Supercuts 2012 Annual Report Download - page 92

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
As of June 30, 2012, the estimated fair value of the Promenade salon concept and Hair Restoration Centers reporting units exceeded the
carrying value by approximately 14.0 and 12.0 percent, respectively. The respective fair values of the Company's remaining reporting units
exceeded carrying value by greater than 20.0 percent at June 30, 2012. While the Company has determined the estimated fair value of
Promenade to be appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that
Promenade may experience additional impairment in future periods. As previously disclosed, the Company has agreed to sell the Hair
Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely that there
could be impairment of the Hair Restoration Centers reporting unit's goodwill in future periods. The term "reasonably likely" refers to an
occurrence that is more than remote but less than probable in the judgment of the Company. Because some of the inherent assumptions and
estimates used in determining the fair value of the reportable segment are outside the control of management, changes in these underlying
assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Promenade salon
concept and Hair Restoration Centers reporting units is dependent on many factors and cannot be predicted with certainty.
As of June 30, 2012, 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.
A summary of the Company's goodwill balance as of June 30, 2012 and 2011 by reporting unit is as follows:
As a result of the goodwill impairment analyses performed in fiscal years 2011 and 2010, the Company recorded $74.1 and $35.3 million,
respectively, impairment charges within continuing operations for the excess of the carrying value of goodwill over the implied fair value of
goodwill for the Promenade salon concept in fiscal year 2011 and the Regis salon concept in fiscal year 2010.
89
Reporting Unit June 30, 2012 June 30, 2011
(Dollars in thousands)
Regis
$
34,992
$
103,761
MasterCuts
4,652
4,652
SmartStyle
49,476
48,916
Supercuts
129,621
129,477
Promenade
243,538
240,910
Total North America Salons
462,279
527,716
Hair Restoration Centers
74,376
152,796
Consolidated Goodwill
$
536,655
$
680,512