Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2017 | Jan. 25, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | REGIS CORP | |
Entity Central Index Key | 716,643 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 46,695,927 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 163,300 | $ 171,044 |
Receivables, net | 31,895 | 19,683 |
Inventories | 87,347 | 98,392 |
Other current assets | 47,814 | 48,114 |
Current assets held for sale (Note 1) | 0 | 32,914 |
Total current assets | 330,356 | 370,147 |
Property and equipment, net | 109,448 | 123,281 |
Goodwill | 417,709 | 416,987 |
Other intangibles, net | 11,416 | 11,965 |
Other assets | 52,958 | 61,756 |
Noncurrent assets held for sale (Note 1) | 0 | 27,352 |
Total assets | 921,887 | 1,011,488 |
Current liabilities: | ||
Accounts payable | 52,738 | 54,501 |
Accrued expenses | 107,198 | 110,435 |
Current liabilities related to assets held for sale (Note 1) | 0 | 13,126 |
Total current liabilities | 159,936 | 178,062 |
Long-term debt, net | 121,096 | 120,599 |
Other noncurrent liabilities | 112,284 | 197,374 |
Noncurrent liabilities related to assets held for sale (Note 1) | 0 | 7,232 |
Total liabilities | 393,316 | 503,267 |
Commitments and contingencies (Note 6) | ||
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 46,688,423 and 46,400,367 common shares at December 31, 2017 and June 30, 2017, respectively | 2,335 | 2,320 |
Additional paid-in capital | 216,301 | 214,109 |
Accumulated other comprehensive income | 11,789 | 3,336 |
Retained earnings | 298,146 | 288,456 |
Total shareholders’ equity | 528,571 | 508,221 |
Total liabilities and shareholders’ equity | $ 921,887 | $ 1,011,488 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2017 | Jun. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock issued (in shares) | 46,688,423 | 46,400,367 |
Common stock outstanding (in shares) | 46,688,423 | 46,400,367 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Revenues: | |||||
Service | $ 223,214 | $ 235,609 | $ 458,773 | $ 478,700 | |
Product | 71,816 | 68,229 | 132,756 | 131,945 | |
Royalties and fees | 13,485 | 11,411 | 26,859 | 23,435 | |
Total revenues | 308,515 | 315,249 | 618,388 | 634,080 | |
Operating expenses: | |||||
Cost of service | 134,850 | 151,193 | 274,686 | 301,990 | |
Cost of product | 39,864 | 34,584 | 70,026 | 65,399 | |
Site operating expenses | 32,119 | 32,638 | 65,422 | 65,283 | |
General and administrative | 48,592 | 36,695 | 83,758 | 72,611 | |
Rent | 65,473 | 45,091 | 107,889 | 91,324 | |
Depreciation and amortization | 24,951 | 12,646 | 37,206 | 24,755 | |
Total operating expenses | 345,849 | 312,847 | 638,987 | 621,362 | |
Operating (loss) income | (37,334) | 2,402 | (20,599) | 12,718 | |
Other (expense) income: | |||||
Interest expense | (2,169) | (2,153) | (4,307) | (4,316) | |
Interest income and other, net | 2,362 | 1,452 | 3,389 | 1,779 | |
(Loss) income from continuing operations before income taxes | (37,141) | 1,701 | (21,517) | 10,181 | |
Income tax benefit (expense) | 76,462 | (719) | 71,630 | (3,459) | |
Income from continuing operations | 39,321 | 982 | 50,113 | 6,722 | |
Loss from discontinued operations, net of taxes (Note 1) | (6,601) | (3,201) | (40,368) | (5,660) | |
Net income (loss) | $ 32,720 | $ (2,219) | $ 9,745 | $ 1,062 | |
Basic: | |||||
Income from continuing operations (in dollars per share) | $ 0.84 | $ 0.02 | $ 1.07 | $ 0.15 | |
Loss from discontinued operations (in dollars per share) | (0.14) | (0.07) | (0.86) | (0.12) | |
Net (loss) income per share, basic (in dollars per share) | [1] | 0.70 | (0.05) | 0.21 | 0.02 |
Diluted: | |||||
Income from continuing operations (in dollars per share) | 0.83 | 0.02 | 1.07 | 0.14 | |
Loss from discontinued operations (in dollars per share) | (0.14) | (0.07) | (0.86) | (0.12) | |
Net (loss) income per share, diluted (in dollars per share) | [1] | $ 0.69 | $ (0.05) | $ 0.21 | $ 0.02 |
Weighted average common and common equivalent shares outstanding: | |||||
Basic (in shares) | 46,821 | 46,327 | 46,719 | 46,277 | |
Diluted (in shares) | 47,314 | 46,774 | 47,053 | 46,751 | |
[1] | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 32,720 | $ (2,219) | $ 9,745 | $ 1,062 |
Foreign currency translation adjustments | (381) | (2,322) | 2,301 | (4,838) |
Reclassification adjustments for losses included in net income (loss) (Note 1) | 6,152 | 0 | 6,152 | 0 |
Comprehensive income (loss) | $ 38,491 | $ (4,541) | $ 18,198 | $ (3,776) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) $ in Thousands | 6 Months Ended | |||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |||
Cash flows from operating activities: | ||||
Net income | $ 9,745 | $ 1,062 | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||
Non-cash impairment related to discontinued operations | 25,095 | 0 | ||
Depreciation and amortization | 20,492 | 20,369 | ||
Depreciation related to discontinued operations | 3,038 | 7,220 | ||
Deferred income taxes | (77,055) | 3,297 | ||
Gain on life insurance | (7,986) | 0 | ||
Gain from sale of salon assets to franchisees, net | (18) | [1] | (121) | [1] |
Salon asset impairments | 16,714 | 4,386 | ||
Accumulated other comprehensive income reclassification adjustments (Note 1) | 6,152 | 0 | ||
Stock-based compensation | 4,618 | 4,400 | ||
Amortization of debt discount and financing costs | 703 | 703 | ||
Other non-cash items affecting earnings | (104) | 64 | ||
Changes in operating assets and liabilities, excluding the effects of asset sales | (13,647) | (13,775) | ||
Net cash (used in) provided by operating activities | (12,253) | 27,605 | ||
Cash flows from investing activities: | ||||
Capital expenditures | (13,773) | (15,510) | ||
Capital expenditures related to discontinued operations | (1,171) | (2,893) | ||
Proceeds from sale of assets to franchisees | 2,696 | [1] | 335 | [1] |
Change in restricted cash | (542) | 738 | ||
Proceeds from company-owned life insurance policies | 18,108 | 0 | ||
Net cash provided by (used in) investing activities | 5,318 | (17,330) | ||
Cash flows from financing activities: | ||||
Taxes paid for shares withheld | (2,039) | (1,113) | ||
Cash settlement of equity awards | (375) | 0 | ||
Net cash used in financing activities | (2,414) | (1,113) | ||
Effect of exchange rate changes on cash and cash equivalents | 253 | (866) | ||
(Decrease) increase in cash and cash equivalents | (9,096) | 8,296 | ||
Cash and cash equivalents: | ||||
Beginning of period | 163,300 | |||
Beginning of period, total cash and cash equivalents | 172,396 | 147,346 | ||
End of period | $ 163,300 | $ 155,642 | ||
[1] | Excludes transaction with The Beautiful Group. |
BASIS OF PRESENTATION OF UNAUDI
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of December 31, 2017 and for the three and six months ended December 31, 2017 and 2016 , reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of December 31, 2017 and its consolidated results of operations, comprehensive income (loss) and cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year. The Condensed Consolidated Balance Sheet data for June 30, 2017 was derived from audited Consolidated Financial Statements, but includes unaudited adjustments for assets and liabilities held for sale and does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2017 and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year. Discontinued Operations: In October 2017, the Company sold substantially all of its mall-based salon business in North America, representing 858 salons, and substantially all of its International segment, representing approximately 250 salons in the UK, to The Bea utiful Group, an affiliate of Regent, a private equity firm based in Los Angeles, California, who will operate these locations as franchise locations. As part of the sale of the mall-based business, The Beautiful Group agreed to pay for the value of certain inventory and assumed specific liabilities, including lease liabilities. For the International segment, the Company entered into a share purchase agreement with The Beautiful Group for minimal consideration. As of September 30, 2017, the Company classified the results of its mall-based business and its International segment as discontinued operations for all periods presented in the Condensed Consolidated Statement of Operations. Included within discontinued operations are the impairment charge, results of operations and professional fees associated with the transaction, for the three and six months ended December 31, 2017 . The operations of the mall-based business and International segment, which were previously recorded in the North American Value, North American Premium and International reporting segments, have been eliminated from ongoing operations of the Company. In connection with the sale of the mall-based business and the International segment as part of our held for sale assessment at September 30, 2017, the Company performed an impairment assessment of the asset groups. The Company recognized net impairment charges within discontinued operations during the three and six months ended December 31, 2017 , based on the difference between the expected sale prices and the carrying value of the asset groups. The following summarizes the results of our discontinued operations for the periods presented: For the Three Months Ended December 31, For the Six Months Ended December 31, 2017 2016 2017 2016 (Dollars in thousands) Revenues $ 7,773 $ 108,793 $ 101,140 $ 221,005 Loss from discontinued operations, before income taxes (10,073 ) (3,201 ) (43,840 ) (5,660 ) Income tax benefit on discontinued operations 3,472 — 3,472 — Loss from discontinued operations, net of income taxes (6,601 ) (3,201 ) (40,368 ) (5,660 ) For the three months ended December 31, 2017 , included within the $6.6 million loss from discontinued operations are $4.8 million of asset impairment charges, $1.1 million of loss from operations and $4.2 million of professional fees associated with the transaction, partly offset by a $3.5 million income tax benefit generated due to federal tax legislation enacted during the three months ended December 31, 2017 . For the six months ended December 31, 2017 , included within the $ 40.4 million loss from discontinued operations are $29.1 million of asset impairment charges, $6.2 million of cumulative foreign currency translation adjustment associated with the Company's liquidation of substantially all foreign entities with British pound denominated entities, $2.8 million of loss from operations and $5.8 million of professional fees associated with the transaction, partly offset by a $3.5 million income tax benefit generated due to federal tax legislation enacted during the three months ended December 31, 2017 . Income taxes have been allocated to continuing and discontinued operations based on the methodology required by interim reporting and accounting for income taxes guidance. See Note 5 to the unaudited Condensed Consolidated Financial Statements for further discussion regarding Staff Accounting Bulletin ("SAB") 118. Within salon asset impairments presented in the Consolidated Statement of Cash Flows for the six months ended December 31, 2016, $1.7 million of salon asset impairments were related to discontinued operations. Other than the salon asset impairments and the other items presented in the Consolidated Statement of Cash Flows, there were no other significant non-cash operating activities or any significant non-cash investing activities related to discontinued operations for the six months ended December 31, 2017 and 2016. SmartStyle ® Salon Restructuring: In December 2017 the Company committed to close 597 non-performing Company owned SmartStyle salons in January 2018. A summary of costs associated with the SmartStyle salon restructuring for the three and six months ended December 31, 2017 is as follows: Dollars in thousands Inventory reserves $ 585 Long-lived fixed asset impairment 5,418 Asset retirement obligation 7,462 Lease termination and other related closure costs 27,290 Deferred rent (3,291 ) Total $ 37,464 As the operational restructuring plan was announced publicly on January 8, 2018, the Company expects to incur an additional $1.0 million in related severance expense in the third quarter of fiscal 2018. Stock-Based Employee Compensation: During the three and six months ended December 31, 2017 , the Company granted various equity awards including restricted stock units (RSUs) and performance-based restricted stock units (PSUs). A summary of equity awards granted is as follows: For the Periods Ended December 31, 2017 Three Months Six Months Restricted stock units 38,811 297,969 Performance-based restricted stock units 153,612 153,612 Total compensation cost for stock-based payment arrangements totaled $2.6 and $2.5 million for the three months ended December 31, 2017 and 2016 , respectively, and $4.6 and $4.4 million for the six months ended December 31, 2017 and 2016 , respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations. Total compensation cost for stock-based payment arrangements for the three and six months ended December 31, 2017 includes $1.0 and $1.2 million , respectively, related to the termination of former executive officers. In connection with the terminations of former executive officers, the Company settled certain PSUs for cash of $0.4 million during the three and six months ended December 31, 2017 , respectively. Long-Lived Asset Impairment Assessments, Excluding Goodwill: The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the estimated fair value of the assets. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including salon level revenues and expenses. Long-lived asset impairment charges of $14.4 and $2.5 million for the three months ended December 31, 2017 and 2016 , respectively, and $16.7 and $4.4 million for the six months ended December 31, 2017 and 2016 , respectively, have been recorded within depreciation and amortization in the Consolidated Statement of Operations. A ccounting Standards Recently Issued But Not Yet Adopted by the Company: Leases In February 2016, the FASB issued updated guidance requiring organizations that lease assets to recognize the rights and obligations created by those leases on the consolidated balance sheet. The new standard is effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the effect the new standard will have on the Company's consolidated financial statements but expects this adoption will result in a material increase in the assets and liabilities on the Company's consolidated balance sheet. Revenue from Contracts with Customers In May 2014, the FASB issued updated guidance for revenue recognition. The updated accounting guidance provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the exchange for goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The guidance is effective for the Company in the first quarter of fiscal year 2019, with early adoption permitted at the beginning of fiscal year 2018. The standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements. The Company expects to adopt this guidance in fiscal year 2019 using the modified retrospective method of adoption. The Company does not believe the standard will impact its recognition of point-of-sale revenue in company-owned salons, or royalties. The Company believes the standard will impact the recognition of initial franchise fees revenue and gift card breakage, although the impacts are not expected to be material to the Company’s consolidated financial statements. The Company licenses intellectual property and trademarks to franchisees through franchise agreements. As part of these agreements, the Company receives an initial franchise fee payment which is currently recognized as revenue when the salon opens. Upon adoption of the new standard initial franchise fees will generally be recognized as revenue over the life of the contract. The Company sells gift cards to customers and records the sale as a liability. The liability is released to revenue once the card is redeemed. Historically a portion of these gift card sales have never been redeemed by the customer (“breakage”). Currently the Company recognizes breakage when redemption is considered remote. Upon adoption of the new standard, expected breakage is anticipated to be recognized as customers redeem the gift cards rather than only when redemption is considered remote. The Company is continuing its assessment, including the impact on internal controls, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures. The new standard is not expected to have any impact on the timing or classification of the Company’s cash flows as reported in the Consolidated Statement of Cash Flows. Intra-Entity Transfers Other Than Inventory In October 2016, the FASB issued guidance on the accounting for income tax effects of intercompany transfers of assets other than inventory. The guidance requires entities to recognize the income tax impact of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the assets have been sold to an outside party. The guidance is effective for the Company in the first quarter of fiscal year 2019, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. Restricted Cash In November 2016, the FASB issued updated cash flow guidance requiring restricted cash and restricted cash equivalents to be included in the cash and cash equivalent balances in the statement of cash flows. Transfers between cash and cash equivalents and restricted cash will no longer be presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the Company's consolidated statement of cash flows. Statement of Cash Flows In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated statement of cash flows. |
INVESTMENT IN AFFILIATES_
INVESTMENT IN AFFILIATES: | 6 Months Ended |
Dec. 31, 2017 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
INVESTMENT IN AFFILIATES | INVESTMENT IN AFFILIATES: Empire Education Group, Inc. (EEG) As of December 31, 2017 , the Company had a 54.6% ownership interest in EEG and no remaining investment value as the Company fully impaired its investment in EEG as of December 31, 2015. The Company has not recorded any equity income or losses related to its investment in EEG subsequent to the impairment. The Company will record equity income related to the Company's investment in EEG once EEG's cumulative income exceeds its cumulative losses, measured from the date of impairment. While the Company could be responsible for certain liabilities associated with this venture, the Company does not currently expect them to have a material impact on the Company's financial position. The table below presents the summarized Statement of Operations information for EEG: For the Three Months Ended December 31, For the Six Months Ended December 31, 2017 2016 2017 2016 (Unaudited) (Dollars in thousands) Gross revenues $ 32,962 $ 31,019 $ 65,599 $ 61,055 Gross profit 9,720 9,168 19,398 17,278 Operating income (loss) 1,053 488 861 (219 ) Net income (loss) 1,034 357 690 (472 ) |
EARNINGS PER SHARE_
EARNINGS PER SHARE: | 6 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE: The Company’s basic earnings per share is calculated as net income (loss) divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards, RSUs and PSUs. The Company’s diluted earnings per share is calculated as net income divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company’s stock-based compensation plans. Stock-based awards with exercise prices greater than the average market price of the Company’s common stock are excluded from the computation of diluted earnings per share. For the three months ended December 31, 2017 and 2016 , 492,889 and 446,877 , respectively, and for the six months ended December 31, 2017 and 2016 , 334,062 and 474,616 , respectively, common stock equivalents of dilutive common stock were included in the diluted earnings per share calculations due to the net income from continuing operations. The computation of weighted average shares outstanding, assuming dilution, excluded 2,373,110 and 2,361,971 of stock-based awards during the three months ended December 31, 2017 and 2016 , respectively, and 1,199,042 and 2,411,047 of stock-based award during the six months ended December 31, 2017 and 2016 , respectively, as they were not dilutive under the treasury stock method. |
SHAREHOLDERS' EQUITY_
SHAREHOLDERS' EQUITY: | 6 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY: Additional Paid-In Capital: The $2.2 million increase in additional paid-in capital during the six months ended December 31, 2017 was primarily due to $4.6 million of stock-based compensation, partly offset by other stock-based compensation activity of $2.4 million , primarily shares forfeited for withholdings on vestings. |
INCOME TAXES_
INCOME TAXES: | 6 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: A summary of income tax benefit (expense) and corresponding effective tax rates is as follows: For the Three Months For the Six Months Ended December 31, 2017 2016 2017 2016 (Dollars in thousands) Income tax benefit (expense) $ 76,462 $ (719 ) $ 71,630 $ (3,459 ) Effective tax rate 205.9 % 42.3 % 332.9 % 34.0 % On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent ; (2) changing rules related to net operating losses ("NOL") carryforwards and carrybacks; (3) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (4) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (5) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (6) allowing full expensing of qualified property; (7) creating a new base erosion anti-abuse minimum tax (“BEAT”) and provisions designed to tax global intangible low-taxed income (“GILTI”); (8) adding rules that limit the deductibility of interest expense; and (9) adding new provisions that further restrict the deductibility of certain executive compensation. Due to our fiscal year end, different provisions of the Tax Act will become applicable at varying dates. Nonetheless, the Company is required to recognize the effects of the rate change and enacted legislation on its deferred tax assets and liabilities in the period of enactment. The SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification (ASC) 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. In connection with our initial analysis of the impact of the Tax Act, we have recorded a provisional estimated net tax benefit of $68.9 million in continuing operations for the periods ended December 31, 2017. The net tax benefit is primarily attributable to the impact of the corporate rate reduction on our deferred tax assets and liabilities along with a partial release of the U.S. valuation allowance (“VA”). The VA release is solely attributable to tax reform and the law change that allows for the indefinite carryforward of NOLs arising in tax years ending after December 31, 2017. Prior law limited the carryforward period to 20 years. As a result of the change, the Company is able to release its VA on deferred tax assets that it expects to reverse in future periods. The Company continues to maintain a VA on the historical balance of its finite lived federal NOLs, tax credits and various state tax attributes. We are still analyzing certain aspects of the Tax Act and refining our calculations, which could potentially affect the measurement of our deferred tax balances and ultimately cause us to revise our provisional estimate in future periods in accordance with SAB 118. In addition, changes in interpretations, assumptions, and guidance regarding the new tax legislation, as well as the potential for technical corrections to the Tax Act, could have a material impact to the Company’s effective tax rate in future periods. The recorded tax provision and effective tax rates for the three and six months ended December 31, 2017 and three and six months ended December 31, 2016 were different than what would normally be expected primarily due to the impact of the Tax Act and the deferred tax VA. Additionally, the majority of the tax provision in periods ended prior to December 31, 2017 related to non-cash tax expense for tax benefits on certain indefinite-lived assets the Company could not recognize for reporting purposes. Due to the Tax Act and the resulting partial release of the Company’s VA, the Company recorded $7.6 million of tax benefit in continuing operations during the three months ended December 31, 2017 , exclusive of the $68.9 million benefit mentioned above. Furthermore, the non-cash tax expense is not expected to be material in future periods. The Company’s U.S. federal income tax returns for the fiscal years 2010 through 2013 have been examined by the Internal Revenue Service (IRS) and were moved to the IRS Appeals Division. The Company believes its income tax positions and deductions will be sustained and will continue to vigorously defend such positions. All earlier tax years are closed to examination. With limited exceptions, the Company is no longer subject to state and international income tax examinations by tax authorities for years before 2012. |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: | 6 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period. See Note 5 to the unaudited Condensed Consolidated Financial Statements for discussion regarding certain issues that have resulted from the IRS' examination of fiscal 2010 through 2013 federal income tax returns. Final resolution of these issues is not expected to have a material impact on the Company's financial position. |
GOODWILL AND OTHER INTANGIBLES_
GOODWILL AND OTHER INTANGIBLES: | 6 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES: During the first quarter of fiscal year 2018, the Company experienced a triggering event due to the redefining of its operating segments as a result of the sale of the mall-based business and the International segment. See Note 10 to the unaudited Condensed Consolidated Financial Statements. The Company utilized the Step 0 goodwill impairment assessment during the first quarter. As part of this assessment, the Company evaluated qualitative factors to determine whether it was more likely than not that the fair value of the reporting units was less than its carrying value. The Company determined it was "more-likely-than-not" that the carrying values of the reporting units were less than the fair values. The Company now reports its operations in two reportable segments: Company-owned salons and Franchise salons. The Company considered whether any goodwill associated with the MasterCuts salons should be allocated as part of the sale of the mall-based business and considered for impairment. The Company determined no goodwill should be allocated to the mall-based business because the salons sold were projected to produce operating losses in the future and had minimal fair value. All goodwill associated with the North American Premium and International segments was previously impaired. Pursuant to the change in operating segments, the Company compared the fair value of the remaining salons in the Company-owned reporting unit to its carrying value and concluded the fair value exceeded its carrying value by a substantial margin, resulting in no goodwill impairment. The table below contains details related to the Company's goodwill: Company-owned Franchise Consolidated (Dollars in thousands) Goodwill, net at June 30, 2017 $ 188,888 $ 228,099 $ 416,987 Translation rate adjustments 573 690 1,263 Derecognition related to sale of salon assets to franchisees (1) (541 ) — (541 ) Goodwill, net at December 31, 2017 $ 188,920 $ 228,789 $ 417,709 _______________________________________________________________________________ (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 EBITDA of the salon being sold and the denominator of which is the EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit. The table below presents other intangible assets: December 31, 2017 June 30, 2017 Cost (1) Accumulated Amortization (1) Net Cost (1) Accumulated Amortization (1) Net (Dollars in thousands) Amortized intangible assets: Brand assets and trade names $ 8,356 $ (4,229 ) $ 4,127 $ 8,187 $ (4,013 ) $ 4,174 Franchise agreements 10,026 (7,744 ) 2,282 9,832 (7,433 ) 2,399 Lease intangibles 14,036 (9,449 ) 4,587 14,007 (9,077 ) 4,930 Other 2,030 (1,610 ) 420 1,994 (1,532 ) 462 $ 34,448 $ (23,032 ) $ 11,416 $ 34,020 $ (22,055 ) $ 11,965 _____________________________ (1) The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency. |
FINANCING ARRANGEMENTS_
FINANCING ARRANGEMENTS: | 6 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS: The Company’s long-term debt consists of the following: Maturity Dates Interest Rate December 31, June 30, (fiscal year) (Dollars in thousands) Senior Term Notes, net 2020 5.50% $ 121,096 $ 120,599 Revolving credit facility 2018 — — — $ 121,096 $ 120,599 Senior Term Notes In December 2015, the Company exchanged its $120.0 million 5.75% senior notes due December 2017 for $123.0 million 5.5% senior notes due December 2019 (Senior Term Notes). The Senior Term Notes were issued at a $3.0 million discount which is being amortized to interest expense over the term of the notes. Interest on the Senior Term Notes is payable semi-annually in arrears on June 1 and December 1 of each year. The Senior Term Notes are unsecured and not guaranteed by any of the Company’s subsidiaries or any third parties. The following table contains details related to the Company's Senior Term Notes: December 31, 2017 June 30, 2017 (Dollars in thousands) Principal amount on the Senior Term Notes $ 123,000 $ 123,000 Unamortized debt discount (1,439 ) (1,815 ) Unamortized debt issuance costs (465 ) (586 ) Senior Term Notes, net $ 121,096 $ 120,599 Revolving Credit Facility The Company has a $200 million five -year unsecured revolving credit facility that expires in June 2018. The revolving credit facility has interest rates tied to LIBOR credit spread. As of December 31, 2017 and June 30, 2017 , the Company had no outstanding borrowings under this credit facility. The Company had outstanding standby letters of credit under the facility of $1.5 million at December 31, 2017 and June 30, 2017 , primarily related to the Company's self-insurance program, therefore, unused available credit under the facility at December 31, 2017 and June 30, 2017 was $198.5 million . The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three months ended December 31, 2017 . |
FAIR VALUE MEASUREMENTS_
FAIR VALUE MEASUREMENTS: | 6 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS: Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). Assets and Liabilities Measured at Fair Value on a Recurring Basis As of December 31, 2017 and June 30, 2017 , the estimated fair value of the Company’s cash, cash equivalents, restricted cash, receivables and accounts payable approximated their carrying values. As of December 31, 2017 , the estimated fair value of the Company's debt was $125.4 million and the carrying value was $123.0 million , excluding the $1.4 million unamortized debt discount and $0.5 million unamortized debt issuance costs. As of June 30, 2017 , the estimated fair value of the Company's debt was $125.9 million and the carrying value was $123.0 million , excluding the $1.8 million unamortized debt discount and $0.6 million unamortized debt issuance costs. The estimated fair value of the Company's debt is based on Level 2 inputs. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. The following impairments were based on fair values using Level 3 inputs: For the Three Months Ended December 31, For the Six Months Ended December 31, 2017 2016 2017 2016 (Dollars in thousands) Long-lived assets (1) $ (14,434 ) $ (2,477 ) $ (16,714 ) $ (4,386 ) _____________________________ (1) See Note 1 to the unaudited Condensed Consolidated Financial Statements. |
SEGMENT INFORMATION_
SEGMENT INFORMATION: | 6 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION: Segment information is prepared on the same basis the chief operating decision maker reviews financial information for operational decision-making purposes. During the first quarter of fiscal year 2018, the Company redefined its operating segments to reflect how the chief operating decision maker now evaluates the business as a result of the Company's Board of Directors' approval of the mall-based business and International segment sale. See Note 1 to the unaudited Condensed Consolidated Financial Statements. The Company now reports its operations in two operating segments: Company-owned salons and Franchise salons. The Company's operating segments are its reportable operating segments. Prior to this change, the Company had four operating segments: North American Value, North American Premium, North American Franchise, and International. The Company did not operate under the realigned operating segment structure prior to the first quarter of fiscal year 2018. The Company’s reportable operating segments consisted of the following salons: December 31, 2017 June 30, 2017 COMPANY-OWNED SALONS: SmartStyle/Cost Cutters in Walmart Stores (1) 2,497 2,652 Supercuts 954 980 Signature Style 1,414 1,468 Mall locations (Regis and MasterCuts) — 898 Total North American Salons 4,865 5,998 Total International Salons (2) — 275 Total Company-owned Salons 4,865 6,273 as a percent of total Company-owned and Franchise salons 55.3 % 70.3 % FRANCHISE SALONS: SmartStyle in Walmart Stores 210 62 Cost Cutters in Walmart Stores 116 114 Supercuts 1,730 1,687 Signature Style 754 770 Total non-mall franchise locations 2,810 2,633 Mall franchise locations (Regis and MasterCuts) 849 — Total North American Salons 3,659 2,633 Total International Salons (2) 270 13 Total Franchise Salons 3,929 2,646 as a percent of total Company-owned and Franchise salons 44.7 % 29.7 % OWNERSHIP INTEREST LOCATIONS: Equity ownership interest locations 89 89 Grand Total, System-wide 8,883 9,008 ____________________________________ (1) In January 2018, the Company closed 597 non-performing Company owned SmartStyle salons. (2) Canadian and Puerto Rican salons are included in the North American salon totals. As of December 31, 2017, the Company-owned operating segment is comprised primarily of SmartStyle ® , Supercuts ® , Cost Cutters ® , and other regional trade names and the Franchise operating segment is comprised primarily of Supercuts, Regis ® , MasterCuts ® , SmartStyle ® , Cost Cutters ® , First Choice Haircutters ® , Roosters ® and Magicuts ® concepts. The Corporate segment represents home office and other unallocated costs. Concurrent with the change in reportable segments, the Company recast its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. Financial information concerning the Company's reportable operating segments is shown in the following table: For the Three Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 223,214 $ — $ — $ 223,214 Product 56,748 15,068 — 71,816 Royalties and fees — 13,485 — 13,485 279,962 28,553 — 308,515 Operating expenses: Cost of service 134,850 — — 134,850 Cost of product 28,044 11,820 — 39,864 Site operating expenses 32,119 — — 32,119 General and administrative 17,947 6,869 23,776 48,592 Rent 65,159 70 244 65,473 Depreciation and amortization 22,054 91 2,806 24,951 Total operating expenses 300,173 18,850 26,826 345,849 Operating (loss) income (20,211 ) 9,703 (26,826 ) (37,334 ) Other (expense) income: Interest expense — — (2,169 ) (2,169 ) Interest income and other, net — — 2,362 2,362 (Loss) income from continuing operations before income taxes $ (20,211 ) $ 9,703 $ (26,633 ) $ (37,141 ) For the Three Months Ended December 31, 2016 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 235,609 $ — $ — $ 235,609 Product 60,636 7,593 — 68,229 Royalties and fees — 11,411 — 11,411 296,245 19,004 — 315,249 Operating expenses: Cost of service 151,193 — — 151,193 Cost of product 28,783 5,801 — 34,584 Site operating expenses 32,638 — — 32,638 General and administrative 11,889 4,968 19,838 36,695 Rent 44,881 41 169 45,091 Depreciation and amortization 10,203 89 2,354 12,646 Total operating expenses 279,587 10,899 22,361 312,847 Operating income (loss) 16,658 8,105 (22,361 ) 2,402 Other (expense) income: Interest expense — — (2,153 ) (2,153 ) Interest income and other, net — — 1,452 1,452 Income (loss) from continuing operations before income taxes $ 16,658 $ 8,105 $ (23,062 ) $ 1,701 For the Six Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 458,773 $ — $ — $ 458,773 Product 109,966 22,790 — 132,756 Royalties and fees — 26,859 — 26,859 568,739 49,649 — 618,388 Operating expenses: Cost of service 274,686 — — 274,686 Cost of product 52,491 17,535 — 70,026 Site operating expenses 65,422 — — 65,422 General and administrative 33,771 12,415 37,572 83,758 Rent 107,282 117 490 107,889 Depreciation and amortization 31,948 183 5,075 37,206 Total operating expenses 565,600 30,250 43,137 638,987 Operating income (loss) 3,139 19,399 (43,137 ) (20,599 ) Other (expense) income: Interest expense — — (4,307 ) (4,307 ) Interest income and other, net — — 3,389 3,389 Income (loss) from continuing operations before income taxes $ 3,139 $ 19,399 $ (44,055 ) $ (21,517 ) For the Six Months Ended December 31, 2016 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 478,700 $ — $ — $ 478,700 Product 116,949 14,996 — 131,945 Royalties and fees — 23,435 — 23,435 595,649 38,431 — 634,080 Operating expenses: Cost of service 301,990 — — 301,990 Cost of product 54,130 11,269 — 65,399 Site operating expenses 65,283 — — 65,283 General and administrative 23,431 10,365 38,815 72,611 Rent 90,893 83 348 91,324 Depreciation and amortization 19,798 179 4,778 24,755 Total operating expenses 555,525 21,896 43,941 621,362 Operating income (loss) 40,124 16,535 (43,941 ) 12,718 Other (expense) income: Interest expense — — (4,316 ) (4,316 ) Interest income and other, net — — 1,779 1,779 Income (loss) from continuing operations before income taxes $ 40,124 $ 16,535 $ (46,478 ) $ 10,181 |
BASIS OF PRESENTATION OF UNAU17
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Long-Lived Asset Impairment Assessments, Excluding Goodwill | The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the estimated fair value of the assets. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including salon level revenues and expenses. |
Accounting Standards Recently Issued But Not Yet Adopted by the Company | Leases In February 2016, the FASB issued updated guidance requiring organizations that lease assets to recognize the rights and obligations created by those leases on the consolidated balance sheet. The new standard is effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. The Company is currently evaluating the effect the new standard will have on the Company's consolidated financial statements but expects this adoption will result in a material increase in the assets and liabilities on the Company's consolidated balance sheet. Revenue from Contracts with Customers In May 2014, the FASB issued updated guidance for revenue recognition. The updated accounting guidance provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the exchange for goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The guidance is effective for the Company in the first quarter of fiscal year 2019, with early adoption permitted at the beginning of fiscal year 2018. The standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements. The Company expects to adopt this guidance in fiscal year 2019 using the modified retrospective method of adoption. The Company does not believe the standard will impact its recognition of point-of-sale revenue in company-owned salons, or royalties. The Company believes the standard will impact the recognition of initial franchise fees revenue and gift card breakage, although the impacts are not expected to be material to the Company’s consolidated financial statements. The Company licenses intellectual property and trademarks to franchisees through franchise agreements. As part of these agreements, the Company receives an initial franchise fee payment which is currently recognized as revenue when the salon opens. Upon adoption of the new standard initial franchise fees will generally be recognized as revenue over the life of the contract. The Company sells gift cards to customers and records the sale as a liability. The liability is released to revenue once the card is redeemed. Historically a portion of these gift card sales have never been redeemed by the customer (“breakage”). Currently the Company recognizes breakage when redemption is considered remote. Upon adoption of the new standard, expected breakage is anticipated to be recognized as customers redeem the gift cards rather than only when redemption is considered remote. The Company is continuing its assessment, including the impact on internal controls, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures. The new standard is not expected to have any impact on the timing or classification of the Company’s cash flows as reported in the Consolidated Statement of Cash Flows. Intra-Entity Transfers Other Than Inventory In October 2016, the FASB issued guidance on the accounting for income tax effects of intercompany transfers of assets other than inventory. The guidance requires entities to recognize the income tax impact of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the assets have been sold to an outside party. The guidance is effective for the Company in the first quarter of fiscal year 2019, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. Restricted Cash In November 2016, the FASB issued updated cash flow guidance requiring restricted cash and restricted cash equivalents to be included in the cash and cash equivalent balances in the statement of cash flows. Transfers between cash and cash equivalents and restricted cash will no longer be presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the Company's consolidated statement of cash flows. Statement of Cash Flows In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on the Company's consolidated statement of cash flows. |
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis | We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. |
BASIS OF PRESENTATION OF UNAU18
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedules of discontinued operations | The following summarizes the results of our discontinued operations for the periods presented: For the Three Months Ended December 31, For the Six Months Ended December 31, 2017 2016 2017 2016 (Dollars in thousands) Revenues $ 7,773 $ 108,793 $ 101,140 $ 221,005 Loss from discontinued operations, before income taxes (10,073 ) (3,201 ) (43,840 ) (5,660 ) Income tax benefit on discontinued operations 3,472 — 3,472 — Loss from discontinued operations, net of income taxes (6,601 ) (3,201 ) (40,368 ) (5,660 ) |
Summary of costs associated with the SmartStyle salon restructuring | A summary of costs associated with the SmartStyle salon restructuring for the three and six months ended December 31, 2017 is as follows: Dollars in thousands Inventory reserves $ 585 Long-lived fixed asset impairment 5,418 Asset retirement obligation 7,462 Lease termination and other related closure costs 27,290 Deferred rent (3,291 ) Total $ 37,464 |
Summary of equity awards | A summary of equity awards granted is as follows: For the Periods Ended December 31, 2017 Three Months Six Months Restricted stock units 38,811 297,969 Performance-based restricted stock units 153,612 153,612 |
INVESTMENT IN AFFILIATES_ (Tabl
INVESTMENT IN AFFILIATES: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Summary of equity method investments | The table below presents the summarized Statement of Operations information for EEG: For the Three Months Ended December 31, For the Six Months Ended December 31, 2017 2016 2017 2016 (Unaudited) (Dollars in thousands) Gross revenues $ 32,962 $ 31,019 $ 65,599 $ 61,055 Gross profit 9,720 9,168 19,398 17,278 Operating income (loss) 1,053 488 861 (219 ) Net income (loss) 1,034 357 690 (472 ) |
INCOME TAXES_ (Tables)
INCOME TAXES: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Summary of income tax benefit (expense) and corresponding effective tax rates | A summary of income tax benefit (expense) and corresponding effective tax rates is as follows: For the Three Months For the Six Months Ended December 31, 2017 2016 2017 2016 (Dollars in thousands) Income tax benefit (expense) $ 76,462 $ (719 ) $ 71,630 $ (3,459 ) Effective tax rate 205.9 % 42.3 % 332.9 % 34.0 % |
GOODWILL AND OTHER INTANGIBLE21
GOODWILL AND OTHER INTANGIBLES: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of recorded goodwill | The table below contains details related to the Company's goodwill: Company-owned Franchise Consolidated (Dollars in thousands) Goodwill, net at June 30, 2017 $ 188,888 $ 228,099 $ 416,987 Translation rate adjustments 573 690 1,263 Derecognition related to sale of salon assets to franchisees (1) (541 ) — (541 ) Goodwill, net at December 31, 2017 $ 188,920 $ 228,789 $ 417,709 _______________________________________________________________________________ (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 EBITDA of the salon being sold and the denominator of which is the EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit. |
Schedule of other intangible assets | The table below presents other intangible assets: December 31, 2017 June 30, 2017 Cost (1) Accumulated Amortization (1) Net Cost (1) Accumulated Amortization (1) Net (Dollars in thousands) Amortized intangible assets: Brand assets and trade names $ 8,356 $ (4,229 ) $ 4,127 $ 8,187 $ (4,013 ) $ 4,174 Franchise agreements 10,026 (7,744 ) 2,282 9,832 (7,433 ) 2,399 Lease intangibles 14,036 (9,449 ) 4,587 14,007 (9,077 ) 4,930 Other 2,030 (1,610 ) 420 1,994 (1,532 ) 462 $ 34,448 $ (23,032 ) $ 11,416 $ 34,020 $ (22,055 ) $ 11,965 _____________________________ (1) The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency. |
FINANCING ARRANGEMENTS_ (Tables
FINANCING ARRANGEMENTS: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company’s long-term debt consists of the following: Maturity Dates Interest Rate December 31, June 30, (fiscal year) (Dollars in thousands) Senior Term Notes, net 2020 5.50% $ 121,096 $ 120,599 Revolving credit facility 2018 — — — $ 121,096 $ 120,599 The following table contains details related to the Company's Senior Term Notes: December 31, 2017 June 30, 2017 (Dollars in thousands) Principal amount on the Senior Term Notes $ 123,000 $ 123,000 Unamortized debt discount (1,439 ) (1,815 ) Unamortized debt issuance costs (465 ) (586 ) Senior Term Notes, net $ 121,096 $ 120,599 |
FAIR VALUE MEASUREMENTS_ (Table
FAIR VALUE MEASUREMENTS: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value impairments | The following impairments were based on fair values using Level 3 inputs: For the Three Months Ended December 31, For the Six Months Ended December 31, 2017 2016 2017 2016 (Dollars in thousands) Long-lived assets (1) $ (14,434 ) $ (2,477 ) $ (16,714 ) $ (4,386 ) _____________________________ (1) See Note 1 to the unaudited Condensed Consolidated Financial Statements. |
SEGMENT INFORMATION_ (Tables)
SEGMENT INFORMATION: (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of reportable operating segment salons | The Company’s reportable operating segments consisted of the following salons: December 31, 2017 June 30, 2017 COMPANY-OWNED SALONS: SmartStyle/Cost Cutters in Walmart Stores (1) 2,497 2,652 Supercuts 954 980 Signature Style 1,414 1,468 Mall locations (Regis and MasterCuts) — 898 Total North American Salons 4,865 5,998 Total International Salons (2) — 275 Total Company-owned Salons 4,865 6,273 as a percent of total Company-owned and Franchise salons 55.3 % 70.3 % FRANCHISE SALONS: SmartStyle in Walmart Stores 210 62 Cost Cutters in Walmart Stores 116 114 Supercuts 1,730 1,687 Signature Style 754 770 Total non-mall franchise locations 2,810 2,633 Mall franchise locations (Regis and MasterCuts) 849 — Total North American Salons 3,659 2,633 Total International Salons (2) 270 13 Total Franchise Salons 3,929 2,646 as a percent of total Company-owned and Franchise salons 44.7 % 29.7 % OWNERSHIP INTEREST LOCATIONS: Equity ownership interest locations 89 89 Grand Total, System-wide 8,883 9,008 ____________________________________ (1) In January 2018, the Company closed 597 non-performing Company owned SmartStyle salons. (2) Canadian and Puerto Rican salons are included in the North American salon totals. |
Schedule of summarized financial information of reportable operating segments | Concurrent with the change in reportable segments, the Company recast its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. Financial information concerning the Company's reportable operating segments is shown in the following table: For the Three Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 223,214 $ — $ — $ 223,214 Product 56,748 15,068 — 71,816 Royalties and fees — 13,485 — 13,485 279,962 28,553 — 308,515 Operating expenses: Cost of service 134,850 — — 134,850 Cost of product 28,044 11,820 — 39,864 Site operating expenses 32,119 — — 32,119 General and administrative 17,947 6,869 23,776 48,592 Rent 65,159 70 244 65,473 Depreciation and amortization 22,054 91 2,806 24,951 Total operating expenses 300,173 18,850 26,826 345,849 Operating (loss) income (20,211 ) 9,703 (26,826 ) (37,334 ) Other (expense) income: Interest expense — — (2,169 ) (2,169 ) Interest income and other, net — — 2,362 2,362 (Loss) income from continuing operations before income taxes $ (20,211 ) $ 9,703 $ (26,633 ) $ (37,141 ) For the Three Months Ended December 31, 2016 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 235,609 $ — $ — $ 235,609 Product 60,636 7,593 — 68,229 Royalties and fees — 11,411 — 11,411 296,245 19,004 — 315,249 Operating expenses: Cost of service 151,193 — — 151,193 Cost of product 28,783 5,801 — 34,584 Site operating expenses 32,638 — — 32,638 General and administrative 11,889 4,968 19,838 36,695 Rent 44,881 41 169 45,091 Depreciation and amortization 10,203 89 2,354 12,646 Total operating expenses 279,587 10,899 22,361 312,847 Operating income (loss) 16,658 8,105 (22,361 ) 2,402 Other (expense) income: Interest expense — — (2,153 ) (2,153 ) Interest income and other, net — — 1,452 1,452 Income (loss) from continuing operations before income taxes $ 16,658 $ 8,105 $ (23,062 ) $ 1,701 For the Six Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 458,773 $ — $ — $ 458,773 Product 109,966 22,790 — 132,756 Royalties and fees — 26,859 — 26,859 568,739 49,649 — 618,388 Operating expenses: Cost of service 274,686 — — 274,686 Cost of product 52,491 17,535 — 70,026 Site operating expenses 65,422 — — 65,422 General and administrative 33,771 12,415 37,572 83,758 Rent 107,282 117 490 107,889 Depreciation and amortization 31,948 183 5,075 37,206 Total operating expenses 565,600 30,250 43,137 638,987 Operating income (loss) 3,139 19,399 (43,137 ) (20,599 ) Other (expense) income: Interest expense — — (4,307 ) (4,307 ) Interest income and other, net — — 3,389 3,389 Income (loss) from continuing operations before income taxes $ 3,139 $ 19,399 $ (44,055 ) $ (21,517 ) For the Six Months Ended December 31, 2016 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 478,700 $ — $ — $ 478,700 Product 116,949 14,996 — 131,945 Royalties and fees — 23,435 — 23,435 595,649 38,431 — 634,080 Operating expenses: Cost of service 301,990 — — 301,990 Cost of product 54,130 11,269 — 65,399 Site operating expenses 65,283 — — 65,283 General and administrative 23,431 10,365 38,815 72,611 Rent 90,893 83 348 91,324 Depreciation and amortization 19,798 179 4,778 24,755 Total operating expenses 555,525 21,896 43,941 621,362 Operating income (loss) 40,124 16,535 (43,941 ) 12,718 Other (expense) income: Interest expense — — (4,316 ) (4,316 ) Interest income and other, net — — 1,779 1,779 Income (loss) from continuing operations before income taxes $ 40,124 $ 16,535 $ (46,478 ) $ 10,181 |
BASIS OF PRESENTATION OF UNAU25
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Discontinued Operations, Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2017USD ($)salon | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)salon | Dec. 31, 2016USD ($) | Oct. 31, 2017salon | Jun. 30, 2017salon | |
Discontinued Operations | ||||||
Number of salons | salon | 8,883 | 8,883 | 9,008 | |||
Loss from discontinued operations, net of income taxes | $ (6,601) | $ (3,201) | $ (40,368) | $ (5,660) | ||
Non-cash impairment related to discontinued operations | 25,095 | 0 | ||||
Reclassification adjustments for losses included in net income (loss) (Note 1) | 6,152 | 0 | 6,152 | 0 | ||
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale | ||||||
Discontinued Operations | ||||||
Loss from discontinued operations, net of income taxes | (6,601) | (3,201) | (40,368) | (5,660) | ||
Non-cash impairment related to discontinued operations | 4,800 | |||||
Loss from operations | 1,100 | 2,800 | ||||
Professional fees | 4,200 | 5,800 | ||||
Income taxes allocated to discontinued operations | $ 3,472 | $ 0 | 3,472 | 0 | ||
Impairment of assets, disposal group | $ 29,100 | $ 1,700 | ||||
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale | North American Value and North American Premium Segments | ||||||
Discontinued Operations | ||||||
Number of salons | salon | 858 | |||||
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale | International | ||||||
Discontinued Operations | ||||||
Number of salons | salon | 250 |
BASIS OF PRESENTATION OF UNAU26
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Discontinued Operations Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Discontinued Operations | ||||
Loss from discontinued operations, net of income taxes | $ (6,601) | $ (3,201) | $ (40,368) | $ (5,660) |
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale | ||||
Discontinued Operations | ||||
Revenues | 7,773 | 108,793 | 101,140 | 221,005 |
Loss from discontinued operations, before income taxes | (10,073) | (3,201) | (43,840) | (5,660) |
Income tax benefit on discontinued operations | 3,472 | 0 | 3,472 | 0 |
Loss from discontinued operations, net of income taxes | $ (6,601) | $ (3,201) | $ (40,368) | $ (5,660) |
BASIS OF PRESENTATION OF UNAU27
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Summary of SmartStyle Restructuring (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2017USD ($)salon | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)salon | Dec. 31, 2016USD ($) | Jun. 30, 2017salon | |
Restructuring Cost and Reserve [Line Items] | |||||
Number of salons | salon | 8,883 | 8,883 | 9,008 | ||
Restructuring Charges [Abstract] | |||||
Long-lived fixed asset impairment | $ 14,434 | $ 2,477 | $ 16,714 | $ 4,386 | |
Company-owned | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Number of salons | salon | 4,865 | 4,865 | 6,273 | ||
Facilities Closing | |||||
Restructuring Charges [Abstract] | |||||
Inventory reserves | $ 585 | $ 585 | |||
Long-lived fixed asset impairment | 5,418 | 5,418 | |||
Asset retirement obligation | 7,462 | 7,462 | |||
Lease termination and other related closure costs | 27,290 | 27,290 | |||
Deferred rent | (3,291) | (3,291) | |||
Total | $ 37,464 | $ 37,464 | |||
Facilities Closing | Company-owned | SmartStyle | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Number of salons | salon | 597 | 597 | |||
Employee Severance | |||||
Restructuring Charges [Abstract] | |||||
Expected costs remaining | $ 1,000 | $ 1,000 |
BASIS OF PRESENTATION OF UNAU28
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Stock-Based Employee Compensation (Details) - shares | 3 Months Ended | 6 Months Ended |
Dec. 31, 2017 | Dec. 31, 2017 | |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock granted (in shares) | 38,811 | 297,969 |
Performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock granted (in shares) | 153,612 | 153,612 |
BASIS OF PRESENTATION OF UNAU29
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Stock-Based Employee Compensation, Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation | $ 2,600 | $ 2,500 | $ 4,618 | $ 4,400 |
Former Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation | 1,000 | 1,200 | ||
Awards settled for cash | $ 400 | $ 400 |
BASIS OF PRESENTATION OF UNAU30
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Long-Lived Asset Impairment Assessments, Excluding Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Long-Lived Asset Impairment Assessments, Excluding Goodwill: | ||||
Long-lived fixed asset impairment | $ 14,434 | $ 2,477 | $ 16,714 | $ 4,386 |
INVESTMENT IN AFFILIATES_ (Deta
INVESTMENT IN AFFILIATES: (Details) - Empire Education Group Inc - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investment in affiliates | ||||
Ownership percentage | 54.60% | 54.60% | ||
Investment value | $ 0 | $ 0 | ||
(Unaudited) | ||||
Gross revenues | 32,962,000 | $ 31,019,000 | 65,599,000 | $ 61,055,000 |
Gross profit | 9,720,000 | 9,168,000 | 19,398,000 | 17,278,000 |
Operating income (loss) | 1,053,000 | 488,000 | 861,000 | (219,000) |
Net income (loss) | $ 1,034,000 | $ 357,000 | $ 690,000 | $ (472,000) |
EARNINGS PER SHARE_ (Details)
EARNINGS PER SHARE: (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||||
Common stock equivalents included in the diluted earnings per share calculation (in shares) | 492,889 | 446,877 | 334,062 | 474,616 |
Equity Based Compensation Awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Awards excluded from diluted earnings per share computation (in shares) | 2,373,110 | 2,361,971 | 1,199,042 | 2,411,047 |
SHAREHOLDERS' EQUITY_ (Details)
SHAREHOLDERS' EQUITY: (Details) $ in Millions | 6 Months Ended |
Dec. 31, 2017USD ($) | |
Stockholders' Equity [Line Items] | |
Stock-based compensation | $ 4.6 |
Adjustments to APIC offset by other stock-based compensation activity | 2.4 |
Additional Paid-in Capital | |
Stockholders' Equity [Line Items] | |
Increase (decrease) in additional paid-in capital | $ 2.2 |
INCOME TAXES_ Summary of Income
INCOME TAXES: Summary of Income Tax Benefit (expense) and corresponding effective tax rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit (expense) | $ 76,462 | $ (719) | $ 71,630 | $ (3,459) |
Effective tax rate | 205.90% | 42.30% | 332.90% | 34.00% |
INCOME TAXES_ Additional Inform
INCOME TAXES: Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Dec. 31, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Provisional estimated net tax benefit | $ 68.9 | $ 68.9 |
Income tax benefit (expense), due to Tax Cuts and Jobs Act of 2017 | $ 7.6 |
GOODWILL AND OTHER INTANGIBLE36
GOODWILL AND OTHER INTANGIBLES: Additional Information (Details) | 3 Months Ended | 6 Months Ended |
Dec. 31, 2017USD ($)reporting_unit | Dec. 31, 2017USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of reporting units | reporting_unit | 2 | |
Company-owned | ||
Goodwill, Impaired [Abstract] | ||
Goodwill impairment loss | $ 0 | |
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Goodwill allocated to discontinued operations | $ 0 | $ 0 |
GOODWILL AND OTHER INTANGIBLE37
GOODWILL AND OTHER INTANGIBLES: Changes in Goodwill (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2017 | $ 416,987 |
Translation rate adjustments | 1,263 |
Derecognition related to sale of salon assets to franchisees | (541) |
Goodwill, net at December 31, 2017 | 417,709 |
Company-owned | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2017 | 188,888 |
Translation rate adjustments | 573 |
Derecognition related to sale of salon assets to franchisees | (541) |
Goodwill, net at December 31, 2017 | 188,920 |
Franchise | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2017 | 228,099 |
Translation rate adjustments | 690 |
Derecognition related to sale of salon assets to franchisees | 0 |
Goodwill, net at December 31, 2017 | $ 228,789 |
GOODWILL AND OTHER INTANGIBLE38
GOODWILL AND OTHER INTANGIBLES: Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
Amortized intangible assets: | ||
Cost | $ 34,448 | $ 34,020 |
Accumulated Amortization | (23,032) | (22,055) |
Net | 11,416 | 11,965 |
Brand assets and trade names | ||
Amortized intangible assets: | ||
Cost | 8,356 | 8,187 |
Accumulated Amortization | (4,229) | (4,013) |
Net | 4,127 | 4,174 |
Franchise agreements | ||
Amortized intangible assets: | ||
Cost | 10,026 | 9,832 |
Accumulated Amortization | (7,744) | (7,433) |
Net | 2,282 | 2,399 |
Lease intangibles | ||
Amortized intangible assets: | ||
Cost | 14,036 | 14,007 |
Accumulated Amortization | (9,449) | (9,077) |
Net | 4,587 | 4,930 |
Other | ||
Amortized intangible assets: | ||
Cost | 2,030 | 1,994 |
Accumulated Amortization | (1,610) | (1,532) |
Net | $ 420 | $ 462 |
FINANCING ARRANGEMENTS_ Schedul
FINANCING ARRANGEMENTS: Schedule of Long-term Debt (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 121,096,000 | $ 120,599,000 | |
Senior Notes | Senior Term Notes, net | |||
Debt Instrument [Line Items] | |||
Interest rate percentage | 5.50% | 5.50% | |
Long-term debt | $ 121,096,000 | 120,599,000 | |
Line of Credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 0 |
FINANCING ARRANGEMENTS_ Additio
FINANCING ARRANGEMENTS: Additional Information (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 121,096,000 | $ 120,599,000 | |
Senior Notes | Senior Term Notes 5.75% | |||
Debt Instrument [Line Items] | |||
Debt face amount | $ 120,000,000 | ||
Interest rate percentage | 5.75% | ||
Senior Notes | Senior Term Notes | |||
Debt Instrument [Line Items] | |||
Debt face amount | $ 123,000,000 | ||
Interest rate percentage | 5.50% | 5.50% | |
Unamortized discount | $ 1,439,000 | 1,815,000 | $ 3,000,000 |
Long-term debt | 121,096,000 | 120,599,000 | |
Line of Credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 200,000,000 | ||
Debt term | 5 years | ||
Long-term debt | $ 0 | 0 | |
Outstanding standby letters of credit | 1,500,000 | 1,500,000 | |
Revolving credit facility remaining borrowing capacity | $ 198,500,000 | $ 198,500,000 |
FINANCING ARRANGEMENTS_ Sched41
FINANCING ARRANGEMENTS: Schedule of Senior Term Notes (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Senior Term Notes, net | $ 121,096 | $ 120,599 | |
Senior Notes | Senior Term Notes, net | |||
Debt Instrument [Line Items] | |||
Principal amount on the Senior Term Notes | 123,000 | 123,000 | |
Unamortized debt discount | (1,439) | (1,815) | $ (3,000) |
Unamortized debt issuance costs | (465) | (586) | |
Senior Term Notes, net | $ 121,096 | $ 120,599 |
FAIR VALUE MEASUREMENTS_ (Detai
FAIR VALUE MEASUREMENTS: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Dec. 31, 2015 | |
Assets and liabilities measured at fair value on a nonrecurring basis | ||||||
Long-lived assets | $ (14,434) | $ (2,477) | $ (16,714) | $ (4,386) | ||
Senior Notes | Senior Term Notes, net | ||||||
Assets and liabilities measured at fair value on a nonrecurring basis | ||||||
Debt fair value | 125,400 | 125,400 | $ 125,900 | |||
Debt, gross | 123,000 | 123,000 | 123,000 | |||
Unamortized discount | 1,439 | 1,439 | 1,815 | $ 3,000 | ||
Unamortized debt issuance costs | $ 465 | $ 465 | $ 586 |
SEGMENT INFORMATION_ Additional
SEGMENT INFORMATION: Additional Information (Details) - segment | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 2 | 4 |
SEGMENT INFORMATION_ Reportable
SEGMENT INFORMATION: Reportable Operating Segment Salons (Details) - salon | Dec. 31, 2017 | Jun. 30, 2017 |
Franchisor Disclosure [Line Items] | ||
Number of salons | 8,883 | 9,008 |
Equity ownership interest locations | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 89 | 89 |
Company-owned | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 4,865 | 6,273 |
as a percent of total Company-owned and Franchise salons | 55.30% | 70.30% |
Company-owned | North American | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 4,865 | 5,998 |
Company-owned | International | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 0 | 275 |
Company-owned | SmartStyle/Cost Cutters in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 2,497 | 2,652 |
Company-owned | Supercuts | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 954 | 980 |
Company-owned | Signature Style | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,414 | 1,468 |
Company-owned | Mall locations (Regis and MasterCuts) | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 0 | 898 |
Company-owned | SmartStyle | Facilities Closing | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 597 | |
Franchise | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 3,929 | 2,646 |
as a percent of total Company-owned and Franchise salons | 44.70% | 29.70% |
Franchise | North American | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 3,659 | 2,633 |
Franchise | International | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 270 | 13 |
Franchise | Total non-mall franchise locations | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 2,810 | 2,633 |
Franchise | SmartStyle in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 210 | 62 |
Franchise | Cost Cutters in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 116 | 114 |
Franchise | Supercuts | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,730 | 1,687 |
Franchise | Signature Style | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 754 | 770 |
Franchise | Mall locations (Regis and MasterCuts) | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 849 | 0 |
SEGMENT INFORMATION_ Operating
SEGMENT INFORMATION: Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | ||||
Service | $ 223,214 | $ 235,609 | $ 458,773 | $ 478,700 |
Product | 71,816 | 68,229 | 132,756 | 131,945 |
Royalties and fees | 13,485 | 11,411 | 26,859 | 23,435 |
Total revenues | 308,515 | 315,249 | 618,388 | 634,080 |
Operating expenses: | ||||
Cost of service | 134,850 | 151,193 | 274,686 | 301,990 |
Cost of product | 39,864 | 34,584 | 70,026 | 65,399 |
Site operating expenses | 32,119 | 32,638 | 65,422 | 65,283 |
General and administrative | 48,592 | 36,695 | 83,758 | 72,611 |
Rent | 65,473 | 45,091 | 107,889 | 91,324 |
Depreciation and amortization | 24,951 | 12,646 | 37,206 | 24,755 |
Total operating expenses | 345,849 | 312,847 | 638,987 | 621,362 |
Operating (loss) income | (37,334) | 2,402 | (20,599) | 12,718 |
Other (expense) income: | ||||
Interest expense | (2,169) | (2,153) | (4,307) | (4,316) |
Interest income and other, net | 2,362 | 1,452 | 3,389 | 1,779 |
(Loss) income from continuing operations before income taxes | (37,141) | 1,701 | (21,517) | 10,181 |
Company-owned | ||||
Revenues: | ||||
Service | 223,214 | 235,609 | 458,773 | 478,700 |
Product | 56,748 | 60,636 | 109,966 | 116,949 |
Royalties and fees | 0 | 0 | 0 | 0 |
Total revenues | 279,962 | 296,245 | 568,739 | 595,649 |
Operating expenses: | ||||
Cost of service | 134,850 | 151,193 | 274,686 | 301,990 |
Cost of product | 28,044 | 28,783 | 52,491 | 54,130 |
Site operating expenses | 32,119 | 32,638 | 65,422 | 65,283 |
Franchise | ||||
Revenues: | ||||
Service | 0 | 0 | 0 | 0 |
Product | 15,068 | 7,593 | 22,790 | 14,996 |
Royalties and fees | 13,485 | 11,411 | 26,859 | 23,435 |
Total revenues | 28,553 | 19,004 | 49,649 | 38,431 |
Operating expenses: | ||||
Cost of service | 0 | 0 | 0 | 0 |
Cost of product | 11,820 | 5,801 | 17,535 | 11,269 |
Site operating expenses | 0 | 0 | 0 | 0 |
Operating Segments | Company-owned | ||||
Operating expenses: | ||||
General and administrative | 17,947 | 11,889 | 33,771 | 23,431 |
Rent | 65,159 | 44,881 | 107,282 | 90,893 |
Depreciation and amortization | 22,054 | 10,203 | 31,948 | 19,798 |
Total operating expenses | 300,173 | 279,587 | 565,600 | 555,525 |
Operating (loss) income | (20,211) | 16,658 | 3,139 | 40,124 |
Other (expense) income: | ||||
Interest expense | 0 | 0 | 0 | 0 |
Interest income and other, net | 0 | 0 | 0 | 0 |
(Loss) income from continuing operations before income taxes | (20,211) | 16,658 | 3,139 | 40,124 |
Operating Segments | Franchise | ||||
Operating expenses: | ||||
General and administrative | 6,869 | 4,968 | 12,415 | 10,365 |
Rent | 70 | 41 | 117 | 83 |
Depreciation and amortization | 91 | 89 | 183 | 179 |
Total operating expenses | 18,850 | 10,899 | 30,250 | 21,896 |
Operating (loss) income | 9,703 | 8,105 | 19,399 | 16,535 |
Other (expense) income: | ||||
Interest expense | 0 | 0 | 0 | 0 |
Interest income and other, net | 0 | 0 | 0 | 0 |
(Loss) income from continuing operations before income taxes | 9,703 | 8,105 | 19,399 | 16,535 |
Unallocated Corporate | ||||
Operating expenses: | ||||
General and administrative | 23,776 | 19,838 | 37,572 | 38,815 |
Rent | 244 | 169 | 490 | 348 |
Depreciation and amortization | 2,806 | 2,354 | 5,075 | 4,778 |
Total operating expenses | 26,826 | 22,361 | 43,137 | 43,941 |
Operating (loss) income | (26,826) | (22,361) | (43,137) | (43,941) |
Other (expense) income: | ||||
Interest expense | (2,169) | (2,153) | (4,307) | (4,316) |
Interest income and other, net | 2,362 | 1,452 | 3,389 | 1,779 |
(Loss) income from continuing operations before income taxes | $ (26,633) | $ (23,062) | $ (44,055) | $ (46,478) |
Uncategorized Items - rgs-20171
Label | Element | Value |
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents | us-gaap_DisposalGroupIncludingDiscontinuedOperationCashAndCashEquivalents | $ 0 |
Disposal Group, Including Discontinued Operation, Cash and Cash Equivalents | us-gaap_DisposalGroupIncludingDiscontinuedOperationCashAndCashEquivalents | $ 1,352,000 |