabilities and purchases denominated in foreign currencies.
During September 2006, the Company's cross-currency swap (which had a notional amount of $21.3 million and hedged a portion of the
Company's net investment in its foreign operations) was settled, resulting in a cash outlay of $8.9 million. This cash outlay was recorded within
investing activities within the Consolidated Statement of Cash Flows. The related cumulative tax-
effected net loss of $7.9 million was recorded
in accumulated other comprehensive income (AOCI) in fiscal year 2007. This amount will remain deferred within AOCI indefinitely, as the
event which would trigger its release from AOCI and recognition in earnings is the sale or liquidation of the Company's international
operations that the cross-currency swap hedged.
In connection with the sale of Provalliance, the Company is considering alternatives which may trigger release of certain material
cumulative foreign currency translation balances and the cumulative tax-effected net loss related to the fiscal year 2007 settlement of the cross-
currency swap from AOCI to earnings. The Company is currently estimating a net gain of approximately $30 to $40 million to be released
from AOCI to earnings upon liquidation of certain foreign subsidiaries.
74
June 30, 2012
Expected maturity date as of June 30, 2012
Fair
Value
2013 2014 2015 2016 2017
Thereafter
Total
(Dollars in thousands)
Liabilities
Long
-term
debt:
Fixed rate
$
28,937
$
24,918
$
180,245
$
17,860
$
17,857
$
17,857
$
287,674
$
307,478
Average
interest
rate
7.4
%
7.5
%
5.4
%
8.5
%
8.5
%
8.5
%
6.3
%
Total
liabilities
$
28,937
$
24,918
$
180,245
$
17,860
$
17,857
$
17,857
$
287,674
$
307,478