REGIS CORP Goodwill & Intangibles Disclosure
June 30, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Gross Carrying Value (2) | Accumulated Impairment (1) | Net | Gross Carrying Value (2) | Accumulated Impairment (1) | Net | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Goodwill | $ | 486,743 | $ | (74,100 | ) | $ | 412,643 | $ | 491,087 | $ | (74,100 | ) | $ | 416,987 | ||||||||||
(1) | In fiscal year 2011 the Company realized a $74.1 million goodwill impairment loss associated with the Company-owned reporting unit (the previous North American Value reporting unit). |
(2) | The change in the gross carrying value of goodwill relates to foreign currency translation adjustments. |
Company-owned | Franchise | Consolidated | ||||||||||
(Dollars in thousands) | ||||||||||||
Goodwill, net at June 30, 2016 | $ | 189,218 | $ | 228,175 | $ | 417,393 | ||||||
Translation rate adjustments | (63 | ) | (76 | ) | (139 | ) | ||||||
Derecognition related to sale of salon assets to franchisees (1) | (267 | ) | — | (267 | ) | |||||||
Goodwill, net at June 30, 2017 | 188,888 | 228,099 | 416,987 | |||||||||
Translation rate adjustments | (201 | ) | (244 | ) | (445 | ) | ||||||
Derecognition related to sale of salon assets to franchisees (1) | (3,899 | ) | — | (3,899 | ) | |||||||
Goodwill, net at June 30, 2018 | $ | 184,788 | $ | 227,855 | $ | 412,643 | ||||||
(1) | Goodwill is derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized is determined by a fraction (the numerator of which is the trailing-twelve months EBITDA of the salon being sold and the denominator of which is the estimated annualized EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit. |
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2018 | Aug 23, 2018 | Showing above |
| 2017 | Aug 23, 2017 | |
| 2016 | Aug 23, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.