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SEGMENT INFORMATION | 12 Months Ended
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Jun. 30, 2011
SEGMENT INFORMATION |
SEGMENT INFORMATION |
16. SEGMENT INFORMATION As of June 30, 2011, the Company owned, franchised or held ownership interests in approximately 12,700 worldwide locations. The Company's locations consisted of 9,419 North American salons (located in the U.S., Canada and Puerto Rico), 400 international salons, 96 hair restoration centers, and 2,786 locations in which the Company maintains an ownership interest through its investments in affiliates. The Company operates its North American salon operations through five primary concepts: Regis Salons, MasterCuts, SmartStyle, Supercuts and Promenade salons. The concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the company-owned and franchise salons within the North American salon concepts are located in high traffic, retail shopping locations that attract mass market consumers, and the individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base. The Company operates its International salon operations, primarily in the United Kingdom, through three primary concepts: Regis, Supercuts, and Sassoon salons. Consistent with the North American concepts, the international concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the international salon concepts are company-owned and are located in malls, leading department stores, and high-street locations. Individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base. The Company's company-owned and franchise hair restoration centers are located in the U.S. and Canada. The Company's hair restoration centers offer three hair restoration solutions; hair systems, hair transplants, and hair therapy, which are targeted at the mass market consumer. Hair restoration centers are located primarily in office and professional buildings within larger metropolitan areas. Based on the way the Company manages its business, it has reported its North American salons, International salons, and Hair Restoration Centers as three separate reportable segments. The accounting policies of the reportable operating segments are the same as those described in Note 1 to the Consolidated Financial Statements. Corporate assets detailed below are primarily comprised of property and equipment associated with the Company's headquarters and distribution centers, corporate cash, inventories located at corporate distribution centers, deferred income taxes, franchise receivables and other corporate assets. Intersegment sales and transfers are not significant. Summarized financial information concerning the Company's reportable operating segments is shown in the following table as of June 30, 2011, 2010, and 2009:
|  | For the Year Ended June 30, 2011 |
--- | --- | --- | ---
|  | Salons |  |  |  |  |  |  |
|  | Hair Restoration Centers |  | Unallocated Corporate |  |  |
|  | North America |  | International |  | Consolidated |
|  | (Dollars in thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Service |  | $ | 1,588,690 |  | $ | 106,734 |  | $ | 67,550 |  | $ | — |  | $ | 1,762,974 |
| Product |  |  | 403,962 |  |  | 43,503 |  |  | 75,729 |  |  | — |  |  | 523,194 |
| Royalties and fees |  |  | 37,292 |  |  | — |  |  | 2,409 |  |  | — |  |  | 39,701 |
|  |  | 2,029,944 |  |  | 150,237 |  |  | 145,688 |  |  | — |  |  | 2,325,869 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cost of service |  |  | 919,526 |  |  | 54,213 |  |  | 39,129 |  |  | — |  |  | 1,012,868 |
| Cost of product |  |  | 201,560 |  |  | 23,631 |  |  | 24,788 |  |  | — |  |  | 249,979 |
| Site operating expenses |  |  | 183,552 |  |  | 9,852 |  |  | 4,318 |  |  | — |  |  | 197,722 |
| General and administrative |  |  | 122,281 |  |  | 12,630 |  |  | 37,038 |  |  | 167,908 |  |  | 339,857 |
| Rent |  |  | 292,479 |  |  | 38,423 |  |  | 9,227 |  |  | 2,157 |  |  | 342,286 |
| Depreciation and amortization |  |  | 69,763 |  |  | 4,750 |  |  | 12,958 |  |  | 17,638 |  |  | 105,109 |
| Goodwill impairment |  |  | 74,100 |  |  | — |  |  | — |  |  | — |  |  | 74,100 |
| Lease termination costs |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total operating expenses |  |  | 1,863,261 |  |  | 143,499 |  |  | 127,458 |  |  | 187,703 |  |  | 2,321,921 |
Operating income (loss) |  |  | 166,683 |  |  | 6,738 |  |  | 18,230 |  |  | (187,703 | ) |  | 3,948 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest expense |  |  | — |  |  | — |  |  | — |  |  | (34,388 | ) |  | (34,388 | )
| Interest income and other, net |  |  | — |  |  | — |  |  | — |  |  | 4,811 |  |  | 4,811 |
Income (loss) from continuing operations before income taxes and equity in income (loss) of affiliated companies |  | $ | 166,683 |  | $ | 6,738 |  | $ | 18,230 |  | $ | (217,280 | ) | $ | (25,629 | )
Total assets |  | $ | 881,526 |  | $ | 69,932 |  | $ | 306,005 |  | $ | 548,290 |  | $ | 1,805,753 |
Long-lived assets |  |  | 254,939 |  |  | 15,193 |  |  | 17,784 |  |  | 59,895 |  |  | 347,811 |
Capital expenditures |  |  | 51,091 |  |  | 2,957 |  |  | 5,542 |  |  | 11,879 |  |  | 71,469 |
Purchases of salon assets |  |  | 18,551 |  |  | — |  |  | — |  |  | — |  |  | 18,551 |
|  | For the Year Ended June 30, 2010 |
--- | --- | --- | ---
|  | Salons |  |  |  |  |  |  |
|  | Hair Restoration Centers |  | Unallocated Corporate |  |  |
|  | North America |  | International |  | Consolidated |
|  | (Dollars in thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Service |  | $ | 1,605,979 |  | $ | 111,833 |  | $ | 66,325 |  | $ | — |  | $ | 1,784,137 |
| Product |  |  | 417,363 |  |  | 44,252 |  |  | 72,978 |  |  | — |  |  | 534,593 |
| Royalties and fees |  |  | 37,221 |  |  | — |  |  | 2,483 |  |  | — |  |  | 39,704 |
|  |  | 2,060,563 |  |  | 156,085 |  |  | 141,786 |  |  | — |  |  | 2,358,434 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cost of service |  |  | 920,905 |  |  | 57,657 |  |  | 37,158 |  |  | — |  |  | 1,015,720 |
| Cost of product |  |  | 219,745 |  |  | 22,570 |  |  | 21,568 |  |  | — |  |  | 263,883 |
| Site operating expenses |  |  | 183,881 |  |  | 10,152 |  |  | 5,305 |  |  | — |  |  | 199,338 |
| General and administrative |  |  | 113,956 |  |  | 13,115 |  |  | 36,207 |  |  | 128,713 |  |  | 291,991 |
| Rent |  |  | 294,263 |  |  | 38,681 |  |  | 9,013 |  |  | 2,141 |  |  | 344,098 |
| Depreciation and amortization |  |  | 72,681 |  |  | 4,986 |  |  | 12,198 |  |  | 18,899 |  |  | 108,764 |
| Goodwill impairment |  |  | 35,277 |  |  | — |  |  | — |  |  | — |  |  | 35,277 |
| Lease termination costs |  |  | — |  |  | 2,145 |  |  | — |  |  | — |  |  | 2,145 |
Total operating expenses |  |  | 1,840,708 |  |  | 149,306 |  |  | 121,449 |  |  | 149,753 |  |  | 2,261,216 |
Operating income (loss) |  |  | 219,855 |  |  | 6,779 |  |  | 20,337 |  |  | (149,753 | ) |  | 97,218 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest expense |  |  | — |  |  | — |  |  | — |  |  | (54,414 | ) |  | (54,414 | )
| Interest income and other, net |  |  | — |  |  | — |  |  | — |  |  | 10,410 |  |  | 10,410 |
Income (loss) from continuing operations before income taxes and equity in income (loss) of affiliated companies |  | $ | 219,855 |  | $ | 6,779 |  | $ | 20,337 |  | $ | (193,757 | ) | $ | 53,214 |
Total assets |  | $ | 992,410 |  | $ | 74,633 |  | $ | 284,615 |  | $ | 567,914 |  | $ | 1,919,572 |
Long-lived assets |  |  | 262,575 |  |  | 15,654 |  |  | 17,484 |  |  | 63,537 |  |  | 359,250 |
Capital expenditures |  |  | 40,393 |  |  | 1,764 |  |  | 3,658 |  |  | 12,006 |  |  | 57,821 |
Purchases of salon assets |  |  | 3,664 |  |  | — |  |  | — |  |  | — |  |  | 3,664 |
|  | For the Year Ended June 30, 2009(1) |
--- | --- | --- | ---
|  | Salons |  |  |  |  |  |  |
|  | Hair Restoration Centers |  | Unallocated Corporate |  |  |
|  | North America |  | International |  | Consolidated |
|  | (Dollars in thousands) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Service |  | $ | 1,646,239 |  | $ | 122,664 |  | $ | 65,055 |  | $ | — |  | $ | 1,833,958 |
| Product |  |  | 434,340 |  |  | 48,905 |  |  | 72,960 |  |  | — |  |  | 556,205 |
| Royalties and fees |  |  | 37,119 |  |  | — |  |  | 2,505 |  |  | — |  |  | 39,624 |
|  |  | 2,117,698 |  |  | 171,569 |  |  | 140,520 |  |  | — |  |  | 2,429,787 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cost of service |  |  | 944,782 |  |  | 64,326 |  |  | 35,611 |  |  | — |  |  | 1,044,719 |
| Cost of product |  |  | 235,520 |  |  | 25,855 |  |  | 21,663 |  |  | — |  |  | 283,038 |
| Site operating expenses |  |  | 173,457 |  |  | 11,762 |  |  | 5,237 |  |  | — |  |  | 190,456 |
| General and administrative |  |  | 117,673 |  |  | 15,720 |  |  | 33,924 |  |  | 124,344 |  |  | 291,661 |
| Rent |  |  | 292,253 |  |  | 44,492 |  |  | 8,887 |  |  | 2,160 |  |  | 347,792 |
| Depreciation and amortization |  |  | 73,395 |  |  | 12,492 |  |  | 11,327 |  |  | 18,441 |  |  | 115,655 |
| Goodwill impairment |  |  | — |  |  | 41,661 |  |  | — |  |  | — |  |  | 41,661 |
| Lease termination costs |  |  | 4,990 |  |  | 742 |  |  | — |  |  | — |  |  | 5,732 |
Total operating expenses |  |  | 1,842,070 |  |  | 217,050 |  |  | 116,649 |  |  | 144,945 |  |  | 2,320,714 |
Operating income (loss) |  |  | 275,628 |  |  | (45,481 | ) |  | 23,871 |  |  | (144,945 | ) |  | 109,073 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest expense |  |  | — |  |  | — |  |  | — |  |  | (39,768 | ) |  | (39,768 | )
| Interest income and other, net |  |  | — |  |  | — |  |  | — |  |  | 9,461 |  |  | 9,461 |
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies |  | $ | 275,628 |  | $ | (45,481 | ) | $ | 23,871 |  | $ | (175,252 | ) | $ | 78,766 |
Total assets |  | $ | 966,596 |  | $ | 49,779 |  | $ | 293,017 |  | $ | 583,094 |  | $ | 1,892,486 |
Long-lived assets |  |  | 281,504 |  |  | 20,314 |  |  | 18,234 |  |  | 71,486 |  |  | 391,538 |
Capital expenditures |  |  | 49,355 |  |  | 3,081 |  |  | 9,858 |  |  | 11,280 |  |  | 73,574 |
Purchases of salon assets |  |  | 39,215 |  |  | 22 |  |  | 889 |  |  | — |  |  | 40,126 |
(1) Beginning with the period ended December 31, 2008, the operations of Trade Secret concept within the North American reportable segment were accounted for as discontinued operations. All comparable periods will reflect Trade Secret as discontinued operations. See further discussion at Note 2 to the Consolidated Financial Statements. Total revenues and long-lived assets associated with business operations in the U.S. and all other countries in aggregate were as follows:
|  | Year Ended June 30, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
|  | Total Revenues |  | Long-lived Assets |  | Total Revenues |  | Long-lived Assets |  | Total Revenues |  | Long-lived Assets |
|  | (Dollars in thousands) |
U.S. |  | $ | 2,007,042 |  | $ | 314,406 |  | $ | 2,055,059 |  | $ | 327,753 |  | $ | 2,121,531 |  | $ | 355,330 |
Other countries |  |  | 318,827 |  |  | 33,405 |  |  | 303,375 |  |  | 31,497 |  |  | 308,256 |  |  | 36,208 |
Total |  | $ | 2,325,869 |  | $ | 347,811 |  | $ | 2,358,434 |  | $ | 359,250 |  | $ | 2,429,787 |  | $ | 391,538 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 131 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 + Details
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