ACQUISITIONS

12 Months Ended

Jun. 30, 2011

ACQUISITIONS

ACQUISITIONS

4. ACQUISITIONS

        During fiscal years 2011, 2010, and 2009, the Company made acquisitions and the purchase prices have been allocated to assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. These acquisitions individually and in the aggregate are not material to the Company's operations. Operations of the acquired companies have been included in the operations of the Company since the date of the respective acquisition.

        Based upon purchase price allocations, the components of the aggregate purchase prices of the acquisitions made during fiscal years 2011, 2010, and 2009 and the allocation of the purchase prices were as follows:

		2011			2010			2009
		(Dollars in thousands)
Components of aggregate purchase prices:
	Cash	$	17,990		$	3,664		$	40,051
	Liabilities assumed or payable		561			—			75
		$	18,551		$	3,664		$	40,126
Allocation of the purchase prices:
	Current assets	$	641		$	178		$	1,337
	Property and equipment		4,232			873			5,989
	Deferred income tax asset		—			—			1,787
	Goodwill		12,489			2,581			30,812
	Identifiable intangible assets		1,964			134			1,322
	Accounts payable and accrued expenses		(534	)		(102	)		(818	)
	Other noncurrent liabilities		(241	)		—			(303	)
		$	18,551		$	3,664		$	40,126

        The value and related weighted average amortization periods for the intangibles acquired during fiscal years 2011 and 2010 business acquisitions, in total and by major intangible asset class, are as follows:

		Purchase Price Allocation
						Weighted Average Amortization Period
		Year Ended June 30,
						(in years)
		2011		2010		2011		2010
		(Dollars in thousands)
Amortized intangible assets:
	Brand assets and trade names	$	159	$	61		10		20
	Customer lists		1,207		—		7		—
	Franchise agreements		269		—		40		—
	Lease intangibles		151		15		20		20
	Non-compete agreements		—		—		—		—
	Other		178		58		20		20
Total		$	1,964	$	134		14		20

        The majority of the purchase price in salon acquisitions is accounted for as residual goodwill rather than identifiable intangible assets. This stems from the value associated with the walk-in customer base of the acquired salons, which is not recorded as an identifiable intangible asset under current accounting guidance, as well as the limited value and customer preference associated with the acquired hair salon brand. Key factors considered by consumers of hair salon services include personal relationships with individual stylists, service quality and price point competitiveness. These attributes represent the "going concern" value of the salon.

        Residual goodwill further represents the Company's opportunity to strategically combine the acquired business with the Company's existing structure to serve a greater number of customers through its expansion strategies. In the acquisitions of international salons and hair restoration centers, the residual goodwill primarily represents the growth prospects that are not captured as part of acquired tangible or identified intangible assets. Generally, the goodwill recognized in the North American salon transactions is expected to be fully deductible for tax purposes and the goodwill recognized in the international salon transactions is non-deductible for tax purposes. Goodwill generated in certain acquisitions, such as the acquisition of hair restoration centers, is not deductible for tax purposes due to the acquisition structure of the transaction.

        During fiscal years 2011, 2010, and 2009, the Company purchased salon operations from its franchisees. The Company evaluated the effective settlement of the pre-existing franchise contracts and associated rights afforded by those contracts. The Company determined that the effective settlement of the pre-existing franchise contracts at the date of the acquisition did not result in a gain or loss, as the agreements were neither favorable nor unfavorable when compared to similar current market transactions, and no settlement provisions exist in the pre-existing contracts. Therefore, no settlement gain or loss was recognized with respect to the Company's franchise buybacks.