Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Mar. 31, 2014 | Apr. 23, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'REGIS CORP | ' |
Entity Central Index Key | '0000716643 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 56,676,862 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $360,800 | $200,488 |
Receivables, net | 24,312 | 33,062 |
Inventories | 143,742 | 139,607 |
Deferred income taxes | 388 | 24,145 |
Income tax receivable | 19,113 | 33,346 |
Other current assets | 55,973 | 57,898 |
Total current assets | 604,328 | 488,546 |
Property and equipment, net | 273,168 | 313,460 |
Goodwill | 423,704 | 460,885 |
Other intangibles, net | 19,959 | 21,496 |
Investment in affiliates | 44,995 | 43,319 |
Other assets | 61,185 | 62,786 |
Total assets | 1,427,339 | 1,390,492 |
Current liabilities: | ' | ' |
Long-term debt, current portion | 173,828 | 173,515 |
Accounts payable | 62,400 | 66,071 |
Accrued expenses | 138,065 | 137,226 |
Total current liabilities | 374,293 | 376,812 |
Long-term debt and capital lease obligations | 120,005 | 1,255 |
Other noncurrent liabilities | 199,814 | 155,011 |
Total liabilities | 694,112 | 533,078 |
Commitments and contingencies (Note 7) | ' | ' |
Shareholders' equity: | ' | ' |
Common stock, $0.05 par value; issued and outstanding 56,677,617 and 56,630,926 common shares at March 31, 2014 and June 30, 2013, respectively | 2,834 | 2,832 |
Additional paid-in capital | 336,645 | 334,266 |
Accumulated other comprehensive income | 19,331 | 20,556 |
Retained earnings | 374,417 | 499,760 |
Total shareholders’ equity | 733,227 | 857,414 |
Total liabilities and shareholders’ equity | $1,427,339 | $1,390,492 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common stock, par value (in dollars per share) | $0.05 | $0.05 |
Common stock, shares issued | 56,677,617 | 56,630,926 |
Common stock, shares outstanding | 56,677,617 | 56,630,926 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | ||||
Revenues: | ' | ' | ' | ' | ||||
Service | $367,230 | $392,149 | $1,099,916 | $1,173,851 | ||||
Product | 94,309 | 103,222 | 278,821 | 313,742 | ||||
Royalties and fees | 10,022 | 9,566 | 29,774 | 28,869 | ||||
Total revenues | 471,561 | 504,937 | 1,408,511 | 1,516,462 | ||||
Operating expenses: | ' | ' | ' | ' | ||||
Cost of service | 226,344 | 234,321 | 674,772 | 701,114 | ||||
Cost of product | 46,146 | 53,276 | 140,631 | 161,472 | ||||
Site operating expenses | 50,215 | 53,737 | 151,260 | 155,956 | ||||
General and administrative | 43,120 | 56,800 | 127,758 | 168,467 | ||||
Rent | 80,614 | 80,761 | 238,788 | 242,815 | ||||
Depreciation and amortization | 28,343 | 22,734 | 76,815 | 65,334 | ||||
Goodwill impairment | 0 | 0 | 34,939 | 0 | ||||
Total operating expenses | 474,782 | 501,629 | 1,444,963 | 1,495,158 | ||||
Operating (loss) income | -3,221 | 3,308 | -36,452 | 21,304 | ||||
Other income (expense): | ' | ' | ' | ' | ||||
Interest expense | -6,299 | -6,356 | -15,956 | -19,834 | ||||
Interest income and other, net | 261 | -62 | 1,144 | 35,151 | ||||
(Loss) income before income taxes and equity in income (loss) of affiliated companies | -9,259 | -3,110 | -51,264 | 36,621 | ||||
Income taxes | -857 | 2,850 | -72,812 | -1,221 | ||||
Equity in income (loss) of affiliated companies, net of income taxes | 23 | 1,156 | 4,762 | -15,976 | ||||
(Loss) income from continuing operations | -10,093 | 896 | -119,314 | 19,424 | ||||
Income from discontinued operations, net of taxes | 609 | 1,465 | 609 | 9,095 | ||||
Net (loss) income | ($9,484) | $2,361 | ($118,705) | $28,519 | ||||
Basic: | ' | ' | ' | ' | ||||
(Loss) income from continuing operations (in dollars per share) | ($0.18) | $0.02 | ($2.11) | $0.34 | ||||
Income from discontinued operations (in dollars per share) | $0.01 | $0.03 | $0.01 | $0.16 | ||||
Net (loss) income per share, basic (in dollars per share) | ($0.17) | [1] | $0.04 | [1] | ($2.10) | [1] | $0.50 | [1] |
Diluted: | ' | ' | ' | ' | ||||
(Loss) income from continuing operations (in dollars per share) | ($0.18) | $0.02 | ($2.11) | $0.34 | ||||
Income from discontinued operations (in dollars per share) | $0.01 | $0.03 | $0.01 | $0.16 | ||||
Net (loss) income per share, diluted (in dollars per share) | ($0.17) | [1] | $0.04 | [1] | ($2.10) | [1] | $0.50 | [1] |
Weighted average common and common equivalent shares outstanding: | ' | ' | ' | ' | ||||
Basic (in shares) | 56,473 | 56,345 | 56,450 | 56,816 | ||||
Diluted (in shares) | 56,473 | 56,500 | 56,450 | 56,928 | ||||
Cash dividends declared per common share | $0 | $0.06 | $0.12 | $0.18 | ||||
[1] | Total is a recalculation; line items calculated individually may not sum to total. |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net (loss) income | ($9,484) | $2,361 | ($118,705) | $28,519 |
Foreign currency translation adjustments: | ' | ' | ' | ' |
Foreign currency translation adjustments during the period | -2,208 | -4,259 | -1,225 | 601 |
Reclassification adjustments for gains included in net (loss) income (Note 1) | 0 | 0 | 0 | -33,842 |
Net current period foreign currency translation adjustments | -2,208 | -4,259 | -1,225 | -33,241 |
Change in fair market value of financial instruments designated as cash flow hedges | 0 | 0 | 0 | -23 |
Other comprehensive loss | -2,208 | -4,259 | -1,225 | -33,264 |
Comprehensive loss | ($11,692) | ($1,898) | ($119,930) | ($4,745) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net (loss) income | ($118,705) | $28,519 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 61,540 | 60,788 |
Equity in (income) loss of affiliated companies | -4,762 | 15,348 |
Deferred income taxes | 68,669 | 14,855 |
Salon asset impairment | 15,275 | 5,035 |
Loss on write down of inventories | 854 | 0 |
Goodwill impairment | 34,939 | 0 |
Accumulated other comprehensive reclassification adjustments | 0 | -33,842 |
Stock-based compensation | 4,899 | 4,723 |
Amortization of debt discount and financing costs | 6,027 | 5,336 |
Other non-cash items affecting earnings | 177 | 1,500 |
Changes in operating assets and liabilities, excluding the effects of acquisitions | 14,801 | -20,522 |
Net cash provided by operating activities | 83,714 | 81,740 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -34,977 | -72,554 |
Asset acquisitions, net of cash received from sale of property | -1 | 220 |
Proceeds from loans and investments | 5,056 | 131,054 |
Restricted cash used to collateralize insurance reserves | 0 | -24,500 |
Net cash (used in) provided by investing activities | -29,922 | 34,220 |
Cash flows from financing activities: | ' | ' |
Borrowings on revolving credit facilities | 0 | 5,200 |
Payments on revolving credit facilities | 0 | -5,200 |
Proceeds from issuance of long-term debt, net of fees | 118,058 | 0 |
Repayments of long-term debt and capital lease obligations | -5,234 | -22,985 |
Repurchase of common stock | 0 | -14,868 |
Dividends paid | -6,793 | -10,310 |
Net cash provided by (used in) financing activities | 106,031 | -48,163 |
Effect of exchange rate changes on cash and cash equivalents | 489 | 569 |
Increase in cash and cash equivalents | 160,312 | 68,366 |
Cash and cash equivalents: | ' | ' |
Beginning of period | 200,488 | 111,943 |
End of period | $360,800 | $180,309 |
BASIS_OF_PRESENTATION_OF_UNAUD
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
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 March 31, 2014 and for the three and nine months ended March 31, 2014 and 2013, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2014 and the consolidated results of its operations and its cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year. | |||||||||||||||||
The Condensed Consolidated Balance Sheet data for June 30, 2013 was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2013 and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year. | |||||||||||||||||
Stock-Based Employee Compensation: | |||||||||||||||||
During the three and nine months ended March 31, 2014, the Company granted various equity awards including restricted stock units (RSUs), equity-based stock appreciation rights (SARs), and performance share units (PSUs). There were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans that have been approved by the shareholders of the Company. | |||||||||||||||||
A summary of equity granted is as follows: | |||||||||||||||||
For the Periods Ended March 31, 2014 | |||||||||||||||||
Three Months | Nine Months | ||||||||||||||||
Restricted stock units | 10,169 | 360,252 | |||||||||||||||
Equity-based stock appreciation rights | — | 469,482 | |||||||||||||||
Performance share units | — | 304,550 | |||||||||||||||
Total compensation cost for stock-based payment arrangements totaled $1.3 and $1.4 million for the three months ended March 31, 2014 and 2013, respectively, and $4.9 and $4.7 million for the nine months ended March 31, 2014 and 2013, respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations. | |||||||||||||||||
Long-Lived Asset Impairment Assessments, Excluding Goodwill: | |||||||||||||||||
The Company assesses the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Impairment is evaluated based on the sum of undiscounted estimated cash flows expected to result from the use of long-lived assets that do not recover their carrying values. If the undiscounted estimated future cash flows are less than the carrying value of the asset, the Company calculates an impairment charge based on the asset's estimated fair value. The fair value of the long-lived asset is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. During the three and nine months ended March 31, 2014 and 2013, the Company recorded non-cash impairment charges primarily as a result of continued negative same-store sales. | |||||||||||||||||
A summary of these impairment charges is as follows: | |||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
North American Value | $ | 5,919 | $ | 1,056 | $ | 9,105 | $ | 3,172 | |||||||||
North American Premium | 1,626 | 539 | 4,625 | 1,617 | |||||||||||||
International | 1,377 | 81 | 1,545 | 246 | |||||||||||||
Total | $ | 8,922 | $ | 1,676 | $ | 15,275 | $ | 5,035 | |||||||||
Goodwill: | |||||||||||||||||
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. Goodwill is tested for impairment annually during the Company’s fourth fiscal quarter or at the time of a triggering event. | |||||||||||||||||
The Company concluded there were no triggering events requiring an interim goodwill impairment test during the three months ended March 31, 2014. In addition, the Company's fair value, as determined by the sum of its reporting units’ fair values, reconciled to within a reasonable range of the Company’s market capitalization as of March 31, 2014, which included an assumed control premium of 30.0%. Accordingly, the fair value of the North American Value reporting unit, the only unit with goodwill at March 31, 2014, continues to exceed its carrying value by greater than 20.0%. | |||||||||||||||||
During the second quarter of fiscal year 2014, the Company experienced two triggering events that resulted in the Company testing its goodwill for impairment. First, the Company redefined its operating segments to reflect how the chief operating decision maker evaluates the business as a result of restructuring the Company's North American field organization. The field reorganization, which impacted all North American salons except for salons in the mass premium category, was announced in the fourth quarter of fiscal year 2013 and completed in the second quarter of fiscal year 2014. The Company did not completely operate under the realigned operating structure prior to the second quarter of fiscal year 2014. | |||||||||||||||||
Second, the Regis and Promenade salon concepts reported lower than projected same-store sales that were unfavorable compared to the Company’s projections used in the fiscal year 2013 annual goodwill impairment test. The disruptive impact of strategic initiatives announced in the fourth quarter of fiscal year 2013 on the first two fiscal quarters of 2014 was greater than anticipated. | |||||||||||||||||
Pursuant to the change in operating segments and the lower than projected same-store sales, during the second quarter of fiscal year 2014, the Company performed interim goodwill impairment tests on its Regis and Promenade salon concept reporting units. The impairment tests resulted in a $34.9 million non-cash goodwill impairment charge on the Regis salon concept reporting unit and no impairment on the Promenade salon concept, as its estimated fair value exceeded its carrying value by approximately 12.0%. The Company considered the negative impact of the fourth quarter fiscal year 2013 strategic initiatives on the results of the remaining reporting units and determined their fair values were significantly greater than their carrying values at December 31, 2013 and therefore did not perform interim goodwill impairment tests on these remaining reporting units. | |||||||||||||||||
In connection with the change in operating segment structure, the Company changed its North American reporting units from five reporting units: SmartStyle, Supercuts, MasterCuts, Regis and Promenade, to two reporting units: North American Value and North American Premium. Subsequent to the interim impairment test of goodwill, the Company compared the carrying value, including goodwill, of the reporting units under the new reporting unit structure to their estimated fair values. The fair value of the North American Value reporting unit exceeded its carrying value by greater than 20.0%. The North American Premium reporting unit does not have any goodwill, as it was fully impaired as of December 31, 2013. Based on the changes to the Company's operating segment structure, goodwill was reallocated to the new reporting units at December 31, 2013 and June 30, 2013. | |||||||||||||||||
Income Taxes: | |||||||||||||||||
As of March 31, 2014, after excluding certain deferred tax liabilities related to assets with indefinite lives, the Company had net deferred tax assets of $89.5 million, which generally expire many years into the future or have no definite expiration period. On a quarterly basis, the Company is required to assess the realizability of deferred tax assets. Realization of deferred tax assets is ultimately dependent upon future taxable income. While the determination of whether or not to record a valuation allowance is not fully governed by a specific objective test, accounting guidance places significant weight on recent financial performance. | |||||||||||||||||
During the second quarter of fiscal year 2014, the impacts from strategic initiatives implemented late in fiscal year 2013 continued to negatively impact the Company’s financial performance. Accordingly, the Company incurred a non-cash charge of $83.1 million to establish a valuation allowance against its United States (U.S.) deferred tax assets. | |||||||||||||||||
During the third quarter of fiscal year 2014, the Company incurred a non-cash charge of $1.3 million to establish a valuation allowance against its United Kingdom (U.K.) deferred tax assets. The primary reason for this charge was the U.K. operations reported cumulative pretax losses for the twelve consecutive quarters ended March 31, 2014. | |||||||||||||||||
A summary of the activity for the deferred tax asset valuation allowance is as follows: | |||||||||||||||||
For the Nine Months Ended March 31, 2014 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Balance, September 30, 2013 | $ | — | |||||||||||||||
U.S. deferred tax asset valuation allowance | 83,140 | ||||||||||||||||
Balance, December 31, 2013 | 83,140 | ||||||||||||||||
U.K. deferred tax asset valuation allowance | 1,251 | ||||||||||||||||
Changes in deferred tax asset valuation allowance | 2,750 | ||||||||||||||||
Balance, March 31, 2014 | $ | 87,141 | |||||||||||||||
The Company will continue to assess the ability to realize its deferred tax assets on a quarterly basis, and will reverse the valuation allowance and record a tax benefit when the Company generates sustainable pretax earnings. | |||||||||||||||||
Foreign Currency Translation: | |||||||||||||||||
During the nine months ended March 31, 2013, the Company completed the sale of its investment in Provalliance and subsequently liquidated all foreign entities with Euro denominated operations. As a result, the Company recognized a net $33.8 million foreign currency translation gain within interest income and other, net in the unaudited Condensed Consolidated Statement of Operations for amounts previously classified within accumulated other comprehensive income. | |||||||||||||||||
Accounting Standards Recently Issued But Not Yet Adopted by the Company: | |||||||||||||||||
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | |||||||||||||||||
In April 2014, the Financial Accounting Standards Board (FASB) updated the accounting guidance related to the definition of a discontinued operation and the related disclosures. The updated accounting guidance defines a discontinued operation as a disposal of a component or a group of components that is to be disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. | |||||||||||||||||
Accounting for Cumulative Translation Adjustment upon Derecognition of Foreign Entities | |||||||||||||||||
In March 2013, the FASB updated the accounting guidance related to the release of cumulative translation adjustments. The updated accounting guidance clarified when to release cumulative translation adjustments into net income. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. | |||||||||||||||||
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | |||||||||||||||||
In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of these requirements to have a material impact on the Company’s consolidated financial statements. |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS: | 9 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||
DISCONTINUED OPERATIONS | ' | |||||||
DISCONTINUED OPERATIONS: | ||||||||
Hair Restoration Centers | ||||||||
On April 9, 2013, the Company sold its Hair Club for Men and Women business (Hair Club), a provider of hair restoration services. At the closing of the sale, the Company received $162.8 million, which was the purchase price of $163.5 million adjusted for the preliminary working capital provision. During the nine months ended March 31, 2014, the Company collected $3.0 million of cash recorded as a receivable as of June 30, 2013, of which $2.0 million was a result of the final working capital provision, resulting in a final purchase price of $164.8 million, and $1.0 million was excess cash from the transaction completion date. | ||||||||
The Company classified the results of operations of Hair Club as discontinued operations for all periods presented in the unaudited Condensed Consolidated Statement of Operations. | ||||||||
The following summarizes the results of operations of the discontinued Hair Club operations: | ||||||||
For the Periods Ended March 31, 2013 | ||||||||
Three Months | Nine Months | |||||||
(Dollars in thousands) | ||||||||
Revenues | $ | 38,424 | $ | 115,604 | ||||
Income from discontinued operations, before income taxes | 2,247 | 14,113 | ||||||
Income tax provision on discontinued operations | (956 | ) | (5,632 | ) | ||||
Equity in income of affiliated companies, net of income taxes | 174 | 614 | ||||||
Income from discontinued operations, net of income taxes | $ | 1,465 | $ | 9,095 | ||||
Income taxes have been allocated to continuing and discontinued operations based on the methodology required by interim reporting and accounting for income taxes guidance. Depreciation and amortization ceased during the three months ended September 30, 2012 in accordance with accounting for discontinued operations. | ||||||||
Trade Secret | ||||||||
On February 16, 2009, the Company sold its Trade Secret salon concept (Trade Secret). The Company reported Trade Secret as a discontinued operation. During the three and nine months ended March 31, 2014, the Company recorded a $0.6 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of Trade Secret. |
INVESTMENT_IN_AFFILIATES
INVESTMENT IN AFFILIATES: | 9 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | ' | |||||||
INVESTMENT IN AFFILIATES | ' | |||||||
INVESTMENT IN AFFILIATES: | ||||||||
Investment in affiliates | ||||||||
The table below presents the carrying amount of investments in affiliates: | ||||||||
March 31, | June 30, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Empire Education Group, Inc. (1) | $ | 44,783 | $ | 43,098 | ||||
MY Style | 212 | 221 | ||||||
$ | 44,995 | $ | 43,319 | |||||
_____________________________ | ||||||||
-1 | The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in EEG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that EEG was not a VIE based on the fact that EEG had sufficient equity at risk. The Company accounts for EEG as an equity investment under the voting interest model, as the Company has granted the other shareholder of EEG an irrevocable proxy to vote a certain number of the Company’s shares such that the other shareholder of EEG has voting control of 51.0% of EEG’s common stock, as well as the right to appoint four of the five members of EEG’s Board of Directors. | |||||||
Empire Education Group, Inc. | ||||||||
During the three months ended March 31, 2014 and 2013, the Company recorded $0.0 and $1.2 million, respectively, of equity earnings related to its investment in Empire Education Group, Inc. (EEG). During the nine months ended March 31, 2014 and 2013, the Company recorded $1.7 and $1.3 million, respectively, of equity earnings related to its investment in EEG. The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment. | ||||||||
During the nine months ended March 31, 2013, the Company recorded an other than temporary impairment charge on its investment in EEG of $17.9 million. This non-cash charge was the result of EEG updating its financial projections for future periods to reflect declining enrollment, revenue and profitability in the for-profit secondary educational market during the nine months ended March 31, 2013. | ||||||||
Based on the Company’s fiscal year 2013 assessment of the carrying value of its investment in EEG, the Company’s estimate of EEG’s fair value exceeds carrying value by approximately 5 percent. The Company continues to monitor EEG’s performance and trends in the for-profit secondary educational market to assess the carrying value of its investment. In the event EEG's performance or trends change unfavorably, EEG could be required to impair its goodwill. As of March 31, 2014, the Company’s share of EEG’s goodwill balance is approximately $16 million. | ||||||||
MY Style | ||||||||
During the nine months ended March 31, 2014, the Company recovered $3.1 million on its previously impaired investments in MY Style’s parent company, Yamano Holding Corporation (Yamano), reported in equity in income (loss) of affiliated companies on the unaudited Condensed Consolidated Statement of Operations. During fiscal year 2011, the Company had estimated the fair values of the Yamano Class A and Class B Preferred Stock to be negligible and recorded an other than temporary non-cash impairment. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE: | 9 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
EARNINGS PER SHARE | ' | ||||||||||||
EARNINGS PER SHARE: | |||||||||||||
The Company’s basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards, RSUs and PSUs. The Company’s diluted earnings per share is calculated as net (loss) 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 value of the Company’s common stock are excluded from the computation of diluted earnings per share. The Company’s diluted earnings per share will also reflect the assumed conversion under the Company’s convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share. | |||||||||||||
Net (loss) income from continuing operations available to common shareholders and net (loss) income from continuing operations for diluted earnings per share under the if-converted method was the same for all periods presented. | |||||||||||||
Impacting the net (loss) income from continuing operations were certain errors related to prior periods that were recorded during the first quarter of fiscal year 2014. The errors related to an overstatement of inventory and self-insurance accruals and an understatement of cash in prior periods. Because these errors were not material to the Company’s consolidated financial statements for any prior periods or the first quarter of fiscal year 2014, the Company recorded a cumulative adjustment to correct the errors during the first quarter of fiscal year 2014. | |||||||||||||
The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share: | |||||||||||||
For the Periods Ended March 31, | |||||||||||||
Three Months | Nine Months | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
(Shares in thousands) | |||||||||||||
Weighted average shares for basic earnings per share | 56,473 | 56,345 | 56,450 | 56,816 | |||||||||
Effect of dilutive securities: | |||||||||||||
Dilutive effect of stock-based compensation (1) | — | 155 | — | 112 | |||||||||
Weighted average shares for diluted earnings per share | 56,473 | 56,500 | 56,450 | 56,928 | |||||||||
_____________________________ | |||||||||||||
-1 | For the three and nine months ended March 31, 2014, 142,536 and 124,189 common stock equivalents of potentially dilutive common stock, respectively, were excluded from the diluted earnings per share calculation due to the net loss from continuing operations. | ||||||||||||
The computation of weighted average shares outstanding, assuming dilution, excluded 1,936,388 and 1,514,325 of stock-based awards during the three months ended March 31, 2014 and 2013, respectively, and 1,712,855 and 1,619,322 of stock-based awards during the nine months ended March 31, 2014 and 2013, respectively, as they were not dilutive under the treasury stock method. The computation of weighted average shares outstanding, assuming dilution, also excluded 11,316,328 and 11,267,057 of shares from convertible debt as they were not dilutive for the three months ended March 31, 2014 and 2013, respectively, and 11,304,707 and 11,253,490 as they were not dilutive for the nine months ended March 31, 2014 and 2013, respectively. |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY: | 9 Months Ended |
Mar. 31, 2014 | |
SHAREHOLDERS' EQUITY: | ' |
SHAREHOLDERS' EQUITY | ' |
SHAREHOLDERS’ EQUITY: | |
Additional Paid-In Capital: | |
The $2.4 million increase in additional paid-in capital during the nine months ended March 31, 2014 was primarily due to stock-based compensation, partly offset by the tax impact of vested and distributed RSAs and RSUs and the expiration of unexercised stock options and stock appreciation rights. |
INCOME_TAXES
INCOME TAXES: | 9 Months Ended |
Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
INCOME TAXES: | |
During the three and nine months ended March 31, 2014, the Company recognized tax expense of $(0.9) and $(72.8) million, respectively, with corresponding effective tax rates of (9.3)% and (142.0)%. During the three and nine months ended March 31, 2013, the Company recognized tax benefit (expense) of $2.9 and $(1.2) million, respectively, with corresponding effective tax rates of 91.6% and 3.3%. | |
The recorded tax expense and effective tax rate for the three months ended March 31, 2014 are different than what would normally be expected due to the effect of the non-cash valuation allowance established against the Company’s deferred tax assets. The recorded tax benefit and effective tax rate for the three months ended March 31, 2013 were higher than would be expected due to the benefit recorded for Work Opportunity Tax Credits. | |
The recorded tax expense and effective tax rate for the nine months ended March 31, 2014 are higher than what would normally be expected due to the effect of the non-cash valuation allowance established against the Company’s deferred tax assets and the tax effect of the second quarter non-cash goodwill impairment charge which was only partly deductible for income tax purposes. The recorded tax expense and effective tax rate for the nine months ended March 31, 2013 were lower than would be expected due to the recognition of a $33.8 million foreign currency translation gain which was primarily non-taxable. | |
The Company’s United States federal income tax returns for the fiscal years 2010 and 2011 are currently under audit. All earlier tax years are closed to examination. The Internal Revenue Service (IRS) has identified certain issues that may result in audit adjustments. The Company is reviewing the issues identified to date. Resolution of these issues is not expected to have a material impact on the Company’s financial statements. For state tax audits, the statute of limitations generally runs three to four years resulting in a number of returns being open for tax audits dating back to fiscal year 2009. The Company is currently under audit in a number of states in which the statute of limitations has been extended for fiscal years 2007 and forward. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES: | 9 Months Ended |
Mar. 31, 2014 | |
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. | |
In addition, the Company is a nominal defendant, and nine current and former directors and officers of the Company are named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder action alleges that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. The Board of Directors appointed a Special Litigation Committee to investigate the claims and allegations made in the derivative action, and to decide on behalf of the Company whether the claims and allegations should be pursued. In April 2014, the Special Litigation Committee issued a report and concluded the claims and allegations should not be pursued. The report indicates the Special Litigation Committee will request the court dismiss the shareholder derivative action. | |
The exposure to loss related to the Company’s discontinued Trade Secret salon concept is the guarantee of certain operating leases that have future minimum rents. The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial statements. | |
As described in Note 6, the Company is currently addressing certain issues that have resulted from the IRS' audit of fiscal 2010 and 2011. |
GOODWILL_AND_OTHER_INTANGIBLES
GOODWILL AND OTHER INTANGIBLES: | 9 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES | ' | ||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES: | |||||||||||||||||||||||||
The table below contains details related to the Company’s recorded goodwill: | |||||||||||||||||||||||||
31-Mar-14 | 30-Jun-13 | ||||||||||||||||||||||||
Gross | Accumulated | Net (2) | Gross | Accumulated | Net | ||||||||||||||||||||
Carrying | Impairment (1) | Carrying | Impairment | ||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Goodwill | $ | 677,365 | $ | (253,661 | ) | $ | 423,704 | $ | 679,607 | $ | (218,722 | ) | $ | 460,885 | |||||||||||
_____________________________ | |||||||||||||||||||||||||
(1) The table below contains additional information regarding accumulated impairment losses: | |||||||||||||||||||||||||
Fiscal Year | Impairment Charge | Reporting Unit (3) | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
2009 | $ | (41,661 | ) | International | |||||||||||||||||||||
2010 | (35,277 | ) | North American Premium | ||||||||||||||||||||||
2011 | (74,100 | ) | North American Value | ||||||||||||||||||||||
2012 | (67,684 | ) | North American Premium | ||||||||||||||||||||||
2014 (4) | (34,939 | ) | North American Premium | ||||||||||||||||||||||
Total | $ | (253,661 | ) | ||||||||||||||||||||||
_____________________________ | |||||||||||||||||||||||||
(2) Remaining net goodwill relates to the Company’s North American Value reporting unit. | |||||||||||||||||||||||||
(3) See Notes 1 and 11 to the unaudited Condensed Consolidated Financial Statements. | |||||||||||||||||||||||||
(4) See Note 1 to the unaudited Condensed Consolidated Financial Statements. | |||||||||||||||||||||||||
The table below presents other intangible assets: | |||||||||||||||||||||||||
31-Mar-14 | 30-Jun-13 | ||||||||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | ||||||||||||||||||||
Amortization (1) | Amortization (1) | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||||
Brand assets and trade names | $ | 8,994 | $ | (3,357 | ) | $ | 5,637 | $ | 9,310 | $ | (3,226 | ) | $ | 6,084 | |||||||||||
Franchise agreements | 10,824 | (6,924 | ) | 3,900 | 11,187 | (6,839 | ) | 4,348 | |||||||||||||||||
Lease intangibles | 14,732 | (7,117 | ) | 7,615 | 14,754 | (6,582 | ) | 8,172 | |||||||||||||||||
Non-compete agreements | 191 | (164 | ) | 27 | 201 | (147 | ) | 54 | |||||||||||||||||
Other | 4,815 | (2,035 | ) | 2,780 | 4,614 | (1,776 | ) | 2,838 | |||||||||||||||||
$ | 39,556 | $ | (19,597 | ) | $ | 19,959 | $ | 40,066 | $ | (18,570 | ) | $ | 21,496 | ||||||||||||
_____________________________ | |||||||||||||||||||||||||
-1 | Balance sheet accounts are converted at the applicable exchange rates effective as of the reported balance sheet dates, while income statement accounts are converted at the average exchange rates for the year-to-date periods presented. |
FINANCING_ARRANGEMENTS
FINANCING ARRANGEMENTS: | 9 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||
FINANCING ARRANGEMENTS | ' | ||||||||||||
FINANCING ARRANGEMENTS: | |||||||||||||
The Company’s long-term debt consisted of the following: | |||||||||||||
Amounts outstanding | |||||||||||||
Maturity Dates | Interest Rate | March 31, | June 30, | ||||||||||
2014 | 2013 | ||||||||||||
(fiscal year) | (Dollars in thousands) | ||||||||||||
Convertible senior notes | 2015 | 5.00% | $ | 170,751 | $ | 166,454 | |||||||
Senior term notes | 2018 | 5.75 | 120,000 | — | |||||||||
Revolving credit facility | 2018 | — | — | — | |||||||||
Equipment and leasehold notes payable | 2015 - 2016 | 4.90 - 8.75 | 3,082 | 8,316 | |||||||||
293,833 | 174,770 | ||||||||||||
Less current portion | (173,828 | ) | (173,515 | ) | |||||||||
Long-term portion | $ | 120,005 | $ | 1,255 | |||||||||
Convertible Senior Notes | |||||||||||||
In July 2009, the Company issued $172.5 million aggregate principal amount of 5.0% convertible senior notes due July 2014. The notes are unsecured, senior obligations of the Company and interest is payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0% per year. As of March 31, 2014, the conversion rate was 65.6019 shares of the Company’s common stock per $1,000 principal amount of notes, representing a conversion price of approximately $15.24 per share of the Company’s common stock. Interest expense related to the 5.0% contractual interest coupon was $2.2 and $6.5 million for both the three and nine months ended March 31, 2014 and 2013, respectively. During the three and nine months ended March 31, 2014, interest expense related to the amortization of the debt discount was $1.4 and $4.3 million, respectively. During the three and nine months ended March 31, 2013, interest expense related to the amortization of the debt discount was $1.3 and $3.9 million, respectively. | |||||||||||||
In April 2014, the Company notified the holders of its outstanding convertible senior notes due July 2014, of its election to settle the notes through the use of a combination of cash and shares of the Company’s common stock. The Company will settle these notes in cash up to a maximum conversion price of $16.23 per share of the Company’s common stock, or approximately $183.7 million. The Company will utilize shares of common stock, if necessary, to settle remaining obligations in excess of the $16.23 per share conversion price. | |||||||||||||
Senior Term Notes | |||||||||||||
In November 2013, the Company issued $120.0 million aggregate principal amount of 5.75% senior notes due December 2017 (Senior Term Notes). Net proceeds from the issuance of the Senior Term Notes were $118.1 million, after underwriting and issuance costs of $1.9 million. Interest on the Senior Term Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2014, at a rate of 5.75% per year. The Senior Term Notes rank equally with the Company’s existing and future unsubordinated unsecured debt. The Senior Term Notes are effectively subordinated to any of the Company’s existing and future secured debt. The Senior Term Notes are unsecured and not guaranteed by any of the Company’s subsidiaries or any third party. | |||||||||||||
The Senior Term Notes contain maintenance covenants, including limitations on incurrence of debt, granting of liens, investments, merger or consolidation, certain restricted payments and transactions with affiliates, none of which are more restrictive than those under the Company’s credit facility. | |||||||||||||
Revolving Credit Facility | |||||||||||||
As of March 31, 2014 and June 30, 2013, the Company had no outstanding borrowings under this facility. Additionally, the Company had outstanding standby letters of credit under the facility of $2.0 and $2.2 million at March 31, 2014 and June 30, 2013, respectively, primarily related to the Company's self-insurance program. Unused available credit under the facility at March 31, 2014 and June 30, 2013 was $398.0 and $397.8 million, respectively. | |||||||||||||
The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three months ended March 31, 2014. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS: | 9 Months Ended |
Mar. 31, 2014 | |
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 that are Measured at Fair Value on a Recurring Basis | |
As of March 31, 2014, the Company’s financial instruments included cash, cash equivalents, receivables, accounts payable and debt. The fair value of cash, cash equivalents, receivables and accounts payable approximated their carrying values as of March 31, 2014 and June 30, 2013. As of March 31, 2014, the estimated fair value and carrying value of debt was $306.1 and $293.8 million, respectively. As of June 30, 2013, the fair value of debt approximated its carrying value. | |
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 the Company’s investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. These assets' fair values are considered Level 3. During the nine months ended March 31, 2014, goodwill of the Regis salon concept reporting unit with a carrying value of $34.9 million was written down to its implied fair value of zero, resulting in a non-cash impairment charge of $34.9 million. The Company calculated the estimated fair value of the Regis salon concept reporting unit based on discounted future cash flows that utilized estimates in annual revenues, cost of service and product rates, fixed expense rates, allocated corporate overhead, long-term growth rates for determining terminal value, discount rate based on the weighted average cost of capital and comparative market multiples. See Notes 1 and 8 to the unaudited Condensed Consolidated Financial Statements. |
SEGMENT_INFORMATION
SEGMENT INFORMATION: | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
SEGMENT INFORMATION | ' | ||||||||||||||||
SEGMENT INFORMATION: | |||||||||||||||||
Segment information is prepared on the same basis the chief operating decision maker reviews financial information for operational decision-making purposes. During the second quarter of fiscal year 2014, the Company redefined its operating segments to reflect how the chief operating decision maker evaluates the business as a result of the restructuring of the Company's North American field organization. The field reorganization, which impacted all North American salons except for salons in the mass premium category, was announced in the fourth quarter of fiscal year 2013 and completed in the second quarter of fiscal year 2014. The Company now reports its operations in three operating segments: North American Value, North American Premium and International. The Company's operating segments are its reportable operating segments. Prior to this change in organizational structure, the Company had two reportable operating segments: North American salons and International salons. The Company did not completely operate under the realigned operating segments structure prior to the second quarter of fiscal year 2014. | |||||||||||||||||
The North American Value reportable operating segment is comprised of 8,289 company-owned and franchised salons located mainly in strip center locations and Walmart Supercenters. North American Value salons offer high quality, convenient and value priced hair care and beauty services and retail products. SmartStyle, Supercuts, MasterCuts, Cost Cutters, and other regional trade names operating in the United States, Canada and Puerto Rico are generally within the North American Value segment. | |||||||||||||||||
The North American Premium reportable operating segment is comprised of 813 company-owned salons primarily in mall-based locations. North American Premium salons offer upscale hair care and beauty services and retail products at reasonable prices. This segment operates in the United States, Canada and Puerto Rico and primarily includes the Regis salons concept, among other trade names. | |||||||||||||||||
The International reportable operating segment is comprised of 358 company-owned salons located in malls, department stores, and high-traffic locations. International salons offer a full range of custom hair care and beauty services and retail products. This segment operates in the United Kingdom primarily under the Supercuts, Regis and Sassoon concepts. | |||||||||||||||||
Concurrent with the change in reportable operating segments, the Company revised its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. | |||||||||||||||||
For the Three Months | For the Nine Months | ||||||||||||||||
Ended March 31, | Ended March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Revenues (1): | |||||||||||||||||
North American Value | $ | 358,788 | $ | 382,666 | $ | 1,066,116 | $ | 1,139,586 | |||||||||
North American Premium | 82,878 | 93,145 | 251,862 | 283,509 | |||||||||||||
International | 29,895 | 29,126 | 90,533 | 93,367 | |||||||||||||
$ | 471,561 | $ | 504,937 | $ | 1,408,511 | $ | 1,516,462 | ||||||||||
Operating (loss) income (1): | |||||||||||||||||
North American Value | $ | 29,989 | $ | 36,440 | $ | 86,826 | $ | 110,457 | |||||||||
North American Premium (2) | (3,853 | ) | (4,428 | ) | (44,001 | ) | (9,265 | ) | |||||||||
International | (3,109 | ) | (213 | ) | (2,871 | ) | 442 | ||||||||||
Total segment operating (loss) income | 23,027 | 31,799 | 39,954 | 101,634 | |||||||||||||
Unallocated Corporate | (26,248 | ) | (28,491 | ) | (76,406 | ) | (80,330 | ) | |||||||||
Operating (loss) income (1) | $ | (3,221 | ) | $ | 3,308 | $ | (36,452 | ) | $ | 21,304 | |||||||
_____________________________ | |||||||||||||||||
-1 | See Note 2 to the unaudited Condensed Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as a discontinued operation. | ||||||||||||||||
-2 | The nine months ended March 31, 2014 includes a non-cash goodwill impairment charge of $34.9 million for the Regis salon concept reporting unit. See Notes 1 and 8 to the unaudited Condensed Consolidated Financial Statements. |
BASIS_OF_PRESENTATION_OF_UNAUD1
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Stock-Based Employee Compensation | ' | ||||||||||||||||
Stock-Based Employee Compensation: | |||||||||||||||||
During the three and nine months ended March 31, 2014, the Company granted various equity awards including restricted stock units (RSUs), equity-based stock appreciation rights (SARs), and performance share units (PSUs). There were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans that have been approved by the shareholders of the Company. | |||||||||||||||||
A summary of equity granted is as follows: | |||||||||||||||||
For the Periods Ended March 31, 2014 | |||||||||||||||||
Three Months | Nine Months | ||||||||||||||||
Restricted stock units | 10,169 | 360,252 | |||||||||||||||
Equity-based stock appreciation rights | — | 469,482 | |||||||||||||||
Performance share units | — | 304,550 | |||||||||||||||
Total compensation cost for stock-based payment arrangements totaled $1.3 and $1.4 million for the three months ended March 31, 2014 and 2013, respectively, and $4.9 and $4.7 million for the nine months ended March 31, 2014 and 2013, respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations. | |||||||||||||||||
Long-Lived Asset Impairment Assessments, Excluding Goodwill | ' | ||||||||||||||||
Long-Lived Asset Impairment Assessments, Excluding Goodwill: | |||||||||||||||||
The Company assesses the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Impairment is evaluated based on the sum of undiscounted estimated cash flows expected to result from the use of long-lived assets that do not recover their carrying values. If the undiscounted estimated future cash flows are less than the carrying value of the asset, the Company calculates an impairment charge based on the asset's estimated fair value. The fair value of the long-lived asset is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. During the three and nine months ended March 31, 2014 and 2013, the Company recorded non-cash impairment charges primarily as a result of continued negative same-store sales. | |||||||||||||||||
A summary of these impairment charges is as follows: | |||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
North American Value | $ | 5,919 | $ | 1,056 | $ | 9,105 | $ | 3,172 | |||||||||
North American Premium | 1,626 | 539 | 4,625 | 1,617 | |||||||||||||
International | 1,377 | 81 | 1,545 | 246 | |||||||||||||
Total | $ | 8,922 | $ | 1,676 | $ | 15,275 | $ | 5,035 | |||||||||
Goodwill | ' | ||||||||||||||||
Goodwill: | |||||||||||||||||
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. Goodwill is tested for impairment annually during the Company’s fourth fiscal quarter or at the time of a triggering event. | |||||||||||||||||
The Company concluded there were no triggering events requiring an interim goodwill impairment test during the three months ended March 31, 2014. In addition, the Company's fair value, as determined by the sum of its reporting units’ fair values, reconciled to within a reasonable range of the Company’s market capitalization as of March 31, 2014, which included an assumed control premium of 30.0%. Accordingly, the fair value of the North American Value reporting unit, the only unit with goodwill at March 31, 2014, continues to exceed its carrying value by greater than 20.0%. | |||||||||||||||||
During the second quarter of fiscal year 2014, the Company experienced two triggering events that resulted in the Company testing its goodwill for impairment. First, the Company redefined its operating segments to reflect how the chief operating decision maker evaluates the business as a result of restructuring the Company's North American field organization. The field reorganization, which impacted all North American salons except for salons in the mass premium category, was announced in the fourth quarter of fiscal year 2013 and completed in the second quarter of fiscal year 2014. The Company did not completely operate under the realigned operating structure prior to the second quarter of fiscal year 2014. | |||||||||||||||||
Second, the Regis and Promenade salon concepts reported lower than projected same-store sales that were unfavorable compared to the Company’s projections used in the fiscal year 2013 annual goodwill impairment test. The disruptive impact of strategic initiatives announced in the fourth quarter of fiscal year 2013 on the first two fiscal quarters of 2014 was greater than anticipated. | |||||||||||||||||
Pursuant to the change in operating segments and the lower than projected same-store sales, during the second quarter of fiscal year 2014, the Company performed interim goodwill impairment tests on its Regis and Promenade salon concept reporting units. The impairment tests resulted in a $34.9 million non-cash goodwill impairment charge on the Regis salon concept reporting unit and no impairment on the Promenade salon concept, as its estimated fair value exceeded its carrying value by approximately 12.0%. The Company considered the negative impact of the fourth quarter fiscal year 2013 strategic initiatives on the results of the remaining reporting units and determined their fair values were significantly greater than their carrying values at December 31, 2013 and therefore did not perform interim goodwill impairment tests on these remaining reporting units. | |||||||||||||||||
In connection with the change in operating segment structure, the Company changed its North American reporting units from five reporting units: SmartStyle, Supercuts, MasterCuts, Regis and Promenade, to two reporting units: North American Value and North American Premium. Subsequent to the interim impairment test of goodwill, the Company compared the carrying value, including goodwill, of the reporting units under the new reporting unit structure to their estimated fair values. The fair value of the North American Value reporting unit exceeded its carrying value by greater than 20.0%. The North American Premium reporting unit does not have any goodwill, as it was fully impaired as of December 31, 2013. Based on the changes to the Company's operating segment structure, goodwill was reallocated to the new reporting units at December 31, 2013 and June 30, 2013. | |||||||||||||||||
Income Tax, Policy | ' | ||||||||||||||||
Income Taxes: | |||||||||||||||||
As of March 31, 2014, after excluding certain deferred tax liabilities related to assets with indefinite lives, the Company had net deferred tax assets of $89.5 million, which generally expire many years into the future or have no definite expiration period. On a quarterly basis, the Company is required to assess the realizability of deferred tax assets. Realization of deferred tax assets is ultimately dependent upon future taxable income. While the determination of whether or not to record a valuation allowance is not fully governed by a specific objective test, accounting guidance places significant weight on recent financial performance. | |||||||||||||||||
During the second quarter of fiscal year 2014, the impacts from strategic initiatives implemented late in fiscal year 2013 continued to negatively impact the Company’s financial performance. Accordingly, the Company incurred a non-cash charge of $83.1 million to establish a valuation allowance against its United States (U.S.) deferred tax assets. | |||||||||||||||||
During the third quarter of fiscal year 2014, the Company incurred a non-cash charge of $1.3 million to establish a valuation allowance against its United Kingdom (U.K.) deferred tax assets. The primary reason for this charge was the U.K. operations reported cumulative pretax losses for the twelve consecutive quarters ended March 31, 2014. | |||||||||||||||||
A summary of the activity for the deferred tax asset valuation allowance is as follows: | |||||||||||||||||
For the Nine Months Ended March 31, 2014 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Balance, September 30, 2013 | $ | — | |||||||||||||||
U.S. deferred tax asset valuation allowance | 83,140 | ||||||||||||||||
Balance, December 31, 2013 | 83,140 | ||||||||||||||||
U.K. deferred tax asset valuation allowance | 1,251 | ||||||||||||||||
Changes in deferred tax asset valuation allowance | 2,750 | ||||||||||||||||
Balance, March 31, 2014 | $ | 87,141 | |||||||||||||||
The Company will continue to assess the ability to realize its deferred tax assets on a quarterly basis, and will reverse the valuation allowance and record a tax benefit when the Company generates sustainable pretax earnings. | |||||||||||||||||
Foreign Currency Translation | ' | ||||||||||||||||
Foreign Currency Translation: | |||||||||||||||||
During the nine months ended March 31, 2013, the Company completed the sale of its investment in Provalliance and subsequently liquidated all foreign entities with Euro denominated operations. As a result, the Company recognized a net $33.8 million foreign currency translation gain within interest income and other, net in the unaudited Condensed Consolidated Statement of Operations for amounts previously classified within accumulated other comprehensive income. | |||||||||||||||||
Accounting Standards Recently Issued But Not Yet Adopted by the Company | ' | ||||||||||||||||
Accounting Standards Recently Issued But Not Yet Adopted by the Company: | |||||||||||||||||
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | |||||||||||||||||
In April 2014, the Financial Accounting Standards Board (FASB) updated the accounting guidance related to the definition of a discontinued operation and the related disclosures. The updated accounting guidance defines a discontinued operation as a disposal of a component or a group of components that is to be disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. | |||||||||||||||||
Accounting for Cumulative Translation Adjustment upon Derecognition of Foreign Entities | |||||||||||||||||
In March 2013, the FASB updated the accounting guidance related to the release of cumulative translation adjustments. The updated accounting guidance clarified when to release cumulative translation adjustments into net income. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. | |||||||||||||||||
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | |||||||||||||||||
In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of these requirements to have a material impact on the Company’s consolidated financial statements. |
BASIS_OF_PRESENTATION_OF_UNAUD2
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block] | ' | ||||||||||||||||
A summary of equity granted is as follows: | |||||||||||||||||
For the Periods Ended March 31, 2014 | |||||||||||||||||
Three Months | Nine Months | ||||||||||||||||
Restricted stock units | 10,169 | 360,252 | |||||||||||||||
Equity-based stock appreciation rights | — | 469,482 | |||||||||||||||
Performance share units | — | 304,550 | |||||||||||||||
Schedule of Impaired Long-Lived Assets Held and Used [Table Text Block] | ' | ||||||||||||||||
A summary of these impairment charges is as follows: | |||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
North American Value | $ | 5,919 | $ | 1,056 | $ | 9,105 | $ | 3,172 | |||||||||
North American Premium | 1,626 | 539 | 4,625 | 1,617 | |||||||||||||
International | 1,377 | 81 | 1,545 | 246 | |||||||||||||
Total | $ | 8,922 | $ | 1,676 | $ | 15,275 | $ | 5,035 | |||||||||
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | ' | ||||||||||||||||
A summary of the activity for the deferred tax asset valuation allowance is as follows: | |||||||||||||||||
For the Nine Months Ended March 31, 2014 | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Balance, September 30, 2013 | $ | — | |||||||||||||||
U.S. deferred tax asset valuation allowance | 83,140 | ||||||||||||||||
Balance, December 31, 2013 | 83,140 | ||||||||||||||||
U.K. deferred tax asset valuation allowance | 1,251 | ||||||||||||||||
Changes in deferred tax asset valuation allowance | 2,750 | ||||||||||||||||
Balance, March 31, 2014 | $ | 87,141 | |||||||||||||||
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS: (Tables) | 9 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||
Schedule of the results of operations of discontinued Hair Club operations | ' | |||||||
The following summarizes the results of operations of the discontinued Hair Club operations: | ||||||||
For the Periods Ended March 31, 2013 | ||||||||
Three Months | Nine Months | |||||||
(Dollars in thousands) | ||||||||
Revenues | $ | 38,424 | $ | 115,604 | ||||
Income from discontinued operations, before income taxes | 2,247 | 14,113 | ||||||
Income tax provision on discontinued operations | (956 | ) | (5,632 | ) | ||||
Equity in income of affiliated companies, net of income taxes | 174 | 614 | ||||||
Income from discontinued operations, net of income taxes | $ | 1,465 | $ | 9,095 | ||||
INVESTMENT_IN_AFFILIATES_Table
INVESTMENT IN AFFILIATES: (Tables) | 9 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | ' | |||||||
Schedule of carrying amount of investments in affiliates | ' | |||||||
The table below presents the carrying amount of investments in affiliates: | ||||||||
March 31, | June 30, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Empire Education Group, Inc. (1) | $ | 44,783 | $ | 43,098 | ||||
MY Style | 212 | 221 | ||||||
$ | 44,995 | $ | 43,319 | |||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE: (Tables) | 9 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Reconciliation of shares used in the computation of basic and diluted earnings per share | ' | ||||||||||||
The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share: | |||||||||||||
For the Periods Ended March 31, | |||||||||||||
Three Months | Nine Months | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
(Shares in thousands) | |||||||||||||
Weighted average shares for basic earnings per share | 56,473 | 56,345 | 56,450 | 56,816 | |||||||||
Effect of dilutive securities: | |||||||||||||
Dilutive effect of stock-based compensation (1) | — | 155 | — | 112 | |||||||||
Weighted average shares for diluted earnings per share | 56,473 | 56,500 | 56,450 | 56,928 | |||||||||
_____________________________ | |||||||||||||
-1 | For the three and nine months ended March 31, 2014, 142,536 and 124,189 common stock equivalents of potentially dilutive common stock, respectively, were excluded from the diluted earnings per share calculation due to the net loss from continuing operations. |
GOODWILL_AND_OTHER_INTANGIBLES1
GOODWILL AND OTHER INTANGIBLES: (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Schedule of the Company's recorded goodwill | ' | ||||||||||||||||||||||||
The table below contains details related to the Company’s recorded goodwill: | |||||||||||||||||||||||||
31-Mar-14 | 30-Jun-13 | ||||||||||||||||||||||||
Gross | Accumulated | Net (2) | Gross | Accumulated | Net | ||||||||||||||||||||
Carrying | Impairment (1) | Carrying | Impairment | ||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Goodwill | $ | 677,365 | $ | (253,661 | ) | $ | 423,704 | $ | 679,607 | $ | (218,722 | ) | $ | 460,885 | |||||||||||
_____________________________ | |||||||||||||||||||||||||
(1) The table below contains additional information regarding accumulated impairment losses: | |||||||||||||||||||||||||
Fiscal Year | Impairment Charge | Reporting Unit (3) | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
2009 | $ | (41,661 | ) | International | |||||||||||||||||||||
2010 | (35,277 | ) | North American Premium | ||||||||||||||||||||||
2011 | (74,100 | ) | North American Value | ||||||||||||||||||||||
2012 | (67,684 | ) | North American Premium | ||||||||||||||||||||||
2014 (4) | (34,939 | ) | North American Premium | ||||||||||||||||||||||
Total | $ | (253,661 | ) | ||||||||||||||||||||||
_____________________________ | |||||||||||||||||||||||||
(2) Remaining net goodwill relates to the Company’s North American Value reporting unit. | |||||||||||||||||||||||||
(3) See Notes 1 and 11 to the unaudited Condensed Consolidated Financial Statements. | |||||||||||||||||||||||||
(4) See Note 1 to the unaudited Condensed Consolidated Financial Statements. | |||||||||||||||||||||||||
Schedule of other intangible assets | ' | ||||||||||||||||||||||||
The table below presents other intangible assets: | |||||||||||||||||||||||||
31-Mar-14 | 30-Jun-13 | ||||||||||||||||||||||||
Cost | Accumulated | Net | Cost | Accumulated | Net | ||||||||||||||||||||
Amortization (1) | Amortization (1) | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||||
Brand assets and trade names | $ | 8,994 | $ | (3,357 | ) | $ | 5,637 | $ | 9,310 | $ | (3,226 | ) | $ | 6,084 | |||||||||||
Franchise agreements | 10,824 | (6,924 | ) | 3,900 | 11,187 | (6,839 | ) | 4,348 | |||||||||||||||||
Lease intangibles | 14,732 | (7,117 | ) | 7,615 | 14,754 | (6,582 | ) | 8,172 | |||||||||||||||||
Non-compete agreements | 191 | (164 | ) | 27 | 201 | (147 | ) | 54 | |||||||||||||||||
Other | 4,815 | (2,035 | ) | 2,780 | 4,614 | (1,776 | ) | 2,838 | |||||||||||||||||
$ | 39,556 | $ | (19,597 | ) | $ | 19,959 | $ | 40,066 | $ | (18,570 | ) | $ | 21,496 | ||||||||||||
_____________________________ | |||||||||||||||||||||||||
-1 | Balance sheet accounts are converted at the applicable exchange rates effective as of the reported balance sheet dates, while income statement accounts are converted at the average exchange rates for the year-to-date periods presented. |
FINANCING_ARRANGEMENTS_Tables
FINANCING ARRANGEMENTS: (Tables) | 9 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||
Schedule of long-term debt | ' | ||||||||||||
The Company’s long-term debt consisted of the following: | |||||||||||||
Amounts outstanding | |||||||||||||
Maturity Dates | Interest Rate | March 31, | June 30, | ||||||||||
2014 | 2013 | ||||||||||||
(fiscal year) | (Dollars in thousands) | ||||||||||||
Convertible senior notes | 2015 | 5.00% | $ | 170,751 | $ | 166,454 | |||||||
Senior term notes | 2018 | 5.75 | 120,000 | — | |||||||||
Revolving credit facility | 2018 | — | — | — | |||||||||
Equipment and leasehold notes payable | 2015 - 2016 | 4.90 - 8.75 | 3,082 | 8,316 | |||||||||
293,833 | 174,770 | ||||||||||||
Less current portion | (173,828 | ) | (173,515 | ) | |||||||||
Long-term portion | $ | 120,005 | $ | 1,255 | |||||||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION: (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Schedule of summarized financial information of reportable operating segments | ' | ||||||||||||||||
For the Three Months | For the Nine Months | ||||||||||||||||
Ended March 31, | Ended March 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Revenues (1): | |||||||||||||||||
North American Value | $ | 358,788 | $ | 382,666 | $ | 1,066,116 | $ | 1,139,586 | |||||||||
North American Premium | 82,878 | 93,145 | 251,862 | 283,509 | |||||||||||||
International | 29,895 | 29,126 | 90,533 | 93,367 | |||||||||||||
$ | 471,561 | $ | 504,937 | $ | 1,408,511 | $ | 1,516,462 | ||||||||||
Operating (loss) income (1): | |||||||||||||||||
North American Value | $ | 29,989 | $ | 36,440 | $ | 86,826 | $ | 110,457 | |||||||||
North American Premium (2) | (3,853 | ) | (4,428 | ) | (44,001 | ) | (9,265 | ) | |||||||||
International | (3,109 | ) | (213 | ) | (2,871 | ) | 442 | ||||||||||
Total segment operating (loss) income | 23,027 | 31,799 | 39,954 | 101,634 | |||||||||||||
Unallocated Corporate | (26,248 | ) | (28,491 | ) | (76,406 | ) | (80,330 | ) | |||||||||
Operating (loss) income (1) | $ | (3,221 | ) | $ | 3,308 | $ | (36,452 | ) | $ | 21,304 | |||||||
_____________________________ | |||||||||||||||||
-1 | See Note 2 to the unaudited Condensed Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as a discontinued operation. | ||||||||||||||||
-2 | The nine months ended March 31, 2014 includes a non-cash goodwill impairment charge of $34.9 million for the Regis salon concept reporting unit. See Notes 1 and 8 to the unaudited Condensed Consolidated Financial Statements. |
BASIS_OF_PRESENTATION_OF_UNAUD3
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Stock-based employees compensation | ' | ' | ' | ' |
Stock-based compensation | $1,300 | $1,400 | $4,899 | $4,723 |
RSUs | ' | ' | ' | ' |
Stock-based employees compensation | ' | ' | ' | ' |
Stock granted (in shares) | 10,169 | ' | 360,252 | ' |
SARs | ' | ' | ' | ' |
Stock-based employees compensation | ' | ' | ' | ' |
Stock granted (in shares) | 0 | ' | 469,482 | ' |
Performance share units | ' | ' | ' | ' |
Stock-based employees compensation | ' | ' | ' | ' |
Stock granted (in shares) | 0 | ' | 304,550 | ' |
BASIS_OF_PRESENTATION_OF_UNAUD4
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: BASIS OF PRESENTATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Impaired Long-Lived Assets Held and Used [Line Items] | ' | ' | ' | ' |
Salon asset impairment | $8,922 | $1,676 | $15,275 | $5,035 |
North American Value Salon Concepts [Member] | ' | ' | ' | ' |
Impaired Long-Lived Assets Held and Used [Line Items] | ' | ' | ' | ' |
Salon asset impairment | 5,919 | 1,056 | 9,105 | 3,172 |
North American Premium [Member] | ' | ' | ' | ' |
Impaired Long-Lived Assets Held and Used [Line Items] | ' | ' | ' | ' |
Salon asset impairment | 1,626 | 539 | 4,625 | 1,617 |
International | ' | ' | ' | ' |
Impaired Long-Lived Assets Held and Used [Line Items] | ' | ' | ' | ' |
Salon asset impairment | $1,377 | $81 | $1,545 | $246 |
BASIS_OF_PRESENTATION_OF_UNAUD5
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Goodwill | ' | ' | ' | ' | ' |
Triggering events | ' | 2 | ' | ' | ' |
Goodwill impairment | $0 | ' | $0 | $34,939 | $0 |
Fair Value Inputs, Control Premium | ' | ' | ' | 30.00% | ' |
Promenade Salon Concept [Member] | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' |
Goodwill impairment | ' | ' | ' | 0 | ' |
Minimum excess of fair value over carrying value for reporting units not impaired or likely to be impaired (as a percent) | ' | 12.00% | ' | ' | ' |
North American Value Salon Concepts | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' |
Minimum excess of fair value over carrying value for reporting units not impaired or likely to be impaired (as a percent) | ' | ' | ' | 20.00% | ' |
Regis Salon Concept [Member] | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' |
Goodwill impairment | ' | ' | ' | $34,939 | ' |
Scenario, Previously Reported | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' |
Number of Operating Segments | ' | ' | ' | 5 | ' |
Scenario, Actual | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' |
Number of Operating Segments | ' | ' | ' | 2 | ' |
BASIS_OF_PRESENTATION_OF_UNAUD6
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 3) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 |
UNITED STATES | UNITED STATES | UNITED KINGDOM | ||||
Valuation Allowance [Line Items] | ' | ' | ' | ' | ' | ' |
Valuation Allowances and Reserves, Balance | $87,141,000 | $83,140,000 | $0 | ' | ' | ' |
Valuation Allowance, Deferred Tax Asset, Change in Amount | ' | ' | ' | 2,750,000 | 83,140,000 | 1,251,000 |
Deferred Tax Assets, Net | $89,500,000 | ' | ' | ' | ' | ' |
BASIS_OF_PRESENTATION_OF_UNAUD7
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Derivative Instruments | ' | ' | ' | ' |
Foreign currency translation gain | $0 | $0 | $0 | $33,842 |
Provalliance | ' | ' | ' | ' |
Derivative Instruments | ' | ' | ' | ' |
Foreign currency translation gain | ' | ' | $33,800 | ' |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS: (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Apr. 09, 2013 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | |
Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Trade Secret Salon Concept [Member] | Trade Secret Salon Concept [Member] | |||||
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash received after preliminary closing adjustments | ' | ' | ' | ' | $162,800,000 | ' | ' | ' | ' | ' | ' |
Cash purchase price | ' | ' | ' | ' | 163,500,000 | ' | ' | ' | ' | ' | ' |
Receivable recorded | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' |
Cash received as a result of the final working capital provision | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | ' |
Final purchase price after closing adjustments | ' | ' | ' | ' | ' | ' | 164,800,000 | ' | ' | ' | ' |
Cash received as a result of excess cash | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' |
Income from discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues | ' | ' | ' | ' | ' | 38,424,000 | ' | 115,604,000 | ' | ' | ' |
Income from discontinued operations, before income taxes | ' | ' | ' | ' | ' | 2,247,000 | ' | 14,113,000 | ' | ' | ' |
Income tax provision on discontinued operations | ' | ' | ' | ' | ' | -956,000 | ' | -5,632,000 | ' | ' | ' |
Equity in income of affiliated companies, net of income taxes | ' | ' | ' | ' | ' | 174,000 | ' | 614,000 | ' | ' | ' |
Income from discontinued operations, net of income taxes | $609,000 | $1,465,000 | $609,000 | $9,095,000 | ' | $1,465,000 | ' | $9,095,000 | ' | $609,000 | ($609,000) |
INVESTMENT_IN_AFFILIATES_Detai
INVESTMENT IN AFFILIATES: (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | |
Investment in affiliates | ' | ' | ' | ' | ' |
Investment in affiliates | $44,995,000 | ' | $44,995,000 | ' | $43,319,000 |
Goodwill balance | 423,704,000 | ' | 423,704,000 | ' | 460,885,000 |
Empire Education Group Inc [Member] | ' | ' | ' | ' | ' |
Investment in affiliates | ' | ' | ' | ' | ' |
Investment in affiliates | 44,783,000 | ' | 44,783,000 | ' | 43,098,000 |
Equity in income (loss), net of income taxes | 0 | 1,200,000 | 1,700,000 | 1,300,000 | ' |
Equity Method Investment, Other than Temporary Impairment | ' | ' | ' | 17,900,000 | ' |
Percentage that fair value exceeded carrying value | ' | ' | ' | ' | 5.00% |
Goodwill balance | 16,000,000 | ' | 16,000,000 | ' | ' |
MY Style | ' | ' | ' | ' | ' |
Investment in affiliates | ' | ' | ' | ' | ' |
Investment in affiliates | $212,000 | ' | $212,000 | ' | $221,000 |
Empire Education Group Inc [Member] | ' | ' | ' | ' | ' |
Investment in affiliates | ' | ' | ' | ' | ' |
Equity Method Investment, Ownership Percentage | 51.00% | ' | 51.00% | ' | ' |
INVESTMENT_IN_AFFILIATES_Detai1
INVESTMENT IN AFFILIATES: (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Summarized Statement of Operations Information: | ' | ' | ' | ' |
Equity in income of affiliated companies | $23 | $1,156 | $4,762 | ($15,976) |
MY Style | Yamano Holding Corporation | ' | ' | ' | ' |
Summarized Statement of Operations Information: | ' | ' | ' | ' |
Equity in income of affiliated companies | ' | ' | $3,100 | ' |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE: (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Reconciliation of the income (loss) available to common shareholders and the income (loss) for diluted earnings per share | ' | ' | ' | ' |
Net (loss) income from continuing operations available to common shareholders | ($10,093) | $896 | ($119,314) | $19,424 |
Weighted average common and common equivalent shares outstanding: | ' | ' | ' | ' |
Weighted average shares for basic earnings per share (in shares) | 56,473,000 | 56,345,000 | 56,450,000 | 56,816,000 |
Effect of dilutive securities: | ' | ' | ' | ' |
Dilutive effect of stock-based compensation (in shares) | 0 | 155,000 | 0 | 112,000 |
Weighted average shares for diluted earnings per share (in shares) | 56,473,000 | 56,500,000 | 56,450,000 | 56,928,000 |
Awards excluded from earnings per share calculations | ' | ' | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 142,536 | ' | 124,189 | ' |
Equity-based compensation awards | ' | ' | ' | ' |
Awards excluded from earnings per share calculations | ' | ' | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 1,936,388 | 1,514,325 | 1,712,855 | 1,619,322 |
Shares issuable upon conversion of debt | ' | ' | ' | ' |
Awards excluded from earnings per share calculations | ' | ' | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 11,316,328 | 11,267,057 | 11,304,707 | 11,253,490 |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY: (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Additional Paid-In Capital: | ' |
Increase in additional paid-in capital | $2.40 |
INCOME_TAXES_Details
INCOME TAXES: (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
(Benefit) provision for income taxes | ' | ' | ' | ' |
Income tax (benefit) expense | $857 | ($2,850) | $72,812 | $1,221 |
Effective tax rate (as a percent) | 9.30% | 91.60% | 142.00% | -3.30% |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax | 0 | 0 | 0 | 33,842 |
Provalliance | ' | ' | ' | ' |
(Benefit) provision for income taxes | ' | ' | ' | ' |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax | ' | ' | $33,800 | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Details) | 9 Months Ended |
Mar. 31, 2014 | |
director | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Number of current and former directors and officers who are named defendants | 9 |
GOODWILL_AND_OTHER_INTANGIBLES2
GOODWILL AND OTHER INTANGIBLES: (Details) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2012 | Jun. 30, 2010 | Jun. 30, 2011 | Jun. 30, 2009 |
North American Premium [Member] | North American Premium [Member] | North American Premium [Member] | North American Value Salon Concepts | International | |||
Goodwill | ' | ' | ' | ' | ' | ' | ' |
Goodwill, Gross | $677,365,000 | $679,607,000 | ' | ' | ' | ' | ' |
Accumulated Impairment | -253,661,000 | -218,722,000 | 34,939,000 | -67,684,000 | -35,277,000 | -74,100,000 | -41,661,000 |
Goodwill | $423,704,000 | $460,885,000 | ' | ' | ' | ' | ' |
GOODWILL_AND_OTHER_INTANGIBLES3
GOODWILL AND OTHER INTANGIBLES: (Details 2) (USD $) | Mar. 31, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Amortized intangible assets: | ' | ' |
Other intangibles, cost | $39,556 | $40,066 |
Other intangibles, accumulated amortization | -19,597 | -18,570 |
Other intangibles, net | 19,959 | 21,496 |
Brand assets and trade names | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 8,994 | 9,310 |
Other intangibles, accumulated amortization | -3,357 | -3,226 |
Other intangibles, net | 5,637 | 6,084 |
Franchise agreements | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 10,824 | 11,187 |
Other intangibles, accumulated amortization | -6,924 | -6,839 |
Other intangibles, net | 3,900 | 4,348 |
Lease intangibles | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 14,732 | 14,754 |
Other intangibles, accumulated amortization | -7,117 | -6,582 |
Other intangibles, net | 7,615 | 8,172 |
Non-compete agreements | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 191 | 201 |
Other intangibles, accumulated amortization | -164 | -147 |
Other intangibles, net | 27 | 54 |
Other | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 4,815 | 4,614 |
Other intangibles, accumulated amortization | -2,035 | -1,776 |
Other intangibles, net | $2,780 | $2,838 |
FINANCING_ARRANGEMENTS_Details
FINANCING ARRANGEMENTS: (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||||||||||||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Nov. 30, 2013 | Jun. 30, 2013 | Jul. 31, 2009 | Nov. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | Apr. 30, 2014 | |
Convertible senior notes | Convertible senior notes | Convertible senior notes | Convertible senior notes | Convertible senior notes | Convertible senior notes | Convertible senior notes | Senior term notes | Senior term notes | Senior term notes | Revolving credit facility | Revolving credit facility | Equipment and leasehold notes payable | Equipment and leasehold notes payable | Subsequent Event [Member] | |||||
Long-term debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate percentage | ' | ' | ' | ' | 5.00% | ' | 5.00% | ' | 5.75% | ' | 5.00% | 5.75% | 5.75% | ' | ' | ' | ' | ' | ' |
Interest rate percentage, minimum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.90% | ' | ' |
Interest rate percentage, maximum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.75% | ' | ' |
Net carrying amount of long-term debt | $293,833,000 | $293,833,000 | ' | $174,770,000 | $170,751,000 | ' | $170,751,000 | ' | ' | $166,454,000 | ' | ' | $120,000,000 | $0 | $0 | $0 | $3,082,000 | $8,316,000 | ' |
Less current portion | -173,828,000 | -173,828,000 | ' | -173,515,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt and capital lease obligations | 120,005,000 | 120,005,000 | ' | 1,255,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible Senior Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Face Amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 172,500,000 | 120,000,000 | ' | ' | ' | ' | ' | ' | ' |
Long-term debt conversion ratio | 65.6019 | ' | ' | ' | ' | ' | 0.0656019 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt conversion price (in dollars per share) | ' | ' | ' | ' | $15.24 | ' | $15.24 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense related to contractual interest coupon | ' | ' | ' | ' | 2,200,000 | 2,200,000 | 6,500,000 | 6,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest cost related to amortization of the discount | ' | ' | ' | ' | 1,400,000 | 1,300,000 | 4,300,000 | 3,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 183,700,000 |
Maximum Conversion Ratio in Cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $16.23 |
Senior Term Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term Debt, Gross | ' | 118,058,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | 118,100,000 | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Fee Amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,900,000 | ' | ' | ' | ' | ' | ' | ' |
Revolving Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of Credit Facility, Amount Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' |
Outstanding standby letters of credit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | 2,200,000 | ' | ' | ' |
Revolving credit facility remaining borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $398,000,000 | $397,800,000 | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | |
Regis Salon Concept [Member] | Regis Salon Concept [Member] | ||||||
Assets and liabilities measured at fair value on a nonrecurring basis | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Fair Value Disclosure | $306,100,000 | ' | $306,100,000 | ' | ' | ' | ' |
Debt, Long-term and Short-term, Combined Amount | 293,800,000 | ' | 293,800,000 | ' | ' | ' | ' |
Goodwill, Gross | 677,365,000 | ' | 677,365,000 | ' | 679,607,000 | ' | 34,900,000 |
Goodwill | 423,704,000 | ' | 423,704,000 | ' | 460,885,000 | 0 | ' |
Goodwill impairment | $0 | $0 | $34,939,000 | $0 | ' | $34,939,000 | ' |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION: (Details) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
segment | segment | ||||
Summarized financial information of reportable operating segments | ' | ' | ' | ' | ' |
Number of reportable segments | ' | ' | 2 | 3 | ' |
Total revenues | $471,561 | $504,937 | ' | $1,408,511 | $1,516,462 |
Operating (loss) income | -3,221 | 3,308 | ' | -36,452 | 21,304 |
Goodwill impairment | 0 | 0 | ' | 34,939 | 0 |
North American Value Salon Concepts | ' | ' | ' | ' | ' |
Summarized financial information of reportable operating segments | ' | ' | ' | ' | ' |
Number of stores | 8,289 | ' | ' | 8,289 | ' |
Total revenues | 358,788 | 382,666 | ' | 1,066,116 | 1,139,586 |
Operating (loss) income | 29,989 | 36,440 | ' | 86,826 | 110,457 |
North American Premium [Member] | ' | ' | ' | ' | ' |
Summarized financial information of reportable operating segments | ' | ' | ' | ' | ' |
Number of stores | 813 | ' | ' | 813 | ' |
Total revenues | 82,878 | 93,145 | ' | 251,862 | 283,509 |
Operating (loss) income | -3,853 | -4,428 | ' | -44,001 | -9,265 |
International | ' | ' | ' | ' | ' |
Summarized financial information of reportable operating segments | ' | ' | ' | ' | ' |
Number of stores | 358 | ' | ' | 358 | ' |
Total revenues | 29,895 | 29,126 | ' | 90,533 | 93,367 |
Operating (loss) income | -3,109 | -213 | ' | -2,871 | 442 |
Operating Segments [Member] | ' | ' | ' | ' | ' |
Summarized financial information of reportable operating segments | ' | ' | ' | ' | ' |
Operating (loss) income | 23,027 | 31,799 | ' | 39,954 | 101,634 |
Unallocated Corporate | ' | ' | ' | ' | ' |
Summarized financial information of reportable operating segments | ' | ' | ' | ' | ' |
Operating (loss) income | ($26,248) | ($28,491) | ' | ($76,406) | ($80,330) |