Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2018 | Jan. 24, 2019 | |
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, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 40,235,526 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 96,954 | $ 110,399 |
Receivables, net | 32,329 | 52,430 |
Inventories | 85,583 | 79,363 |
Other current assets | 34,267 | 47,867 |
Total current assets | 249,133 | 290,059 |
Property and equipment, net | 96,133 | 105,860 |
Goodwill | 393,774 | 412,643 |
Other intangibles, net | 9,736 | 10,557 |
Other assets | 40,379 | 37,616 |
Total assets | 789,155 | 856,735 |
Current liabilities: | ||
Accounts payable | 57,127 | 57,738 |
Accrued expenses | 86,634 | 100,716 |
Total current liabilities | 143,761 | 158,454 |
Long-term debt | 90,000 | 90,000 |
Long-term lease liability | 17,646 | 0 |
Other noncurrent liabilities | 112,738 | 121,843 |
Total liabilities | 364,145 | 370,297 |
Commitments and contingencies (Note 7) | ||
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 2,074 | 2,263 |
Additional paid-in capital | 128,964 | 194,436 |
Accumulated other comprehensive income | 8,145 | 9,656 |
Retained earnings | 285,827 | 280,083 |
Total shareholders’ equity | 425,010 | 486,438 |
Total liabilities and shareholders’ equity | $ 789,155 | $ 856,735 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2018 | Jun. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock issued (in shares) | 41,472,468 | 45,258,571 |
Common stock outstanding (in shares) | 41,472,468 | 45,258,571 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenues: | |||||
Total revenues | $ 274,671 | $ 313,849 | $ 562,506 | $ 629,313 | |
Operating expenses: | |||||
Cost of service | 114,931 | 134,850 | 236,428 | 274,686 | |
Cost of product | 36,350 | 39,864 | 68,531 | 70,026 | |
Site operating expenses | 35,563 | 38,598 | 72,384 | 78,627 | |
General and administrative | 45,836 | 48,592 | 93,563 | 83,758 | |
Rent | 34,642 | 65,473 | 70,620 | 107,889 | |
Depreciation and amortization | 8,900 | 24,951 | 19,102 | 37,206 | |
Total operating expenses | 276,222 | 352,328 | 560,628 | 652,192 | |
Operating (loss) income | (1,551) | (38,479) | 1,878 | (22,879) | |
Other (expense) income: | |||||
Interest expense | (1,072) | (2,169) | (2,078) | (4,307) | |
Gain (loss) from sale of salon assets to franchisees, net | 2,865 | (104) | (1,095) | 18 | |
Interest income and other, net | 629 | 2,019 | 989 | 2,439 | |
Income (loss) from continuing operations before income taxes | 871 | (38,733) | (306) | (24,729) | |
Income tax (expense) benefit | (454) | 80,825 | 260 | 75,266 | |
Income (loss) from continuing operations | 417 | 42,092 | (46) | 50,537 | |
Income (loss) from discontinued operations, net of taxes | 6,113 | (6,601) | 5,849 | (40,368) | |
Net income | $ 6,530 | $ 35,491 | $ 5,803 | $ 10,169 | |
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ 0.01 | $ 0.90 | $ 0 | $ 1.08 | |
Income (loss) discontinued operations (in dollars per share) | 0.14 | (0.14) | 0.13 | (0.86) | |
Net income per share, basic (in dollars per share) | [1] | 0.15 | 0.76 | 0.13 | 0.22 |
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | 0.01 | 0.89 | 0 | 1.07 | |
Income (loss) from discontinued operations (in dollars per share) | 0.14 | (0.14) | 0.13 | (0.86) | |
Net income per share, diluted (in dollars per share) | [1] | $ 0.15 | $ 0.75 | $ 0.13 | $ 0.22 |
Weighted average common and common equivalent shares outstanding: | |||||
Basic (in shares) | 43,619 | 46,821 | 44,175 | 46,719 | |
Diluted (in shares) | 44,479 | 47,314 | 44,175 | 47,053 | |
Service | |||||
Revenues: | |||||
Total revenues | $ 190,419 | $ 223,278 | $ 398,267 | $ 458,908 | |
Product | |||||
Revenues: | |||||
Total revenues | 61,649 | 71,832 | 119,240 | 132,790 | |
Royalties and fees | |||||
Revenues: | |||||
Total revenues | $ 22,603 | $ 18,739 | $ 44,999 | $ 37,615 | |
[1] | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 6,530 | $ 35,491 | $ 5,803 | $ 10,169 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments | (2,592) | (376) | (1,511) | 2,276 |
Reclassification adjustments for losses included in net income (Note 3) | 0 | 6,152 | 0 | 6,152 |
Net current period foreign currency translation adjustments | (2,592) | 5,776 | (1,511) | 8,428 |
Comprehensive income | $ 3,938 | $ 41,267 | $ 4,292 | $ 18,597 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Cash flows from operating activities: | ||
Net income | $ 5,803 | $ 10,169 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Non-cash impairment and other adjustments related to discontinued operations | 176 | 25,095 |
Depreciation and amortization | 16,799 | 20,491 |
Depreciation related to discontinued operations | 0 | 3,038 |
Deferred income taxes | (7,915) | (80,691) |
Gain on life insurance | 0 | (7,986) |
Loss (gain) from sale of salon assets to franchisees, net | 1,095 | (18) |
Salon asset impairments | 2,303 | 16,715 |
Accumulated other comprehensive income reclassification adjustment | 0 | 6,152 |
Stock-based compensation | 4,552 | 4,618 |
Amortization of debt discount and financing costs | 138 | 703 |
Other non-cash items affecting earnings | (681) | (105) |
Changes in operating assets and liabilities, excluding the effects of asset sales | (33,223) | (10,593) |
Net cash used in operating activities | (10,953) | (12,412) |
Cash flows from investing activities: | ||
Capital expenditures | (16,804) | (13,773) |
Capital expenditures related to discontinued operations | 0 | (1,171) |
Proceeds from sale of assets to franchisees | 24,050 | 2,696 |
Proceeds from company-owned life insurance policies | 24,616 | 18,108 |
Net cash provided by investing activities | 31,862 | 5,860 |
Cash flows from financing activities: | ||
Proceeds on issuance of common stock | 330 | 0 |
Repurchase of common stock | (65,136) | 0 |
Settlement of equity awards | 0 | (375) |
Taxes paid for shares withheld | (2,305) | (2,039) |
Net proceeds from sale and leaseback transaction | 18,068 | 0 |
Net cash used in financing activities | (49,043) | (2,414) |
Effect of exchange rate changes on cash and cash equivalents | (174) | 253 |
Decrease in cash, cash equivalents, and restricted cash | (28,308) | (8,713) |
Cash, cash equivalents and restricted cash: | ||
Beginning of period | 120,466 | |
Beginning of period, total cash, cash equivalents and restricted cash | 148,774 | 209,986 |
End of period | $ 120,466 | $ 201,273 |
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, 2018 | |
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, 2018 and for the three and six months ended December 31, 2018 and 2017 , reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of December 31, 2018 and its consolidated results of operations, comprehensive income 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 accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do 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, 2018 and other documents filed or furnished with the SEC during the current fiscal year. Goodwill: As of December 31, 2018 and June 30, 2018 , the Company-owned reporting unit had $166.9 million and $184.8 million of goodwill, respectively, and the Franchise salons reporting unit had $226.9 million and $227.9 million of goodwill, respectively. See Note 9 to the Consolidated Financial Statements. The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An interim impairment analysis was not required in the six months ended December 31, 2018. The Company performs its annual impairment assessment as of April 30. For the fiscal year 2018 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Company-owned and Franchise reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of our reporting units exceeded their carrying value. The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 24% . The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis and comparable market multiples. The assumptions used in determining fair value were the number and pace of salons sold to franchisees, proceeds for salon sales, weighted average cost of capital, general and administrative expenses and utilization of net operating loss benefits. We selected the assumptions by considering our historical financial performance and trends, historical salon sale proceeds and estimated salon sale activities. The preparation of our fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. A 100 basis point increase in our weighted average cost of capital within the Company-owned reporting unit would result in a reduction in headroom to approximately 17% . Other uncertain factors or events exist which may result in a future triggering event and require us to perform an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to our annual assessment. These internal and external factors include but are not limited to the following: • Changes in the company-owned salon strategy, • Franchise expansion and sales opportunities, • Future market earnings multiples deterioration, • Our financial performance falls short of our projections due to internal operating factors, • Economic recession, • Reduced salon traffic, as defined by total transactions, and/or revenue, • Deterioration of industry trends, • Increased competition, • Inability to reduce general and administrative expenses as company-owned salon count potentially decreases, • Other factors causing our cash flow to deteriorate. If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 24% headroom, we may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill. Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses of goodwill. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material. Accounting Standards Recently Adopted by the Company: Revenue from Contracts with Customers In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company retrospectively adopted these standards on July 1, 2018. The impact of these standards was applied to all periods presented and the cumulative effect of applying the standard was recognized at the beginning of the earliest period presented. See Note 2 to the unaudited Condensed Consolidated Financial Statements for additional information regarding the impact of the adoption of the revenue recognition guidance. Restricted Cash In November 2016, the FASB issued 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 are no longer presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The Company retrospectively adopted this guidance on July 1, 2018. The impact of this standard was applied to all periods presented. As a result of including restricted cash in the beginning and end of period balances, cash, cash equivalents and restricted cash presented in the statement of cash flows increased $38.4 million , $23.5 million and $37.6 million as of June 30, 2018, December 31, 2018 and June 30, 2017, respectively. Statement of Cash Flows In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The Company retrospectively adopted this guidance on July 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated statement of cash flows. 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. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company will elect this optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods. The Company is leveraging its lease management system to facilitate the adoption of this standard. The Company is continuing to evaluate 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, as substantially all of its operating lease commitments will be subject to the new guidance. |
REVENUE RECOGNITION_
REVENUE RECOGNITION: | 6 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION: | REVENUE RECOGNITION: In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted the amended revenue recognition guidance, ASC Topic 606, on July 1, 2018 using the full retrospective transition method which required the adjustment of each prior reporting period presented. The adjusted amounts include the application of a practical expedient that permitted the Company to reflect the aggregate effect of all modifications that occurred prior to fiscal year 2017 when identifying the satisfied and unsatisfied performance obligation, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. As a result of adopting this new standard the Company is providing its updated revenue recognition policies. Revenue Recognition and Deferred Revenue: Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided. Product revenues are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the customer. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales by the Company to its franchisees are included within product revenues in the Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 days of delivery. Revenue recognized over time Franchise revenues primarily include royalties, advertising fund fees, franchise fees and other fees. Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenue is billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreement, are recorded on a gross basis within the Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Upon adoption of the new revenue recognition guidance, recognition of these fees is deferred until the salon opening and is then recognized over the term of the franchise agreement, typically ten years . Under previous guidance the initial franchise fees were recognized in full upon salon opening. The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows: Three Months Ended December 31, 2018 Three Months Ended December 31, 2017 Company-owned Franchise Company-owned Franchise (in thousands) Revenue recognized at a point in time: Service $ 190,419 $ — $ 223,278 $ — Product 43,831 17,818 56,764 15,068 Total revenue recognized at a point in time $ 234,250 $ 17,818 $ 280,042 $ 15,068 Revenue recognized over time: Royalty and other franchise fees $ — $ 14,736 $ — $ 12,260 Advertising fund fees — 7,867 — 6,479 Total revenue recognized over time $ — $ 22,603 $ — $ 18,739 Total revenue $ 234,250 $ 40,421 $ 280,042 $ 33,807 Six Months Ended December 31, 2018 Six Months Ended December 31, 2017 Company-owned Franchise Company-owned Franchise (in thousands) Revenue recognized at a point in time: Service $ 398,267 $ — $ 458,908 $ — Product 85,793 33,447 110,000 22,790 Total revenue recognized at a point in time $ 484,060 $ 33,447 $ 568,908 $ 22,790 Revenue recognized over time: Royalty and other franchise fees $ — $ 29,156 $ — $ 24,410 Advertising fund fees — 15,843 — 13,205 Total revenue recognized over time $ — $ 44,999 $ — $ 37,615 Total revenue $ 484,060 $ 78,446 $ 568,908 $ 60,405 Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows: December 31, June 30, Balance Sheet Classification (in thousands) Receivables from contracts with customers, net $ 17,861 $ 21,504 Accounts receivable, net Broker fees $ 15,584 $ 14,002 Other assets Deferred revenue: Current Gift card liability $ 4,613 $ 3,320 Accrued expenses Deferred franchise fees unopened salons 172 2,306 Accrued expenses Deferred franchise fees open salons 3,428 3,030 Accrued expenses Total current deferred revenue $ 8,213 $ 8,656 Non-current Deferred franchise fees unopened salons $ 13,472 $ 11,161 Other non-current liabilities Deferred franchise fees open salons 20,112 18,346 Other non-current liabilities Total non-current deferred revenue $ 33,584 $ 29,507 Receivables relate primarily to payments due for royalties, franchise fees, advertising fees, and sales of salon services and product. The receivable balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from franchisees. As of December 31, 2018 and June 30, 2018 , the balance in the allowance for doubtful accounts was $2.0 million and $1.2 million , respectively. Activity in the period was not significant. Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as General and Administrative expense over the term of the agreement. The adoption of the amended revenue recognition guidance did not significantly change the Company's accounting for broker fees. The following table is a rollforward of the broker fee balance for the periods indicated (in thousands): Balance as of June 30, 2018 $ 14,002 Additions 2,752 Amortization (1,158 ) Write-offs (12 ) Balance as of December 31, 2018 $ 15,584 Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons. Gift card revenue for the three months ended December 31, 2018 and 2017 was $1.1 million and $1.3 million , respectively, and for the six months ended December 31, 2018 and 2017 was $2.2 million and $2.7 million , respectively. Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue for the three months ended December 31, 2018 and 2017 was $0.8 million and $0.7 million , respectively, and for the six months ended December 31, 2018 and 2017 was $1.7 million and $1.3 million . Estimated revenue expected to the recognized in the future related to deferred franchise fees for open salons as of December 31, 2018 is as follows (in thousands): Remainder of 2019 $ 1,643 2020 3,326 2021 3,238 2022 3,118 2023 2,941 Thereafter 9,274 Total $ 23,540 The amended revenue recognition guidance impacted the Company's previously reported financial statements as follows: CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) June 30, 2018 (Dollars in thousands) Adjustments for new revenue recognition guidance Previously Franchise Advertising Gift Card Reported Fees Funds Breakage Taxes Adjusted ASSETS Current assets: Cash and cash equivalents $ 110,399 $ — $ — $ — $ — $ 110,399 Receivables, net 52,430 — — — — 52,430 Inventories 79,363 — — — — 79,363 Other current assets 47,867 — — — — 47,867 Total current assets 290,059 — — — — 290,059 Property and equipment, net 105,860 — — — — 105,860 Goodwill 412,643 — — — — 412,643 Other intangibles, net 10,557 — — — — 10,557 Other assets 37,616 — — — — 37,616 Total assets $ 856,735 $ — $ — $ — $ — $ 856,735 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 57,738 $ — $ — $ — $ — $ 57,738 Accrued expenses 97,630 3,030 — 56 — 100,716 Total current liabilities 155,368 3,030 — 56 — 158,454 Long-term debt 90,000 — — — — 90,000 Other noncurrent liabilities 107,875 18,346 — — (4,378 ) 121,843 Total liabilities 353,243 21,376 — 56 (4,378 ) 370,297 Commitments and contingencies (Note 7) Shareholders’ equity: 0 Common stock 2,263 — — — — 2,263 Additional paid-in capital 194,436 — — — — 194,436 Accumulated other comprehensive income 9,568 88 — — — 9,656 Retained earnings 297,225 (21,464 ) — (56 ) 4,378 280,083 Total shareholders’ equity 503,492 (21,376 ) — (56 ) 4,378 486,438 Total liabilities and shareholders’ equity $ 856,735 $ — $ — $ — $ — $ 856,735 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) For The Three Months Ended December 31, 2017 (Dollars and shares in thousands, except per share data amounts) Adjustments for new revenue recognition guidance Previously Franchise Advertising Gift Card Reported Fees Funds Breakage Taxes Adjusted Revenues: Service $ 223,214 $ — $ — $ 64 $ — $ 223,278 Product 71,816 — — 16 — 71,832 Royalties and fees 13,485 (1,225 ) 6,479 — — 18,739 308,515 (1,225 ) 6,479 80 — 313,849 Operating expenses: Cost of service 134,850 — — — — 134,850 Cost of product 39,864 — — — — 39,864 Site operating expenses 32,119 — 6,479 — — 38,598 General and administrative 48,592 — — — — 48,592 Rent 65,473 — — — — 65,473 Depreciation and amortization 24,951 — — — — 24,951 Total operating expenses 345,849 — 6,479 — — 352,328 Operating income (37,334 ) (1,225 ) — 80 — (38,479 ) Other (expense) income: Interest expense (2,169 ) — — — — (2,169 ) Gain from sale of salon assets to franchisees, net (104 ) — — — — (104 ) Interest income and other, net 2,466 — — (447 ) — 2,019 Income from continuing operations before income taxes (37,141 ) (1,225 ) — (367 ) — (38,733 ) Income tax expense 76,462 — — — 4,363 80,825 Income from continuing operations 39,321 (1,225 ) — (367 ) 4,363 42,092 Loss from discontinued operations, net of taxes (6,601 ) — — — — (6,601 ) Net loss $ 32,720 $ (1,225 ) $ — $ (367 ) $ 4,363 $ 35,491 Net loss per share: Basic: Income from continuing operations $ 0.84 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.90 Loss from discontinued operations (0.14 ) 0.00 0.00 0.00 0.00 (0.14 ) Net loss per share, basic (1) $ 0.70 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.76 Diluted: Income from continuing operations $ 0.83 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.89 Loss from discontinued operations (0.14 ) 0.00 0.00 0.00 0.00 (0.14 ) Net loss per share, diluted (1) $ 0.69 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.75 Weighted average common and common equivalent shares outstanding: Basic 46,821 46,821 46,821 46,821 46,821 46,821 Diluted 47,314 47,314 47,314 47,314 47,314 47,314 _____________________________________________________________________________ (1) Total is a recalculation; line items calculated individually may not sum to total due to rounding. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) For The Six Months Ended December 31, 2017 (Dollars and shares in thousands, except per share data amounts) Adjustments for new revenue recognition guidance Previously Franchise Advertising Gift Card Reported Fees Funds Breakage Taxes Adjusted Revenues: Service $ 458,773 $ — $ — $ 135 $ — $ 458,908 Product 132,756 — — 34 — 132,790 Royalties and fees 26,859 (2,449 ) 13,205 — — 37,615 618,388 (2,449 ) 13,205 169 — 629,313 Operating expenses: Cost of service 274,686 — — — — 274,686 Cost of product 70,026 — — — — 70,026 Site operating expenses 65,422 — 13,205 — — 78,627 General and administrative 83,758 — — — — 83,758 Rent 107,889 — — — — 107,889 Depreciation and amortization 37,206 — — — — 37,206 Total operating expenses 638,987 — 13,205 — — 652,192 Operating income (20,599 ) (2,449 ) — 169 — (22,879 ) Other (expense) income: Interest expense (4,307 ) — — — — (4,307 ) Gain from sale of salon assets to franchisees, net 18 — — — — 18 Interest income and other, net 3,371 — — (932 ) — 2,439 Income from continuing operations before income taxes (21,517 ) (2,449 ) — (763 ) — (24,729 ) Income tax expense 71,630 — — — 3,636 75,266 Income from continuing operations 50,113 (2,449 ) — (763 ) 3,636 50,537 Loss from discontinued operations, net of taxes (40,368 ) — — — — (40,368 ) Net loss $ 9,745 $ (2,449 ) $ — $ (763 ) $ 3,636 $ 10,169 Net loss per share: Basic: Income from continuing operations $ 1.07 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 1.08 Loss from discontinued operations (0.86 ) 0.00 0.00 0.00 0.00 (0.86 ) Net loss per share, basic (1) $ 0.21 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 0.22 Diluted: Income from continuing operations $ 1.07 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 1.07 Loss from discontinued operations (0.86 ) 0.00 0.00 0.00 0.00 (0.86 ) Net loss per share, diluted (1) $ 0.21 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 0.22 Weighted average common and common equivalent shares outstanding: Basic 46,719 46,719 46,719 46,719 46,719 46,719 Diluted 47,053 47,053 47,053 47,053 47,053 47,053 _____________________________________________________________________________ (1) Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
DISCONTINUED OPERATIONS_
DISCONTINUED OPERATIONS: | 6 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | 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 ("TBG"), an affiliate of Regent, a private equity firm based in Los Angeles, California, who operates these locations as franchise locations. As part of the sale of the mall-based business, TBG agreed to pay for the value of certain inventory, prepaid rent and assumed specific liabilities, including lease liabilities. In March 2018, the Company entered into discussions with TBG regarding a waiver of working capital and prepaid rent payments associated with the original transaction and the financing of certain receivables to assist TBG with its cash flow and operational needs. Based on the status of these discussions as of March 31, 2018, the Company fully reserved for the working capital and prepaid rent amount of $11.7 million . In August 2018, the Company entered into promissory notes for approximately $11.7 million in working capital receivables and $8.0 million in accounts receivables, a majority of which was for inventory purchases. All notes have a maturity date of August 2, 2020. Under the working capital notes, if no default has occurred under such notes and certain other conditions are met, such notes will be forgiven as of the maturity date and will be exchanged for a three -year contingent payment right that is payable to us upon the occurrence of certain TBG monetization events. Should the Company need to record reserves against its current and future receivables from TBG these reserves would be recorded within general and administrative expenses. For the International segment, the Company entered into a share purchase agreement with TBG for minimal consideration. 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. In connection with the sale of the mall-based business and the International segment, the Company performed an impairment assessment of the asset groups. The Company recognized net impairment charges within discontinued operations 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, 2018 2017 2018 2017 (Dollars in thousands) (Dollars in thousands) Revenues $ — $ 7,773 $ — $ 101,140 Loss from discontinued operations, before income taxes (750 ) (10,073 ) (1,086 ) (43,840 ) Income tax benefit on discontinued operations 6,863 3,472 6,935 3,472 Income (loss) from discontinued operations, net of income taxes $ 6,113 $ (6,601 ) $ 5,849 $ (40,368 ) For the three months ended December 31, 2018 , the $6.1 million income from discontinued operations includes $6.9 million of income tax benefits recognized in the quarter with respect to the wind-down of the transaction, partly offset by $0.8 million of actuarial insurance accrual adjustments associated with the transaction. For the six months ended December 31, 2018 , the $5.8 million income from discontinued operations includes $6.9 million of income tax benefits associated with the wind-down and transfer of legal entities related to discontinued operations, partly offset by professional fees and actuarial insurance accrual adjustments associated with the transaction. For the three months ended December 31, 2017 , included within the $6.6 million loss from discontinued operations were $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 were $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 currencies, $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. Other than the 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 three and six months ended December 31, 2018 and 2017 . The Company utilized the consolidation of variable interest entities guidance to determine whether or not TBG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of TBG. As of December 31, 2018 , the Company concluded that TBG is a VIE, based on the fact that the equity investment at risk in TBG is not sufficient. The Company determined that it is not the primary beneficiary of TBG based on its exposure to the expected losses of TBG and as it is not the variable interest holder that is most closely associated within the relationship and the significance of the activities of TBG. The exposure to loss related to the Company's involvement with TBG is the carrying value of the amounts due from TBG of $8.4 million as of December 31, 2018 and the guarantee of the operating leases. |
EARNINGS PER SHARE_
EARNINGS PER SHARE: | 6 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE: The Company’s basic earnings per share is calculated as net income divided by weighted average common shares outstanding, excluding unvested outstanding RSAs, 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, 2018 , 859,598 common stock equivalents of dilutive common stock were included in the diluted earnings per share calculations due to the net income from continuing operations. For the six months ended December 31, 2018 , 903,107 common stock equivalents of dilutive common stock were excluded in the diluted earnings per share calculations due to the net loss from continuing operations. For the three and six months ended December 31, 2017 , 492,889 and 334,062 , 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 734,526 and 2,373,110 of stock-based awards during the three months ended December 31, 2018 and 2017 , respectively, and 520,348 and 1,199,042 of stock-based awards during the six months ended December 31, 2018 and 2017 , respectively, as they were not dilutive under the treasury stock method. |
SHAREHOLDERS' EQUITY_
SHAREHOLDERS' EQUITY: | 6 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY: Stock-Based Employee Compensation: During the three and six months ended December 31, 2018 , 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 Three Months Ended December 31, 2018 For the Six Months Ended December 31, 2018 Restricted stock units 1,437 338,859 Performance-based restricted stock units 3,506 733,688 The RSUs granted to employees vest in equal amounts over a three -year period subsequent to the grant date, cliff vest after a three -year period or cliff vest after a five -year period subsequent to the grant date. The PSUs granted to employees have a three year performance period ending June 30, 2021 linked to the Company's stock price reaching a specified volume weighted average closing price for a 50 day period that ends on June 30, 2021. The PSUs granted to certain executives include an additional two year service period after the performance period. Of the total PSUs granted, 52,590 PSUs have a maximum vesting percentage of 200% based on the level of performance achieved for the respective award, while the remaining PSUs have a maximum vesting percentage of 100% . Total compensation cost for stock-based payment arrangements totaling $2.2 and $2.6 million for the three months ended December 31, 2018 and 2017 , respectively, and $4.6 million for the six months ended December 31, 2018 and 2017 , respectively, was recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations. Additional Paid-In Capital: The $65.5 million decrease in additional paid-in capital during the six months ended December 31, 2018 was primarily due to $68.1 million of common stock repurchases and $2.0 million of other stock-based compensation activity, primarily shares forfeited for withholdings on vestings, partly offset by $4.6 million of stock-based compensation. During the three and six months ended December 31, 2018 , the Company repurchased 2.9 million and 4.0 million shares, respectively, for $48.9 million and $68.3 million , respectively, under a previously approved stock repurchase program. At December 31, 2018 , $167.0 million remains outstanding under the approved stock repurchase program. |
INCOME TAXES_
INCOME TAXES: | 6 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: A summary of income tax (expense) benefit and corresponding effective tax rates is as follows: For the Three Months Ended December 31, For the Six Months Ended December 31, 2018 2017 2018 2017 (Dollars in thousands) Income tax (expense) benefit $ (454 ) $ 80,825 $ 260 $ 75,266 Effective tax rate 52.1 % 208.7 % 85.0 % 304.4 % 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 Company applied the guidance under SEC Staff Accounting Bulletin No. 118 which allowed for a measurement period up to one year after the December 22, 2017 enactment date of the Tax Act to complete the accounting requirements. The Company recorded a provisional net tax benefit of $68.1 million in continuing operations through fiscal year 2018. During the three and six months ended December 31, 2018, the Company made no adjustments to previously recorded provisional amounts related to the Tax Act and is now complete with its accounting. The Company is no longer subject to IRS examinations for years before 2013. Furthermore, 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, 2018 | |
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. |
CASH, CASH EQUIVALETS AND RESTR
CASH, CASH EQUIVALETS AND RESTRICTED CASH: | 6 Months Ended |
Dec. 31, 2018 | |
Cash and Cash Equivalents [Abstract] | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | CASH, CASH EQUIVALENTS AND RESTRICTED CASH: The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows: December 31, June 30, (Dollars in thousands) Cash and cash equivalents $ 96,954 $ 110,399 Restricted cash, included in Other current assets (1) 23,512 38,375 Total cash, cash equivalents and restricted cash $ 120,466 $ 148,774 _______________________________________________________________________________ (1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs. |
GOODWILL AND OTHER INTANGIBLES_
GOODWILL AND OTHER INTANGIBLES: | 6 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES: The table below contains details related to the Company's goodwill: Company-owned Franchise Consolidated (Dollars in thousands) Goodwill, net at June 30, 2018 $ 184,788 $ 227,855 $ 412,643 Translation rate adjustments (337 ) (936 ) (1,273 ) Derecognition related to sale of salon assets to franchisees (1) (17,596 ) — (17,596 ) Goodwill, net at December 31, 2018 $ 166,855 $ 226,919 $ 393,774 _______________________________________________________________________________ (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. The table below presents other intangible assets: December 31, 2018 June 30, 2018 Cost (1) Accumulated Amortization (1) Net Cost (1) Accumulated Amortization (1) Net (Dollars in thousands) Amortized intangible assets: Brand assets and trade names $ 7,910 $ (4,274 ) $ 3,636 $ 8,128 $ (4,260 ) $ 3,868 Franchise agreements 9,562 (7,717 ) 1,845 9,763 (7,712 ) 2,051 Lease intangibles 13,967 (10,096 ) 3,871 13,997 (9,770 ) 4,227 Other 1,945 (1,561 ) 384 1,983 (1,572 ) 411 $ 33,384 $ (23,648 ) $ 9,736 $ 33,871 $ (23,314 ) $ 10,557 _______________________________________________________________________________ (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, 2018 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS: The Company’s long-term debt consists of the following: Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Revolving credit facility 2023 3.77% $ 90,000 $ 90,000 Revolving Credit Facility As of December 31, 2018 and June 30, 2018 , the Company has $90.0 million of outstanding borrowings under a $295.0 million revolving credit facility. At December 31, 2018 and June 30, 2018 , the Company has outstanding standby letters of credit under the revolving credit facility of $23.0 million and $1.5 million , respectively, primarily related to the Company's self-insurance program. The unused available credit under the facility was $182.0 million and $203.5 million , respectively. Amounts outstanding under the revolving credit facility are due at maturity in March 2023. The Company’s long-term financial liability consists of the following: Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Long-term lease liability 2033 3.50% $ 17,646 $ — Sale and Leaseback Transaction In November 2018, the Company sold its Salt Lake City Distribution Center to Nearon Enterprises, LLC (Nearon), an unrelated party. The Company is leasing the property back from Nearon for 15 years with the option to renew three times for five year periods. As the Company plans to lease the property for more than 75% of its economic life, the sales proceeds received from the buyer-lessor are recognized as a financial liability. This financial liability is reduced based on the rental payments made under the lease that are allocated between principal and interest. As of December 31, 2018 , the current portion of the Company’s financial liability was $0.6 million . As of December 31, 2018, future lease payments due are as follows: Remainder of 2019 $ 585 2020 1,111 2021 1,063 2022 1,042 2023 1,021 Thereafter 13,374 Total $ 18,196 The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three and six months ended December 31, 2018 . |
FAIR VALUE MEASUREMENTS_
FAIR VALUE MEASUREMENTS: | 6 Months Ended |
Dec. 31, 2018 | |
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, 2018 and June 30, 2018 , 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, 2018 and June 30, 2018 , the estimated fair value of the Company's debt was $90.0 million and the carrying value was $90.0 million . As of December 31, 2018 the estimated fair value of the Company’s long-term financial liability was $17.6 million . The estimated fair values of the Company's debt and long-term financial liability are 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, 2018 2017 2018 2017 (Dollars in thousands) Long-lived assets $ 472 $ 14,435 $ 2,303 $ 16,715 |
SEGMENT INFORMATION_
SEGMENT INFORMATION: | 6 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION: Segment information is prepared on the same basis that the chief operating decision maker reviews financial information for operational decision-making purposes. The Company’s reportable operating segments consisted of the following salons: December 31, 2018 June 30, 2018 COMPANY-OWNED SALONS: SmartStyle/Cost Cutters in Walmart Stores 1,615 1,660 Supercuts 760 928 Signature Style 1,293 1,378 Total Company-owned Salons 3,668 3,966 as a percent of total Company-owned and Franchise salons 46.2 % 49.1 % FRANCHISE SALONS: SmartStyle/Cost Cutters in Walmart Stores 594 561 Supercuts 1,930 1,739 Signature Style 747 745 Total franchise locations, excluding TBG 3,271 3,045 as a percent of total Company-owned and Franchise salons 41.2 % 37.7 % Total North America TBG Salons (1) 732 807 as a percent of total Company-owned and Franchise salons 9.2 % 10.0 % Total North American Salons 4,003 3,852 Total International TBG Salons (1) 263 262 as a percent of total Company-owned and Franchise salons 3.3 % 3.2 % Total Franchise Salons 4,266 4,114 as a percent of total Company-owned and Franchise salons 53.8 % 50.9 % OWNERSHIP INTEREST LOCATIONS: Equity ownership interest locations 87 88 Grand Total, System-wide 8,021 8,168 ____________________________________ (1) Canadian and Puerto Rican salons are included in the North American salon totals. As of December 31, 2018 , 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. Financial information concerning the Company's reportable operating segments is shown in the following table: For the Three Months Ended December 31, 2018 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 190,419 $ — $ — $ 190,419 Product 43,831 17,818 — 61,649 Royalties and fees — 22,603 — 22,603 234,250 40,421 — 274,671 Operating expenses: Cost of service 114,931 — — 114,931 Cost of product 21,901 14,449 — 36,350 Site operating expenses 27,696 7,867 — 35,563 General and administrative 14,198 9,466 22,172 45,836 Rent 34,258 184 200 34,642 Depreciation and amortization 6,728 215 1,957 8,900 Total operating expenses 219,712 32,181 24,329 276,222 Operating income (loss) 14,538 8,240 (24,329 ) (1,551 ) Other (expense) income: Interest expense — — (1,072 ) (1,072 ) Loss from sale of salon assets to franchisees, net — — 2,865 2,865 Interest income and other, net — — 629 629 Income (loss) from continuing operations before income taxes $ 14,538 $ 8,240 $ (21,907 ) $ 871 For the Three Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 223,278 $ — $ — $ 223,278 Product 56,764 15,068 — 71,832 Royalties and fees — 18,739 — 18,739 280,042 33,807 — 313,849 Operating expenses: Cost of service 134,850 — — 134,850 Cost of product 28,044 11,820 — 39,864 Site operating expenses 32,119 6,479 — 38,598 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 25,329 26,826 352,328 Operating income (loss) (20,131 ) 8,478 (26,826 ) (38,479 ) Other (expense) income: Interest expense — — (2,169 ) (2,169 ) Gain from sale of salon assets to franchisees, net — — (104 ) (104 ) Interest income and other, net — — 2,019 2,019 Income (loss) from continuing operations before income taxes $ (20,131 ) $ 8,478 $ (27,080 ) $ (38,733 ) For the Six Months Ended December 31, 2018 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 398,267 $ — $ — $ 398,267 Product 85,793 33,447 — 119,240 Royalties and fees — 44,999 — 44,999 484,060 78,446 — 562,506 Operating expenses: Cost of service 236,428 — — 236,428 Cost of product 41,669 26,862 — 68,531 Site operating expenses 56,541 15,843 — 72,384 General and administrative 30,579 17,130 45,854 93,563 Rent 69,944 278 398 70,620 Depreciation and amortization 14,785 373 3,944 19,102 Total operating expenses 449,946 60,486 50,196 560,628 Operating income (loss) 34,114 17,960 (50,196 ) 1,878 Other (expense) income: Interest expense — — (2,078 ) (2,078 ) Loss from sale of salon assets to franchisees, net — — (1,095 ) (1,095 ) Interest income and other, net — — 989 989 Income (loss) from continuing operations before income taxes $ 34,114 $ 17,960 $ (52,380 ) $ (306 ) For the Six Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 458,908 $ — $ — $ 458,908 Product 110,000 22,790 — 132,790 Royalties and fees — 37,615 — 37,615 568,908 60,405 — 629,313 Operating expenses: Cost of service 274,686 — — 274,686 Cost of product 52,491 17,535 — 70,026 Site operating expenses 65,422 13,205 — 78,627 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 43,455 43,137 652,192 Operating income (loss) 3,308 16,950 (43,137 ) (22,879 ) Other (expense) income: Interest expense — — (4,307 ) (4,307 ) Gain from sale of salon assets to franchisees, net — — 18 18 Interest income and other, net — — 2,439 2,439 Income (loss) from continuing operations before income taxes $ 3,308 $ 16,950 $ (44,987 ) $ (24,729 ) |
BASIS OF PRESENTATION OF UNAU_2
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 6 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Goodwill | The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An interim impairment analysis was not required in the six months ended December 31, 2018. The Company performs its annual impairment assessment as of April 30. For the fiscal year 2018 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Company-owned and Franchise reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of our reporting units exceeded their carrying value. The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 24% . The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis and comparable market multiples. The assumptions used in determining fair value were the number and pace of salons sold to franchisees, proceeds for salon sales, weighted average cost of capital, general and administrative expenses and utilization of net operating loss benefits. We selected the assumptions by considering our historical financial performance and trends, historical salon sale proceeds and estimated salon sale activities. The preparation of our fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. A 100 basis point increase in our weighted average cost of capital within the Company-owned reporting unit would result in a reduction in headroom to approximately 17% . Other uncertain factors or events exist which may result in a future triggering event and require us to perform an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to our annual assessment. These internal and external factors include but are not limited to the following: • Changes in the company-owned salon strategy, • Franchise expansion and sales opportunities, • Future market earnings multiples deterioration, • Our financial performance falls short of our projections due to internal operating factors, • Economic recession, • Reduced salon traffic, as defined by total transactions, and/or revenue, • Deterioration of industry trends, • Increased competition, • Inability to reduce general and administrative expenses as company-owned salon count potentially decreases, • Other factors causing our cash flow to deteriorate. If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 24% headroom, we may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill. Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses of goodwill. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material. |
Accounting Standards | Accounting Standards Recently Adopted by the Company: Revenue from Contracts with Customers In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company retrospectively adopted these standards on July 1, 2018. The impact of these standards was applied to all periods presented and the cumulative effect of applying the standard was recognized at the beginning of the earliest period presented. See Note 2 to the unaudited Condensed Consolidated Financial Statements for additional information regarding the impact of the adoption of the revenue recognition guidance. Restricted Cash In November 2016, the FASB issued 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 are no longer presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The Company retrospectively adopted this guidance on July 1, 2018. The impact of this standard was applied to all periods presented. As a result of including restricted cash in the beginning and end of period balances, cash, cash equivalents and restricted cash presented in the statement of cash flows increased $38.4 million , $23.5 million and $37.6 million as of June 30, 2018, December 31, 2018 and June 30, 2017, respectively. Statement of Cash Flows In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The Company retrospectively adopted this guidance on July 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated statement of cash flows. 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. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company will elect this optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods. The Company is leveraging its lease management system to facilitate the adoption of this standard. The Company is continuing to evaluate 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, as substantially all of its operating lease commitments will be subject to the new guidance. |
Revenue Recognition | In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted the amended revenue recognition guidance, ASC Topic 606, on July 1, 2018 using the full retrospective transition method which required the adjustment of each prior reporting period presented. The adjusted amounts include the application of a practical expedient that permitted the Company to reflect the aggregate effect of all modifications that occurred prior to fiscal year 2017 when identifying the satisfied and unsatisfied performance obligation, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. As a result of adopting this new standard the Company is providing its updated revenue recognition policies. Revenue Recognition and Deferred Revenue: Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided. Product revenues are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the customer. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales by the Company to its franchisees are included within product revenues in the Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 days of delivery. Revenue recognized over time Franchise revenues primarily include royalties, advertising fund fees, franchise fees and other fees. Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenue is billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreement, are recorded on a gross basis within the Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Upon adoption of the new revenue recognition guidance, recognition of these fees is deferred until the salon opening and is then recognized over the term of the franchise agreement, typically ten years . Under previous guidance the initial franchise fees were recognized in full upon salon opening. |
Fair Value Measurements | 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. |
REVENUE RECOGNITION_ (Tables)
REVENUE RECOGNITION: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows: Three Months Ended December 31, 2018 Three Months Ended December 31, 2017 Company-owned Franchise Company-owned Franchise (in thousands) Revenue recognized at a point in time: Service $ 190,419 $ — $ 223,278 $ — Product 43,831 17,818 56,764 15,068 Total revenue recognized at a point in time $ 234,250 $ 17,818 $ 280,042 $ 15,068 Revenue recognized over time: Royalty and other franchise fees $ — $ 14,736 $ — $ 12,260 Advertising fund fees — 7,867 — 6,479 Total revenue recognized over time $ — $ 22,603 $ — $ 18,739 Total revenue $ 234,250 $ 40,421 $ 280,042 $ 33,807 Six Months Ended December 31, 2018 Six Months Ended December 31, 2017 Company-owned Franchise Company-owned Franchise (in thousands) Revenue recognized at a point in time: Service $ 398,267 $ — $ 458,908 $ — Product 85,793 33,447 110,000 22,790 Total revenue recognized at a point in time $ 484,060 $ 33,447 $ 568,908 $ 22,790 Revenue recognized over time: Royalty and other franchise fees $ — $ 29,156 $ — $ 24,410 Advertising fund fees — 15,843 — 13,205 Total revenue recognized over time $ — $ 44,999 $ — $ 37,615 Total revenue $ 484,060 $ 78,446 $ 568,908 $ 60,405 |
Schedule of receivables, broker fees and deferred revenue | Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows: December 31, June 30, Balance Sheet Classification (in thousands) Receivables from contracts with customers, net $ 17,861 $ 21,504 Accounts receivable, net Broker fees $ 15,584 $ 14,002 Other assets Deferred revenue: Current Gift card liability $ 4,613 $ 3,320 Accrued expenses Deferred franchise fees unopened salons 172 2,306 Accrued expenses Deferred franchise fees open salons 3,428 3,030 Accrued expenses Total current deferred revenue $ 8,213 $ 8,656 Non-current Deferred franchise fees unopened salons $ 13,472 $ 11,161 Other non-current liabilities Deferred franchise fees open salons 20,112 18,346 Other non-current liabilities Total non-current deferred revenue $ 33,584 $ 29,507 |
Broker fees | The following table is a rollforward of the broker fee balance for the periods indicated (in thousands): Balance as of June 30, 2018 $ 14,002 Additions 2,752 Amortization (1,158 ) Write-offs (12 ) Balance as of December 31, 2018 $ 15,584 |
Estimated revenue expected to be recognized | Estimated revenue expected to the recognized in the future related to deferred franchise fees for open salons as of December 31, 2018 is as follows (in thousands): Remainder of 2019 $ 1,643 2020 3,326 2021 3,238 2022 3,118 2023 2,941 Thereafter 9,274 Total $ 23,540 |
Schedules of impact of revenue recognition policy | The amended revenue recognition guidance impacted the Company's previously reported financial statements as follows: CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) June 30, 2018 (Dollars in thousands) Adjustments for new revenue recognition guidance Previously Franchise Advertising Gift Card Reported Fees Funds Breakage Taxes Adjusted ASSETS Current assets: Cash and cash equivalents $ 110,399 $ — $ — $ — $ — $ 110,399 Receivables, net 52,430 — — — — 52,430 Inventories 79,363 — — — — 79,363 Other current assets 47,867 — — — — 47,867 Total current assets 290,059 — — — — 290,059 Property and equipment, net 105,860 — — — — 105,860 Goodwill 412,643 — — — — 412,643 Other intangibles, net 10,557 — — — — 10,557 Other assets 37,616 — — — — 37,616 Total assets $ 856,735 $ — $ — $ — $ — $ 856,735 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 57,738 $ — $ — $ — $ — $ 57,738 Accrued expenses 97,630 3,030 — 56 — 100,716 Total current liabilities 155,368 3,030 — 56 — 158,454 Long-term debt 90,000 — — — — 90,000 Other noncurrent liabilities 107,875 18,346 — — (4,378 ) 121,843 Total liabilities 353,243 21,376 — 56 (4,378 ) 370,297 Commitments and contingencies (Note 7) Shareholders’ equity: 0 Common stock 2,263 — — — — 2,263 Additional paid-in capital 194,436 — — — — 194,436 Accumulated other comprehensive income 9,568 88 — — — 9,656 Retained earnings 297,225 (21,464 ) — (56 ) 4,378 280,083 Total shareholders’ equity 503,492 (21,376 ) — (56 ) 4,378 486,438 Total liabilities and shareholders’ equity $ 856,735 $ — $ — $ — $ — $ 856,735 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) For The Three Months Ended December 31, 2017 (Dollars and shares in thousands, except per share data amounts) Adjustments for new revenue recognition guidance Previously Franchise Advertising Gift Card Reported Fees Funds Breakage Taxes Adjusted Revenues: Service $ 223,214 $ — $ — $ 64 $ — $ 223,278 Product 71,816 — — 16 — 71,832 Royalties and fees 13,485 (1,225 ) 6,479 — — 18,739 308,515 (1,225 ) 6,479 80 — 313,849 Operating expenses: Cost of service 134,850 — — — — 134,850 Cost of product 39,864 — — — — 39,864 Site operating expenses 32,119 — 6,479 — — 38,598 General and administrative 48,592 — — — — 48,592 Rent 65,473 — — — — 65,473 Depreciation and amortization 24,951 — — — — 24,951 Total operating expenses 345,849 — 6,479 — — 352,328 Operating income (37,334 ) (1,225 ) — 80 — (38,479 ) Other (expense) income: Interest expense (2,169 ) — — — — (2,169 ) Gain from sale of salon assets to franchisees, net (104 ) — — — — (104 ) Interest income and other, net 2,466 — — (447 ) — 2,019 Income from continuing operations before income taxes (37,141 ) (1,225 ) — (367 ) — (38,733 ) Income tax expense 76,462 — — — 4,363 80,825 Income from continuing operations 39,321 (1,225 ) — (367 ) 4,363 42,092 Loss from discontinued operations, net of taxes (6,601 ) — — — — (6,601 ) Net loss $ 32,720 $ (1,225 ) $ — $ (367 ) $ 4,363 $ 35,491 Net loss per share: Basic: Income from continuing operations $ 0.84 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.90 Loss from discontinued operations (0.14 ) 0.00 0.00 0.00 0.00 (0.14 ) Net loss per share, basic (1) $ 0.70 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.76 Diluted: Income from continuing operations $ 0.83 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.89 Loss from discontinued operations (0.14 ) 0.00 0.00 0.00 0.00 (0.14 ) Net loss per share, diluted (1) $ 0.69 $ (0.03 ) $ 0.00 $ (0.01 ) $ 0.09 $ 0.75 Weighted average common and common equivalent shares outstanding: Basic 46,821 46,821 46,821 46,821 46,821 46,821 Diluted 47,314 47,314 47,314 47,314 47,314 47,314 _____________________________________________________________________________ (1) Total is a recalculation; line items calculated individually may not sum to total due to rounding. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) For The Six Months Ended December 31, 2017 (Dollars and shares in thousands, except per share data amounts) Adjustments for new revenue recognition guidance Previously Franchise Advertising Gift Card Reported Fees Funds Breakage Taxes Adjusted Revenues: Service $ 458,773 $ — $ — $ 135 $ — $ 458,908 Product 132,756 — — 34 — 132,790 Royalties and fees 26,859 (2,449 ) 13,205 — — 37,615 618,388 (2,449 ) 13,205 169 — 629,313 Operating expenses: Cost of service 274,686 — — — — 274,686 Cost of product 70,026 — — — — 70,026 Site operating expenses 65,422 — 13,205 — — 78,627 General and administrative 83,758 — — — — 83,758 Rent 107,889 — — — — 107,889 Depreciation and amortization 37,206 — — — — 37,206 Total operating expenses 638,987 — 13,205 — — 652,192 Operating income (20,599 ) (2,449 ) — 169 — (22,879 ) Other (expense) income: Interest expense (4,307 ) — — — — (4,307 ) Gain from sale of salon assets to franchisees, net 18 — — — — 18 Interest income and other, net 3,371 — — (932 ) — 2,439 Income from continuing operations before income taxes (21,517 ) (2,449 ) — (763 ) — (24,729 ) Income tax expense 71,630 — — — 3,636 75,266 Income from continuing operations 50,113 (2,449 ) — (763 ) 3,636 50,537 Loss from discontinued operations, net of taxes (40,368 ) — — — — (40,368 ) Net loss $ 9,745 $ (2,449 ) $ — $ (763 ) $ 3,636 $ 10,169 Net loss per share: Basic: Income from continuing operations $ 1.07 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 1.08 Loss from discontinued operations (0.86 ) 0.00 0.00 0.00 0.00 (0.86 ) Net loss per share, basic (1) $ 0.21 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 0.22 Diluted: Income from continuing operations $ 1.07 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 1.07 Loss from discontinued operations (0.86 ) 0.00 0.00 0.00 0.00 (0.86 ) Net loss per share, diluted (1) $ 0.21 $ (0.05 ) $ 0.00 $ (0.02 ) $ 0.08 $ 0.22 Weighted average common and common equivalent shares outstanding: Basic 46,719 46,719 46,719 46,719 46,719 46,719 Diluted 47,053 47,053 47,053 47,053 47,053 47,053 _____________________________________________________________________________ (1) Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
DISCONTINUED OPERATIONS_ (Table
DISCONTINUED OPERATIONS: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule 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, 2018 2017 2018 2017 (Dollars in thousands) (Dollars in thousands) Revenues $ — $ 7,773 $ — $ 101,140 Loss from discontinued operations, before income taxes (750 ) (10,073 ) (1,086 ) (43,840 ) Income tax benefit on discontinued operations 6,863 3,472 6,935 3,472 Income (loss) from discontinued operations, net of income taxes $ 6,113 $ (6,601 ) $ 5,849 $ (40,368 ) |
SHAREHOLDERS' EQUITY_ (Tables)
SHAREHOLDERS' EQUITY: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of restricted stock awards activity | A summary of equity awards granted is as follows: For the Three Months Ended December 31, 2018 For the Six Months Ended December 31, 2018 Restricted stock units 1,437 338,859 Performance-based restricted stock units 3,506 733,688 |
INCOME TAXES_ (Tables)
INCOME TAXES: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Summary of income tax benefit (expense) and corresponding effective tax rates | A summary of income tax (expense) benefit and corresponding effective tax rates is as follows: For the Three Months Ended December 31, For the Six Months Ended December 31, 2018 2017 2018 2017 (Dollars in thousands) Income tax (expense) benefit $ (454 ) $ 80,825 $ 260 $ 75,266 Effective tax rate 52.1 % 208.7 % 85.0 % 304.4 % |
CASH, CASH EQUIVALETS AND RES_2
CASH, CASH EQUIVALETS AND RESTRICTED CASH: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash and cash equivalents | The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows: December 31, June 30, (Dollars in thousands) Cash and cash equivalents $ 96,954 $ 110,399 Restricted cash, included in Other current assets (1) 23,512 38,375 Total cash, cash equivalents and restricted cash $ 120,466 $ 148,774 _______________________________________________________________________________ (1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs. |
Schedule of restricted cash and cash equivalents | The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows: December 31, June 30, (Dollars in thousands) Cash and cash equivalents $ 96,954 $ 110,399 Restricted cash, included in Other current assets (1) 23,512 38,375 Total cash, cash equivalents and restricted cash $ 120,466 $ 148,774 _______________________________________________________________________________ (1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs. |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
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, 2018 $ 184,788 $ 227,855 $ 412,643 Translation rate adjustments (337 ) (936 ) (1,273 ) Derecognition related to sale of salon assets to franchisees (1) (17,596 ) — (17,596 ) Goodwill, net at December 31, 2018 $ 166,855 $ 226,919 $ 393,774 _______________________________________________________________________________ (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. |
Schedule of other intangible assets | The table below presents other intangible assets: December 31, 2018 June 30, 2018 Cost (1) Accumulated Amortization (1) Net Cost (1) Accumulated Amortization (1) Net (Dollars in thousands) Amortized intangible assets: Brand assets and trade names $ 7,910 $ (4,274 ) $ 3,636 $ 8,128 $ (4,260 ) $ 3,868 Franchise agreements 9,562 (7,717 ) 1,845 9,763 (7,712 ) 2,051 Lease intangibles 13,967 (10,096 ) 3,871 13,997 (9,770 ) 4,227 Other 1,945 (1,561 ) 384 1,983 (1,572 ) 411 $ 33,384 $ (23,648 ) $ 9,736 $ 33,871 $ (23,314 ) $ 10,557 _______________________________________________________________________________ (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, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company’s long-term debt consists of the following: Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Revolving credit facility 2023 3.77% $ 90,000 $ 90,000 |
Schedule of long-term financial liability | As of December 31, 2018, future lease payments due are as follows: Remainder of 2019 $ 585 2020 1,111 2021 1,063 2022 1,042 2023 1,021 Thereafter 13,374 Total $ 18,196 The Company’s long-term financial liability consists of the following: Maturity Date Interest Rate December 31, June 30, (Fiscal Year) (Dollars in thousands) Long-term lease liability 2033 3.50% $ 17,646 $ — |
FAIR VALUE MEASUREMENTS_ (Table
FAIR VALUE MEASUREMENTS: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2018 2017 (Dollars in thousands) Long-lived assets $ 472 $ 14,435 $ 2,303 $ 16,715 |
SEGMENT INFORMATION_ (Tables)
SEGMENT INFORMATION: (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of reportable operating segment salons | The Company’s reportable operating segments consisted of the following salons: December 31, 2018 June 30, 2018 COMPANY-OWNED SALONS: SmartStyle/Cost Cutters in Walmart Stores 1,615 1,660 Supercuts 760 928 Signature Style 1,293 1,378 Total Company-owned Salons 3,668 3,966 as a percent of total Company-owned and Franchise salons 46.2 % 49.1 % FRANCHISE SALONS: SmartStyle/Cost Cutters in Walmart Stores 594 561 Supercuts 1,930 1,739 Signature Style 747 745 Total franchise locations, excluding TBG 3,271 3,045 as a percent of total Company-owned and Franchise salons 41.2 % 37.7 % Total North America TBG Salons (1) 732 807 as a percent of total Company-owned and Franchise salons 9.2 % 10.0 % Total North American Salons 4,003 3,852 Total International TBG Salons (1) 263 262 as a percent of total Company-owned and Franchise salons 3.3 % 3.2 % Total Franchise Salons 4,266 4,114 as a percent of total Company-owned and Franchise salons 53.8 % 50.9 % OWNERSHIP INTEREST LOCATIONS: Equity ownership interest locations 87 88 Grand Total, System-wide 8,021 8,168 ____________________________________ (1) Canadian and Puerto Rican salons are included in the North American salon totals. |
Schedule of summarized financial information of reportable operating segments | Financial information concerning the Company's reportable operating segments is shown in the following table: For the Three Months Ended December 31, 2018 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 190,419 $ — $ — $ 190,419 Product 43,831 17,818 — 61,649 Royalties and fees — 22,603 — 22,603 234,250 40,421 — 274,671 Operating expenses: Cost of service 114,931 — — 114,931 Cost of product 21,901 14,449 — 36,350 Site operating expenses 27,696 7,867 — 35,563 General and administrative 14,198 9,466 22,172 45,836 Rent 34,258 184 200 34,642 Depreciation and amortization 6,728 215 1,957 8,900 Total operating expenses 219,712 32,181 24,329 276,222 Operating income (loss) 14,538 8,240 (24,329 ) (1,551 ) Other (expense) income: Interest expense — — (1,072 ) (1,072 ) Loss from sale of salon assets to franchisees, net — — 2,865 2,865 Interest income and other, net — — 629 629 Income (loss) from continuing operations before income taxes $ 14,538 $ 8,240 $ (21,907 ) $ 871 For the Three Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 223,278 $ — $ — $ 223,278 Product 56,764 15,068 — 71,832 Royalties and fees — 18,739 — 18,739 280,042 33,807 — 313,849 Operating expenses: Cost of service 134,850 — — 134,850 Cost of product 28,044 11,820 — 39,864 Site operating expenses 32,119 6,479 — 38,598 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 25,329 26,826 352,328 Operating income (loss) (20,131 ) 8,478 (26,826 ) (38,479 ) Other (expense) income: Interest expense — — (2,169 ) (2,169 ) Gain from sale of salon assets to franchisees, net — — (104 ) (104 ) Interest income and other, net — — 2,019 2,019 Income (loss) from continuing operations before income taxes $ (20,131 ) $ 8,478 $ (27,080 ) $ (38,733 ) For the Six Months Ended December 31, 2018 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 398,267 $ — $ — $ 398,267 Product 85,793 33,447 — 119,240 Royalties and fees — 44,999 — 44,999 484,060 78,446 — 562,506 Operating expenses: Cost of service 236,428 — — 236,428 Cost of product 41,669 26,862 — 68,531 Site operating expenses 56,541 15,843 — 72,384 General and administrative 30,579 17,130 45,854 93,563 Rent 69,944 278 398 70,620 Depreciation and amortization 14,785 373 3,944 19,102 Total operating expenses 449,946 60,486 50,196 560,628 Operating income (loss) 34,114 17,960 (50,196 ) 1,878 Other (expense) income: Interest expense — — (2,078 ) (2,078 ) Loss from sale of salon assets to franchisees, net — — (1,095 ) (1,095 ) Interest income and other, net — — 989 989 Income (loss) from continuing operations before income taxes $ 34,114 $ 17,960 $ (52,380 ) $ (306 ) For the Six Months Ended December 31, 2017 Company-owned Franchise Corporate Consolidated (Dollars in thousands) Revenues: Service $ 458,908 $ — $ — $ 458,908 Product 110,000 22,790 — 132,790 Royalties and fees — 37,615 — 37,615 568,908 60,405 — 629,313 Operating expenses: Cost of service 274,686 — — 274,686 Cost of product 52,491 17,535 — 70,026 Site operating expenses 65,422 13,205 — 78,627 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 43,455 43,137 652,192 Operating income (loss) 3,308 16,950 (43,137 ) (22,879 ) Other (expense) income: Interest expense — — (4,307 ) (4,307 ) Gain from sale of salon assets to franchisees, net — — 18 18 Interest income and other, net — — 2,439 2,439 Income (loss) from continuing operations before income taxes $ 3,308 $ 16,950 $ (44,987 ) $ (24,729 ) |
BASIS OF PRESENTATION OF UNAU_3
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Goodwill (Details) $ in Thousands | Dec. 31, 2018USD ($) | Jun. 30, 2018USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Goodwill | $ 393,774 | $ 412,643 |
Headroom Percent | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 0.24 | |
Increase (decrease) per 100 basis-point increase in weighted average cost of capital | (0.17) | |
Company-owned | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Goodwill | 166,855 | $ 184,788 |
Franchise | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Goodwill | $ 226,919 | $ 227,855 |
BASIS OF PRESENTATION OF UNAU_4
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounting Standards Recently Adopted by the Company (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash, cash equivalents and restricted cash | $ 120,466 | $ 148,774 | $ 208,634 | |
Accounting Standards Update 2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash, cash equivalents and restricted cash | $ 38,400 | $ 23,500 | $ 37,600 |
REVENUE RECOGNITION_ Revenue Re
REVENUE RECOGNITION: Revenue Recognized (Details) | 6 Months Ended |
Dec. 31, 2018 | |
Revenue recognized at a point in time | |
Disaggregation of Revenue [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 30 days |
Revenue recognized over time | |
Disaggregation of Revenue [Line Items] | |
Performance obligations expected to be satisfied, expected timing | ten years |
REVENUE RECOGNITION_ Disaggrega
REVENUE RECOGNITION: Disaggregation of Revenue by Timing (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 274,671 | $ 313,849 | $ 562,506 | $ 629,313 |
Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 234,250 | 280,042 | 484,060 | 568,908 |
Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 40,421 | 33,807 | 78,446 | 60,405 |
Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 190,419 | 223,278 | 398,267 | 458,908 |
Service | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 190,419 | 223,278 | 398,267 | 458,908 |
Service | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | 0 | 0 | 0 |
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 61,649 | 71,832 | 119,240 | 132,790 |
Product | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 43,831 | 56,764 | 85,793 | 110,000 |
Product | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 17,818 | 15,068 | 33,447 | 22,790 |
Royalties and fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 22,603 | 18,739 | 44,999 | 37,615 |
Royalties and fees | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | 0 | 0 | 0 |
Royalties and fees | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 22,603 | 18,739 | 44,999 | 37,615 |
Revenue recognized at a point in time: | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 234,250 | 280,042 | 484,060 | 568,908 |
Revenue recognized at a point in time: | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 17,818 | 15,068 | 33,447 | 22,790 |
Revenue recognized at a point in time: | Service | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 190,419 | 223,278 | 398,267 | 458,908 |
Revenue recognized at a point in time: | Service | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | 0 | 0 | 0 |
Revenue recognized at a point in time: | Product | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 43,831 | 56,764 | 85,793 | 110,000 |
Revenue recognized at a point in time: | Product | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 17,818 | 15,068 | 33,447 | 22,790 |
Revenue recognized over time: | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | 0 | 0 | 0 |
Revenue recognized over time: | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 22,603 | 18,739 | 44,999 | 37,615 |
Revenue recognized over time: | Royalties and fees | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | 0 | 0 | 0 |
Revenue recognized over time: | Royalties and fees | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 14,736 | 12,260 | 29,156 | 24,410 |
Revenue recognized over time: | Advertising fund | Operating Segments | Company-owned | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 0 | 0 | 0 | 0 |
Revenue recognized over time: | Advertising fund | Operating Segments | Franchise | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 7,867 | $ 6,479 | $ 15,843 | $ 13,205 |
REVENUE RECOGNITION_ Receivable
REVENUE RECOGNITION: Receivables, Broker Fees and Deferred Revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 17,861 | $ 21,504 |
Broker fees | 15,584 | 14,002 |
Deferred revenue | ||
Current | 8,213 | 8,656 |
Total deferred revenue | 33,584 | 29,507 |
Gift card liability | ||
Deferred revenue | ||
Current | 4,613 | 3,320 |
Deferred franchise fees unopened salons | ||
Deferred revenue | ||
Current | 172 | 2,306 |
Non-current | 13,472 | 11,161 |
Deferred franchise fees open salons | ||
Deferred revenue | ||
Current | 3,428 | 3,030 |
Non-current | $ 20,112 | $ 18,346 |
REVENUE RECOGNITION_ Additional
REVENUE RECOGNITION: Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |||||
Allowance for doubtful accounts | $ 2,000 | $ 2,000 | $ 1,200 | ||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 274,671 | $ 313,849 | 562,506 | $ 629,313 | |
Gift Cards | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 1,100 | 1,300 | 2,200 | 2,700 | |
Franchise Fees | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 800 | $ 700 | $ 1,700 | $ 1,300 |
REVENUE RECOGNITION_ Broker Fee
REVENUE RECOGNITION: Broker Fee Balance (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Change In Deferred Costs [Roll Forward] | |
Balance as of June 30, 2018 | $ 14,002 |
Additions | 2,752 |
Amortization | (1,158) |
Write-offs | (12) |
Balance as of December 31, 2018 | $ 15,584 |
REVENUE RECOGNITION_ Future Est
REVENUE RECOGNITION: Future Estimated Expected Revenue (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 1,643 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 3,326 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 3,238 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 3,118 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 2,941 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 9,274 |
Performance obligations expected to be satisfied, expected timing | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied | $ 23,540 |
Performance obligations expected to be satisfied, expected timing |
REVENUE RECOGNITION_ Impact on
REVENUE RECOGNITION: Impact on Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 96,954 | $ 110,399 |
Receivables, net | 32,329 | 52,430 |
Inventories | 85,583 | 79,363 |
Other current assets | 34,267 | 47,867 |
Total current assets | 249,133 | 290,059 |
Property and equipment, net | 96,133 | 105,860 |
Goodwill | 393,774 | 412,643 |
Other intangibles, net | 9,736 | 10,557 |
Other assets | 40,379 | 37,616 |
Total assets | 789,155 | 856,735 |
Current liabilities: | ||
Accounts payable | 57,127 | 57,738 |
Accrued expenses | 86,634 | 100,716 |
Total current liabilities | 143,761 | 158,454 |
Long-term debt | 90,000 | 90,000 |
Other noncurrent liabilities | 112,738 | 121,843 |
Total liabilities | 364,145 | 370,297 |
Commitments and contingencies (Note 7) | ||
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 2,074 | 2,263 |
Additional paid-in capital | 128,964 | 194,436 |
Accumulated other comprehensive income | 8,145 | 9,656 |
Retained earnings | 285,827 | 280,083 |
Total shareholders’ equity | 425,010 | 486,438 |
Total liabilities and shareholders’ equity | $ 789,155 | 856,735 |
Previously Reported | ||
Current assets: | ||
Cash and cash equivalents | 110,399 | |
Receivables, net | 52,430 | |
Inventories | 79,363 | |
Other current assets | 47,867 | |
Total current assets | 290,059 | |
Property and equipment, net | 105,860 | |
Goodwill | 412,643 | |
Other intangibles, net | 10,557 | |
Other assets | 37,616 | |
Total assets | 856,735 | |
Current liabilities: | ||
Accounts payable | 57,738 | |
Accrued expenses | 97,630 | |
Total current liabilities | 155,368 | |
Long-term debt | 90,000 | |
Other noncurrent liabilities | 107,875 | |
Total liabilities | 353,243 | |
Commitments and contingencies (Note 7) | ||
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 2,263 | |
Additional paid-in capital | 194,436 | |
Accumulated other comprehensive income | 9,568 | |
Retained earnings | 297,225 | |
Total shareholders’ equity | 503,492 | |
Total liabilities and shareholders’ equity | 856,735 | |
Restatement Adjustment | Franchise Fees | ||
Current assets: | ||
Cash and cash equivalents | 0 | |
Receivables, net | 0 | |
Inventories | 0 | |
Other current assets | 0 | |
Total current assets | 0 | |
Property and equipment, net | 0 | |
Goodwill | 0 | |
Other intangibles, net | 0 | |
Other assets | 0 | |
Total assets | 0 | |
Current liabilities: | ||
Accounts payable | 0 | |
Accrued expenses | 3,030 | |
Total current liabilities | 3,030 | |
Long-term debt | 0 | |
Other noncurrent liabilities | 18,346 | |
Total liabilities | 21,376 | |
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 0 | |
Additional paid-in capital | 0 | |
Accumulated other comprehensive income | 88 | |
Retained earnings | (21,464) | |
Total shareholders’ equity | (21,376) | |
Total liabilities and shareholders’ equity | 0 | |
Restatement Adjustment | Advertising Funds | ||
Current assets: | ||
Cash and cash equivalents | 0 | |
Receivables, net | 0 | |
Inventories | 0 | |
Other current assets | 0 | |
Total current assets | 0 | |
Property and equipment, net | 0 | |
Goodwill | 0 | |
Other intangibles, net | 0 | |
Other assets | 0 | |
Total assets | 0 | |
Current liabilities: | ||
Accounts payable | 0 | |
Accrued expenses | 0 | |
Total current liabilities | 0 | |
Long-term debt | 0 | |
Other noncurrent liabilities | 0 | |
Total liabilities | 0 | |
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 0 | |
Additional paid-in capital | 0 | |
Accumulated other comprehensive income | 0 | |
Retained earnings | 0 | |
Total shareholders’ equity | 0 | |
Total liabilities and shareholders’ equity | 0 | |
Restatement Adjustment | Gift Card Breakage | ||
Current assets: | ||
Cash and cash equivalents | 0 | |
Receivables, net | 0 | |
Inventories | 0 | |
Other current assets | 0 | |
Total current assets | 0 | |
Property and equipment, net | 0 | |
Goodwill | 0 | |
Other intangibles, net | 0 | |
Other assets | 0 | |
Total assets | 0 | |
Current liabilities: | ||
Accounts payable | 0 | |
Accrued expenses | 56 | |
Total current liabilities | 56 | |
Long-term debt | 0 | |
Other noncurrent liabilities | 0 | |
Total liabilities | 56 | |
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 0 | |
Additional paid-in capital | 0 | |
Accumulated other comprehensive income | 0 | |
Retained earnings | (56) | |
Total shareholders’ equity | (56) | |
Total liabilities and shareholders’ equity | 0 | |
Restatement Adjustment | Taxes | ||
Current assets: | ||
Cash and cash equivalents | 0 | |
Receivables, net | 0 | |
Inventories | 0 | |
Other current assets | 0 | |
Total current assets | 0 | |
Property and equipment, net | 0 | |
Goodwill | 0 | |
Other intangibles, net | 0 | |
Other assets | 0 | |
Total assets | 0 | |
Current liabilities: | ||
Accounts payable | 0 | |
Accrued expenses | 0 | |
Total current liabilities | 0 | |
Long-term debt | 0 | |
Other noncurrent liabilities | (4,378) | |
Total liabilities | (4,378) | |
Shareholders’ equity: | ||
Common stock, $0.05 par value; issued and outstanding 41,472,468 and 45,258,571 common shares at December 31, 2018 and June 30, 2018 respectively | 0 | |
Additional paid-in capital | 0 | |
Accumulated other comprehensive income | 0 | |
Retained earnings | 4,378 | |
Total shareholders’ equity | 4,378 | |
Total liabilities and shareholders’ equity | $ 0 |
REVENUE RECOGNITION_ Impact o_2
REVENUE RECOGNITION: Impact on Statement of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenues: | |||||
Total revenues | $ 274,671 | $ 313,849 | $ 562,506 | $ 629,313 | |
Operating expenses: | |||||
Cost of service | 114,931 | 134,850 | 236,428 | 274,686 | |
Cost of product | 36,350 | 39,864 | 68,531 | 70,026 | |
Site operating expenses | 35,563 | 38,598 | 72,384 | 78,627 | |
General and administrative | 45,836 | 48,592 | 93,563 | 83,758 | |
Rent | 34,642 | 65,473 | 70,620 | 107,889 | |
Depreciation and amortization | 8,900 | 24,951 | 19,102 | 37,206 | |
Total operating expenses | 276,222 | 352,328 | 560,628 | 652,192 | |
Operating (loss) income | (1,551) | (38,479) | 1,878 | (22,879) | |
Other (expense) income: | |||||
Interest expense | (1,072) | (2,169) | (2,078) | (4,307) | |
Gain (loss) from sale of salon assets to franchisees, net | 2,865 | (104) | (1,095) | 18 | |
Interest income and other, net | 629 | 2,019 | 989 | 2,439 | |
Income from continuing operations before income taxes | 871 | (38,733) | (306) | (24,729) | |
Income tax (expense) benefit | (454) | 80,825 | 260 | 75,266 | |
Income (loss) from continuing operations | 417 | 42,092 | (46) | 50,537 | |
Income (loss) from discontinued operations, net of taxes | 6,113 | (6,601) | 5,849 | (40,368) | |
Net income | $ 6,530 | $ 35,491 | $ 5,803 | $ 10,169 | |
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ 0.01 | $ 0.90 | $ 0 | $ 1.08 | |
Income (loss) discontinued operations (in dollars per share) | 0.14 | (0.14) | 0.13 | (0.86) | |
Net income per share, basic (in dollars per share) | [1] | 0.15 | 0.76 | 0.13 | 0.22 |
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | 0.01 | 0.89 | 0 | 1.07 | |
Income (loss) from discontinued operations (in dollars per share) | 0.14 | (0.14) | 0.13 | (0.86) | |
Net income per share, diluted (in dollars per share) | [1] | $ 0.15 | $ 0.75 | $ 0.13 | $ 0.22 |
Weighted average common and common equivalent shares outstanding: | |||||
Basic (in shares) | 43,619 | 46,821 | 44,175 | 46,719 | |
Diluted (in shares) | 44,479 | 47,314 | 44,175 | 47,053 | |
Service | |||||
Revenues: | |||||
Total revenues | $ 190,419 | $ 223,278 | $ 398,267 | $ 458,908 | |
Product | |||||
Revenues: | |||||
Total revenues | 61,649 | 71,832 | 119,240 | 132,790 | |
Royalties and fees | |||||
Revenues: | |||||
Total revenues | $ 22,603 | 18,739 | $ 44,999 | 37,615 | |
Previously Reported | |||||
Revenues: | |||||
Total revenues | 308,515 | 618,388 | |||
Operating expenses: | |||||
Cost of service | 134,850 | 274,686 | |||
Cost of product | 39,864 | 70,026 | |||
Site operating expenses | 32,119 | 65,422 | |||
General and administrative | 48,592 | 83,758 | |||
Rent | 65,473 | 107,889 | |||
Depreciation and amortization | 24,951 | 37,206 | |||
Total operating expenses | 345,849 | 638,987 | |||
Operating (loss) income | (37,334) | (20,599) | |||
Other (expense) income: | |||||
Interest expense | (2,169) | (4,307) | |||
Gain (loss) from sale of salon assets to franchisees, net | (104) | 18 | |||
Interest income and other, net | 2,466 | 3,371 | |||
Income from continuing operations before income taxes | (37,141) | (21,517) | |||
Income tax (expense) benefit | 76,462 | 71,630 | |||
Income (loss) from continuing operations | 39,321 | 50,113 | |||
Income (loss) from discontinued operations, net of taxes | (6,601) | (40,368) | |||
Net income | $ 32,720 | $ 9,745 | |||
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ 0.84 | $ 1.07 | |||
Income (loss) discontinued operations (in dollars per share) | (0.14) | (0.86) | |||
Net income per share, basic (in dollars per share) | 0.70 | 0.21 | |||
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | 0.83 | 1.07 | |||
Income (loss) from discontinued operations (in dollars per share) | (0.14) | (0.86) | |||
Net income per share, diluted (in dollars per share) | $ 0.69 | $ 0.21 | |||
Previously Reported | Service | |||||
Revenues: | |||||
Total revenues | $ 223,214 | $ 458,773 | |||
Previously Reported | Product | |||||
Revenues: | |||||
Total revenues | 71,816 | 132,756 | |||
Previously Reported | Royalties and fees | |||||
Revenues: | |||||
Total revenues | 13,485 | 26,859 | |||
Restatement Adjustment | Franchise Fees | |||||
Revenues: | |||||
Total revenues | (1,225) | (2,449) | |||
Operating expenses: | |||||
Cost of service | 0 | 0 | |||
Cost of product | 0 | 0 | |||
Site operating expenses | 0 | 0 | |||
General and administrative | 0 | 0 | |||
Rent | 0 | 0 | |||
Depreciation and amortization | 0 | 0 | |||
Total operating expenses | 0 | 0 | |||
Operating (loss) income | (1,225) | (2,449) | |||
Other (expense) income: | |||||
Interest expense | 0 | 0 | |||
Gain (loss) from sale of salon assets to franchisees, net | 0 | 0 | |||
Interest income and other, net | 0 | 0 | |||
Income from continuing operations before income taxes | (1,225) | (2,449) | |||
Income tax (expense) benefit | 0 | 0 | |||
Income (loss) from continuing operations | (1,225) | (2,449) | |||
Income (loss) from discontinued operations, net of taxes | 0 | 0 | |||
Net income | $ (1,225) | $ (2,449) | |||
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ (0.03) | $ (0.05) | |||
Income (loss) discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, basic (in dollars per share) | (0.03) | (0.05) | |||
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | (0.03) | (0.05) | |||
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, diluted (in dollars per share) | $ (0.03) | $ (0.05) | |||
Restatement Adjustment | Franchise Fees | Service | |||||
Revenues: | |||||
Total revenues | $ 0 | $ 0 | |||
Restatement Adjustment | Franchise Fees | Product | |||||
Revenues: | |||||
Total revenues | 0 | 0 | |||
Restatement Adjustment | Franchise Fees | Royalties and fees | |||||
Revenues: | |||||
Total revenues | (1,225) | (2,449) | |||
Restatement Adjustment | Advertising Funds | |||||
Revenues: | |||||
Total revenues | 6,479 | 13,205 | |||
Operating expenses: | |||||
Cost of service | 0 | 0 | |||
Cost of product | 0 | 0 | |||
Site operating expenses | 6,479 | 13,205 | |||
General and administrative | 0 | 0 | |||
Rent | 0 | 0 | |||
Depreciation and amortization | 0 | 0 | |||
Total operating expenses | 6,479 | 13,205 | |||
Operating (loss) income | 0 | 0 | |||
Other (expense) income: | |||||
Interest expense | 0 | 0 | |||
Gain (loss) from sale of salon assets to franchisees, net | 0 | 0 | |||
Interest income and other, net | 0 | 0 | |||
Income from continuing operations before income taxes | 0 | 0 | |||
Income tax (expense) benefit | 0 | 0 | |||
Income (loss) from continuing operations | 0 | 0 | |||
Income (loss) from discontinued operations, net of taxes | 0 | 0 | |||
Net income | $ 0 | $ 0 | |||
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ 0 | $ 0 | |||
Income (loss) discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, basic (in dollars per share) | 0 | 0 | |||
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | 0 | 0 | |||
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, diluted (in dollars per share) | $ 0 | $ 0 | |||
Restatement Adjustment | Advertising Funds | Service | |||||
Revenues: | |||||
Total revenues | $ 0 | $ 0 | |||
Restatement Adjustment | Advertising Funds | Product | |||||
Revenues: | |||||
Total revenues | 0 | 0 | |||
Restatement Adjustment | Advertising Funds | Royalties and fees | |||||
Revenues: | |||||
Total revenues | 6,479 | 13,205 | |||
Restatement Adjustment | Gift Card Breakage | |||||
Revenues: | |||||
Total revenues | 80 | 169 | |||
Operating expenses: | |||||
Cost of service | 0 | 0 | |||
Cost of product | 0 | 0 | |||
Site operating expenses | 0 | 0 | |||
General and administrative | 0 | 0 | |||
Rent | 0 | 0 | |||
Depreciation and amortization | 0 | 0 | |||
Total operating expenses | 0 | 0 | |||
Operating (loss) income | 80 | 169 | |||
Other (expense) income: | |||||
Interest expense | 0 | 0 | |||
Gain (loss) from sale of salon assets to franchisees, net | 0 | 0 | |||
Interest income and other, net | (447) | (932) | |||
Income from continuing operations before income taxes | (367) | (763) | |||
Income tax (expense) benefit | 0 | 0 | |||
Income (loss) from continuing operations | (367) | (763) | |||
Income (loss) from discontinued operations, net of taxes | 0 | 0 | |||
Net income | $ (367) | $ (763) | |||
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ (0.01) | $ (0.02) | |||
Income (loss) discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, basic (in dollars per share) | (0.01) | (0.02) | |||
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | (0.01) | (0.02) | |||
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, diluted (in dollars per share) | $ (0.01) | $ (0.02) | |||
Restatement Adjustment | Gift Card Breakage | Service | |||||
Revenues: | |||||
Total revenues | $ 64 | $ 135 | |||
Restatement Adjustment | Gift Card Breakage | Product | |||||
Revenues: | |||||
Total revenues | 16 | 34 | |||
Restatement Adjustment | Gift Card Breakage | Royalties and fees | |||||
Revenues: | |||||
Total revenues | 0 | 0 | |||
Restatement Adjustment | Taxes | |||||
Revenues: | |||||
Total revenues | 0 | 0 | |||
Operating expenses: | |||||
Cost of service | 0 | 0 | |||
Cost of product | 0 | 0 | |||
Site operating expenses | 0 | 0 | |||
General and administrative | 0 | 0 | |||
Rent | 0 | 0 | |||
Depreciation and amortization | 0 | 0 | |||
Total operating expenses | 0 | 0 | |||
Operating (loss) income | 0 | 0 | |||
Other (expense) income: | |||||
Interest expense | 0 | 0 | |||
Gain (loss) from sale of salon assets to franchisees, net | 0 | 0 | |||
Interest income and other, net | 0 | 0 | |||
Income from continuing operations before income taxes | 0 | 0 | |||
Income tax (expense) benefit | 4,363 | 3,636 | |||
Income (loss) from continuing operations | 4,363 | 3,636 | |||
Income (loss) from discontinued operations, net of taxes | 0 | 0 | |||
Net income | $ 4,363 | $ 3,636 | |||
Basic: | |||||
Income (loss) from continuing operations (in dollars per share) | $ 0.09 | $ 0.08 | |||
Income (loss) discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, basic (in dollars per share) | 0.09 | 0.08 | |||
Diluted: | |||||
Income (loss) from continuing operations (in dollars per share) | 0.09 | 0.08 | |||
Income (loss) from discontinued operations (in dollars per share) | 0 | 0 | |||
Net income per share, diluted (in dollars per share) | $ 0.09 | $ 0.08 | |||
Restatement Adjustment | Taxes | Service | |||||
Revenues: | |||||
Total revenues | $ 0 | $ 0 | |||
Restatement Adjustment | Taxes | Product | |||||
Revenues: | |||||
Total revenues | 0 | 0 | |||
Restatement Adjustment | Taxes | Royalties and fees | |||||
Revenues: | |||||
Total revenues | $ 0 | $ 0 | |||
[1] | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
DISCONTINUED OPERATIONS_ Additi
DISCONTINUED OPERATIONS: Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Aug. 31, 2018USD ($) | Dec. 31, 2018USD ($)salon | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($)salon | Dec. 31, 2017USD ($) | Jun. 30, 2018salon | Mar. 31, 2018USD ($) | Oct. 31, 2017salon | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Number of stores | salon | 8,021 | 8,021 | 8,168 | |||||
(Loss) income from discontinued operations, net of income taxes | $ 6,113 | $ (6,601) | $ 5,849 | $ (40,368) | ||||
Asset impairment charges | 176 | 25,095 | ||||||
TBG | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
VIE loss exposure | 8,400 | 8,400 | ||||||
Discontinued Operations, Disposed of by Sale | Mall-Based Salons and International Segment | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Working capital and prepaid rent | $ 11,700 | |||||||
Working capital promissory note receivable | $ 11,700 | |||||||
Accounts receivable promissory note receivable | $ 8,000 | |||||||
Contingent payment right period | 3 years | |||||||
(Loss) income from discontinued operations, net of income taxes | 6,113 | (6,601) | 5,849 | (40,368) | ||||
Income tax benefit on discontinued operations | (6,863) | (3,472) | (6,935) | (3,472) | ||||
Actuarial insurance accrual adjustments | 800 | |||||||
Loss from discontinued operations, before income taxes | $ (750) | (10,073) | $ (1,086) | (43,840) | ||||
Asset impairment charges | 4,800 | 29,100 | ||||||
Loss from operations | 1,100 | |||||||
Professional fees | $ 4,200 | 5,800 | ||||||
Foreign currency transaction loss | 6,200 | |||||||
Loss from operations | $ (2,800) | |||||||
North America | Facility Closing | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Number of stores | salon | 858 | |||||||
UNITED KINGDOM | Facility Closing | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Number of stores | salon | 250 |
DISCONTINUED OPERATIONS_ Schedu
DISCONTINUED OPERATIONS: Schedule of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss from discontinued operations, net of income taxes | $ 6,113 | $ (6,601) | $ 5,849 | $ (40,368) |
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] | ||||
Revenues | 0 | 7,773 | 0 | 101,140 |
Loss from discontinued operations, before income taxes | (750) | (10,073) | (1,086) | (43,840) |
Income tax benefit on discontinued operations | 6,863 | 3,472 | 6,935 | 3,472 |
Loss from discontinued operations, net of income taxes | $ 6,113 | $ (6,601) | $ 5,849 | $ (40,368) |
EARNINGS PER SHARE_ (Details)
EARNINGS PER SHARE: (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||||
Common stock equivalents included in the diluted earnings per share calculation (in shares) | 859,598 | 492,889 | 334,062 | |
Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Awards excluded from diluted earnings per share computation (in shares) | 903,107 | |||
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) | 734,526 | 2,373,110 | 520,348 | 1,199,042 |
SHAREHOLDERS' EQUITY_ Schedule
SHAREHOLDERS' EQUITY: Schedule of Equity Awards Granted (Details) - shares | 3 Months Ended | 6 Months Ended |
Dec. 31, 2018 | Dec. 31, 2018 | |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock granted (in shares) | 1,437 | 338,859 |
Performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock granted (in shares) | 3,506 | 733,688 |
SHAREHOLDERS' EQUITY_ Stock-Bas
SHAREHOLDERS' EQUITY: Stock-Based Employee Compensation, Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($)dayshares | Dec. 31, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $ | $ 2.2 | $ 2.6 | $ 4.6 | $ 4.6 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Stock granted (in shares) | 1,437 | 338,859 | ||
Restricted stock units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Restricted stock units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Restricted stock units | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Restricted stock units | Tranche 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Restricted stock units | Tranche 3 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Threshold trading days | day | 50 | |||
Additional service period | 2 years | |||
Stock granted (in shares) | 3,506 | 733,688 | ||
Performance-based restricted stock units | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock granted (in shares) | 52,590 | |||
Performance-based restricted stock units | Tranche 1 | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 200.00% | |||
Performance-based restricted stock units | Tranche 2 | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 100.00% |
SHAREHOLDERS' EQUITY_ Additiona
SHAREHOLDERS' EQUITY: Additional Paid-In Capital (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders' Equity [Line Items] | ||||
Share-based compensation | $ 2.2 | $ 2.6 | $ 4.6 | $ 4.6 |
Stock repurchased during period (in shares) | 2,879,414 | 3,973,093 | ||
Remaining authorized repurchase amount | $ 167 | $ 167 | ||
Additional Paid-in Capital | ||||
Stockholders' Equity [Line Items] | ||||
Increase (decrease) in additional paid-in capital | (65.5) | |||
Stock repurchased during the period, less adjustments | 68.1 | |||
Adjustments to APIC offset by other stock-based compensation activity | 2 | |||
Stock repurchased during period, value | $ 48.9 | $ 68.3 |
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, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (expense) benefit | $ (454) | $ 80,825 | $ 260 | $ 75,266 |
Effective tax rate | 52.10% | 208.70% | 85.00% | 304.40% |
INCOME TAXES_ Additional Inform
INCOME TAXES: Additional Information (Details) $ in Millions | 12 Months Ended |
Jun. 30, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Provisional net tax benefit | $ 68.1 |
CASH, CASH EQUIVALETS AND RES_3
CASH, CASH EQUIVALETS AND RESTRICTED CASH: (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 |
Cash and Cash Equivalents [Abstract] | |||
Cash and cash equivalents | $ 96,954 | $ 110,399 | |
Restricted cash, included in Other current assets | 23,512 | 38,375 | |
Total cash, cash equivalents and restricted cash | $ 120,466 | $ 148,774 | $ 208,634 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES: Changes in Goodwill (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2018 | $ 412,643 |
Translation rate adjustments | (1,273) |
Derecognition related to sale of salon assets to franchisees | (17,596) |
Goodwill, net at December 31, 2018 | 393,774 |
Company-owned | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2018 | 184,788 |
Translation rate adjustments | (337) |
Derecognition related to sale of salon assets to franchisees | (17,596) |
Goodwill, net at December 31, 2018 | 166,855 |
Franchise | |
Goodwill [Roll Forward] | |
Goodwill, net at June 30, 2018 | 227,855 |
Translation rate adjustments | (936) |
Derecognition related to sale of salon assets to franchisees | 0 |
Goodwill, net at December 31, 2018 | $ 226,919 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLES: Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Amortized intangible assets: | ||
Cost | $ 33,384 | $ 33,871 |
Accumulated Amortization | (23,648) | (23,314) |
Net | 9,736 | 10,557 |
Brand assets and trade names | ||
Amortized intangible assets: | ||
Cost | 7,910 | 8,128 |
Accumulated Amortization | (4,274) | (4,260) |
Net | 3,636 | 3,868 |
Franchise agreements | ||
Amortized intangible assets: | ||
Cost | 9,562 | 9,763 |
Accumulated Amortization | (7,717) | (7,712) |
Net | 1,845 | 2,051 |
Lease intangibles | ||
Amortized intangible assets: | ||
Cost | 13,967 | 13,997 |
Accumulated Amortization | (10,096) | (9,770) |
Net | 3,871 | 4,227 |
Other | ||
Amortized intangible assets: | ||
Cost | 1,945 | 1,983 |
Accumulated Amortization | (1,561) | (1,572) |
Net | $ 384 | $ 411 |
FINANCING ARRANGEMENTS_ Schedul
FINANCING ARRANGEMENTS: Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 90,000 | $ 90,000 |
Line of Credit | Revolving Credit Facility | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Interest rate percentage | 3.77% | |
Long-term debt | $ 90,000 | $ 90,000 |
FINANCING ARRANGEMENTS_ Revolvi
FINANCING ARRANGEMENTS: Revolving Credit Facility (Details) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 90,000,000 | $ 90,000,000 |
Line of Credit | Revolving Credit Facility | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 90,000,000 | 90,000,000 |
Maximum borrowing capacity | 295,000,000 | 295,000,000 |
Unused borrowing capacity, amount | 182,000,000 | 203,500,000 |
Line of Credit | Letter of Credit | Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term line of credit | $ 23,000,000 | $ 1,500,000 |
FINANCING ARRANGEMENTS_ Sched_2
FINANCING ARRANGEMENTS: Schedule of Long-term Financial Liability (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Debt Disclosure [Abstract] | ||
Interest Rate | 3.50% | |
Long-term lease liability | $ 17,646 | $ 0 |
FINANCING ARRANGEMENTS_ Sale an
FINANCING ARRANGEMENTS: Sale and Leaseback Transaction (Details) $ in Millions | Dec. 31, 2018USD ($) | Nov. 30, 2018renewal_option |
Debt Disclosure [Abstract] | ||
Term of contract | 15 years | |
Number of renewal options | renewal_option | 3 | |
Renewal term | 5 years | |
Lease period as a percent of economic life (more than) | 75.00% | |
Short-term financial liability | $ | $ 0.6 |
FINANCING ARRANGEMENTS_ Sched_3
FINANCING ARRANGEMENTS: Schedule of Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract] | |
Remainder of 2019 | $ 585 |
2,020 | 1,111 |
2,021 | 1,063 |
2,022 | 1,042 |
2,023 | 1,021 |
Thereafter | 13,374 |
Total | $ 18,196 |
FAIR VALUE MEASUREMENTS_ (Detai
FAIR VALUE MEASUREMENTS: (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Assets and liabilities measured at fair value on a nonrecurring basis | |||||
Long-term debt, fair value | $ 90,000 | $ 90,000 | $ 90,000 | ||
Long-term debt | 90,000 | 90,000 | 90,000 | ||
Long-term lease liability | 17,646 | 17,646 | $ 0 | ||
Long-lived assets | 2,303 | $ 16,715 | |||
Level 2 | |||||
Assets and liabilities measured at fair value on a nonrecurring basis | |||||
Long-term lease liability | 17,600 | 17,600 | |||
Nonrecurring | Level 3 | |||||
Assets and liabilities measured at fair value on a nonrecurring basis | |||||
Long-lived assets | $ 472 | $ 14,435 | $ 2,303 | $ 16,715 |
SEGMENT INFORMATION_ Reportable
SEGMENT INFORMATION: Reportable Operating Segment Salons (Details) - salon | Dec. 31, 2018 | Jun. 30, 2018 |
Franchisor Disclosure [Line Items] | ||
Number of salons | 8,021 | 8,168 |
Equity ownership interest locations | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 87 | 88 |
Company-owned | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 3,668 | 3,966 |
as a percent of total Company-owned and Franchise salons | 46.20% | 49.10% |
Company-owned | SmartStyle/Cost Cutters in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,615 | 1,660 |
Company-owned | Supercuts | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 760 | 928 |
Company-owned | Signature Style | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,293 | 1,378 |
Franchise | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 4,266 | 4,114 |
as a percent of total Company-owned and Franchise salons | 53.80% | 50.90% |
Franchise | North American | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 4,003 | 3,852 |
Franchise | International | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 263 | 262 |
as a percent of total Company-owned and Franchise salons | 3.30% | 3.20% |
Franchise | Total franchise locations, excluding TBG | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 3,271 | 3,045 |
as a percent of total Company-owned and Franchise salons | 41.20% | 37.70% |
Franchise | SmartStyle/Cost Cutters in Walmart Stores | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 594 | 561 |
Franchise | Supercuts | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 1,930 | 1,739 |
Franchise | Signature Style | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 747 | 745 |
Franchise | Total North America TBG Salons (1) | ||
Franchisor Disclosure [Line Items] | ||
Number of salons | 732 | 807 |
as a percent of total Company-owned and Franchise salons | 9.20% | 10.00% |
SEGMENT INFORMATION_ Operating
SEGMENT INFORMATION: Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | ||||
Total revenues | $ 274,671 | $ 313,849 | $ 562,506 | $ 629,313 |
Operating expenses: | ||||
Cost of service | 114,931 | 134,850 | 236,428 | 274,686 |
Cost of product | 36,350 | 39,864 | 68,531 | 70,026 |
Site operating expenses | 35,563 | 38,598 | 72,384 | 78,627 |
General and administrative | 45,836 | 48,592 | 93,563 | 83,758 |
Rent | 34,642 | 65,473 | 70,620 | 107,889 |
Depreciation and amortization | 8,900 | 24,951 | 19,102 | 37,206 |
Total operating expenses | 276,222 | 352,328 | 560,628 | 652,192 |
Operating (loss) income | (1,551) | (38,479) | 1,878 | (22,879) |
Other (expense) income: | ||||
Interest expense | (1,072) | (2,169) | (2,078) | (4,307) |
Gain (loss) from sale of salon assets to franchisees, net | 2,865 | (104) | (1,095) | 18 |
Interest income and other, net | 629 | 2,019 | 989 | 2,439 |
Income (loss) from continuing operations before income taxes | 871 | (38,733) | (306) | (24,729) |
Operating Segments | Company-owned | ||||
Revenues: | ||||
Total revenues | 234,250 | 280,042 | 484,060 | 568,908 |
Operating expenses: | ||||
Cost of service | 114,931 | 134,850 | 236,428 | 274,686 |
Cost of product | 21,901 | 28,044 | 41,669 | 52,491 |
Site operating expenses | 27,696 | 32,119 | 56,541 | 65,422 |
General and administrative | 14,198 | 17,947 | 30,579 | 33,771 |
Rent | 34,258 | 65,159 | 69,944 | 107,282 |
Depreciation and amortization | 6,728 | 22,054 | 14,785 | 31,948 |
Total operating expenses | 219,712 | 300,173 | 449,946 | 565,600 |
Operating (loss) income | 14,538 | (20,131) | 34,114 | 3,308 |
Other (expense) income: | ||||
Interest expense | 0 | 0 | 0 | 0 |
Gain (loss) from sale of salon assets to franchisees, net | 0 | 0 | 0 | 0 |
Interest income and other, net | 0 | 0 | 0 | 0 |
Income (loss) from continuing operations before income taxes | 14,538 | (20,131) | 34,114 | 3,308 |
Operating Segments | Franchise | ||||
Revenues: | ||||
Total revenues | 40,421 | 33,807 | 78,446 | 60,405 |
Operating expenses: | ||||
Cost of service | 0 | 0 | 0 | 0 |
Cost of product | 14,449 | 11,820 | 26,862 | 17,535 |
Site operating expenses | 7,867 | 6,479 | 15,843 | 13,205 |
General and administrative | 9,466 | 6,869 | 17,130 | 12,415 |
Rent | 184 | 70 | 278 | 117 |
Depreciation and amortization | 215 | 91 | 373 | 183 |
Total operating expenses | 32,181 | 25,329 | 60,486 | 43,455 |
Operating (loss) income | 8,240 | 8,478 | 17,960 | 16,950 |
Other (expense) income: | ||||
Interest expense | 0 | 0 | 0 | 0 |
Gain (loss) from sale of salon assets to franchisees, net | 0 | 0 | 0 | 0 |
Interest income and other, net | 0 | 0 | 0 | 0 |
Income (loss) from continuing operations before income taxes | 8,240 | 8,478 | 17,960 | 16,950 |
Unallocated Corporate | ||||
Operating expenses: | ||||
General and administrative | 22,172 | 23,776 | 45,854 | 37,572 |
Rent | 200 | 244 | 398 | 490 |
Depreciation and amortization | 1,957 | 2,806 | 3,944 | 5,075 |
Total operating expenses | 24,329 | 26,826 | 50,196 | 43,137 |
Operating (loss) income | (24,329) | (26,826) | (50,196) | (43,137) |
Other (expense) income: | ||||
Interest expense | (1,072) | (2,169) | (2,078) | (4,307) |
Gain (loss) from sale of salon assets to franchisees, net | 2,865 | (104) | (1,095) | 18 |
Interest income and other, net | 629 | 2,019 | 989 | 2,439 |
Income (loss) from continuing operations before income taxes | (21,907) | (27,080) | (52,380) | (44,987) |
Service | ||||
Revenues: | ||||
Total revenues | 190,419 | 223,278 | 398,267 | 458,908 |
Service | Operating Segments | Company-owned | ||||
Revenues: | ||||
Total revenues | 190,419 | 223,278 | 398,267 | 458,908 |
Service | Operating Segments | Franchise | ||||
Revenues: | ||||
Total revenues | 0 | 0 | 0 | 0 |
Product | ||||
Revenues: | ||||
Total revenues | 61,649 | 71,832 | 119,240 | 132,790 |
Product | Operating Segments | Company-owned | ||||
Revenues: | ||||
Total revenues | 43,831 | 56,764 | 85,793 | 110,000 |
Product | Operating Segments | Franchise | ||||
Revenues: | ||||
Total revenues | 17,818 | 15,068 | 33,447 | 22,790 |
Royalties and fees | ||||
Revenues: | ||||
Total revenues | 22,603 | 18,739 | 44,999 | 37,615 |
Royalties and fees | Operating Segments | Company-owned | ||||
Revenues: | ||||
Total revenues | 0 | 0 | 0 | 0 |
Royalties and fees | Operating Segments | Franchise | ||||
Revenues: | ||||
Total revenues | $ 22,603 | $ 18,739 | $ 44,999 | $ 37,615 |
Uncategorized Items - rgs-20181
Label | Element | Value |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Disposal Group, Including Discontinued Operations | us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsDisposalGroupIncludingDiscontinuedOperations | $ 1,352,000 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Disposal Group, Including Discontinued Operations | us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsDisposalGroupIncludingDiscontinuedOperations | $ 0 |