Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Aug. 15, 2014 | Dec. 31, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'REGIS CORP | ' | ' |
Entity Central Index Key | '0000716643 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Jun-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Entity Well-known Seasoned Issues | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'No | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $670,414,816 |
Entity Common Stock, Shares Outstanding | ' | 55,641,456 | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEET
CONSOLIDATED BALANCE SHEET (USD $) | Jun. 30, 2014 | Jun. 30, 2013 | ||
In Thousands, unless otherwise specified | ||||
Current assets: | ' | ' | ||
Cash and cash equivalents | $378,627 | $200,488 | ||
Receivables, net | 25,808 | 33,062 | ||
Inventories | 137,151 | 139,607 | ||
Deferred income taxes | 133 | 24,145 | ||
Income tax receivable | 6,461 | 33,346 | ||
Other current assets | 65,086 | 57,898 | ||
Total current assets | 613,266 | 488,546 | ||
Property and equipment, net | 266,538 | 313,460 | ||
Goodwill | 425,264 | [1] | 460,885 | |
Other intangibles, net | 19,812 | 21,496 | ||
Investment in affiliates | 28,611 | 43,319 | ||
Other assets | 62,458 | 62,786 | ||
Total assets | 1,415,949 | 1,390,492 | ||
Current liabilities: | ' | ' | ||
Long-term debt, current portion | 173,501 | [2] | 173,515 | [2] |
Accounts payable | 68,491 | 66,071 | ||
Accrued expenses | 142,720 | 137,226 | ||
Total current liabilities | 384,712 | 376,812 | ||
Long-term debt and capital lease obligations | 120,002 | 1,255 | ||
Other noncurrent liabilities | 190,454 | 155,011 | ||
Total liabilities | 695,168 | 533,078 | ||
Commitments and contingencies | ' | ' | ||
Shareholders' equity: | ' | ' | ||
Common stock, $0.05 par value; issued and outstanding, 56,651,166 and 56,630,926 common shares at June 30, 2014 and 2013, respectively | 2,833 | 2,832 | ||
Additional paid-in capital | 337,837 | 334,266 | ||
Accumulated other comprehensive income | 22,651 | 20,556 | ||
Retained earnings | 357,460 | 499,760 | ||
Total shareholders' equity | 720,781 | 857,414 | ||
Total liabilities and shareholders' equity | $1,415,949 | $1,390,492 | ||
[1] | Remaining net goodwill relates to the Company's North American Value reporting unit. | |||
[2] | As of June 30, 2013, the Company included the convertible senior notes within long-term debt, current portion on the Consolidated Balance Sheet as the holders of the senior convertible notes had the option to convert at any time after April 15, 2014. |
CONSOLIDATED_BALANCE_SHEET_Par
CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | Jun. 30, 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 | 56,651,166 | 56,630,926 |
Common stock, shares outstanding | 56,651,166 | 56,630,926 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 12 Months Ended | |||||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||
Revenues: | ' | ' | ' | |||
Service | $1,480,103 | $1,563,890 | $1,643,891 | |||
Product | 371,454 | 415,707 | 440,048 | |||
Royalties and fees | 40,880 | 39,116 | 38,288 | |||
Total revenues | 1,892,437 | [1] | 2,018,713 | [1] | 2,122,227 | [1] |
Operating expenses: | ' | ' | ' | |||
Cost of service | 907,294 | 930,687 | 941,671 | |||
Cost of product | 187,204 | 228,577 | 221,635 | |||
Site operating expenses | 202,359 | 203,912 | 207,031 | |||
General and administrative | 172,793 | 226,740 | 249,634 | |||
Rent | 322,105 | 324,716 | 331,769 | |||
Depreciation and amortization | 99,733 | 91,755 | 104,970 | |||
Goodwill impairment | 34,939 | 0 | 67,684 | |||
Total operating expenses | 1,926,427 | 2,006,387 | 2,124,394 | |||
Operating (loss) income | -33,990 | [1],[2] | 12,326 | [1],[2] | -2,167 | [1] |
Other (expense) income: | ' | ' | ' | |||
Interest expense | -22,290 | -37,594 | -28,245 | |||
Interest income and other, net | 1,952 | 35,366 | 5,098 | |||
(Loss) income from continuing operations before income taxes and equity in loss of affiliated companies | -54,328 | 10,098 | -25,314 | |||
Income taxes | -71,129 | 10,024 | 4,430 | |||
Equity in loss of affiliated companies, net of income taxes | -11,623 | -15,956 | -30,859 | |||
(Loss) income from continuing operations | -137,080 | [2],[3] | 4,166 | [2],[3] | -51,743 | |
Income (loss) from discontinued operations, net of taxes | 1,353 | [4] | 25,028 | [4] | -62,350 | |
Net (loss) income | ($135,727) | [2],[3],[4] | $29,194 | [2],[3],[4] | ($114,093) | |
Basic and diluted: | ' | ' | ' | |||
(Loss) income from continuing operations per share, basic and diluted (in dollars per share) | ($2.43) | [5] | $0.07 | ($0.91) | ||
Income (loss) from discontinued operations per share, basic and diluted (in usd per share) | $0.02 | [5] | $0.44 | [5] | ($1.09) | |
Net income (loss) per share, basic and diluted (in dollars per share) | ($2.40) | [5],[6] | $0.51 | [6] | ($2) | [6] |
Weighted average common and common equivalent shares outstanding: | ' | ' | ' | |||
Basic (in shares) | 56,482 | 56,704 | 57,137 | |||
Diluted (in shares) | 56,482 | 56,846 | 57,137 | |||
Cash dividends declared per common share | $0.12 | $0.24 | $0.24 | |||
[1] | See NoteB 2 to the Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as discontinued operations. | |||||
[2] | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Companybs U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | |||||
[3] | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | |||||
[4] | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. | |||||
[5] | Total is an annual recalculation; line items calculated quarterly may not sum to total. | |||||
[6] | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
CONSOLIDATED_STATEMENT_OF_COMP
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (USD $) | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | ||
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ||
Net (loss) income | ($135,727) | [1],[2],[3] | $29,194 | [1],[2],[3] | ($114,093) |
Foreign currency translation adjustments: | ' | ' | ' | ||
Foreign currency translation adjustments during the period | 1,930 | -1,349 | -24,254 | ||
Reclassification adjustments for gains included in net (loss) income | 0 | -33,842 | 0 | ||
Net current period foreign currency translation adjustments | 1,930 | -35,191 | -24,254 | ||
Recognition of deferred compensation and other, net of tax expense of $411 and $644, in fiscal years 2013 and 2012, respectively | 165 | 656 | 1,029 | ||
Change in fair market value of financial instruments designated as cash flow hedges, net of tax (benefit) expense of $0, $(12) and $210, respectively | 0 | -23 | 393 | ||
Other comprehensive income (loss) | 2,095 | -34,558 | -22,832 | ||
Comprehensive loss | ($133,632) | ($5,364) | ($136,925) | ||
[1] | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | ||||
[2] | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Companybs U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | ||||
[3] | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. |
CONSOLIDATED_STATEMENT_OF_COMP1
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' |
Recognition of deferred compensation and other, tax expense | ' | $411 | $644 |
Change in fair market value of financial instruments designated as cash flow hedges, tax (benefit) expense | $0 | ($12) | $210 |
CONSOLIDATED_STATEMENT_OF_SHAR
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | |
In Thousands, except Share data, unless otherwise specified | ||||||
Balance at Jun. 30, 2011 | $1,032,619 | $2,886 | $341,190 | $77,946 | $610,597 | |
Balance (in shares) at Jun. 30, 2011 | ' | 57,710,811 | ' | ' | ' | |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | |
Net (loss) income | -114,093 | ' | ' | ' | -114,093 | |
Foreign currency translation adjustments | -24,254 | ' | ' | -24,254 | ' | |
Proceeds from exercise of SARs & stock options | 0 | 0 | 0 | ' | ' | |
Proceeds from exercise of SARs & stock options (in shares) | ' | 60 | ' | ' | ' | |
Stock-based compensation | 7,597 | ' | 7,597 | ' | ' | |
Shares issued through franchise stock incentive program | 306 | 1 | 305 | ' | ' | |
Shares issued through franchise stock incentive program (in shares) | ' | 18,844 | ' | ' | ' | |
Recognition of deferred compensation and other, net of taxes | 1,422 | ' | ' | 1,422 | ' | |
Net restricted stock activity | -1,442 | -16 | -1,426 | ' | ' | |
Net restricted stock activity (in shares) | ' | -314,474 | ' | ' | ' | |
Vested stock option expirations | -723 | ' | -723 | ' | ' | |
Minority interest | 1,580 | ' | ' | ' | 1,580 | |
Dividends | -13,855 | ' | ' | ' | -13,855 | |
Balance at Jun. 30, 2012 | 889,157 | 2,871 | 346,943 | 55,114 | 484,229 | |
Balance (in shares) at Jun. 30, 2012 | ' | 57,415,241 | ' | ' | ' | |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | |
Net (loss) income | 29,194 | [1],[2],[3] | ' | ' | ' | 29,194 |
Foreign currency translation adjustments | -35,191 | ' | ' | -35,191 | ' | |
Stock repurchase program | -14,868 | -45 | -14,823 | ' | ' | |
Stock repurchase program (in shares) | ' | -909,175 | ' | ' | ' | |
Proceeds from exercise of SARs & stock options | 41 | ' | 41 | ' | ' | |
Proceeds from exercise of SARs & stock options (in shares) | ' | 3,051 | ' | ' | ' | |
Stock-based compensation | 5,881 | ' | 5,881 | ' | ' | |
Shares issued through franchise stock incentive program | 357 | 1 | 356 | ' | ' | |
Shares issued through franchise stock incentive program (in shares) | ' | 19,583 | ' | ' | ' | |
Recognition of deferred compensation and other, net of taxes | 633 | ' | ' | 633 | ' | |
Net restricted stock activity | -2,723 | 5 | -2,728 | ' | ' | |
Net restricted stock activity (in shares) | ' | -102,226 | ' | ' | ' | |
Vested stock option expirations | -1,404 | ' | -1,404 | ' | ' | |
Minority interest | 45 | ' | ' | ' | 45 | |
Dividends | -13,708 | ' | ' | ' | -13,708 | |
Balance at Jun. 30, 2013 | 857,414 | 2,832 | 334,266 | 20,556 | 499,760 | |
Balance (in shares) at Jun. 30, 2013 | 56,630,926 | 56,630,926 | ' | ' | ' | |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | |
Net (loss) income | -135,727 | [1],[2],[3] | ' | ' | ' | -135,727 |
Foreign currency translation adjustments | 1,930 | ' | ' | 1,930 | ' | |
Proceeds from exercise of SARs & stock options | 0 | ' | 0 | ' | ' | |
Proceeds from exercise of SARs & stock options (in shares) | ' | 11 | ' | ' | ' | |
Stock-based compensation | 6,400 | ' | 6,400 | ' | ' | |
Shares issued through franchise stock incentive program | 290 | 1 | 289 | ' | ' | |
Shares issued through franchise stock incentive program (in shares) | ' | 20,095 | ' | ' | ' | |
Recognition of deferred compensation and other, net of taxes | 165 | ' | ' | 165 | ' | |
Net restricted stock activity | -2,603 | 0 | -2,603 | ' | ' | |
Net restricted stock activity (in shares) | ' | -134 | ' | ' | ' | |
Vested stock option expirations | -515 | ' | -515 | ' | ' | |
Minority interest | 220 | ' | ' | ' | 220 | |
Dividends | -6,793 | ' | ' | ' | -6,793 | |
Balance at Jun. 30, 2014 | $720,781 | $2,833 | $337,837 | $22,651 | $357,460 | |
Balance (in shares) at Jun. 30, 2014 | 56,651,166 | 56,651,166 | ' | ' | ' | |
[1] | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | |||||
[2] | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Companybs U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | |||||
[3] | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. |
CONSOLIDATED_STATEMENT_OF_CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||
Cash flows from operating activities: | ' | ' | ' | |||
Net (loss) income | ($135,727) | [1],[2],[3] | $29,194 | [1],[2],[3] | ($114,093) | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ' | ' | ' | |||
Depreciation and amortization | 81,406 | 84,018 | 111,435 | |||
Equity in loss of affiliated companies | 11,623 | 15,328 | 30,043 | |||
Dividends received from affiliated companies | 0 | 1,095 | 4,047 | |||
Deferred income taxes | 68,781 | 10,322 | -14,171 | |||
Accumulated other comprehensive reclassification adjustment | 0 | -33,842 | 0 | |||
Gain from sale of discontinued operations | 0 | -17,827 | 0 | |||
Loss on write down of inventories | 854 | 12,557 | 0 | |||
Goodwill impairment | 34,939 | 0 | 146,110 | |||
Salon asset impairments | 18,327 | 8,224 | 6,636 | |||
Note receivable bad debt recovery | 0 | -333 | -805 | |||
Stock-based compensation | 6,400 | 5,881 | 7,597 | |||
Amortization of debt discount and financing costs | 8,152 | 7,346 | 6,696 | |||
Other noncash items affecting earnings | 224 | 394 | 31 | |||
Changes in operating assets and liabilities: | ' | ' | ' | |||
Receivables | 5,681 | [4] | -4,332 | [4] | -4,502 | [4] |
Inventories | 2,555 | [4] | -10,745 | [4] | 2,644 | [4] |
Income tax receivable | 26,884 | [4] | -23,421 | [4] | 2,809 | [4] |
Other current assets | -6,503 | [4] | -8,064 | [4] | -5,272 | [4] |
Other assets | -103 | [4] | 239 | [4] | -841 | [4] |
Accounts payable | 1,907 | [4] | 19,086 | [4] | -4,856 | [4] |
Accrued expenses | 3,505 | [4] | -26,431 | [4] | -8,657 | [4] |
Other noncurrent liabilities | -11,502 | [4] | 459 | [4] | -11,151 | [4] |
Net cash provided by operating activities | 117,403 | 69,148 | 153,700 | |||
Cash flows from investing activities: | ' | ' | ' | |||
Capital expenditures | -49,439 | -105,857 | -85,769 | |||
Proceeds from sale of assets | 14 | 163,916 | 502 | |||
Salon acquisitions, net of cash acquired | -15 | 0 | -2,587 | |||
Proceeds from loans and investments | 5,056 | 131,581 | 11,995 | |||
Disbursements for loans and investments | 0 | 0 | -15,000 | |||
Change in restricted cash | 0 | -24,500 | 0 | |||
Net cash (used in) provided by investing activities | -44,384 | 165,140 | -90,859 | |||
Cash flows from financing activities: | ' | ' | ' | |||
Borrowings on revolving credit facilities | 0 | 5,200 | 471,500 | |||
Payments on revolving credit facilities | 0 | -5,200 | -471,500 | |||
Proceeds from issuance of long-term debt, net of fees | 118,058 | 0 | 0 | |||
Repayments of long-term debt and capital lease obligations | -7,059 | -118,223 | -29,693 | |||
Repurchase of common stock | 0 | -14,868 | 0 | |||
Dividends paid | -6,793 | -13,708 | -13,855 | |||
Net cash provided by (used in) financing activities | 104,206 | -146,799 | -43,548 | |||
Effect of exchange rate changes on cash and cash equivalents | 914 | 1,056 | -3,613 | |||
Increase in cash and cash equivalents | 178,139 | 88,545 | 15,680 | |||
Cash and cash equivalents: | ' | ' | ' | |||
Beginning of year | 200,488 | 111,943 | 96,263 | |||
End of year | $378,627 | $200,488 | $111,943 | |||
[1] | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | |||||
[2] | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Companybs U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | |||||
[3] | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. | |||||
[4] | Changes in operating assets and liabilities exclude assets acquired and liabilities assumed through acquisitions. |
BUSINESS_DESCRIPTION_AND_SUMMA
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||
Business Description: | |||||||||||||
Regis Corporation (the Company) owns, operates and franchises hairstyling and hair care salons throughout the United States (U.S.), the United Kingdom (U.K.), Canada and Puerto Rico. Substantially all of the hairstyling and hair care salons owned and operated by the Company in the U.S., Canada and Puerto Rico are located in leased space in enclosed mall shopping centers, strip shopping centers or Walmart Supercenters. Franchised salons throughout the U.S. are primarily located in strip shopping centers. Company-owned salons in the U.K. are owned and operated in malls, leading department stores, mass merchants and high-street locations. | |||||||||||||
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 restructuring the Company's North American field organization. Based on the way the Company now manages its business, it has three reportable segments: North American Value, North American Premium and International salons. Prior to this change, the Company had two reportable operating segments: North American salons and International salons. See Note 14 to the Consolidated Statement of Operations. Concurrent with the change in reportable operating segments, the Company revised its prior period financial information to conform to the new segment structure. Historical financial information presented herein reflects this change. | |||||||||||||
Consolidation: | |||||||||||||
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidated variable interest entities where it has determined it is the primary beneficiary of those entities' operations. | |||||||||||||
Variable Interest Entities: | |||||||||||||
The Company has or has had interests in certain privately held entities through arrangements that do not involve voting interests. Such entities, known as a variable interest entity (VIE), are required to be consolidated by its primary beneficiary. The Company evaluates whether or not it is the primary beneficiary for each VIE using a qualitative assessment that considers the VIE's purpose and design, the involvement of each of the interest holders and the risk and benefits of the VIE. | |||||||||||||
As of June 30, 2014, the Company has one VIE, Roosters MGC International LLC (Roosters), where the Company is the primary beneficiary. The Company owns a 60.0% ownership interest in Roosters. As of June 30, 2014, total assets, total liabilities and total shareholders' equity of Roosters were $6.5, $1.8 and $4.7 million, respectively. Net income attributable to the non-controlling interest in Roosters was immaterial for fiscal years 2014, 2013 and 2012. Shareholders' equity attributable to the non-controlling interest in Roosters was $1.8 million and $1.6 million as of June 30, 2014 and 2013 and recorded within retained earnings on the Consolidated Balance Sheet. | |||||||||||||
The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in Empire Education Group, Inc. (EEG) was a 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. | |||||||||||||
Use of Estimates: | |||||||||||||
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||
Cash and Cash Equivalents: | |||||||||||||
Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2014 and 2013. | |||||||||||||
The Company has restricted cash primarily related to contractual obligations to collateralize its self-insurance program. The restricted cash arrangement can be canceled by the Company at any time if substituted with letters of credit. The restricted cash balance is classified within other current assets on the Consolidated Balance Sheet. | |||||||||||||
Receivables and Allowance for Doubtful Accounts: | |||||||||||||
The receivable balance on the Company's Consolidated Balance Sheet primarily includes credit card receivables and accounts and notes receivable from franchisees. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. | |||||||||||||
The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables. As of June 30, 2014 and 2013, the allowance for doubtful accounts was $0.9 and $0.6 million, respectively. | |||||||||||||
Inventories: | |||||||||||||
Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and relaxers. Inventories are stated at the lower of cost or market, with cost determined on a weighted average cost basis. | |||||||||||||
Physical inventory counts are performed annually in the fourth quarter of the fiscal year. Product and service inventories are adjusted based on the physical inventory counts. During the fiscal year, cost of retail product sold to salon guests is determined based on the weighted average cost of product sold, adjusted for an estimated shrinkage factor and the cost of product used in salon services is determined by applying estimated percentage of total cost of service and product to service revenues. The estimated percentage related to service inventories is updated quarterly based on cycle count results and other factors that could impact the Company's margin rate estimates such as service sales mix, discounting and special promotions. Actual results compared to quarterly estimates have not historically resulted in material adjustments to our Statement of Operations. | |||||||||||||
The Company has inventory valuation reserves for excess and obsolete inventories, or other factors that may render inventories unmarketable at their historical costs. Estimates of the future demand for the Company's inventory and anticipated changes in formulas and packaging are some of the other factors used by management in assessing the net realizable value of inventories. During fiscal year 2013, the Company recorded an inventory write-down of $12.6 million associated with standardizing plan-o-grams, eliminating retail products and consolidating from four own-branded product lines to one. | |||||||||||||
Property and Equipment: | |||||||||||||
Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful asset lives (30 to 39 years for buildings, 10 years for improvements and three to ten years for equipment, furniture and software). Depreciation expense was $79.7, $81.8 and $96.4 million in fiscal years 2014, 2013 and 2012, respectively. | |||||||||||||
The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. Amortization expense related to capitalized software, included within depreciation expense disclosed above, was $7.5, $6.8 and $22.3 million in fiscal years 2014, 2013 and 2012, respectively, which has been determined based on an estimated useful lives ranging from five to seven years. | |||||||||||||
The Company implemented a third party point-of-sale (POS) information system in fiscal year 2013. The Company recorded $16.2 million of accelerated amortization expense in fiscal year 2012 associated with a previously developed POS system that became fully depreciated as of June 30, 2012. | |||||||||||||
Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets, are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income. Fully depreciated or amortized assets remain in the accounts until retired from service. | |||||||||||||
Long-Lived Asset Impairment Assessments, Excluding Goodwill: | |||||||||||||
The Company assesses the impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets that do not recover the carrying values. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the assets' estimated fair value. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. Long-lived asset impairment charges are recorded within depreciation and amortization in the Consolidated Statement of Operations. | |||||||||||||
Judgments made by management related to the expected useful lives of long-lived assets and the ability to realize undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance. As the ongoing expected cash flows and carrying amounts of long-lived assets are assessed, these factors could cause the Company to realize material impairment charges. | |||||||||||||
A summary of long-lived asset impairment charges follows: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
North American Value | $ | 11,714 | $ | 5,031 | $ | 2,892 | |||||||
North American Premium | 5,014 | 3,042 | 3,174 | ||||||||||
International | 1,599 | 151 | 570 | ||||||||||
Total | $ | 18,327 | $ | 8,224 | $ | 6,636 | |||||||
Goodwill: | |||||||||||||
Goodwill is tested for impairment annually during the Company's fourth fiscal quarter or at the time of a triggering event. In evaluating whether goodwill is impaired, the Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, as a basis for determining if the Company needs to perform the two-step goodwill impairment test. If it is determined that it is more likely than not that the fair value of the reporting unit is less than the carrying value, the Company does not need to perform the two-step impairment test. Depending on certain factors, the Company may elect to proceed directly to the two-step impairment test. In the two-step goodwill impairment assessment, the Company compares the carrying value of each reporting unit, including goodwill, to the estimated fair value of the reporting unit. The Company's reporting units are its operating segments. | |||||||||||||
In assessing qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value, the Company evaluates certain factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting unit. | |||||||||||||
The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total company-owned salons. | |||||||||||||
For the two-step goodwill impairment test, the Company calculates estimated fair values of the reporting units based on discounted future cash flows utilizing estimates in annual revenue, service and product margins, fixed expense rates, allocated corporate overhead, and long-term growth rates for determining terminal value. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company periodically engages third-party valuation consultants to assist in evaluating the Company's estimated fair value calculations. | |||||||||||||
In situations where a reporting unit's carrying value exceeds its estimated fair value, the amount of the impairment loss must be measured. The measurement of impairment is calculated by determining the implied fair value of a reporting unit's goodwill. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all other assets and liabilities of that unit based on the relative fair values under the assumption of a taxable transaction. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of goodwill. The goodwill impairment is measured as the excess of the carrying value of goodwill over its implied fair value. | |||||||||||||
As a result of our annual impairment test during the fourth quarter of 2014, fair values of the Company's reporting units were deemed to be greater than their respective carrying values. For the fiscal year 2014 annual impairment testing of goodwill, respective fair values of the Company's reporting units with goodwill exceeded carrying values 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 former Regis and Promenade reporting units 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 foundational 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 former Regis and Promenade reporting units. The impairment tests resulted in a $34.9 million non-cash goodwill impairment charge on the former Regis reporting unit and no impairment on the former Promenade reporting unit, as its estimated fair value exceeded its carrying value by approximately 12.0%. The impairment was only partly deductible for tax purposes resulting in a tax benefit of $6.3 million. See Note 9 to the Consolidated Financial Statements. | |||||||||||||
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. Based on the changes to the Company's operating segment structure, goodwill has been reallocated to the new reporting units at June 30, 2014 and 2013. | |||||||||||||
Analyzing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses of goodwill. However, if actual results are not consistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material. | |||||||||||||
During fiscal years 2014 and 2012, the Company impaired $34.9 and $67.7 million, respectively, of goodwill associated with our North American Premium reporting unit. No goodwill impairment charges were recorded during fiscal year 2013. | |||||||||||||
As of June 30, 2014, the Company's estimated fair value, as determined by the sum of our reporting units' fair value, reconciled within a reasonable range of our market capitalization, which included an assumed control premium of 30.0%. | |||||||||||||
A summary of the Company's goodwill balance by reporting unit follows: | |||||||||||||
Fiscal | |||||||||||||
Reporting Unit | 2014 | 2013 | |||||||||||
(Dollars in thousands) | |||||||||||||
North American Value | $ | 425,264 | $ | 425,932 | |||||||||
North American Premium | — | 34,953 | |||||||||||
Total | $ | 425,264 | $ | 460,885 | |||||||||
_______________________________________________________________________________ | |||||||||||||
(1) As of June 30, 2014 and 2013, the International reporting unit had no goodwill. | |||||||||||||
See Note 4 to the Consolidated Financial Statements. | |||||||||||||
Investments In Affiliates: | |||||||||||||
The Company has equity investments in securities of certain privately held entities. The Company accounts for these investments under the equity or cost method of accounting. Investments accounted for under the equity method are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss. Investments are reviewed for changes in circumstance or the occurrence of events that suggest the Company's investment may not be recoverable. | |||||||||||||
During fiscal years 2013 and 2012, the Company recorded noncash impairments of $17.9 and $19.4 million, respectively, related to its investment in EEG. Due to economic, regulatory and other factors, the Company may be required to take additional noncash impairment charges related to its investments and such noncash impairments could be material to its consolidated balance sheet and results of operations. Based on EEG's annual goodwill impairment assessment during fiscal year 2014, the Company's portion of EEG's estimated fair value exceeds carrying value of its investment by approximately 10%. Any meaningful underperformance against plan or reduced outlook by EEG, changes to the carrying value of EEG or further erosion in valuations of the for-profit secondary educational market could lead to other than temporary impairments of the Company's investment in EEG. In addition, EEG may be required to record noncash impairment charges related to long-lived assets or establish valuation allowances against certain of its deferred tax assets and our share of such noncash impairment charges or valuation allowances could be material to the Company's consolidated balance sheet and results of operations. During fiscal years 2014, 2013 and 2012, the Company recorded its share, $21.2, $2.1 and $8.9 million, respectively, of noncash impairment charges recorded directly by EEG for goodwill and long-lived and intangible assets. As of June 30, 2014, EEG has no goodwill. As of June 30, 2014, our share of EEG's deferred tax assets was $7.8 million. See Note 5 to the Consolidated Financial Statements. | |||||||||||||
Self-Insurance Accruals: | |||||||||||||
The Company uses a combination of third party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date. | |||||||||||||
The Company estimates self-insurance liabilities using a number of factors, primarily based on independent third-party actuarially-determined amounts, historical claims experience, estimates of incurred but not reported claims, demographic factors and severity factors. | |||||||||||||
Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from historical trends and actuarial assumptions. For fiscal years 2014, 2013 and 2012, the Company recorded (decreases) increases in expense from changes in estimates related to prior year open policy periods of $(2.0), $(1.1) and $0.9 million, respectively. A 10.0% change in the self-insurance reserve would affect income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies by approximately $4.8 million for fiscal years 2014, 2013 and 2012. The Company updates loss projections twice each year and adjusts its recorded liability to reflect updated projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time. | |||||||||||||
As of June 30, 2014, the Company had $14.9 and $32.7 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals. As of June 30, 2013, the Company had $14.8 and $32.4 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals. | |||||||||||||
Deferred Rent and Rent Expense: | |||||||||||||
The Company leases most salon locations under operating leases. Rent expense is recognized on a straight-line basis over the lease term. Tenant improvement allowances funded by landlord incentives, rent holidays and rent escalation clauses which provide for scheduled rent increases during the lease term or for rental payments commencing at a date other than the date of initial occupancy are recorded in the Consolidated Statements of Operations on a straight-line basis over the lease term (including one renewal period if renewal is reasonably assured based on the imposition of an economic penalty for failure to exercise the renewal option). The difference between the rent due under the stated periods of the lease and the straight-line basis is recorded as deferred rent within accrued expenses and other noncurrent liabilities in the Consolidated Balance Sheet. | |||||||||||||
For purposes of recognizing incentives and minimum rental expenses on a straight-line basis, the Company uses the date it obtains the legal right to use and control the leased space to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of its intended use. | |||||||||||||
Certain leases provide for contingent rents, which are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheet, along with the corresponding rent expense in the Consolidated Statement of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. | |||||||||||||
Revenue Recognition and Deferred Revenue: | |||||||||||||
Company-owned salon revenues are recognized at the time when the services are provided. Product revenues are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) until they are redeemed. | |||||||||||||
Product sales by the Company to its franchisees are included within product revenues on the Consolidated Statement of Operations and recorded at the time product is shipped to franchise locations. | |||||||||||||
Franchise revenues primarily include royalties, initial franchise fees and net rental income. Royalties are recognized as revenue in the month in which franchisee services are rendered. The Company recognizes revenue from initial franchise fees at the time franchise locations are opened, as this is generally when the Company has performed all initial services required under the franchise agreement. See Note 8 to the Consolidated Financial Statements. | |||||||||||||
Classification of Expenses: | |||||||||||||
The following discussion provides the primary costs classified in each major expense category: | |||||||||||||
Beginning in fiscal year 2014, costs associated with field leaders, excluding salons within the North American Premium segment, that were previously recorded within General and Administrative expense are now categorized within Cost of Service and Site Operating expense as a result of the field reorganization that took place in the fourth quarter of fiscal year 2013. Previously, field leaders did not work on the salon floor daily. As reorganized, field leaders now spend most of their time on the salon floor leading and mentoring stylists and serving guests. As a result, district and senior district leader labor costs are now reported within Cost of Service rather than General and Administrative expenses and their travel costs are reported within Site Operating expenses rather than General and Administrative expenses. | |||||||||||||
Cost of service— labor costs related to salon employees, costs associated with our field supervision (fiscal year 2014) and the cost of product used in providing service. | |||||||||||||
Cost of product— cost of product sold to guests, labor costs related to selling retail product and the cost of product sold to franchisees. | |||||||||||||
Site operating— direct costs incurred by the Company's salons, such as advertising, workers' compensation, insurance, utilities, travel costs associated with our field supervision (fiscal year 2014) and janitorial costs. | |||||||||||||
General and administrative— costs associated with our field supervision (fiscal years 2013 and 2012), salon training and promotions, distribution centers and corporate offices (such as salaries and professional fees), including cost incurred to support franchise operations. | |||||||||||||
Consideration Received from Vendors: | |||||||||||||
The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. See Note 1 to the Consolidated Financial Statements. | |||||||||||||
With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction to the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A quarterly analysis is performed in order to ensure the estimated rebate accrued is reasonable and any necessary adjustments are recorded. | |||||||||||||
Shipping and Handling Costs: | |||||||||||||
Shipping and handling costs are incurred to store, move and ship product from the Company's distribution centers to company-owned and franchise locations and include an allocation of internal overhead. Such shipping and handling costs related to product shipped to company-owned locations are included in site operating expenses in the Consolidated Statement of Operations. Shipping and handling costs related to shipping product to franchise locations totaled $3.2, $3.6 and $3.8 million during fiscal years 2014, 2013 and 2012, respectively and are included within general and administrative expenses on the Consolidated Statement of Operations. Any amounts billed to franchisees for shipping and handling are included in product revenues within the Consolidated Statement of Operations. | |||||||||||||
Advertising: | |||||||||||||
Advertising costs, including salon collateral material, are expensed as incurred. Advertising costs expensed and included in continuing operations in fiscal years 2014, 2013 and 2012 was $40.6, $39.2, $42.1 million, respectively. | |||||||||||||
The Company participates in cooperative advertising programs under which vendors reimburse the Company for costs related to advertising its products. The Company records such reimbursements as a reduction of advertising expense when the expense is incurred. During fiscal years 2014, 2013 and 2012, no amounts were received in excess of the Company's related expense. | |||||||||||||
Advertising Funds: | |||||||||||||
The Company has various franchising programs supporting certain of its franchise salon concepts. Most maintain advertising funds that provide comprehensive advertising and sales promotion support. The Company is required to participate in the advertising funds for company-owned locations under the same salon concept. The Company assists in the administration of the advertising funds. However, a group of individuals consisting of franchisee representatives has control over all of the expenditures and operates the funds in accordance with franchise operating and other agreements. | |||||||||||||
The Company records advertising expense in the period the company-owned salon makes contributions to the respective advertising fund. During fiscal years 2014, 2013 and 2012, total contributions to the franchise advertising funds totaled $18.6, $19.0, $19.2 million, respectively. | |||||||||||||
The Company records all advertising funds as assets and liabilities within the Company's Consolidated Balance Sheet. As of June 30, 2014 and 2013, approximately $26.8 and $20.8 million, respectively, representing the advertising funds' assets and liabilities were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheet. | |||||||||||||
Stock-Based Employee Compensation Plans: | |||||||||||||
The Company recognizes stock-based compensation expense based on the fair value of the awards at the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period of the award (or to the date a participant becomes eligible for retirement, if earlier). The Company uses option pricing methods that require the input of subjective assumptions, including the expected term, expected volatility, dividend yield and risk-free interest rate. | |||||||||||||
The Company estimates the likelihood and the rate of achievement for performance sensitive stock-based awards at the end of each reporting period. Changes in the estimated rate of achievement can have a significant effect on the recorded stock-based compensation expense as the effect of a change in the estimated achievement level is recognized in the period the change occurs. | |||||||||||||
Preopening Expenses: | |||||||||||||
Non-capital expenditures such as payroll, training costs and promotion incurred prior to the opening of a new location are expensed as incurred. | |||||||||||||
Sales Taxes: | |||||||||||||
Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statement of Operations. | |||||||||||||
Income Taxes: | |||||||||||||
Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. The Company evaluates all evidence, including recent financial performance, the existence of cumulative year losses and our forecast of future taxable income, to assess the need for a valuation allowance against our deferred tax assets. 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 fiscal year 2014, the impacts from foundational initiatives implemented late in the prior fiscal year continued to negatively impact the Company’s financial performance. Due to recent negative financial performance and cumulative losses incurred in recent years, the Company was no longer able to conclude that it was more likely than not the U.S. and U.K. deferred tax assets would be fully realized and established a valuation allowance on the U.S. and U.K. deferred tax assets. | |||||||||||||
A summary of the activity for the deferred tax asset valuation allowance follows: | |||||||||||||
Fiscal Year | |||||||||||||
2014 | |||||||||||||
(Dollars in thousands) | |||||||||||||
Balance, June 30, 2013 | $ | — | |||||||||||
Establishment of valuation allowance against U.S. & U.K. deferred tax assets | 84,391 | ||||||||||||
Changes to deferred tax asset valuation allowance | (469 | ) | |||||||||||
Balance, June 30, 2014 | $ | 83,922 | |||||||||||
The Company will continue to assess its 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 sufficient sustainable pretax earnings to make the realizability of the deferred tax assets more likely than not. | |||||||||||||
The Company reserves for potential liabilities related to anticipated tax audit issues in the U.S. and other tax jurisdictions based on an estimate of whether additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when it is determined the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. Inherent in the measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities. | |||||||||||||
Net (Loss) Income 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 and restricted stock units. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan and dilutive securities. 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 related 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. | |||||||||||||
Comprehensive (Loss) Income: | |||||||||||||
Components of comprehensive (loss) income include net (loss) income, foreign currency translation adjustments, changes in fair value of derivative instruments, recognition of deferred compensation and reclassification adjustments, net of tax within shareholders' equity. | |||||||||||||
Foreign Currency Translation: | |||||||||||||
Financial position, results of operations and cash flows of the Company's international subsidiaries are measured using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each fiscal year end. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity. Statement of Operations accounts are translated at the average rates of exchange prevailing during the year. During fiscal years 2014, 2013 and 2012, the foreign currency gain (loss) recorded within interest income and other, net in the Consolidated Statement of Operations was $0.1, $33.4 and $0.4 million, respectively. During fiscal year 2013, Company recognized a $33.8 million foreign currency translation gain in connection with the sale of Provalliance and subsequent liquidation of all foreign entities with Euro denominated operations within interest income and other, net in the Consolidated Statement of Operations. | |||||||||||||
Accounting Standards Recently Issued But Not Yet Adopted by the Company: | |||||||||||||
Revenue from Contracts with Customers | |||||||||||||
In May 2014, the Financial Accounting Standards Board ("FASB") issued updated guidance for revenue recognition. The updated accounting guidance provides a comprehensive new revenue recognition model that requires a Company to recognize revenue to depict the exchange for goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This guidance will be effective in the first quarter of fiscal year 2018. This update permits the use of either the retrospective or simplified transition method. The Company does not expect the adoption of this update to have a material impact on the Company's consolidated financial statements and is evaluating the effect this guidance will have on its related disclosures. | |||||||||||||
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity | |||||||||||||
In April 2014, the FASB updated the accounting guidance related to the definition of a discontinued operation and 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 2016 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 | 12 Months Ended | ||||||||
Jun. 30, 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. The sale included the Company's 50.0% interest in Hair Club for Men, Ltd., which was previously accounted for under the equity method. At the closing of the sale, the Company received $162.8 million, which represented the purchase price of $163.5 million adjusted for the preliminary working capital provision. During fiscal year 2014, the Company collected $3.0 million of cash recorded as 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 recorded an after-tax gain of $17.8 million upon the sale of Hair Club and incurred $5.4 million in professional and transaction fees during fiscal year 2013 associated with the sale. | |||||||||
The Company classified the results of operations of Hair Club as discontinued operations for all periods presented in the Consolidated Statement of Operations. There was no significant continuing involvement by the Company in the operations of Hair Club after the disposal. | |||||||||
The following summarizes the results of operations of our discontinued Hair Club operations for the periods presented: | |||||||||
Fiscal Years | |||||||||
2013 | 2012 | ||||||||
(Dollars in thousands) | |||||||||
Revenues | $ | 115,734 | $ | 151,552 | |||||
Income (loss) from discontinued operations, before income taxes | $ | 28,643 | $ | (65,114 | ) | ||||
Income tax (provision) benefit on discontinued operations | (4,242 | ) | 849 | ||||||
Equity in income of affiliated companies, net of tax | 627 | 816 | |||||||
Income (loss) from discontinued operations, net of income taxes | $ | 25,028 | $ | (63,449 | ) | ||||
Income taxes have been allocated to continuing and discontinued operations based on the methodology required by accounting for income taxes guidance. Depreciation and amortization ceased during fiscal year 2013 in accordance with accounting for discontinued operations. Hair Club depreciation and amortization expense for fiscal year 2012 was $13.1 million. During fiscal year 2012, the Company performed an interim impairment test of goodwill related to Hair Club during the three months ended December 31, 2011 and recorded a $78.4 million impairment charge for the excess of the carrying value of goodwill over the implied fair value. | |||||||||
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 fiscal years 2014 and 2012, the Company recorded tax benefits of $1.4 and $1.1 million, respectively, in discontinued operations related to the release of tax reserves associated with the disposition of Trade Secret. |
OTHER_FINANCIAL_STATEMENT_DATA
OTHER FINANCIAL STATEMENT DATA | 12 Months Ended | ||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||||||||||||||||||
OTHER FINANCIAL STATEMENT DATA | ' | ||||||||||||||||||||||||||||
The following provides additional information concerning selected balance sheet accounts: | |||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
Other current assets: | |||||||||||||||||||||||||||||
Prepaids | $ | 36,951 | $ | 29,629 | |||||||||||||||||||||||||
Restricted cash | 27,500 | 27,500 | |||||||||||||||||||||||||||
Notes receivable | 635 | 769 | |||||||||||||||||||||||||||
$ | 65,086 | $ | 57,898 | ||||||||||||||||||||||||||
Property and equipment: | |||||||||||||||||||||||||||||
Land | $ | 3,864 | $ | 3,864 | |||||||||||||||||||||||||
Buildings and improvements | 48,108 | 47,842 | |||||||||||||||||||||||||||
Equipment, furniture and leasehold improvements | 797,757 | 789,737 | |||||||||||||||||||||||||||
Internal use software | 122,826 | 118,093 | |||||||||||||||||||||||||||
Equipment, furniture and leasehold improvements under capital leases | 77,223 | 81,489 | |||||||||||||||||||||||||||
1,049,778 | 1,041,025 | ||||||||||||||||||||||||||||
Less accumulated depreciation and amortization | (718,959 | ) | (665,924 | ) | |||||||||||||||||||||||||
Less amortization of equipment, furniture and leasehold improvements under capital leases | (64,281 | ) | (61,641 | ) | |||||||||||||||||||||||||
$ | 266,538 | $ | 313,460 | ||||||||||||||||||||||||||
Accrued expenses: | |||||||||||||||||||||||||||||
Payroll and payroll related costs | $ | 69,319 | $ | 74,940 | |||||||||||||||||||||||||
Insurance | 18,710 | 19,035 | |||||||||||||||||||||||||||
Other | 54,691 | 43,251 | |||||||||||||||||||||||||||
$ | 142,720 | $ | 137,226 | ||||||||||||||||||||||||||
Other noncurrent liabilities: | |||||||||||||||||||||||||||||
Deferred income taxes | $ | 83,201 | $ | 36,399 | |||||||||||||||||||||||||
Deferred rent | 36,958 | 39,389 | |||||||||||||||||||||||||||
Insurance | 25,965 | 29,378 | |||||||||||||||||||||||||||
Deferred benefits | 32,728 | 32,435 | |||||||||||||||||||||||||||
Other | 11,602 | 17,410 | |||||||||||||||||||||||||||
$ | 190,454 | $ | 155,011 | ||||||||||||||||||||||||||
The following provides additional information concerning other intangibles, net: | |||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
Weighted Average Amortization Periods (1) | Cost | Accumulated | Net | Weighted Average Amortization Periods (1) | Cost | Accumulated | Net | ||||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||||||
(In years) | (Dollars in thousands) | (In years) | (Dollars in thousands) | ||||||||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||||||||
Brand assets and trade names | 32 | $ | 9,203 | $ | (3,510 | ) | $ | 5,693 | 32 | $ | 9,310 | $ | (3,226 | ) | $ | 6,084 | |||||||||||||
Franchise agreements | 19 | 11,063 | (7,163 | ) | 3,900 | 19 | 11,187 | (6,839 | ) | 4,348 | |||||||||||||||||||
Lease intangibles | 20 | 14,775 | (7,326 | ) | 7,449 | 20 | 14,754 | (6,582 | ) | 8,172 | |||||||||||||||||||
Other | 20 | 5,074 | (2,304 | ) | 2,770 | 20 | 4,815 | (1,923 | ) | 2,892 | |||||||||||||||||||
22 | $ | 40,115 | $ | (20,303 | ) | $ | 19,812 | 22 | $ | 40,066 | $ | (18,570 | ) | $ | 21,496 | ||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||||||
-1 | All intangible assets have been assigned an estimated finite useful life and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from one to 40 years). | ||||||||||||||||||||||||||||
Total amortization expense related to intangible assets during fiscal years 2014, 2013 and 2012 was approximately $1.7, $1.8 and $1.9 million, respectively. As of June 30, 2014, future estimated amortization expense related to intangible assets is estimated to be: | |||||||||||||||||||||||||||||
Fiscal Year | (Dollars in | ||||||||||||||||||||||||||||
thousands) | |||||||||||||||||||||||||||||
2015 | $ | 1,710 | |||||||||||||||||||||||||||
2016 | 1,644 | ||||||||||||||||||||||||||||
2017 | 1,589 | ||||||||||||||||||||||||||||
2018 | 1,575 | ||||||||||||||||||||||||||||
2019 | 1,575 | ||||||||||||||||||||||||||||
Thereafter | 11,719 | ||||||||||||||||||||||||||||
Total | $ | 19,812 | |||||||||||||||||||||||||||
The following provides supplemental disclosures of cash flow activity: | |||||||||||||||||||||||||||||
Fiscal Years | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
Cash paid (received) for: | |||||||||||||||||||||||||||||
Interest | $ | 21,173 | $ | 38,990 | -1 | $ | 28,448 | ||||||||||||||||||||||
Income taxes, net | (16,266 | ) | 1,088 | 14,754 | |||||||||||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||||||
-1 | Includes $10.6 million of cash paid for make-whole associated with prepayment of senior notes. |
GOODWILL
GOODWILL | 12 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
GOODWILL | ' | ||||||||||||||||||||||||
The table below contains details related to the Company's recorded goodwill: | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Gross | Accumulated | Net (2) | Gross | Accumulated | Net | ||||||||||||||||||||
Carrying | Impairment (1) | Carrying | Impairment (1) | ||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Goodwill | $ | 678,925 | $ | (253,661 | ) | $ | 425,264 | $ | 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 14 to the Consolidated Financial Statements. | ||||||||||||||||||||||||
-4 | See Note 1 to the Consolidated Financial Statements. | ||||||||||||||||||||||||
The table below contains details related to the Company's recorded goodwill: | |||||||||||||||||||||||||
North American Value | North American Premium | Consolidated | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Goodwill, net at June 30, 2012 | $ | 427,287 | $ | 34,992 | $ | 462,279 | |||||||||||||||||||
Translation rate adjustments | (1,355 | ) | (39 | ) | (1,394 | ) | |||||||||||||||||||
Goodwill, net at June 30, 2013 | 425,932 | 34,953 | 460,885 | ||||||||||||||||||||||
Goodwill impairment | — | (34,939 | ) | (34,939 | ) | ||||||||||||||||||||
Goodwill acquired | 130 | — | 130 | ||||||||||||||||||||||
Translation rate adjustments | (798 | ) | (14 | ) | (812 | ) | |||||||||||||||||||
Goodwill, net at June 30, 2014 | $ | 425,264 | $ | — | $ | 425,264 | |||||||||||||||||||
INVESTMENTS_IN_AFFILIATES
INVESTMENTS IN AFFILIATES | 12 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | ' | ||||||||||||||||||||||||
INVESTMENTS IN AND LOANS TO AFFILIATES | ' | ||||||||||||||||||||||||
INVESTMENTS IN AFFILIATES | |||||||||||||||||||||||||
The table below presents the carrying amount of investments in affiliates: | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Empire Education Group, Inc. | $ | 28,398 | $ | 43,098 | |||||||||||||||||||||
MY Style | 213 | 221 | |||||||||||||||||||||||
$ | 28,611 | $ | 43,319 | ||||||||||||||||||||||
The table below presents summarized financial information of equity method investees based on audited results. | |||||||||||||||||||||||||
Greater Than 50 Percent Owned (1) | Less Than 50 Percent Owned (2) | ||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Summarized Balance Sheet Information: | |||||||||||||||||||||||||
Current assets | $ | 54,774 | $ | 35,900 | $ | 56,516 | $ | — | $ | — | $ | 84,700 | |||||||||||||
Noncurrent assets | 57,803 | 91,847 | 96,639 | — | — | 316,282 | |||||||||||||||||||
Current liabilities | 24,797 | 25,317 | 61,074 | — | — | 106,995 | |||||||||||||||||||
Noncurrent liabilities | 33,004 | 21,560 | 13,947 | — | — | 78,815 | |||||||||||||||||||
Summarized Statement of Operations Information: | |||||||||||||||||||||||||
Gross revenue | $ | 166,540 | $ | 170,964 | $ | 182,326 | $ | — | $ | — | $ | 305,515 | |||||||||||||
Gross profit | 52,440 | 58,457 | 67,201 | — | — | 132,647 | |||||||||||||||||||
Operating (loss) income | (33,526 | ) | 4,981 | (1,335 | ) | — | — | 35,569 | |||||||||||||||||
Net (loss) income | (26,699 | ) | 2,359 | (7,211 | ) | — | — | 24,067 | |||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||
-1 | Represents the summarized financial information of EEG. As EEG is a significant subsidiary for the fiscal year 2014 financial statements, the separate financial statements of EEG are included subsequent to the Company's financial statements. Gross profit includes depreciation and amortization expense of $5.8, $7.4, and $7.5 million for fiscal years 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||
-2 | The Company previously owned a 46.7% equity interest in Provalliance. During fiscal year 2013, the Company completed the sale of its investment in Provalliance. | ||||||||||||||||||||||||
Investment in Empire Education Group, Inc. | |||||||||||||||||||||||||
As of June 30, 2014 and 2013, the Company's ownership interest in Empire Education Group, Inc. (EEG) was 54.5%. EEG operates accredited cosmetology schools and is managed by the Empire Beauty School executive team. The Company accounts for EEG as an equity investment under the voting interest model. | |||||||||||||||||||||||||
During fiscal years 2014, 2013 and 2012 the Company recorded its share of pretax noncash impairment charges recorded by EEG for goodwill and fixed and intangible asset impairments of $21.2, $2.1 and $8.9 million, respectively. In addition, during fiscal years 2013 and 2012, the Company recorded other than temporary impairment charges of its investment in EEG of $17.9 and $19.4 million, respectively, to account for the negative business impacts resulting from regulatory changes including declines in enrollment, revenue and profitability in the for-profit secondary educational market. The Company did not receive a tax benefit on these impairment charges. | |||||||||||||||||||||||||
Due to economic, regulatory and other factors, including declines in enrollment, revenue and profitability in the for-profit secondary educational market, the Company may be required to record additional noncash impairment charges related to its investment in EEG and such noncash impairments could be material to the Company's consolidated balance sheet and results of operations. Based on EEG's annual goodwill impairment assessment during fiscal year 2014, the Company's portion of EEG's estimated fair value exceeds carrying value of its investment by approximately 10%. Any meaningful underperformance against plan or reduced outlook by EEG, changes to the carrying value of EEG or further erosion in valuations of the for-profit secondary educational market could lead to other than temporary impairments of the Company's investment in EEG. In addition, EEG may be required to record noncash impairment charges related to long-lived assets or establish valuation allowances against certain of its deferred tax assets and our share of such noncash impairment charges or valuation allowances could be material to the Company's consolidated balance sheet and results of operations. EEG does not have any goodwill recorded as of June 30, 2014. As of June 30, 2014, our share of EEG's deferred tax assets was $7.8 million. | |||||||||||||||||||||||||
During fiscal years 2014, 2013 and 2012, the Company recorded $(14.5), $1.3 and $(4.0) million, respectively, of equity (loss) earnings related to its investment in EEG. | |||||||||||||||||||||||||
The Company previously provided EEG with a $15.0 million revolving credit facility and outstanding loan, both of which matured during fiscal year 2013. At June 30, 2012, there was $15.0 and $11.4 million outstanding on the revolving credit facility and loan outstanding, respectively. The Company received $15.0 million in payments on the revolving credit facility during the fiscal year 2013. The Company received $11.4 and $10.0 million in principal payments on the loan during the fiscal years 2013 and 2012, respectively. During fiscal years 2013 and 2012, the Company recorded less than $0.1 and $0.5 million, respectively, of interest income related to the loan and revolving credit facility. | |||||||||||||||||||||||||
Investment in Provalliance | |||||||||||||||||||||||||
On September 27, 2012, the Company sold its 46.7% equity interest in Provalliance for $103.4 million. The Company previously had a right (Provalliance Equity Put), which if exercised, would require the Company to purchase an additional ownership interest in Provalliance between specified dates in 2010 to 2018. The Provalliance Equity Put was classified as a Level 3 fair value measurement as the fair value was determined based on unobservable inputs that could not be corroborated by observable market data. During fiscal year 2013, the Company recorded a $0.6 million decrease in the fair value of the Provalliance Equity Put that automatically terminated upon the sale. | |||||||||||||||||||||||||
In connection with the sale of Provalliance, the Company recorded a $37.4 million other than temporary impairment charge during fiscal year 2012. In addition, the fair value of the Provalliance Equity Put decreased by $20.2 to $0.6 million as of June 30, 2012. The other than temporary impairment charge and reduction in the fair value of the Provalliance Equity Put resulted in a net impairment charge of $17.2 million that is recorded within the equity in (loss) income of affiliated companies during fiscal year 2012. Regis did not receive a tax benefit on the net impairment charge. | |||||||||||||||||||||||||
During fiscal year 2012, the Company recorded $9.8 million of equity earnings and received $2.8 million of cash dividends related to its investment in Provalliance. | |||||||||||||||||||||||||
Due to the sale of the Company's investment in Provalliance, the Company liquidated its foreign entities with Euro denominated operations. Amounts previously classified within accumulated other comprehensive income that were recognized in earnings were foreign currency translation rate gain adjustments of $43.4 million, a cumulative tax-effected net loss of $7.9 million associated with a cross-currency swap that was settled in fiscal year 2007 that hedged the Company's European operations, and a $1.7 million net loss associated with cash repatriation, which netted to $33.8 million for fiscal year 2013, recorded within interest income and other, net on the Consolidated Statement of Operations. | |||||||||||||||||||||||||
Investment in MY Style | |||||||||||||||||||||||||
The Company accounts for its 27.1% ownership interest in MY Style as a cost method investment. The Company previously had an outstanding note with MY Style, which matured during fiscal year 2013. The Company recorded less than $0.1 million in interest income related to the note during fiscal years 2013 and 2012. | |||||||||||||||||||||||||
During fiscal year 2014, MY Style's parent company, Yamano Holdings Corporation (Yamano), redeemed its Class A and Class B Preferred Stock for $3.1 million. 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. The Company reported the gain associated with Yamano's redemption within equity in loss of affiliated companies on the Consolidated Statement of Operations. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 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 Measured at Fair Value on a Recurring Basis | |
The Company's financial instruments include cash, cash equivalents, receivables, accounts payable and debt. The fair values of cash and cash equivalents, receivables, accounts payable and debt approximated the carrying values as of June 30, 2014. | |
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. | |
Level 3 Fair Value Measurements | |
During fiscal year 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. See Notes 1 and 4 to the Consolidated Financial Statements. | |
During fiscal year 2013, the Company's investment in EEG with a carrying value of $59.9 million was written down to its implied fair value of $42.0 million, resulting in an impairment charge of $17.9 million. See Note 5 to the Consolidated Financial Statements. |
FINANCING_ARRANGEMENTS
FINANCING ARRANGEMENTS | 12 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||
FINANCING ARRANGEMENTS | ' | ||||||||||||||
FINANCING ARRANGEMENTS | |||||||||||||||
The Company's long-term debt consists of the following: | |||||||||||||||
Interest rate % | |||||||||||||||
Fiscal Years | June 30, | ||||||||||||||
Maturity Dates | 2014 | 2013 | 2014 | 2013 | |||||||||||
(fiscal year) | (Dollars in thousands) | ||||||||||||||
Convertible senior notes(1)(2) | 2015 | 5.00% | 5.00% | $ | 172,246 | $ | 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 | 4.90 - 8.75 | 1,257 | 8,316 | ||||||||||
293,503 | 174,770 | ||||||||||||||
Less current portion (1) | (173,501 | ) | (173,515 | ) | |||||||||||
Long-term portion | $ | 120,002 | $ | 1,255 | |||||||||||
_______________________________________________________________________________ | |||||||||||||||
-1 | As of June 30, 2013, the Company included the convertible senior notes within long-term debt, current portion on the Consolidated Balance Sheet as the holders of the senior convertible notes had the option to convert at any time after April 15, 2014. | ||||||||||||||
-2 | In July 2014, the Company settled the convertible senior notes with $172.5 million in cash. | ||||||||||||||
The debt agreements contain covenants, including limitations on incurrence of debt, granting of liens, investments, merger or consolidation, certain restricted payments and transactions with affiliates. In addition, the Company must adhere to specified fixed charge coverage and leverage ratios. The Company was in compliance with all covenants and other requirements of our financing arrangements as of June 30, 2014. | |||||||||||||||
Aggregate maturities of long-term debt, including associated capital lease obligations of $1.3 million at June 30, 2014, are as follows: | |||||||||||||||
Fiscal year | (Dollars in thousands) | ||||||||||||||
2015 | $ | 173,501 | |||||||||||||
2016 | 2 | ||||||||||||||
2017 | — | ||||||||||||||
2018 | 120,000 | ||||||||||||||
2019 | — | ||||||||||||||
Thereafter | — | ||||||||||||||
$ | 293,503 | ||||||||||||||
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 were unsecured, senior obligations of the Company and interest was payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0% per year. As of June 30, 2014, the notes were convertible at a conversion rate of 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. | |||||||||||||||
At the time of issuance, the Company had the choice of net-cash settlement, settlement in its own shares or a combination thereof and concluded the conversion option was indexed to its own stock. As a result, the Company allocated $24.7 million of the $172.5 million principal amount of the convertible senior notes to equity, which resulted in a $24.7 million debt discount. The $24.7 million debt discount was amortized over the period the convertible senior notes were expected to be outstanding, which was five years, as additional non-cash interest expense. The combined debt discount amortization and the contractual interest coupon resulted in an effective interest rate on the convertible debt of 8.9%. | |||||||||||||||
The following table provides equity and debt information for the convertible senior notes: | |||||||||||||||
June 30, | |||||||||||||||
2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||
Principal amount on the convertible senior notes | $ | 172,500 | $ | 172,500 | |||||||||||
Unamortized debt discount | (254 | ) | (6,046 | ) | |||||||||||
Net carrying amount of convertible debt | $ | 172,246 | $ | 166,454 | |||||||||||
The following table provides interest rate and interest expense amounts related to the convertible senior notes: | |||||||||||||||
Fiscal Years | |||||||||||||||
2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||
Interest cost related to contractual interest coupon—5.0% | $ | 8,625 | $ | 8,625 | |||||||||||
Interest cost related to amortization of the discount | 5,792 | 5,320 | |||||||||||||
Total interest cost | $ | 14,417 | $ | 13,945 | |||||||||||
Senior Term Notes | |||||||||||||||
In November 2013, the Company issued $120.0 million aggregate principal amount of 5.75% senior unsecured notes due December 2017 (Senior Term Notes). Net proceeds from the issuance of the Senior Term Notes were $118.1 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. The Senior Term Notes rank equally with the Company's existing senior unsecured 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 revolving credit facility. | |||||||||||||||
Revolving Credit Facility | |||||||||||||||
The Company has a $400.0 million unsecured revolving credit facility agreement, that expires in June 2018. The revolving credit facility has rates tied to a LIBOR credit spread and a quarterly facility fee on the average daily amount of the facility (whether used or unused). Both the LIBOR credit spread and the facility fee are based on the Company's debt to EBITDA ratio at the end of each fiscal quarter. In addition, the Company may request an increase in revolving credit commitments under the facility of up to $200.0 million under certain circumstances. Events of default under the credit agreement include change of control of the Company and the Company's default with respect to other debt exceeding $10.0 million. As of June 30, 2014 and 2013, the Company had no outstanding borrowings under this revolving credit facility. Additionally, the Company had outstanding standby letters of credit under the revolving credit facility of $2.2 million at June 30, 2014 and 2013, respectively, primarily related to its self-insurance program. Unused available credit under the facility at June 30, 2014 and 2013 was $397.8 million, respectively. | |||||||||||||||
Equipment and Leasehold Notes Payable | |||||||||||||||
The equipment and leasehold notes payable are primarily comprised of capital lease obligations. In September 2011, the Company entered into an agreement to refinance existing capital leases to a three year term with a contract rate of 4.9%. As of June 30, 2014 the capital lease balance was $1.3 million and will be amortized at the historical rate of 9.2%. There was no gain or loss recorded on the refinance. The Company entered into the refinancing to reduce cash interest payments. | |||||||||||||||
Private Shelf Agreement | |||||||||||||||
During fiscal year 2013, the Company prepaid $89.3 million of unsecured, fixed rate, senior term notes outstanding under a private shelf agreement. As a result of the prepayment, the Company incurred a make-whole payment of $10.6 million that was recorded in interest expense within the Consolidated Statement of Operations. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||
COMMITMENTS AND CONTINGENCIES | ' | ||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||
Operating Leases: | |||||||||||||
The Company leases most of its company-owned salons and some of its corporate facilities and distribution centers under operating leases. The original terms of the salon leases range from one to 20 years, with many leases renewable for additional five to ten year terms at the option of the Company. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Rent expense for the Company's international department store salons is based primarily on a percentage of sales. | |||||||||||||
The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. These leases, generally with terms of approximately five years, are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees. | |||||||||||||
Sublease income was $29.5, $29.1 and $28.3 million in fiscal years 2014, 2013 and 2012, respectively. Rent expense on premises subleased was $29.1, $28.7 and $27.9 million in fiscal years 2014, 2013 and 2012, respectively. Rent expense and related rental income on sublease arrangements with franchisees is netted within the rent expense line item on the Consolidated Statement of Operations. In most cases, the amount of rental income related to sublease arrangements with franchisees approximates the amount of rent expense from the primary lease, thereby having no net impact on rent expense or net income (loss). However, in limited cases, the Company charges a 10.0% mark-up in its sublease arrangements. The net rental income resulting from such arrangements totaled $0.4 million for each fiscal year 2014, 2013 and 2012 and was classified in the royalties and fees caption of the Consolidated Statement of Operations. | |||||||||||||
The Company has a sublease arrangement for a leased building the Company previously occupied. Rent expense of $0.9 million and related sublease income of $0.6 million for this arrangement is netted within the rent expense line on the Consolidated Statement of Operations. The aggregate amount of lease payments to be made over the remaining lease term are approximately $2.5 million. | |||||||||||||
The Company also guarantees approximately 10 operating leases associated with the Company's former Trade Secret concept. As the Company has not experienced and does not expect any material loss to result from these arrangements, the Company has determined the exposure to the risk of loss on these guarantees to be immaterial to the financial statements. | |||||||||||||
Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Minimum rent | $ | 246,687 | $ | 246,787 | $ | 250,487 | |||||||
Percentage rent based on sales | 7,164 | 7,566 | 8,938 | ||||||||||
Real estate taxes and other expenses | 68,254 | 70,363 | 72,344 | ||||||||||
$ | 322,105 | $ | 324,716 | $ | 331,769 | ||||||||
As of June 30, 2014, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancelable operating leases with remaining terms of greater than one year are as follows: | |||||||||||||
Fiscal Year | Corporate | Franchisee | Guaranteed | ||||||||||
leases | leases | leases | |||||||||||
(Dollars in thousands) | |||||||||||||
2015 | $ | 246,000 | $ | 52,663 | $ | 404 | |||||||
2016 | 193,779 | 44,600 | 310 | ||||||||||
2017 | 138,255 | 34,371 | 195 | ||||||||||
2018 | 90,605 | 24,387 | 85 | ||||||||||
2019 | 49,327 | 14,197 | 34 | ||||||||||
Thereafter | 51,392 | 11,392 | 14 | ||||||||||
Total minimum lease payments | $ | 769,358 | $ | 181,610 | $ | 1,042 | |||||||
The Company continues to negotiate and enter into leases and commitments for the acquisition of equipment and leasehold improvements related to future salon locations. | |||||||||||||
Contingencies: | |||||||||||||
The Company is self-insured for most workers' compensation, employment practice liability and general liability. Workers' compensation and general liability losses are subject to per occurrence and aggregate annual liability limitations. The Company is insured for losses in excess of these limitations. The Company is also self-insured for health care claims for eligible participating employees subject to certain deductibles and limitations. The Company determines its liability for claims incurred but not reported on an actuarial basis. | |||||||||||||
Litigation and Settlements: | |||||||||||||
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 was a nominal defendant, and nine current and former directors and officers of the Company were named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder action alleged 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, and in June 2014 the Special Litigation Committee filed a motion requesting the court dismiss the shareholder derivative action. | |||||||||||||
See Note 9 for discussion regarding certain issues that have resulted from the IRS' audit of fiscal year 2010 and 2011. | |||||||||||||
During fiscal year 2014 and 2013, the Company incurred $3.3 and $1.2 million of expense in conjunction with the derivative shareholder action. During fiscal year 2012, the Company was awarded $1.1 million in conjunction with a class-action lawsuit. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
INCOME TAXES | ' | ||||||||||||
The components of (loss) income before income taxes are as follows: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
(Loss) income before income taxes: | |||||||||||||
U.S. | $ | (51,866 | ) | $ | (25,177 | ) | $ | (35,430 | ) | ||||
International | (2,462 | ) | 35,275 | 10,116 | |||||||||
$ | (54,328 | ) | $ | 10,098 | $ | (25,314 | ) | ||||||
The provision (benefit) for income taxes consists of: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Current: | |||||||||||||
U.S. | $ | 1,460 | $ | (21,053 | ) | $ | (1,095 | ) | |||||
International | 890 | 707 | 2,261 | ||||||||||
Deferred: | |||||||||||||
U.S. | 67,992 | 10,405 | (5,519 | ) | |||||||||
International | 787 | (83 | ) | (77 | ) | ||||||||
$ | 71,129 | $ | (10,024 | ) | $ | (4,430 | ) | ||||||
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to earnings (loss) before income taxes, as a result of the following: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
U.S. statutory rate (benefit) | (35.0 | )% | 35 | % | (35.0 | )% | |||||||
State income taxes, net of federal income tax benefit | (0.2 | ) | 3.6 | 3.5 | |||||||||
Valuation allowance (1) | 160.8 | — | — | ||||||||||
Tax effect of goodwill impairment | 11.5 | — | 47.7 | ||||||||||
Foreign income taxes at other than U.S. rates | 1.4 | 4.1 | (0.5 | ) | |||||||||
Tax effect of foreign currency translation gain | — | (107.0 | ) | — | |||||||||
Work Opportunity and Welfare-to-Work Tax Credits | (5.3 | ) | (42.8 | ) | (19.4 | ) | |||||||
Other, net | (2.3 | ) | 7.8 | (13.8 | ) | ||||||||
130.9 | % | (99.3 | )% | (17.5 | )% | ||||||||
_______________________________________________________________________________ | |||||||||||||
(1) See Note 1 to the Consolidated Financial Statements. | |||||||||||||
The (2.3)% of Other, net in fiscal year 2014 does not include the rate impact of any items in excess of 5% of computed tax. | |||||||||||||
The 7.8% of Other, net in fiscal year 2013 includes the rate impact of meals and entertainment expense disallowance, donated inventory, unrecognized tax benefits and miscellaneous items of 4.9%, (3.4)%, 5.5% and 0.8%, respectively. | |||||||||||||
The (13.8)% of Other, net in fiscal year 2012 includes the rate impact of meals and entertainment expense disallowance, unrecognized tax benefits and miscellaneous items of 2.1%, (9.1)% and (6.8)%, respectively. | |||||||||||||
The components of the net deferred tax assets and liabilities are as follows: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||
Deferred tax assets: | |||||||||||||
Deferred rent | $ | 12,625 | $ | 12,953 | |||||||||
Payroll and payroll related costs | 24,857 | 34,073 | |||||||||||
Net operating loss carryforwards | 17,180 | 2,484 | |||||||||||
Tax credit carryforwards | 20,134 | 4,366 | |||||||||||
Inventories | 2,926 | 7,920 | |||||||||||
Allowance for doubtful accounts/notes | 216 | 7,004 | |||||||||||
Insurance | 6,195 | 6,106 | |||||||||||
Other | 8,815 | 14,353 | |||||||||||
Subtotal | $ | 92,948 | $ | 89,259 | |||||||||
Valuation allowance | (83,922 | ) | — | ||||||||||
Total deferred tax assets | $ | 9,026 | $ | 89,259 | |||||||||
Deferred tax liabilities: | |||||||||||||
Depreciation | $ | (8,086 | ) | $ | (20,684 | ) | |||||||
Amortization of intangibles | (77,650 | ) | (72,635 | ) | |||||||||
Other | (5,689 | ) | (7,206 | ) | |||||||||
Total deferred tax liabilities | $ | (91,425 | ) | $ | (100,525 | ) | |||||||
Net deferred tax (liability) asset | $ | (82,399 | ) | $ | (11,266 | ) | |||||||
At June 30, 2014, the Company has tax effected federal, state and U.K. net operating loss carryforwards of approximately $12.4, $3.7 and $1.1 million, respectively. The federal loss carryforward expires in 2034. The state loss carryforwards expire from 2016 to 2034. The U.K. loss carryforward has no expiration. | |||||||||||||
The Company's tax credit carryforward of $20.1 million consists of $18.6 million that will expire from 2031 to 2034. The remaining $1.5 million carryforward has no expiration date. | |||||||||||||
As of June 30, 2014, undistributed earnings of international subsidiaries of approximately $23.7 million were considered to have been reinvested indefinitely and, accordingly, the Company has not provided for U.S. income taxes on such earnings. It is not practicable for the Company to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings. | |||||||||||||
The Company files tax returns and pays tax primarily in the U.S., Canada, the U.K. and Luxembourg as well as states, cities, and provinces within these jurisdictions. In the U.S., fiscal years 2010 and beyond remain open for federal tax audit. The Company's U.S. federal income tax returns for the fiscal years 2010 and 2011 are currently under examination by the Internal Revenue Service (IRS). The IRS has identified certain issues that may result in audit adjustments. The Company is reviewing the issues identified to date. In anticipation of resolution of the issues identified, the Company made a payment of $9.5 million to the IRS during the fourth quarter ended June 30, 2014. The majority of the amount paid relates to timing differences and will be recovered by claiming future tax deductions and by receiving a benefit when the Company's U.S. deferred tax asset valuation allowance is reversed. Final resolution of these issues is not expected to have a material impact on the Company’s financial statements. 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. For state tax audits, the statute of limitations generally spans three to four years, resulting in a number of states remaining open for tax audits dating back to fiscal year 2009. Internationally, including Canada, the statute of limitations for tax audits varies by jurisdiction, but generally ranges from three to five years. | |||||||||||||
A rollforward of the unrecognized tax benefits is as follows: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Balance at beginning of period | $ | 10,015 | $ | 4,381 | $ | 13,493 | |||||||
(Reductions)/additions based on tax positions related to the current year | (2,114 | ) | 44 | 482 | |||||||||
(Reductions)/additions based on tax positions of prior years | (505 | ) | 7,132 | (7 | ) | ||||||||
Reductions on tax positions related to the expiration of the statute of limitations | (994 | ) | (1,403 | ) | (1,571 | ) | |||||||
Settlements | (4,934 | ) | (139 | ) | (8,016 | ) | |||||||
Balance at end of period | $ | 1,468 | $ | 10,015 | $ | 4,381 | |||||||
If the Company were to prevail on all unrecognized tax benefits recorded, a benefit of approximately $1 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During the fiscal years 2014, 2013 and 2012, we recorded interest and penalties of approximately $0.1, $0.7 and $(1.2) million, respectively, as additions to the accrual net of the respective reversal of previously accrued interest and penalties. As of June 30, 2014, the Company had accrued interest and penalties related to unrecognized tax benefits of $1.1 million. This amount is not included in the gross unrecognized tax benefits noted above. | |||||||||||||
It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next fiscal year. However, an estimate of the amount or range of the change cannot be made at this time. |
BENEFIT_PLANS
BENEFIT PLANS | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | ||||||||||||
BENEFIT PLANS | ' | ||||||||||||
BENEFIT PLANS | |||||||||||||
Regis Retirement Savings Plan: | |||||||||||||
The Company maintains a defined contribution 401(k) plan, the Regis Retirement Savings Plan (RRSP). The RRSP is a defined contribution profit sharing plan with a 401(k) feature that is intended to qualify under Section 401(a) of the Internal Revenue Code (Code) and is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). | |||||||||||||
The 401(k) portion of the RRSP is cash or deferred arrangement intended to qualify under section 401(k) of the Code and under which eligible employees may elect to contribute a percentage of their eligible compensation. Employees who are 18 years of age or older and who were not highly compensated employees as defined by the Code during the preceding RRSP year are eligible to participate in the RRSP commencing with the first day of the month following their completion of one month of service. | |||||||||||||
The discretionary employer contribution profit sharing portion of the RRSP is a noncontributory defined contribution component covering full-time and part-time employees of the Company who have at least one year of eligible service, defined as 1,000 hours of service during the RRSP year, are employed by the Company on the last day of the RRSP year and are employed at Salon Support, distribution centers, as field leaders, artistic directors or consultants, and that are not highly compensated employees as defined by the Code. Participants' interest in the noncontributory defined contribution component become 20.0% vested after completing two years of service with vesting increasing 20.0% for each additional year of service, and with participants becoming fully vested after six full years of service. | |||||||||||||
Nonqualified Deferred Salary Plan: | |||||||||||||
The Company maintains a Nonqualified Deferred Salary Plan (Executive Plan), which covers Company officers and all other employees who are highly compensated as defined by the Code. The discretionary employer contribution portion of the Executive Plan is a profit sharing component in which a participants interest becomes 20.0% vested after completing two years of service with vesting increasing 20.0% for each additional year of service, and with participants becoming fully vested after six full years of service. Certain participants within the Executive Plan also receive a matching contribution from the Company. | |||||||||||||
Stock Purchase Plan: | |||||||||||||
The Company has an employee stock purchase plan (ESPP) available to qualifying employees. Under the terms of the ESPP, eligible employees may purchase the Company's common stock through payroll deductions. The Company contributes an amount equal to 15.0% of the purchase price of the stock to be purchased on the open market and pays all expenses of the ESPP and its administration, not to exceed an aggregate contribution of $11.8 million. As of June 30, 2014, the Company's cumulative contributions to the ESPP totaled $9.6 million. | |||||||||||||
Deferred Compensation Contracts: | |||||||||||||
The Company has unfunded deferred compensation contracts covering certain current and former key executives. Prior to June 30, 2012, deferred compensation benefits were based on the executive's years of service and compensation for the 60 months preceding the executive's termination date. Effective June 30, 2012, these contracts were amended and the benefits were frozen as of June 30, 2012. | |||||||||||||
Expense associated with the deferred compensation contracts included in general and administrative expenses on the Consolidated Statement of Operations totaled $0.9, $1.6 and $5.9 million for fiscal years 2014, 2013 and 2012, respectively. | |||||||||||||
The table below presents the projected benefit obligation of these deferred compensation contracts in the Consolidated Balance Sheet: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||
Current portion (included in Accrued liabilities) | $ | 2,913 | $ | 3,532 | |||||||||
Long-term portion (included in Other noncurrent liabilities) | 7,677 | 9,446 | |||||||||||
$ | 10,590 | $ | 12,978 | ||||||||||
The tax-affected accumulated other comprehensive income (loss) for the deferred compensation contracts, consisting of primarily unrecognized actuarial income, was $0.3 and $0.1 million at June 30, 2014 and 2013, respectively. | |||||||||||||
The Company had previously agreed to pay the former Vice Chairman an annual amount of $0.6 million, adjusted for inflation to $0.9 million in fiscal years 2014 and 2013, for the remainder of his life. Additionally, the Company has a survivor benefit plan for the former Vice Chairman's spouse at a rate of one half of his deferred compensation benefit, adjusted for inflation, for the remaining life of his spouse. In October 2013, the former Vice Chairman passed away and the Company began paying survivor benefits to his spouse. At this time, the Company reduced the accrual for future obligations to account for the reduction in benefits to the survivor. In connection with the passing of the former Vice Chairman, the Company received $5.8 million in life insurance proceeds. The Company recorded a gain of $1.0 million recorded in general and administrative in the Consolidated Statement of Operations associated with the proceeds. Estimated associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $(2.1), $0.7 and $0.8 million for fiscal years 2014, 2013 and 2012, respectively. Related obligations totaled $2.5 and $5.7 million at June 30, 2014 and 2013, respectively, with $0.5 and $0.9 million within accrued expenses at June 30, 2014 and 2013, respectively and the remainder included in other noncurrent liabilities in the Consolidated Balance Sheet. | |||||||||||||
In connection with the former Chief Executive Officer's deferred compensation contract, the Company paid the former Chief Executive Officer $15.1 million in fiscal year 2013. Associated compensation expense included in general and administrative expenses on the Consolidated Statement of Operations totaled $3.7 million for fiscal year 2012. | |||||||||||||
Compensation expense included in (loss) income before income taxes and equity in loss of affiliated companies related to the aforementioned plans, excluding amounts paid for expenses and administration of the plans included the following: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Executive Plan (including profit sharing) | $ | 203 | $ | 311 | $ | 394 | |||||||
ESPP | 347 | 441 | 449 | ||||||||||
Deferred compensation contracts | 1,641 | 2,370 | 10,452 | ||||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 12 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Earnings Per Share [Abstract] | ' | |||||||||
EARNINGS PER SHARE | ' | |||||||||
EARNINGS PER SHARE | ||||||||||
Net (loss) income from continuing operations available to common shareholders and net (loss) income from continuing operations for the diluted earnings per share under the if-converted method was the same for all periods presented. Interest on the convertible debt was excluded from net (loss) income from continuing operations for diluted earnings per share as the convertible debt was not dilutive. | ||||||||||
The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share: | ||||||||||
Fiscal Years | ||||||||||
2014 | 2013 | 2012 | ||||||||
(Shares in thousands) | ||||||||||
Weighted average shares for basic earnings per share | 56,482 | 56,704 | 57,137 | |||||||
Effect of dilutive securities: | ||||||||||
Dilutive effect of stock-based compensation(1) | — | 142 | — | |||||||
Weighted average shares for diluted earnings per share | 56,482 | 56,846 | 57,137 | |||||||
_______________________________________________________________________________ | ||||||||||
-1 | For fiscal year 2014 and 2012, 119,750 and 182,270 common stock equivalents of potentially dilutive common stock were not included in the diluted earnings per share calculation due to the net loss from continuing operations. | |||||||||
The computation of weighted average shares outstanding, assuming dilution, excluded 1,799,352, 1,593,228 and 1,987,784 of equity-based compensation awards during the fiscal years 2014, 2013 and 2012, respectively. These amounts were excluded because they were not dilutive under the treasury stock method. The computation of weighted average shares outstanding, assuming dilution also excluded 11,307,605, 11,260,261 and 11,208,552 of shares from convertible debt for fiscal years 2014, 2013 and 2012, respectively. These amounts were excluded as they were not dilutive. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||
Company grants long-term equity-based awards under the Amended and Restated 2004 Long Term Incentive Plan (the "2004 Plan"). The 2004 Plan provides for the granting of nonqualified stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs) and stock-settled performance share units (PSUs), as well as cash-based performance grants, to employees and non-employee directors of the Company. Under the 2004 Plan, a maximum of 6,750,000 shares were approved for issuance. In October 2013, the 2004 Plan was amended to limit the number of future full value awards (awards other than stock options and SARs) to 3,465,701. Shares issued under the 2004 Plan are issued from new shares. As of June 30, 2014 there were 3,905,483 partial shares or 3,029,874 full shares available for grant under the 2004 Plan. All unvested awards are subject to forfeiture in the event of termination of employment, unless accelerated. SAR and RSU awards granted subsequent to July 1, 2012 generally include various acceleration terms for participants aged sixty-two years or older and employees aged fifty-five or older and have fifteen years of continuous service. | ||||||||||||||||
The Company also has outstanding stock options under the 2000 Stock Option Plan (the "2000 Plan), although the plan terminated in 2010 and no additional awards have since been or will be made under the 2000 Plan. The 2000 Plan allowed the Company to grant both incentive and nonqualified stock options and replaced the Company's 1991 Stock Option Plan. | ||||||||||||||||
Under the 2004 Plan and the 2000 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant. | ||||||||||||||||
Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2014, 2013 and 2012 were as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Stock options & SARs | $ | 6 | $ | 6.63 | N/A | |||||||||||
RSAs & RSUs | 15.5 | 17.4 | $ | 16.94 | ||||||||||||
PSUs | 15.73 | 18.33 | N/A | |||||||||||||
The fair value of stock options and SARs granted prior to June 30, 2013 was estimated on the date of grant using a lattice option valuation model. Effective July 1, 2013, the Company changed from the lattice option valuation model to the Black-Scholes-Merton (BSM) option valuation model for valuing SARs. The Company elected to make the change in valuation methodology because the Company's historical grants of SARs lacked complex vesting conditions or maximum payout limitations on the value of the awards. The Company does not expect a material difference in future valuations as a result of the change in models. The fair value of market-based RSUs granted during fiscal year 2013 was estimated on the date of grant using a Monte Carlo simulation model. The significant assumptions used in determining the estimated fair value of stock options, SARs and market-based RSUs granted during fiscal years 2014, 2013 and 2012 were as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Risk-free interest rate | 1.67 - 1.96% | 0.66 - 0.87% | N/A | |||||||||||||
Expected term (in years) | 6 | 6 | N/A | |||||||||||||
Expected volatility | 44.00% | 44.00 - 47.00% | N/A | |||||||||||||
Expected dividend yield | 1.52 - 1.61% | 1.33 - 1.46% | N/A | |||||||||||||
The risk free rate of return is determined based on the U.S. Treasury rates approximating the expected life of the stock options and SARs granted. Expected volatility is established based on historical volatility of the Company's stock price. Estimated expected life was based on an analysis of historical stock options granted data which included analyzing grant activity including grants exercised, expired and canceled. The expected dividend yield is determined based on the Company's annual dividend amount as a percentage of the strike price at the time of the grant. The Company uses historical data to estimate pre-vesting forfeiture rates. | ||||||||||||||||
Stock-based compensation expense, recorded within General and Administrative expense in the Consolidated Statement of Operations, was as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
SARs & stock options | $ | 2,145 | $ | 1,986 | $ | 1,447 | ||||||||||
RSAs, RSUs, & PSUs | 4,255 | 3,895 | 6,150 | |||||||||||||
Total stock-based compensation expense | 6,400 | 5,881 | 7,597 | |||||||||||||
Less: Income tax benefit | — | (2,235 | ) | (2,898 | ) | |||||||||||
Total stock-based compensation expense, net of tax | $ | 6,400 | $ | 3,646 | $ | 4,699 | ||||||||||
Stock Appreciation Rights & Stock Options: | ||||||||||||||||
SARs and stock options granted under the 2004 Plan and 2000 Plan generally vest ratably over a three to five years period on each of the annual grant date anniversaries and expire ten years from the grant date. SARs granted subsequent to fiscal year 2012 vest ratably over a three year period. | ||||||||||||||||
Activity for all of our outstanding SARs and stock options is as follows: | ||||||||||||||||
Shares | Weighted | Weighted- | Aggregate | |||||||||||||
(in thousands) | Average | Average | Intrinsic Value | |||||||||||||
Exercise Price | Remaining | (in thousands) | ||||||||||||||
SARs | Stock | Contractual Life | ||||||||||||||
Options | ||||||||||||||||
Outstanding balance at June 30, 2013 | 860 | 429 | $ | 25.26 | ||||||||||||
Granted | 470 | — | 15.74 | |||||||||||||
Forfeited/Expired | (189 | ) | (177 | ) | 30.06 | |||||||||||
Exercised | (1 | ) | — | 16.6 | ||||||||||||
Outstanding balance at June 30, 2014 | 1,140 | 252 | $ | 20.8 | 6.8 | — | ||||||||||
Exercisable at June 30, 2014 | 383 | 246 | $ | 25.85 | 4.5 | — | ||||||||||
Unvested options, net of estimated forfeitures | 686 | 6 | $ | 16.68 | 8.7 | — | ||||||||||
The total intrinsic value, cash proceeds and income tax benefit associated with the exercise of SARs and stock options during fiscal years 2014, 2013 and 2012 were immaterial. As of June 30, 2014, there was $2.9 million of unrecognized expense related to SARs and stock options that is to be recognized over a weighted-average period of 1.8 years. | ||||||||||||||||
Restricted Stock Awards & Restricted Stock Units: | ||||||||||||||||
RSAs and RSUs granted to employees under the 2004 Plan generally vest ratably over a three to five year period on each of the annual grant date anniversaries or vest entirely after a three or five year period. In addition, the Company has an outstanding RSU grant to its Chief Executive Officer that vests upon the achievement of a specified value for the Company's stock over a specified period of time. RSUs granted to non-employee directors under the 2004 Plan generally vest in equal monthly amounts over a one year period from the Company's previous annual shareholder meeting date. Distributions on vested RSUs granted to non-employee directors are deferred until the director's board service ends. | ||||||||||||||||
Activity for all of our RSAs and RSUs is as follows: | ||||||||||||||||
Shares/Units | Weighted | Aggregate Intrinsic | ||||||||||||||
(in thousands) | Average | Value | ||||||||||||||
Grant Date | (in thousands) | |||||||||||||||
RSAs | RSUs | Fair Value | ||||||||||||||
Outstanding balance at June 30, 2013 | 315 | 250 | $ | 17.46 | ||||||||||||
Granted | — | 362 | 15.5 | |||||||||||||
Forfeited | (26 | ) | (19 | ) | 17.05 | |||||||||||
Vested | (103 | ) | (81 | ) | 17.92 | |||||||||||
Outstanding balance at June 30, 2014 | 186 | 512 | $ | 16.34 | $ | 9,817 | ||||||||||
Vested at June 30, 2014 | — | 81 | $ | 16.42 | $ | 1,145 | ||||||||||
Unvested awards, net of estimated forfeitures | 179 | 361 | $ | 16.4 | $ | 7,602 | ||||||||||
As of June 30, 2014, there was $6.6 million of unrecognized expense related to RSAs and RSUs that is expected to be recognized over a weighted-average period of 2.2 years. | ||||||||||||||||
Performance Share Units: | ||||||||||||||||
PSUs represent shares potentially issuable in the future. Issuance is based upon the relative achievement of the Company's performance goals. PSUs granted to employees under the 2004 Plan generally cliff vest after two years following a one year performance period. | ||||||||||||||||
For certain PSUs granted in the fiscal years 2014 and 2013, the performance goals related to the Company achieving specified levels of same-store sales and earnings before interest, taxes, depreciation and amortization, adjusted ("adjusted EBITDA") for certain items impacting comparability for fiscal years 2014 and 2013. As the Company did not achieve thresholds related to performance goals for fiscal years 2014 and 2013, no PSUs were earned during fiscal years 2014 and 2013 for these awards. | ||||||||||||||||
In addition, during fiscal year 2014, the Company granted 0.1 million shares at target with a weighted average grant date fair value of $15.72 for performance goal of achieving a cumulative adjusted EBITDA during a three year period. As of June 30, 2014, the Company does not expect any of these units to be earned. Therefore, there is no unrecognized expense related to PSUs as of June 30, 2014. Future compensation expense for the unvested awards could reach a maximum of $1.9 million to be recognized over 2.2 years, assuming the Company expects the target performance metric is earned. |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||
SHAREHOLDERS' EQUITY | |||||||||
Authorized Shares and Designation of Preferred Class: | |||||||||
The Company has 100 million shares of capital stock authorized, par value $0.05, of which all outstanding shares, and shares available under the Stock Option Plans, have been designated as common. | |||||||||
In addition, 250,000 shares of authorized capital stock have been designated as Series A Junior Participating Preferred Stock (preferred stock). None of the preferred stock has been issued. | |||||||||
Shareholders' Rights Plan: | |||||||||
The Company has a shareholders' rights plan pursuant to which one preferred share purchase right is held by shareholders for each outstanding share of common stock. The rights become exercisable only following the acquisition by a person or group, without the prior consent of the Board of Directors, of 20.0% or more of the Company's voting stock, or following the announcement of a tender offer or exchange offer to acquire an interest of 20.0% or more. If the rights become exercisable, they entitle all holders, except the takeover bidder, to purchase one one-thousandth of a share of preferred stock at an exercise price of $140, subject to adjustment, or in lieu of purchasing the preferred stock, to purchase for the same exercise price common stock of the Company (or in certain cases common stock of an acquiring company) having a market value of twice the exercise price of a right. | |||||||||
Share Repurchase Program: | |||||||||
In May 2000, the Company's Board of Directors (Board) approved a stock repurchase program. Originally, the program authorized up to $50.0 million to be expended for the repurchase of the Company's stock. The Board elected to increase this maximum to $100.0 million in August 2003, to $200.0 million on May 3, 2005, and to $300.0 million on April 26, 2007. The timing and amounts of any repurchases will depend on many factors, including the market price of the common stock and overall market conditions. Historically, the repurchases to date have been made primarily to eliminate the dilutive effect of shares issued in conjunction with acquisitions, restricted stock grants and stock option exercises. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. As of June 30, 2014, a total accumulated 7.7 million shares have been repurchased for $241.3 million. As of June 30, 2014, $58.7 million remained outstanding under the approved stock repurchase program. | |||||||||
Accumulated Other Comprehensive Income: | |||||||||
The components of accumulated other comprehensive income are as follows: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
(Dollars in thousands) | |||||||||
Foreign currency translation | $ | 22,364 | $ | 20,434 | |||||
Unrealized gain on deferred compensation contracts | 287 | 122 | |||||||
Accumulated other comprehensive income | $ | 22,651 | $ | 20,556 | |||||
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | ||||||||||||||||||||||||
Jun. 30, 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 8,295 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 801 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 360 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. | |||||||||||||||||||||||||
Financial information concerning the Company's reportable operating segments is shown in the following table: | |||||||||||||||||||||||||
Fiscal Years | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Revenues(1): | |||||||||||||||||||||||||
North American Value salons | $ | 1,430,083 | $ | 1,515,581 | $ | 1,570,542 | |||||||||||||||||||
North American Premium salons | 333,858 | 373,820 | 410,563 | ||||||||||||||||||||||
International salons | 128,496 | 129,312 | 141,122 | ||||||||||||||||||||||
$ | 1,892,437 | $ | 2,018,713 | $ | 2,122,227 | ||||||||||||||||||||
Depreciation and amortization expense(1): | |||||||||||||||||||||||||
North American Value salons | $ | 66,038 | $ | 56,364 | $ | 55,317 | |||||||||||||||||||
North American Premium salons | 15,859 | 15,893 | 15,936 | ||||||||||||||||||||||
International salons | 5,227 | 5,222 | 5,297 | ||||||||||||||||||||||
Total segment depreciation and amortization expense | 87,124 | 77,479 | 76,550 | ||||||||||||||||||||||
Unallocated Corporate | 12,609 | 14,276 | 28,420 | ||||||||||||||||||||||
$ | 99,733 | $ | 91,755 | $ | 104,970 | ||||||||||||||||||||
Operating (loss) income(1): | |||||||||||||||||||||||||
North American Value salons | $ | 118,935 | $ | 141,103 | $ | 197,478 | |||||||||||||||||||
North American Premium salons(2) | (46,274 | ) | (13,850 | ) | (57,504 | ) | |||||||||||||||||||
International salons | (3,356 | ) | (1,380 | ) | 2,505 | ||||||||||||||||||||
Total segment operating income | 69,305 | 125,873 | 142,479 | ||||||||||||||||||||||
Unallocated Corporate | (103,295 | ) | (113,547 | ) | (144,646 | ) | |||||||||||||||||||
Operating (loss) income(1) | $ | (33,990 | ) | $ | 12,326 | $ | (2,167 | ) | |||||||||||||||||
Interest expense | (22,290 | ) | (37,594 | ) | (28,245 | ) | |||||||||||||||||||
Interest income and other, net | 1,952 | 35,366 | 5,098 | ||||||||||||||||||||||
(Loss) income from continuing operations before income taxes and equity in loss of affiliated companies | $ | (54,328 | ) | $ | 10,098 | $ | (25,314 | ) | |||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||
-1 | See Note 2 to the Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as discontinued operations. | ||||||||||||||||||||||||
-2 | Included in the North American Premium salons segment's operating loss for fiscal years 2014 and 2012 are goodwill impairment charges of $34.9 and $67.7 million, respectively. | ||||||||||||||||||||||||
The Company's chief operating decision maker does not evaluate reportable segments using assets and capital expenditure information. | |||||||||||||||||||||||||
Total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate were as follows: | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Total | Property and | Total | Property and | Total | Property and | ||||||||||||||||||||
Revenues | Equipment, Net | Revenues | Equipment, Net | Revenues | Equipment, Net | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
U.S. | $ | 1,626,794 | $ | 240,460 | $ | 1,737,517 | $ | 285,111 | $ | 1,815,797 | $ | 274,711 | |||||||||||||
Other countries | 265,643 | 26,078 | 281,196 | 28,349 | 306,430 | 31,088 | |||||||||||||||||||
Total | $ | 1,892,437 | $ | 266,538 | $ | 2,018,713 | $ | 313,460 | $ | 2,122,227 | $ | 305,799 | |||||||||||||
QUARTERLY_FINANCIAL_DATA_UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | ' | ||||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||||||||||||
Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 in this Form 10-K for explanations of items, which impacted fiscal years 2014 and 2013 revenues, operating and net (loss) income. | |||||||||||||||||||||
Summarized quarterly data for fiscal years 2014 and 2013 follows: | |||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||
September 30(e) | December 31 | March 31 | June 30 | Year Ended | |||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Revenues | $ | 468,583 | $ | 468,367 | $ | 471,561 | $ | 483,926 | $ | 1,892,437 | |||||||||||
Cost of service and product revenues, excluding depreciation and amortization | 269,039 | 273,874 | 272,490 | 279,095 | 1,094,498 | ||||||||||||||||
Operating income (loss)(a) | 1,429 | (34,660 | ) | (3,221 | ) | 2,462 | (33,990 | ) | |||||||||||||
(Loss) income from continuing operations(a)(b) | (136 | ) | (109,085 | ) | (10,093 | ) | (17,766 | ) | (137,080 | ) | |||||||||||
Income from discontinued operations(c) | — | — | 609 | 744 | 1,353 | ||||||||||||||||
Net (loss) income (a)(b)(c) | (136 | ) | (109,085 | ) | (9,484 | ) | (17,022 | ) | (135,727 | ) | |||||||||||
(Loss) income from continuing operations per share, basic and diluted(d) | — | (1.93 | ) | (0.18 | ) | (0.31 | ) | (2.43 | ) | ||||||||||||
Income from discontinued operations per share, basic and diluted | — | — | 0.01 | 0.01 | 0.02 | ||||||||||||||||
Net (loss) income per basic and diluted share(d) | — | (1.93 | ) | (0.17 | ) | (0.30 | ) | (2.40 | ) | ||||||||||||
Dividends declared per share | 0.06 | 0.06 | — | — | 0.12 | ||||||||||||||||
Quarter Ended | |||||||||||||||||||||
September 30 | December 31 | March 31 | June 30(e) | Year Ended | |||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
2013 | |||||||||||||||||||||
Revenues | $ | 505,360 | $ | 506,165 | $ | 504,937 | $ | 502,251 | $ | 2,018,713 | |||||||||||
Cost of service and product revenues, excluding depreciation and amortization | 285,660 | 289,329 | 287,597 | 296,678 | 1,159,264 | ||||||||||||||||
Operating income (loss)(a) | 9,273 | 8,723 | 3,308 | (8,978 | ) | 12,326 | |||||||||||||||
Income (loss) from continuing operations(a)(b) | 34,647 | (16,119 | ) | 896 | (15,258 | ) | 4,166 | ||||||||||||||
Income (loss) from discontinued operations(c) | 3,777 | 3,853 | 1,465 | 15,933 | 25,028 | ||||||||||||||||
Net income (loss)(a)(b)(c) | 38,424 | (12,266 | ) | 2,361 | 675 | 29,194 | |||||||||||||||
Income (loss) from continuing operations per share, basic | 0.6 | (0.28 | ) | 0.02 | (0.27 | ) | 0.07 | ||||||||||||||
Income (loss) from discontinued operations per share, basic(d) | 0.07 | 0.07 | 0.03 | 0.28 | 0.44 | ||||||||||||||||
Net income (loss) per basic share(d) | 0.67 | (0.22 | ) | 0.04 | 0.01 | 0.51 | |||||||||||||||
Income (loss) from continuing operations per share, diluted | 0.54 | (0.28 | ) | 0.02 | (0.27 | ) | 0.07 | ||||||||||||||
Income (loss) from discontinued operations per share, diluted | 0.06 | 0.07 | 0.03 | 0.28 | 0.44 | ||||||||||||||||
Net income (loss) per diluted share(d) | 0.59 | (0.22 | ) | 0.04 | 0.01 | 0.51 | |||||||||||||||
Dividends declared per share | 0.06 | 0.06 | 0.06 | 0.06 | 0.24 | ||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||
(a) | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Company’s U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | ||||||||||||||||||||
(b) | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | ||||||||||||||||||||
(c) | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. | ||||||||||||||||||||
(d) | Total is an annual recalculation; line items calculated quarterly may not sum to total. | ||||||||||||||||||||
(e) | During the fourth quarter of fiscal year 2013, the Company recorded a cumulative adjustment to correct prior period errors that related to an understatement of interest expense and certain uncertain tax positions. The impact of these items on the Company's Consolidated Statement of Operations increased interest expense by $0.4 million, increased income tax expense by $0.3 million and decreased net income by $0.7 million. During first quarter of fiscal year 2014, the Company recorded adjustments to correct errors related to the fourth quarter of fiscal year 2013 for an overstatement of inventory and self-insurance accruals and an understatement of cash. The impact of these items on the Company's Consolidated Statement of Operations decreased Site Operating expenses by $1.3 million, increased Cost of Product by $0.3 million and decreased net loss by $0.6 million. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or respective fiscal year, the Company recorded adjustments to correct the errors during each respective quarter. |
BUSINESS_DESCRIPTION_AND_SUMMA1
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Consolidation | ' |
Consolidation: | |
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidated variable interest entities where it has determined it is the primary beneficiary of those entities' operations. | |
Variable Interest Entities | ' |
Variable Interest Entities: | |
The Company has or has had interests in certain privately held entities through arrangements that do not involve voting interests. Such entities, known as a variable interest entity (VIE), are required to be consolidated by its primary beneficiary. The Company evaluates whether or not it is the primary beneficiary for each VIE using a qualitative assessment that considers the VIE's purpose and design, the involvement of each of the interest holders and the risk and benefits of the VIE. | |
As of June 30, 2014, the Company has one VIE, Roosters MGC International LLC (Roosters), where the Company is the primary beneficiary. The Company owns a 60.0% ownership interest in Roosters. As of June 30, 2014, total assets, total liabilities and total shareholders' equity of Roosters were $6.5, $1.8 and $4.7 million, respectively. Net income attributable to the non-controlling interest in Roosters was immaterial for fiscal years 2014, 2013 and 2012. Shareholders' equity attributable to the non-controlling interest in Roosters was $1.8 million and $1.6 million as of June 30, 2014 and 2013 and recorded within retained earnings on the Consolidated Balance Sheet. | |
The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in Empire Education Group, Inc. (EEG) was a 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. | |
Use of Estimates | ' |
Use of Estimates: | |
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents: | |
Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2014 and 2013. | |
The Company has restricted cash primarily related to contractual obligations to collateralize its self-insurance program. The restricted cash arrangement can be canceled by the Company at any time if substituted with letters of credit. The restricted cash balance is classified within other current assets on the Consolidated Balance Sheet. | |
Receivables and Allowance for Doubtful Accounts | ' |
Receivables and Allowance for Doubtful Accounts: | |
The receivable balance on the Company's Consolidated Balance Sheet primarily includes credit card receivables and accounts and notes receivable from franchisees. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. | |
The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables. As of June 30, 2014 and 2013, the allowance for doubtful accounts was $0.9 and $0.6 million, respectively. | |
Inventories | ' |
Inventories: | |
Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and relaxers. Inventories are stated at the lower of cost or market, with cost determined on a weighted average cost basis. | |
Physical inventory counts are performed annually in the fourth quarter of the fiscal year. Product and service inventories are adjusted based on the physical inventory counts. During the fiscal year, cost of retail product sold to salon guests is determined based on the weighted average cost of product sold, adjusted for an estimated shrinkage factor and the cost of product used in salon services is determined by applying estimated percentage of total cost of service and product to service revenues. The estimated percentage related to service inventories is updated quarterly based on cycle count results and other factors that could impact the Company's margin rate estimates such as service sales mix, discounting and special promotions. Actual results compared to quarterly estimates have not historically resulted in material adjustments to our Statement of Operations. | |
The Company has inventory valuation reserves for excess and obsolete inventories, or other factors that may render inventories unmarketable at their historical costs. Estimates of the future demand for the Company's inventory and anticipated changes in formulas and packaging are some of the other factors used by management in assessing the net realizable value of inventories. During fiscal year 2013, the Company recorded an inventory write-down of $12.6 million associated with standardizing plan-o-grams, eliminating retail products and consolidating from four own-branded product lines to one. | |
Property and Equipment | ' |
Property and Equipment: | |
Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful asset lives (30 to 39 years for buildings, 10 years for improvements and three to ten years for equipment, furniture and software). Depreciation expense was $79.7, $81.8 and $96.4 million in fiscal years 2014, 2013 and 2012, respectively. | |
The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. Amortization expense related to capitalized software, included within depreciation expense disclosed above, was $7.5, $6.8 and $22.3 million in fiscal years 2014, 2013 and 2012, respectively, which has been determined based on an estimated useful lives ranging from five to seven years. | |
The Company implemented a third party point-of-sale (POS) information system in fiscal year 2013. The Company recorded $16.2 million of accelerated amortization expense in fiscal year 2012 associated with a previously developed POS system that became fully depreciated as of June 30, 2012. | |
Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets, are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income. Fully depreciated or amortized assets remain in the accounts until retired from service. | |
Long-Lived Asset Impairment Assessments, Excluding Goodwill | ' |
Long-Lived Asset Impairment Assessments, Excluding Goodwill: | |
The Company assesses the impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets that do not recover the carrying values. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the assets' estimated fair value. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. Long-lived asset impairment charges are recorded within depreciation and amortization in the Consolidated Statement of Operations. | |
Judgments made by management related to the expected useful lives of long-lived assets and the ability to realize undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance. As the ongoing expected cash flows and carrying amounts of long-lived assets are assessed, these factors could cause the Company to realize material impairment charges. | |
Goodwill | ' |
Goodwill: | |
Goodwill is tested for impairment annually during the Company's fourth fiscal quarter or at the time of a triggering event. In evaluating whether goodwill is impaired, the Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, as a basis for determining if the Company needs to perform the two-step goodwill impairment test. If it is determined that it is more likely than not that the fair value of the reporting unit is less than the carrying value, the Company does not need to perform the two-step impairment test. Depending on certain factors, the Company may elect to proceed directly to the two-step impairment test. In the two-step goodwill impairment assessment, the Company compares the carrying value of each reporting unit, including goodwill, to the estimated fair value of the reporting unit. The Company's reporting units are its operating segments. | |
In assessing qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value, the Company evaluates certain factors including, but not limited to, economic, market and industry conditions, cost factors and the overall financial performance of the reporting unit. | |
The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total company-owned salons. | |
For the two-step goodwill impairment test, the Company calculates estimated fair values of the reporting units based on discounted future cash flows utilizing estimates in annual revenue, service and product margins, fixed expense rates, allocated corporate overhead, and long-term growth rates for determining terminal value. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company periodically engages third-party valuation consultants to assist in evaluating the Company's estimated fair value calculations. | |
In situations where a reporting unit's carrying value exceeds its estimated fair value, the amount of the impairment loss must be measured. The measurement of impairment is calculated by determining the implied fair value of a reporting unit's goodwill. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all other assets and liabilities of that unit based on the relative fair values under the assumption of a taxable transaction. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of goodwill. The goodwill impairment is measured as the excess of the carrying value of goodwill over its implied fair value. | |
As a result of our annual impairment test during the fourth quarter of 2014, fair values of the Company's reporting units were deemed to be greater than their respective carrying values. For the fiscal year 2014 annual impairment testing of goodwill, respective fair values of the Company's reporting units with goodwill exceeded carrying values 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 former Regis and Promenade reporting units 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 foundational 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 former Regis and Promenade reporting units. The impairment tests resulted in a $34.9 million non-cash goodwill impairment charge on the former Regis reporting unit and no impairment on the former Promenade reporting unit, as its estimated fair value exceeded its carrying value by approximately 12.0%. The impairment was only partly deductible for tax purposes resulting in a tax benefit of $6.3 million. See Note 9 to the Consolidated Financial Statements. | |
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. Based on the changes to the Company's operating segment structure, goodwill has been reallocated to the new reporting units at June 30, 2014 and 2013. | |
Analyzing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses of goodwill. However, if actual results are not consistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material. | |
Investment In and Loans to Affiliates | ' |
Investments In Affiliates: | |
The Company has equity investments in securities of certain privately held entities. The Company accounts for these investments under the equity or cost method of accounting. Investments accounted for under the equity method are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss. Investments are reviewed for changes in circumstance or the occurrence of events that suggest the Company's investment may not be recoverable. | |
During fiscal years 2013 and 2012, the Company recorded noncash impairments of $17.9 and $19.4 million, respectively, related to its investment in EEG. Due to economic, regulatory and other factors, the Company may be required to take additional noncash impairment charges related to its investments and such noncash impairments could be material to its consolidated balance sheet and results of operations. Based on EEG's annual goodwill impairment assessment during fiscal year 2014, the Company's portion of EEG's estimated fair value exceeds carrying value of its investment by approximately 10%. Any meaningful underperformance against plan or reduced outlook by EEG, changes to the carrying value of EEG or further erosion in valuations of the for-profit secondary educational market could lead to other than temporary impairments of the Company's investment in EEG. In addition, EEG may be required to record noncash impairment charges related to long-lived assets or establish valuation allowances against certain of its deferred tax assets and our share of such noncash impairment charges or valuation allowances could be material to the Company's consolidated balance sheet and results of operations. | |
Self Insurance Accruals | ' |
Self-Insurance Accruals: | |
The Company uses a combination of third party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date. | |
The Company estimates self-insurance liabilities using a number of factors, primarily based on independent third-party actuarially-determined amounts, historical claims experience, estimates of incurred but not reported claims, demographic factors and severity factors. | |
Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from historical trends and actuarial assumptions. For fiscal years 2014, 2013 and 2012, the Company recorded (decreases) increases in expense from changes in estimates related to prior year open policy periods of $(2.0), $(1.1) and $0.9 million, respectively. A 10.0% change in the self-insurance reserve would affect income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies by approximately $4.8 million for fiscal years 2014, 2013 and 2012. The Company updates loss projections twice each year and adjusts its recorded liability to reflect updated projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time. | |
Deferred Rent and Rent Expense | ' |
Deferred Rent and Rent Expense: | |
The Company leases most salon locations under operating leases. Rent expense is recognized on a straight-line basis over the lease term. Tenant improvement allowances funded by landlord incentives, rent holidays and rent escalation clauses which provide for scheduled rent increases during the lease term or for rental payments commencing at a date other than the date of initial occupancy are recorded in the Consolidated Statements of Operations on a straight-line basis over the lease term (including one renewal period if renewal is reasonably assured based on the imposition of an economic penalty for failure to exercise the renewal option). The difference between the rent due under the stated periods of the lease and the straight-line basis is recorded as deferred rent within accrued expenses and other noncurrent liabilities in the Consolidated Balance Sheet. | |
For purposes of recognizing incentives and minimum rental expenses on a straight-line basis, the Company uses the date it obtains the legal right to use and control the leased space to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of its intended use. | |
Certain leases provide for contingent rents, which are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheet, along with the corresponding rent expense in the Consolidated Statement of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. | |
Revenue Recognition and Deferred Revenue | ' |
Revenue Recognition and Deferred Revenue: | |
Company-owned salon revenues are recognized at the time when the services are provided. Product revenues are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) until they are redeemed. | |
Product sales by the Company to its franchisees are included within product revenues on the Consolidated Statement of Operations and recorded at the time product is shipped to franchise locations. | |
Franchise revenues primarily include royalties, initial franchise fees and net rental income. Royalties are recognized as revenue in the month in which franchisee services are rendered. The Company recognizes revenue from initial franchise fees at the time franchise locations are opened, as this is generally when the Company has performed all initial services required under the franchise agreement. See Note 8 to the Consolidated Financial Statements. | |
Classification of Expenses | ' |
Classification of Expenses: | |
The following discussion provides the primary costs classified in each major expense category: | |
Beginning in fiscal year 2014, costs associated with field leaders, excluding salons within the North American Premium segment, that were previously recorded within General and Administrative expense are now categorized within Cost of Service and Site Operating expense as a result of the field reorganization that took place in the fourth quarter of fiscal year 2013. Previously, field leaders did not work on the salon floor daily. As reorganized, field leaders now spend most of their time on the salon floor leading and mentoring stylists and serving guests. As a result, district and senior district leader labor costs are now reported within Cost of Service rather than General and Administrative expenses and their travel costs are reported within Site Operating expenses rather than General and Administrative expenses. | |
Cost of service— labor costs related to salon employees, costs associated with our field supervision (fiscal year 2014) and the cost of product used in providing service. | |
Cost of product— cost of product sold to guests, labor costs related to selling retail product and the cost of product sold to franchisees. | |
Site operating— direct costs incurred by the Company's salons, such as advertising, workers' compensation, insurance, utilities, travel costs associated with our field supervision (fiscal year 2014) and janitorial costs. | |
General and administrative— costs associated with our field supervision (fiscal years 2013 and 2012), salon training and promotions, distribution centers and corporate offices (such as salaries and professional fees), including cost incurred to support franchise operations. | |
Consideration Received from Vendors | ' |
Consideration Received from Vendors: | |
The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. See Note 1 to the Consolidated Financial Statements. | |
With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction to the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A quarterly analysis is performed in order to ensure the estimated rebate accrued is reasonable and any necessary adjustments are recorded. | |
Shipping and Handling Costs | ' |
Shipping and Handling Costs: | |
Shipping and handling costs are incurred to store, move and ship product from the Company's distribution centers to company-owned and franchise locations and include an allocation of internal overhead. Such shipping and handling costs related to product shipped to company-owned locations are included in site operating expenses in the Consolidated Statement of Operations. Shipping and handling costs related to shipping product to franchise locations totaled $3.2, $3.6 and $3.8 million during fiscal years 2014, 2013 and 2012, respectively and are included within general and administrative expenses on the Consolidated Statement of Operations. Any amounts billed to franchisees for shipping and handling are included in product revenues within the Consolidated Statement of Operations. | |
Advertising | ' |
Advertising: | |
Advertising costs, including salon collateral material, are expensed as incurred. Advertising costs expensed and included in continuing operations in fiscal years 2014, 2013 and 2012 was $40.6, $39.2, $42.1 million, respectively. | |
The Company participates in cooperative advertising programs under which vendors reimburse the Company for costs related to advertising its products. The Company records such reimbursements as a reduction of advertising expense when the expense is incurred. | |
Advertising Funds | ' |
Advertising Funds: | |
The Company has various franchising programs supporting certain of its franchise salon concepts. Most maintain advertising funds that provide comprehensive advertising and sales promotion support. The Company is required to participate in the advertising funds for company-owned locations under the same salon concept. The Company assists in the administration of the advertising funds. However, a group of individuals consisting of franchisee representatives has control over all of the expenditures and operates the funds in accordance with franchise operating and other agreements. | |
The Company records advertising expense in the period the company-owned salon makes contributions to the respective advertising fund. | |
Stock-Based Employee Compensation Plans | ' |
Stock-Based Employee Compensation Plans: | |
The Company recognizes stock-based compensation expense based on the fair value of the awards at the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period of the award (or to the date a participant becomes eligible for retirement, if earlier). The Company uses option pricing methods that require the input of subjective assumptions, including the expected term, expected volatility, dividend yield and risk-free interest rate. | |
The Company estimates the likelihood and the rate of achievement for performance sensitive stock-based awards at the end of each reporting period. Changes in the estimated rate of achievement can have a significant effect on the recorded stock-based compensation expense as the effect of a change in the estimated achievement level is recognized in the period the change occurs. | |
Preopening Expenses | ' |
Preopening Expenses: | |
Non-capital expenditures such as payroll, training costs and promotion incurred prior to the opening of a new location are expensed as incurred. | |
Sales Taxes | ' |
Sales Taxes: | |
Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statement of Operations. | |
Income Taxes | ' |
The Company will continue to assess its 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 sufficient sustainable pretax earnings to make the realizability of the deferred tax assets more likely than not. | |
The Company reserves for potential liabilities related to anticipated tax audit issues in the U.S. and other tax jurisdictions based on an estimate of whether additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when it is determined the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. Inherent in the measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities. | |
Income Taxes: | |
Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. The Company evaluates all evidence, including recent financial performance, the existence of cumulative year losses and our forecast of future taxable income, to assess the need for a valuation allowance against our deferred tax assets. 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 fiscal year 2014, the impacts from foundational initiatives implemented late in the prior fiscal year continued to negatively impact the Company’s financial performance. Due to recent negative financial performance and cumulative losses incurred in recent years, the Company was no longer able to conclude that it was more likely than not the U.S. and U.K. deferred tax assets would be fully realized and established a valuation allowance on the U.S. and U.K. deferred tax assets. | |
Net Income (Loss) Per Share | ' |
Net (Loss) Income 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 and restricted stock units. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan and dilutive securities. 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 related 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. | |
Comprehensive (Loss) Income | ' |
Comprehensive (Loss) Income: | |
Components of comprehensive (loss) income include net (loss) income, foreign currency translation adjustments, changes in fair value of derivative instruments, recognition of deferred compensation and reclassification adjustments, net of tax within shareholders' equity. | |
Foreign Currency Translation | ' |
Foreign Currency Translation: | |
Financial position, results of operations and cash flows of the Company's international subsidiaries are measured using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each fiscal year end. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity. Statement of Operations accounts are translated at the average rates of exchange prevailing during the year. |
BUSINESS_DESCRIPTION_AND_SUMMA2
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
Details of Impairment of Long-Lived Assets Held and Used by Asset | ' | ||||||||||||
A summary of long-lived asset impairment charges follows: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
North American Value | $ | 11,714 | $ | 5,031 | $ | 2,892 | |||||||
North American Premium | 5,014 | 3,042 | 3,174 | ||||||||||
International | 1,599 | 151 | 570 | ||||||||||
Total | $ | 18,327 | $ | 8,224 | $ | 6,636 | |||||||
Schedule of goodwill by reporting unit | ' | ||||||||||||
A summary of the Company's goodwill balance by reporting unit follows: | |||||||||||||
Fiscal | |||||||||||||
Reporting Unit | 2014 | 2013 | |||||||||||
(Dollars in thousands) | |||||||||||||
North American Value | $ | 425,264 | $ | 425,932 | |||||||||
North American Premium | — | 34,953 | |||||||||||
Total | $ | 425,264 | $ | 460,885 | |||||||||
_______________________________________________________________________________ | |||||||||||||
(1) As of June 30, 2014 and 2013, the International reporting unit had no goodwill. | |||||||||||||
Components of the net deferred tax assets and liabilities | ' | ||||||||||||
A summary of the activity for the deferred tax asset valuation allowance follows: | |||||||||||||
Fiscal Year | |||||||||||||
2014 | |||||||||||||
(Dollars in thousands) | |||||||||||||
Balance, June 30, 2013 | $ | — | |||||||||||
Establishment of valuation allowance against U.S. & U.K. deferred tax assets | 84,391 | ||||||||||||
Changes to deferred tax asset valuation allowance | (469 | ) | |||||||||||
Balance, June 30, 2014 | $ | 83,922 | |||||||||||
The components of the net deferred tax assets and liabilities are as follows: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||
Deferred tax assets: | |||||||||||||
Deferred rent | $ | 12,625 | $ | 12,953 | |||||||||
Payroll and payroll related costs | 24,857 | 34,073 | |||||||||||
Net operating loss carryforwards | 17,180 | 2,484 | |||||||||||
Tax credit carryforwards | 20,134 | 4,366 | |||||||||||
Inventories | 2,926 | 7,920 | |||||||||||
Allowance for doubtful accounts/notes | 216 | 7,004 | |||||||||||
Insurance | 6,195 | 6,106 | |||||||||||
Other | 8,815 | 14,353 | |||||||||||
Subtotal | $ | 92,948 | $ | 89,259 | |||||||||
Valuation allowance | (83,922 | ) | — | ||||||||||
Total deferred tax assets | $ | 9,026 | $ | 89,259 | |||||||||
Deferred tax liabilities: | |||||||||||||
Depreciation | $ | (8,086 | ) | $ | (20,684 | ) | |||||||
Amortization of intangibles | (77,650 | ) | (72,635 | ) | |||||||||
Other | (5,689 | ) | (7,206 | ) | |||||||||
Total deferred tax liabilities | $ | (91,425 | ) | $ | (100,525 | ) | |||||||
Net deferred tax (liability) asset | $ | (82,399 | ) | $ | (11,266 | ) |
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||||||
Jun. 30, 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 our discontinued Hair Club operations for the periods presented: | |||||||||
Fiscal Years | |||||||||
2013 | 2012 | ||||||||
(Dollars in thousands) | |||||||||
Revenues | $ | 115,734 | $ | 151,552 | |||||
Income (loss) from discontinued operations, before income taxes | $ | 28,643 | $ | (65,114 | ) | ||||
Income tax (provision) benefit on discontinued operations | (4,242 | ) | 849 | ||||||
Equity in income of affiliated companies, net of tax | 627 | 816 | |||||||
Income (loss) from discontinued operations, net of income taxes | $ | 25,028 | $ | (63,449 | ) | ||||
OTHER_FINANCIAL_STATEMENT_DATA1
OTHER FINANCIAL STATEMENT DATA (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule of additional information concerning selected balance sheet accounts | ' | ||||||||||||||||||||||||||||
The following provides additional information concerning selected balance sheet accounts: | |||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
Other current assets: | |||||||||||||||||||||||||||||
Prepaids | $ | 36,951 | $ | 29,629 | |||||||||||||||||||||||||
Restricted cash | 27,500 | 27,500 | |||||||||||||||||||||||||||
Notes receivable | 635 | 769 | |||||||||||||||||||||||||||
$ | 65,086 | $ | 57,898 | ||||||||||||||||||||||||||
Property and equipment: | |||||||||||||||||||||||||||||
Land | $ | 3,864 | $ | 3,864 | |||||||||||||||||||||||||
Buildings and improvements | 48,108 | 47,842 | |||||||||||||||||||||||||||
Equipment, furniture and leasehold improvements | 797,757 | 789,737 | |||||||||||||||||||||||||||
Internal use software | 122,826 | 118,093 | |||||||||||||||||||||||||||
Equipment, furniture and leasehold improvements under capital leases | 77,223 | 81,489 | |||||||||||||||||||||||||||
1,049,778 | 1,041,025 | ||||||||||||||||||||||||||||
Less accumulated depreciation and amortization | (718,959 | ) | (665,924 | ) | |||||||||||||||||||||||||
Less amortization of equipment, furniture and leasehold improvements under capital leases | (64,281 | ) | (61,641 | ) | |||||||||||||||||||||||||
$ | 266,538 | $ | 313,460 | ||||||||||||||||||||||||||
Accrued expenses: | |||||||||||||||||||||||||||||
Payroll and payroll related costs | $ | 69,319 | $ | 74,940 | |||||||||||||||||||||||||
Insurance | 18,710 | 19,035 | |||||||||||||||||||||||||||
Other | 54,691 | 43,251 | |||||||||||||||||||||||||||
$ | 142,720 | $ | 137,226 | ||||||||||||||||||||||||||
Other noncurrent liabilities: | |||||||||||||||||||||||||||||
Deferred income taxes | $ | 83,201 | $ | 36,399 | |||||||||||||||||||||||||
Deferred rent | 36,958 | 39,389 | |||||||||||||||||||||||||||
Insurance | 25,965 | 29,378 | |||||||||||||||||||||||||||
Deferred benefits | 32,728 | 32,435 | |||||||||||||||||||||||||||
Other | 11,602 | 17,410 | |||||||||||||||||||||||||||
$ | 190,454 | $ | 155,011 | ||||||||||||||||||||||||||
Schedule of additional information concerning other intangibles, net | ' | ||||||||||||||||||||||||||||
The following provides additional information concerning other intangibles, net: | |||||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||
Weighted Average Amortization Periods (1) | Cost | Accumulated | Net | Weighted Average Amortization Periods (1) | Cost | Accumulated | Net | ||||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||||||
(In years) | (Dollars in thousands) | (In years) | (Dollars in thousands) | ||||||||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||||||||
Brand assets and trade names | 32 | $ | 9,203 | $ | (3,510 | ) | $ | 5,693 | 32 | $ | 9,310 | $ | (3,226 | ) | $ | 6,084 | |||||||||||||
Franchise agreements | 19 | 11,063 | (7,163 | ) | 3,900 | 19 | 11,187 | (6,839 | ) | 4,348 | |||||||||||||||||||
Lease intangibles | 20 | 14,775 | (7,326 | ) | 7,449 | 20 | 14,754 | (6,582 | ) | 8,172 | |||||||||||||||||||
Other | 20 | 5,074 | (2,304 | ) | 2,770 | 20 | 4,815 | (1,923 | ) | 2,892 | |||||||||||||||||||
22 | $ | 40,115 | $ | (20,303 | ) | $ | 19,812 | 22 | $ | 40,066 | $ | (18,570 | ) | $ | 21,496 | ||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||||||
-1 | All intangible assets have been assigned an estimated finite useful life and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from one to 40 years). | ||||||||||||||||||||||||||||
Schedule of future estimated amortization expense related to amortizable intangible assets | ' | ||||||||||||||||||||||||||||
As of June 30, 2014, future estimated amortization expense related to intangible assets is estimated to be: | |||||||||||||||||||||||||||||
Fiscal Year | (Dollars in | ||||||||||||||||||||||||||||
thousands) | |||||||||||||||||||||||||||||
2015 | $ | 1,710 | |||||||||||||||||||||||||||
2016 | 1,644 | ||||||||||||||||||||||||||||
2017 | 1,589 | ||||||||||||||||||||||||||||
2018 | 1,575 | ||||||||||||||||||||||||||||
2019 | 1,575 | ||||||||||||||||||||||||||||
Thereafter | 11,719 | ||||||||||||||||||||||||||||
Total | $ | 19,812 | |||||||||||||||||||||||||||
Schedule of supplemental disclosures of cash flow activity | ' | ||||||||||||||||||||||||||||
The following provides supplemental disclosures of cash flow activity: | |||||||||||||||||||||||||||||
Fiscal Years | |||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
Cash paid (received) for: | |||||||||||||||||||||||||||||
Interest | $ | 21,173 | $ | 38,990 | -1 | $ | 28,448 | ||||||||||||||||||||||
Income taxes, net | (16,266 | ) | 1,088 | 14,754 | |||||||||||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||||||
-1 | Includes $10.6 million of cash paid for make-whole associated with prepayment of senior notes. |
GOODWILL_Tables
GOODWILL (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Jun. 30, 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: | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Gross | Accumulated | Net (2) | Gross | Accumulated | Net | ||||||||||||||||||||
Carrying | Impairment (1) | Carrying | Impairment (1) | ||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Goodwill | $ | 678,925 | $ | (253,661 | ) | $ | 425,264 | $ | 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 14 to the Consolidated Financial Statements. | ||||||||||||||||||||||||
-4 | See Note 1 to the Consolidated Financial Statements. | ||||||||||||||||||||||||
Schedule of goodwill | ' | ||||||||||||||||||||||||
The table below contains details related to the Company's recorded goodwill: | |||||||||||||||||||||||||
North American Value | North American Premium | Consolidated | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Goodwill, net at June 30, 2012 | $ | 427,287 | $ | 34,992 | $ | 462,279 | |||||||||||||||||||
Translation rate adjustments | (1,355 | ) | (39 | ) | (1,394 | ) | |||||||||||||||||||
Goodwill, net at June 30, 2013 | 425,932 | 34,953 | 460,885 | ||||||||||||||||||||||
Goodwill impairment | — | (34,939 | ) | (34,939 | ) | ||||||||||||||||||||
Goodwill acquired | 130 | — | 130 | ||||||||||||||||||||||
Translation rate adjustments | (798 | ) | (14 | ) | (812 | ) | |||||||||||||||||||
Goodwill, net at June 30, 2014 | $ | 425,264 | $ | — | $ | 425,264 | |||||||||||||||||||
INVESTMENTS_IN_AFFILIATES_Tabl
INVESTMENTS IN AFFILIATES (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | ' | ||||||||||||||||||||||||
Schedule of carrying amount of investments in and loans to affiliates | ' | ||||||||||||||||||||||||
The table below presents the carrying amount of investments in affiliates: | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Empire Education Group, Inc. | $ | 28,398 | $ | 43,098 | |||||||||||||||||||||
MY Style | 213 | 221 | |||||||||||||||||||||||
$ | 28,611 | $ | 43,319 | ||||||||||||||||||||||
Schedule of summarized financial information of equity method investees | ' | ||||||||||||||||||||||||
The table below presents summarized financial information of equity method investees based on audited results. | |||||||||||||||||||||||||
Greater Than 50 Percent Owned (1) | Less Than 50 Percent Owned (2) | ||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Summarized Balance Sheet Information: | |||||||||||||||||||||||||
Current assets | $ | 54,774 | $ | 35,900 | $ | 56,516 | $ | — | $ | — | $ | 84,700 | |||||||||||||
Noncurrent assets | 57,803 | 91,847 | 96,639 | — | — | 316,282 | |||||||||||||||||||
Current liabilities | 24,797 | 25,317 | 61,074 | — | — | 106,995 | |||||||||||||||||||
Noncurrent liabilities | 33,004 | 21,560 | 13,947 | — | — | 78,815 | |||||||||||||||||||
Summarized Statement of Operations Information: | |||||||||||||||||||||||||
Gross revenue | $ | 166,540 | $ | 170,964 | $ | 182,326 | $ | — | $ | — | $ | 305,515 | |||||||||||||
Gross profit | 52,440 | 58,457 | 67,201 | — | — | 132,647 | |||||||||||||||||||
Operating (loss) income | (33,526 | ) | 4,981 | (1,335 | ) | — | — | 35,569 | |||||||||||||||||
Net (loss) income | (26,699 | ) | 2,359 | (7,211 | ) | — | — | 24,067 | |||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||
-1 | Represents the summarized financial information of EEG. As EEG is a significant subsidiary for the fiscal year 2014 financial statements, the separate financial statements of EEG are included subsequent to the Company's financial statements. Gross profit includes depreciation and amortization expense of $5.8, $7.4, and $7.5 million for fiscal years 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||
-2 | The Company previously owned a 46.7% equity interest in Provalliance. During fiscal year 2013, the Company completed the sale of its investment in Provalliance. |
FINANCING_ARRANGEMENTS_Tables
FINANCING ARRANGEMENTS (Tables) | 12 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||
Schedule of long-term debt | ' | ||||||||||||||
The Company's long-term debt consists of the following: | |||||||||||||||
Interest rate % | |||||||||||||||
Fiscal Years | June 30, | ||||||||||||||
Maturity Dates | 2014 | 2013 | 2014 | 2013 | |||||||||||
(fiscal year) | (Dollars in thousands) | ||||||||||||||
Convertible senior notes(1)(2) | 2015 | 5.00% | 5.00% | $ | 172,246 | $ | 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 | 4.90 - 8.75 | 1,257 | 8,316 | ||||||||||
293,503 | 174,770 | ||||||||||||||
Less current portion (1) | (173,501 | ) | (173,515 | ) | |||||||||||
Long-term portion | $ | 120,002 | $ | 1,255 | |||||||||||
_______________________________________________________________________________ | |||||||||||||||
-1 | As of June 30, 2013, the Company included the convertible senior notes within long-term debt, current portion on the Consolidated Balance Sheet as the holders of the senior convertible notes had the option to convert at any time after April 15, 2014. | ||||||||||||||
-2 | In July 2014, the Company settled the convertible senior notes with $172.5 million in cash. | ||||||||||||||
Schedule of maturities of long-term debt | ' | ||||||||||||||
Aggregate maturities of long-term debt, including associated capital lease obligations of $1.3 million at June 30, 2014, are as follows: | |||||||||||||||
Fiscal year | (Dollars in thousands) | ||||||||||||||
2015 | $ | 173,501 | |||||||||||||
2016 | 2 | ||||||||||||||
2017 | — | ||||||||||||||
2018 | 120,000 | ||||||||||||||
2019 | — | ||||||||||||||
Thereafter | — | ||||||||||||||
$ | 293,503 | ||||||||||||||
Schedule of equity and debt information for convertible senior notes | ' | ||||||||||||||
The following table provides equity and debt information for the convertible senior notes: | |||||||||||||||
June 30, | |||||||||||||||
2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||
Principal amount on the convertible senior notes | $ | 172,500 | $ | 172,500 | |||||||||||
Unamortized debt discount | (254 | ) | (6,046 | ) | |||||||||||
Net carrying amount of convertible debt | $ | 172,246 | $ | 166,454 | |||||||||||
Schedule of interest rate and interest expense on convertible senior notes | ' | ||||||||||||||
The following table provides interest rate and interest expense amounts related to the convertible senior notes: | |||||||||||||||
Fiscal Years | |||||||||||||||
2014 | 2013 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||
Interest cost related to contractual interest coupon—5.0% | $ | 8,625 | $ | 8,625 | |||||||||||
Interest cost related to amortization of the discount | 5,792 | 5,320 | |||||||||||||
Total interest cost | $ | 14,417 | $ | 13,945 | |||||||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||||||
Schedule of total rent expense, excluding sublease rent expense | ' | ||||||||||||
Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Minimum rent | $ | 246,687 | $ | 246,787 | $ | 250,487 | |||||||
Percentage rent based on sales | 7,164 | 7,566 | 8,938 | ||||||||||
Real estate taxes and other expenses | 68,254 | 70,363 | 72,344 | ||||||||||
$ | 322,105 | $ | 324,716 | $ | 331,769 | ||||||||
Schedule of future minimum lease payments under noncancelable operating leases | ' | ||||||||||||
As of June 30, 2014, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancelable operating leases with remaining terms of greater than one year are as follows: | |||||||||||||
Fiscal Year | Corporate | Franchisee | Guaranteed | ||||||||||
leases | leases | leases | |||||||||||
(Dollars in thousands) | |||||||||||||
2015 | $ | 246,000 | $ | 52,663 | $ | 404 | |||||||
2016 | 193,779 | 44,600 | 310 | ||||||||||
2017 | 138,255 | 34,371 | 195 | ||||||||||
2018 | 90,605 | 24,387 | 85 | ||||||||||
2019 | 49,327 | 14,197 | 34 | ||||||||||
Thereafter | 51,392 | 11,392 | 14 | ||||||||||
Total minimum lease payments | $ | 769,358 | $ | 181,610 | $ | 1,042 | |||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
Components of income (loss) before income taxes | ' | ||||||||||||
The components of (loss) income before income taxes are as follows: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
(Loss) income before income taxes: | |||||||||||||
U.S. | $ | (51,866 | ) | $ | (25,177 | ) | $ | (35,430 | ) | ||||
International | (2,462 | ) | 35,275 | 10,116 | |||||||||
$ | (54,328 | ) | $ | 10,098 | $ | (25,314 | ) | ||||||
(Benefit) provision for income taxes | ' | ||||||||||||
The provision (benefit) for income taxes consists of: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Current: | |||||||||||||
U.S. | $ | 1,460 | $ | (21,053 | ) | $ | (1,095 | ) | |||||
International | 890 | 707 | 2,261 | ||||||||||
Deferred: | |||||||||||||
U.S. | 67,992 | 10,405 | (5,519 | ) | |||||||||
International | 787 | (83 | ) | (77 | ) | ||||||||
$ | 71,129 | $ | (10,024 | ) | $ | (4,430 | ) | ||||||
Provision for income taxes, reconciliation to applicable U.S. statutory rate | ' | ||||||||||||
The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to earnings (loss) before income taxes, as a result of the following: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
U.S. statutory rate (benefit) | (35.0 | )% | 35 | % | (35.0 | )% | |||||||
State income taxes, net of federal income tax benefit | (0.2 | ) | 3.6 | 3.5 | |||||||||
Valuation allowance (1) | 160.8 | — | — | ||||||||||
Tax effect of goodwill impairment | 11.5 | — | 47.7 | ||||||||||
Foreign income taxes at other than U.S. rates | 1.4 | 4.1 | (0.5 | ) | |||||||||
Tax effect of foreign currency translation gain | — | (107.0 | ) | — | |||||||||
Work Opportunity and Welfare-to-Work Tax Credits | (5.3 | ) | (42.8 | ) | (19.4 | ) | |||||||
Other, net | (2.3 | ) | 7.8 | (13.8 | ) | ||||||||
130.9 | % | (99.3 | )% | (17.5 | )% | ||||||||
_______________________________________________________________________________ | |||||||||||||
(1) See Note 1 to the Consolidated Financial Statements. | |||||||||||||
Components of the net deferred tax assets and liabilities | ' | ||||||||||||
A summary of the activity for the deferred tax asset valuation allowance follows: | |||||||||||||
Fiscal Year | |||||||||||||
2014 | |||||||||||||
(Dollars in thousands) | |||||||||||||
Balance, June 30, 2013 | $ | — | |||||||||||
Establishment of valuation allowance against U.S. & U.K. deferred tax assets | 84,391 | ||||||||||||
Changes to deferred tax asset valuation allowance | (469 | ) | |||||||||||
Balance, June 30, 2014 | $ | 83,922 | |||||||||||
The components of the net deferred tax assets and liabilities are as follows: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||
Deferred tax assets: | |||||||||||||
Deferred rent | $ | 12,625 | $ | 12,953 | |||||||||
Payroll and payroll related costs | 24,857 | 34,073 | |||||||||||
Net operating loss carryforwards | 17,180 | 2,484 | |||||||||||
Tax credit carryforwards | 20,134 | 4,366 | |||||||||||
Inventories | 2,926 | 7,920 | |||||||||||
Allowance for doubtful accounts/notes | 216 | 7,004 | |||||||||||
Insurance | 6,195 | 6,106 | |||||||||||
Other | 8,815 | 14,353 | |||||||||||
Subtotal | $ | 92,948 | $ | 89,259 | |||||||||
Valuation allowance | (83,922 | ) | — | ||||||||||
Total deferred tax assets | $ | 9,026 | $ | 89,259 | |||||||||
Deferred tax liabilities: | |||||||||||||
Depreciation | $ | (8,086 | ) | $ | (20,684 | ) | |||||||
Amortization of intangibles | (77,650 | ) | (72,635 | ) | |||||||||
Other | (5,689 | ) | (7,206 | ) | |||||||||
Total deferred tax liabilities | $ | (91,425 | ) | $ | (100,525 | ) | |||||||
Net deferred tax (liability) asset | $ | (82,399 | ) | $ | (11,266 | ) | |||||||
Unrecognized tax benefits | ' | ||||||||||||
A rollforward of the unrecognized tax benefits is as follows: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Balance at beginning of period | $ | 10,015 | $ | 4,381 | $ | 13,493 | |||||||
(Reductions)/additions based on tax positions related to the current year | (2,114 | ) | 44 | 482 | |||||||||
(Reductions)/additions based on tax positions of prior years | (505 | ) | 7,132 | (7 | ) | ||||||||
Reductions on tax positions related to the expiration of the statute of limitations | (994 | ) | (1,403 | ) | (1,571 | ) | |||||||
Settlements | (4,934 | ) | (139 | ) | (8,016 | ) | |||||||
Balance at end of period | $ | 1,468 | $ | 10,015 | $ | 4,381 | |||||||
BENEFIT_PLANS_Tables
BENEFIT PLANS (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | ||||||||||||
Schedule of Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits by Title of Individual and Type of Deferred Compensation [Table Text Block] | ' | ||||||||||||
The table below presents the projected benefit obligation of these deferred compensation contracts in the Consolidated Balance Sheet: | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(Dollars in thousands) | |||||||||||||
Current portion (included in Accrued liabilities) | $ | 2,913 | $ | 3,532 | |||||||||
Long-term portion (included in Other noncurrent liabilities) | 7,677 | 9,446 | |||||||||||
$ | 10,590 | $ | 12,978 | ||||||||||
Schedule of compensation expenses | ' | ||||||||||||
Compensation expense included in (loss) income before income taxes and equity in loss of affiliated companies related to the aforementioned plans, excluding amounts paid for expenses and administration of the plans included the following: | |||||||||||||
Fiscal Years | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(Dollars in thousands) | |||||||||||||
Executive Plan (including profit sharing) | $ | 203 | $ | 311 | $ | 394 | |||||||
ESPP | 347 | 441 | 449 | ||||||||||
Deferred compensation contracts | 1,641 | 2,370 | 10,452 | ||||||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 12 Months Ended | |||||||||
Jun. 30, 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: | ||||||||||
Fiscal Years | ||||||||||
2014 | 2013 | 2012 | ||||||||
(Shares in thousands) | ||||||||||
Weighted average shares for basic earnings per share | 56,482 | 56,704 | 57,137 | |||||||
Effect of dilutive securities: | ||||||||||
Dilutive effect of stock-based compensation(1) | — | 142 | — | |||||||
Weighted average shares for diluted earnings per share | 56,482 | 56,846 | 57,137 | |||||||
_______________________________________________________________________________ | ||||||||||
-1 | For fiscal year 2014 and 2012, 119,750 and 182,270 common stock equivalents of potentially dilutive common stock were not included in the diluted earnings per share calculation due to the net loss from continuing operations. |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Schedule of weighted average fair values per stock-based compensation award granted | ' | |||||||||||||||
Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2014, 2013 and 2012 were as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Stock options & SARs | $ | 6 | $ | 6.63 | N/A | |||||||||||
RSAs & RSUs | 15.5 | 17.4 | $ | 16.94 | ||||||||||||
PSUs | 15.73 | 18.33 | N/A | |||||||||||||
Schedule of assumptions used in determining estimated fair value of stock options, SARs and market-based RSUs granted | ' | |||||||||||||||
The significant assumptions used in determining the estimated fair value of stock options, SARs and market-based RSUs granted during fiscal years 2014, 2013 and 2012 were as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Risk-free interest rate | 1.67 - 1.96% | 0.66 - 0.87% | N/A | |||||||||||||
Expected term (in years) | 6 | 6 | N/A | |||||||||||||
Expected volatility | 44.00% | 44.00 - 47.00% | N/A | |||||||||||||
Expected dividend yield | 1.52 - 1.61% | 1.33 - 1.46% | N/A | |||||||||||||
Schedule of stock-based compensation expense | ' | |||||||||||||||
Stock-based compensation expense, recorded within General and Administrative expense in the Consolidated Statement of Operations, was as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
SARs & stock options | $ | 2,145 | $ | 1,986 | $ | 1,447 | ||||||||||
RSAs, RSUs, & PSUs | 4,255 | 3,895 | 6,150 | |||||||||||||
Total stock-based compensation expense | 6,400 | 5,881 | 7,597 | |||||||||||||
Less: Income tax benefit | — | (2,235 | ) | (2,898 | ) | |||||||||||
Total stock-based compensation expense, net of tax | $ | 6,400 | $ | 3,646 | $ | 4,699 | ||||||||||
Schedule of activity for outstanding SARs and stock options | ' | |||||||||||||||
Activity for all of our outstanding SARs and stock options is as follows: | ||||||||||||||||
Shares | Weighted | Weighted- | Aggregate | |||||||||||||
(in thousands) | Average | Average | Intrinsic Value | |||||||||||||
Exercise Price | Remaining | (in thousands) | ||||||||||||||
SARs | Stock | Contractual Life | ||||||||||||||
Options | ||||||||||||||||
Outstanding balance at June 30, 2013 | 860 | 429 | $ | 25.26 | ||||||||||||
Granted | 470 | — | 15.74 | |||||||||||||
Forfeited/Expired | (189 | ) | (177 | ) | 30.06 | |||||||||||
Exercised | (1 | ) | — | 16.6 | ||||||||||||
Outstanding balance at June 30, 2014 | 1,140 | 252 | $ | 20.8 | 6.8 | — | ||||||||||
Exercisable at June 30, 2014 | 383 | 246 | $ | 25.85 | 4.5 | — | ||||||||||
Unvested options, net of estimated forfeitures | 686 | 6 | $ | 16.68 | 8.7 | — | ||||||||||
Schedule of activity for RSAs and RSUs | ' | |||||||||||||||
Activity for all of our RSAs and RSUs is as follows: | ||||||||||||||||
Shares/Units | Weighted | Aggregate Intrinsic | ||||||||||||||
(in thousands) | Average | Value | ||||||||||||||
Grant Date | (in thousands) | |||||||||||||||
RSAs | RSUs | Fair Value | ||||||||||||||
Outstanding balance at June 30, 2013 | 315 | 250 | $ | 17.46 | ||||||||||||
Granted | — | 362 | 15.5 | |||||||||||||
Forfeited | (26 | ) | (19 | ) | 17.05 | |||||||||||
Vested | (103 | ) | (81 | ) | 17.92 | |||||||||||
Outstanding balance at June 30, 2014 | 186 | 512 | $ | 16.34 | $ | 9,817 | ||||||||||
Vested at June 30, 2014 | — | 81 | $ | 16.42 | $ | 1,145 | ||||||||||
Unvested awards, net of estimated forfeitures | 179 | 361 | $ | 16.4 | $ | 7,602 | ||||||||||
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||
Schedule of components of accumulated other comprehensive income | ' | ||||||||
The components of accumulated other comprehensive income are as follows: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
(Dollars in thousands) | |||||||||
Foreign currency translation | $ | 22,364 | $ | 20,434 | |||||
Unrealized gain on deferred compensation contracts | 287 | 122 | |||||||
Accumulated other comprehensive income | $ | 22,651 | $ | 20,556 | |||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||||||
Schedule of summarized financial information of reportable operating segments | ' | ||||||||||||||||||||||||
Financial information concerning the Company's reportable operating segments is shown in the following table: | |||||||||||||||||||||||||
Fiscal Years | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Revenues(1): | |||||||||||||||||||||||||
North American Value salons | $ | 1,430,083 | $ | 1,515,581 | $ | 1,570,542 | |||||||||||||||||||
North American Premium salons | 333,858 | 373,820 | 410,563 | ||||||||||||||||||||||
International salons | 128,496 | 129,312 | 141,122 | ||||||||||||||||||||||
$ | 1,892,437 | $ | 2,018,713 | $ | 2,122,227 | ||||||||||||||||||||
Depreciation and amortization expense(1): | |||||||||||||||||||||||||
North American Value salons | $ | 66,038 | $ | 56,364 | $ | 55,317 | |||||||||||||||||||
North American Premium salons | 15,859 | 15,893 | 15,936 | ||||||||||||||||||||||
International salons | 5,227 | 5,222 | 5,297 | ||||||||||||||||||||||
Total segment depreciation and amortization expense | 87,124 | 77,479 | 76,550 | ||||||||||||||||||||||
Unallocated Corporate | 12,609 | 14,276 | 28,420 | ||||||||||||||||||||||
$ | 99,733 | $ | 91,755 | $ | 104,970 | ||||||||||||||||||||
Operating (loss) income(1): | |||||||||||||||||||||||||
North American Value salons | $ | 118,935 | $ | 141,103 | $ | 197,478 | |||||||||||||||||||
North American Premium salons(2) | (46,274 | ) | (13,850 | ) | (57,504 | ) | |||||||||||||||||||
International salons | (3,356 | ) | (1,380 | ) | 2,505 | ||||||||||||||||||||
Total segment operating income | 69,305 | 125,873 | 142,479 | ||||||||||||||||||||||
Unallocated Corporate | (103,295 | ) | (113,547 | ) | (144,646 | ) | |||||||||||||||||||
Operating (loss) income(1) | $ | (33,990 | ) | $ | 12,326 | $ | (2,167 | ) | |||||||||||||||||
Interest expense | (22,290 | ) | (37,594 | ) | (28,245 | ) | |||||||||||||||||||
Interest income and other, net | 1,952 | 35,366 | 5,098 | ||||||||||||||||||||||
(Loss) income from continuing operations before income taxes and equity in loss of affiliated companies | $ | (54,328 | ) | $ | 10,098 | $ | (25,314 | ) | |||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||||||
-1 | See Note 2 to the Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as discontinued operations. | ||||||||||||||||||||||||
-2 | Included in the North American Premium salons segment's operating loss for fiscal years 2014 and 2012 are goodwill impairment charges of $34.9 and $67.7 million, respectively. | ||||||||||||||||||||||||
Schedule of total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate | ' | ||||||||||||||||||||||||
Total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate were as follows: | |||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
Total | Property and | Total | Property and | Total | Property and | ||||||||||||||||||||
Revenues | Equipment, Net | Revenues | Equipment, Net | Revenues | Equipment, Net | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
U.S. | $ | 1,626,794 | $ | 240,460 | $ | 1,737,517 | $ | 285,111 | $ | 1,815,797 | $ | 274,711 | |||||||||||||
Other countries | 265,643 | 26,078 | 281,196 | 28,349 | 306,430 | 31,088 | |||||||||||||||||||
Total | $ | 1,892,437 | $ | 266,538 | $ | 2,018,713 | $ | 313,460 | $ | 2,122,227 | $ | 305,799 | |||||||||||||
QUARTERLY_FINANCIAL_DATA_UNAUD1
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||||||
Schedule of quarterly financial data | ' | ||||||||||||||||||||
Summarized quarterly data for fiscal years 2014 and 2013 follows: | |||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||
September 30(e) | December 31 | March 31 | June 30 | Year Ended | |||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Revenues | $ | 468,583 | $ | 468,367 | $ | 471,561 | $ | 483,926 | $ | 1,892,437 | |||||||||||
Cost of service and product revenues, excluding depreciation and amortization | 269,039 | 273,874 | 272,490 | 279,095 | 1,094,498 | ||||||||||||||||
Operating income (loss)(a) | 1,429 | (34,660 | ) | (3,221 | ) | 2,462 | (33,990 | ) | |||||||||||||
(Loss) income from continuing operations(a)(b) | (136 | ) | (109,085 | ) | (10,093 | ) | (17,766 | ) | (137,080 | ) | |||||||||||
Income from discontinued operations(c) | — | — | 609 | 744 | 1,353 | ||||||||||||||||
Net (loss) income (a)(b)(c) | (136 | ) | (109,085 | ) | (9,484 | ) | (17,022 | ) | (135,727 | ) | |||||||||||
(Loss) income from continuing operations per share, basic and diluted(d) | — | (1.93 | ) | (0.18 | ) | (0.31 | ) | (2.43 | ) | ||||||||||||
Income from discontinued operations per share, basic and diluted | — | — | 0.01 | 0.01 | 0.02 | ||||||||||||||||
Net (loss) income per basic and diluted share(d) | — | (1.93 | ) | (0.17 | ) | (0.30 | ) | (2.40 | ) | ||||||||||||
Dividends declared per share | 0.06 | 0.06 | — | — | 0.12 | ||||||||||||||||
Quarter Ended | |||||||||||||||||||||
September 30 | December 31 | March 31 | June 30(e) | Year Ended | |||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
2013 | |||||||||||||||||||||
Revenues | $ | 505,360 | $ | 506,165 | $ | 504,937 | $ | 502,251 | $ | 2,018,713 | |||||||||||
Cost of service and product revenues, excluding depreciation and amortization | 285,660 | 289,329 | 287,597 | 296,678 | 1,159,264 | ||||||||||||||||
Operating income (loss)(a) | 9,273 | 8,723 | 3,308 | (8,978 | ) | 12,326 | |||||||||||||||
Income (loss) from continuing operations(a)(b) | 34,647 | (16,119 | ) | 896 | (15,258 | ) | 4,166 | ||||||||||||||
Income (loss) from discontinued operations(c) | 3,777 | 3,853 | 1,465 | 15,933 | 25,028 | ||||||||||||||||
Net income (loss)(a)(b)(c) | 38,424 | (12,266 | ) | 2,361 | 675 | 29,194 | |||||||||||||||
Income (loss) from continuing operations per share, basic | 0.6 | (0.28 | ) | 0.02 | (0.27 | ) | 0.07 | ||||||||||||||
Income (loss) from discontinued operations per share, basic(d) | 0.07 | 0.07 | 0.03 | 0.28 | 0.44 | ||||||||||||||||
Net income (loss) per basic share(d) | 0.67 | (0.22 | ) | 0.04 | 0.01 | 0.51 | |||||||||||||||
Income (loss) from continuing operations per share, diluted | 0.54 | (0.28 | ) | 0.02 | (0.27 | ) | 0.07 | ||||||||||||||
Income (loss) from discontinued operations per share, diluted | 0.06 | 0.07 | 0.03 | 0.28 | 0.44 | ||||||||||||||||
Net income (loss) per diluted share(d) | 0.59 | (0.22 | ) | 0.04 | 0.01 | 0.51 | |||||||||||||||
Dividends declared per share | 0.06 | 0.06 | 0.06 | 0.06 | 0.24 | ||||||||||||||||
_______________________________________________________________________________ | |||||||||||||||||||||
(a) | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Company’s U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | ||||||||||||||||||||
(b) | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | ||||||||||||||||||||
(c) | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. | ||||||||||||||||||||
(d) | Total is an annual recalculation; line items calculated quarterly may not sum to total. | ||||||||||||||||||||
(e) | During the fourth quarter of fiscal year 2013, the Company recorded a cumulative adjustment to correct prior period errors that related to an understatement of interest expense and certain uncertain tax positions. The impact of these items on the Company's Consolidated Statement of Operations increased interest expense by $0.4 million, increased income tax expense by $0.3 million and decreased net income by $0.7 million. During first quarter of fiscal year 2014, the Company recorded adjustments to correct errors related to the fourth quarter of fiscal year 2013 for an overstatement of inventory and self-insurance accruals and an understatement of cash. The impact of these items on the Company's Consolidated Statement of Operations decreased Site Operating expenses by $1.3 million, increased Cost of Product by $0.3 million and decreased net loss by $0.6 million. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or respective fiscal year, the Company recorded adjustments to correct the errors during each respective quarter. |
BUSINESS_DESCRIPTION_AND_SUMMA3
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2011 | |
segment | segment | segment | ||||
Accounting Policies [Abstract] | ' | ' | ' | ' | ' | ' |
Number of reportable segments | 3 | 2 | 3 | ' | ' | ' |
Variable interest entities | ' | ' | ' | ' | ' | ' |
Total assets | $1,415,949,000 | ' | $1,415,949,000 | $1,390,492,000 | ' | ' |
Total liabilities | 695,168,000 | ' | 695,168,000 | 533,078,000 | ' | ' |
Total shareholders' equity | 720,781,000 | ' | 720,781,000 | 857,414,000 | 889,157,000 | 1,032,619,000 |
Roosters | ' | ' | ' | ' | ' | ' |
Variable interest entities | ' | ' | ' | ' | ' | ' |
Number of variable interest entities | ' | ' | 1 | ' | ' | ' |
Ownership interest percentage | ' | ' | 60.00% | ' | ' | ' |
Total assets | 6,500,000 | ' | 6,500,000 | ' | ' | ' |
Total liabilities | 1,800,000 | ' | 1,800,000 | ' | ' | ' |
Total shareholders' equity | 4,700,000 | ' | 4,700,000 | ' | ' | ' |
Shareholders' equity attributable to the noncontrolling interest | $1,800,000 | ' | $1,800,000 | $1,600,000 | ' | ' |
Empire Education Group, Inc. | ' | ' | ' | ' | ' | ' |
Variable interest entities | ' | ' | ' | ' | ' | ' |
Ownership percentage in equity method investee | 51.00% | ' | 51.00% | ' | ' | ' |
Number of members appointed to board of directors by investee | 4 | ' | 4 | ' | ' | ' |
Number of board of directors members | 5 | ' | 5 | ' | ' | ' |
BUSINESS_DESCRIPTION_AND_SUMMA4
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
private_label_brand | private_label_brand | |||
Receivables and Allowance for Doubtful Accounts | ' | ' | ' | ' |
Allowance for doubtful accounts | $600,000 | $900,000 | $600,000 | ' |
Inventories: | ' | ' | ' | ' |
Inventory reserve recorded | $12,600,000 | $854,000 | $12,557,000 | $0 |
Number of private label brands before consolidation | 4 | ' | 4 | ' |
Number of Private Label Brands after Consolidation | 1 | ' | 1 | ' |
BUSINESS_DESCRIPTION_AND_SUMMA5
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Property and Equipment: | ' | ' | ' |
Depreciation expense | $79.70 | $81.80 | $96.40 |
Buildings | Minimum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '30 years | ' | ' |
Buildings | Maximum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '39 years | ' | ' |
Improvements | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '10 years | ' | ' |
Equipment | Minimum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '3 years | ' | ' |
Equipment | Maximum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '10 years | ' | ' |
Furniture | Minimum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '3 years | ' | ' |
Furniture | Maximum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '10 years | ' | ' |
Software | Minimum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '3 years | ' | ' |
Software | Maximum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '10 years | ' | ' |
Capitalized software | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Amortization expense related to capitalized software | 7.5 | 6.8 | 22.3 |
Capitalized software | Minimum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '5 years | ' | ' |
Capitalized software | Maximum | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Estimated useful asset lives | '7 years | ' | ' |
POS Information System | ' | ' | ' |
Property and Equipment: | ' | ' | ' |
Accelerated depreciation | ' | ' | $16.20 |
BUSINESS_DESCRIPTION_AND_SUMMA6
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Impairment of assets | $8,900 | $4,700 | $18,327 | $8,224 | $6,636 |
North American Value | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Impairment of assets | ' | ' | 11,714 | 5,031 | 2,892 |
North American Premium | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Impairment of assets | ' | ' | 5,014 | 3,042 | 3,174 |
International Salons | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Impairment of assets | ' | ' | $1,599 | $151 | $570 |
BUSINESS_DESCRIPTION_AND_SUMMA7
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | ||
event | reporting_unit | Regis Salon Concept | Regis Salon Concept | North American Value | North American Value | North American Premium | North American Premium | Promenade | International Salons | International Salons | Prior Presentation | ||||
reporting_unit | |||||||||||||||
Goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Number of goodwill impairment triggering events | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Goodwill impairment | $34,900,000 | $34,939,000 | $0 | $67,684,000 | $34,900,000 | $34,900,000 | ' | ' | ' | ' | $0 | ' | ' | ' | |
Minimum excess of fair value over carrying value for reporting units not impaired or likely to be impaired (as a percent) | ' | ' | ' | ' | ' | ' | 20.00% | ' | ' | ' | 12.00% | ' | ' | ' | |
Tax benefit on goodwill impairment loss | ' | ' | ' | ' | 6,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Number of operating segments | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5 | |
Goodwill | ' | $425,264,000 | [1] | $460,885,000 | $462,279,000 | ' | ' | $425,264,000 | $425,932,000 | $0 | $34,953,000 | ' | $0 | $0 | ' |
Control premium | ' | 30.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
[1] | Remaining net goodwill relates to the Company's North American Value reporting unit. |
BUSINESS_DESCRIPTION_AND_SUMMA8
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Investments in and Advances to Affiliates [Line Items] | ' | ' | ' | ' |
Deferred tax asset | ' | $92,948,000 | $89,259,000 | ' |
Empire Education Group, Inc. | ' | ' | ' | ' |
Investments in and Advances to Affiliates [Line Items] | ' | ' | ' | ' |
Other than temporary impairment | 17,900,000 | ' | 17,900,000 | 19,400,000 |
Equity Method Investment, Percentage of Fair Value in Excess of Carrying Amount | ' | 10.00% | ' | ' |
Impairment Of Goodwill Intangible and Fixed Assets | ' | 21,200,000 | 2,100,000 | 8,900,000 |
Deferred tax asset | ' | $7,800,000 | ' | ' |
BUSINESS_DESCRIPTION_AND_SUMMA9
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 7) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
item | |||
renewal_period | |||
Self Insurance Accruals | ' | ' | ' |
(Decrease) increase in self-insurance expense due to change in estimates related to prior year open policy periods | ($2) | ($1.10) | $0.90 |
Change in self-insurance reserve that would affect income (loss) (as a percent) | 10.00% | 10.00% | 10.00% |
Effect of percentage change in the self-insurance reserve on income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies | 4.8 | 4.8 | 4.8 |
Number of times the entity updates loss projections each year | 2 | ' | ' |
Self-insurance accruals, current | 14.9 | 14.8 | ' |
Self-insurance accruals, noncurrent | 32.7 | 32.4 | ' |
Deferred Rent and Rent Expense | ' | ' | ' |
Number of renewal periods | 1 | ' | ' |
Shipping and Handling Costs: | ' | ' | ' |
Shipping and handling costs | $3.20 | $3.60 | $3.80 |
Recovered_Sheet1
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 8) (USD $) | 12 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | ||
Reimbursement amounts received in excess of advertising expenses | $0 | $0 | $0 | |
Goodwill | 425,264,000 | [1] | 460,885,000 | 462,279,000 |
Advertising Funds | ' | ' | ' | |
Total contributions to franchise brand advertising funds | 18,600,000 | 19,000,000 | 19,200,000 | |
Advertising funds, assets | 26,800,000 | 20,800,000 | ' | |
Advertising funds, liabilities | 20,600,000 | 20,800,000 | ' | |
Continuing operations | ' | ' | ' | |
Advertising costs | $40,600,000 | $39,200,000 | $42,100,000 | |
[1] | Remaining net goodwill relates to the Company's North American Value reporting unit. |
Recovered_Sheet2
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 9) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Jun. 30, 2014 |
Movement in Valuation Allowances and Reserves [Roll Forward] | ' | ' |
Balance, June 30, 2013 | ' | $0 |
Establishment of valuation allowance against U.S. & U.K. deferred tax assets | 84,400 | 84,391 |
Changes to deferred tax asset valuation allowance | ' | -469 |
Balance, June 30, 2014 | ' | $83,922 |
Recovered_Sheet3
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 10) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Foreign Currency Translation | ' | ' | ' |
Foreign currency gain (loss) | $100,000 | $33,400,000 | $400,000 |
Foreign currency translation gain | 0 | 33,842,000 | 0 |
Provalliance | ' | ' | ' |
Foreign Currency Translation | ' | ' | ' |
Foreign currency translation gain | ' | $33,800,000 | ' |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS (Details) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Apr. 09, 2013 | Dec. 31, 2011 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Apr. 09, 2013 | Jun. 30, 2014 | Jun. 30, 2012 | |
Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Hair Restoration Centers | Trade Secret | Trade Secret | |||||
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership interest (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' |
Cash received after closing adjustments and transaction fees | ' | ' | ' | ' | $162,800,000 | ' | ' | ' | ' | ' | ' | ' |
Cash to be received, before closing adjustments and transaction fees | ' | ' | ' | ' | 163,500,000 | ' | ' | ' | ' | ' | ' | ' |
Receivable recorded | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' |
Cash received as a result of the final working capital provision | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | ' | ' |
Purchase price | ' | ' | ' | ' | ' | ' | 164,800,000 | ' | ' | ' | ' | ' |
Proceeds from divestiture of businesses as result of excess cash | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' |
After-tax gain on sale of business | ' | 0 | 17,827,000 | 0 | ' | ' | ' | 17,800,000 | ' | ' | ' | ' |
Professional and transaction fees | ' | ' | ' | ' | ' | ' | ' | 5,400,000 | ' | ' | ' | ' |
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 13,100,000 | ' | ' | ' |
Goodwill impairment charges | 34,900,000 | 34,939,000 | 0 | 67,684,000 | ' | 78,400,000 | ' | ' | ' | ' | ' | ' |
Tax effect of discontinued operation | ' | ' | ' | ' | ' | ' | ' | ($4,242,000) | $849,000 | ' | $1,400,000 | $1,100,000 |
DISCONTINUED_OPERATIONS_Detail1
DISCONTINUED OPERATIONS (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | ||||||||||
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Income (loss) from discontinued operations, net of taxes | $744 | [1] | $609 | [1] | $0 | [1] | $0 | [1],[2] | $15,933 | [1],[2] | $1,465 | [1] | $3,853 | [1] | $3,777 | [1] | $1,353 | [1] | $25,028 | [1] | ($62,350) |
Hair Restoration Centers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | 115,734 | 151,552 | ||||||||||
Income (loss) from discontinued operations, before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | 28,643 | -65,114 | ||||||||||
Income tax (provision) benefit on discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | -4,242 | 849 | ||||||||||
Equity in income of affiliated companies, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | ' | 627 | 816 | ||||||||||
Income (loss) from discontinued operations, net of taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | $25,028 | ($63,449) | ||||||||||
[1] | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. | ||||||||||||||||||||
[2] | During the fourth quarter of fiscal year 2013, the Company recorded a cumulative adjustment to correct prior period errors that related to an understatement of interest expense and certain uncertain tax positions. The impact of these items on the Company's Consolidated Statement of Operations increased interest expense by $0.4 million, increased income tax expense by $0.3 million and decreased net income by $0.7 million. During first quarter of fiscal year 2014, the Company recorded adjustments to correct errors related to the fourth quarter of fiscal year 2013 for an overstatement of inventory and self-insurance accruals and an understatement of cash. The impact of these items on the Company's Consolidated Statement of Operations decreased Site Operating expenses by $1.3 million, increased Cost of Product by $0.3 million and decreased net loss by $0.6 million. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or respective fiscal year, the Company recorded adjustments to correct the errors during each respective quarter. |
OTHER_FINANCIAL_STATEMENT_DATA2
OTHER FINANCIAL STATEMENT DATA (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
In Thousands, unless otherwise specified | |||
Other current assets: | ' | ' | ' |
Prepaids | $36,951 | $29,629 | ' |
Restricted cash | 27,500 | 27,500 | ' |
Notes receivable | 635 | 769 | ' |
Other current assets | 65,086 | 57,898 | ' |
Property and equipment: | ' | ' | ' |
Property and equipment, gross | 1,049,778 | 1,041,025 | ' |
Less accumulated depreciation and amortization | -718,959 | -665,924 | ' |
Less amortization of equipment, furniture and leasehold improvements under capital leases | -64,281 | -61,641 | ' |
Property and equipment, net | 266,538 | 313,460 | 305,799 |
Accrued expenses: | ' | ' | ' |
Payroll and payroll related costs | 69,319 | 74,940 | ' |
Insurance | 18,710 | 19,035 | ' |
Other | 54,691 | 43,251 | ' |
Accrued expenses | 142,720 | 137,226 | ' |
Other noncurrent liabilities: | ' | ' | ' |
Deferred income taxes | 83,201 | 36,399 | ' |
Deferred rent | 36,958 | 39,389 | ' |
Insurance | 25,965 | 29,378 | ' |
Deferred benefits | 32,728 | 32,435 | ' |
Other | 11,602 | 17,410 | ' |
Other noncurrent liabilities | 190,454 | 155,011 | ' |
Land | ' | ' | ' |
Property and equipment: | ' | ' | ' |
Property and equipment, gross | 3,864 | 3,864 | ' |
Buildings and improvements | ' | ' | ' |
Property and equipment: | ' | ' | ' |
Property and equipment, gross | 48,108 | 47,842 | ' |
Equipment, furniture and leasehold improvements | ' | ' | ' |
Property and equipment: | ' | ' | ' |
Property and equipment, gross | 797,757 | 789,737 | ' |
Internal use software | ' | ' | ' |
Property and equipment: | ' | ' | ' |
Property and equipment, gross | 122,826 | 118,093 | ' |
Equipment, furniture and leasehold improvements under capital leases | ' | ' | ' |
Property and equipment: | ' | ' | ' |
Property and equipment, gross | $77,223 | $81,489 | ' |
OTHER_FINANCIAL_STATEMENT_DATA3
OTHER FINANCIAL STATEMENT DATA (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||
Amortized intangible assets: | ' | ' | ' | ' | ||
Cost | $40,066,000 | $40,115,000 | $40,066,000 | ' | ||
Accumulated Amortization | -18,570,000 | -20,303,000 | -18,570,000 | ' | ||
Total | 21,496,000 | 19,812,000 | 21,496,000 | ' | ||
Weighted Average Amortization Period | ' | '22 years | [1] | '22 years | [1] | ' |
Total amortization expense related to amortizable intangible assets | ' | 1,700,000 | 1,800,000 | 1,900,000 | ||
Future estimated amortization expense related to amortizable intangible assets | ' | ' | ' | ' | ||
2015 | ' | 1,710,000 | ' | ' | ||
2016 | ' | 1,644,000 | ' | ' | ||
2017 | ' | 1,589,000 | ' | ' | ||
2018 | ' | 1,575,000 | ' | ' | ||
2019 | ' | 1,575,000 | ' | ' | ||
Thereafter | ' | 11,719,000 | ' | ' | ||
Total | 21,496,000 | 19,812,000 | 21,496,000 | ' | ||
Cash paid (received) for: | ' | ' | ' | ' | ||
Interest | ' | 21,173,000 | 38,990,000 | [2] | 28,448,000 | |
Income taxes, net | ' | -16,266,000 | 1,088,000 | 14,754,000 | ||
Cash paid for make-whole associated with prepayment of senior notes | 6,700,000 | ' | 10,600,000 | ' | ||
Minimum | ' | ' | ' | ' | ||
Amortized intangible assets: | ' | ' | ' | ' | ||
Weighted Average Amortization Period | ' | '1 year | ' | ' | ||
Maximum | ' | ' | ' | ' | ||
Amortized intangible assets: | ' | ' | ' | ' | ||
Weighted Average Amortization Period | ' | '40 years | ' | ' | ||
Brand assets and trade names | ' | ' | ' | ' | ||
Amortized intangible assets: | ' | ' | ' | ' | ||
Cost | 9,310,000 | 9,203,000 | 9,310,000 | ' | ||
Accumulated Amortization | -3,226,000 | -3,510,000 | -3,226,000 | ' | ||
Total | 6,084,000 | 5,693,000 | 6,084,000 | ' | ||
Weighted Average Amortization Period | ' | '32 years | [1] | '32 years | [1] | ' |
Future estimated amortization expense related to amortizable intangible assets | ' | ' | ' | ' | ||
Total | 6,084,000 | 5,693,000 | 6,084,000 | ' | ||
Franchise agreements | ' | ' | ' | ' | ||
Amortized intangible assets: | ' | ' | ' | ' | ||
Cost | 11,187,000 | 11,063,000 | 11,187,000 | ' | ||
Accumulated Amortization | -6,839,000 | -7,163,000 | -6,839,000 | ' | ||
Total | 4,348,000 | 3,900,000 | 4,348,000 | ' | ||
Weighted Average Amortization Period | ' | '19 years | [1] | '19 years | [1] | ' |
Future estimated amortization expense related to amortizable intangible assets | ' | ' | ' | ' | ||
Total | 4,348,000 | 3,900,000 | 4,348,000 | ' | ||
Lease intangibles | ' | ' | ' | ' | ||
Amortized intangible assets: | ' | ' | ' | ' | ||
Cost | 14,754,000 | 14,775,000 | 14,754,000 | ' | ||
Accumulated Amortization | -6,582,000 | -7,326,000 | -6,582,000 | ' | ||
Total | 8,172,000 | 7,449,000 | 8,172,000 | ' | ||
Weighted Average Amortization Period | ' | '20 years | [1] | '20 years | [1] | ' |
Future estimated amortization expense related to amortizable intangible assets | ' | ' | ' | ' | ||
Total | 8,172,000 | 7,449,000 | 8,172,000 | ' | ||
Other | ' | ' | ' | ' | ||
Amortized intangible assets: | ' | ' | ' | ' | ||
Cost | 4,815,000 | 5,074,000 | 4,815,000 | ' | ||
Accumulated Amortization | -1,923,000 | -2,304,000 | -1,923,000 | ' | ||
Total | 2,892,000 | 2,770,000 | 2,892,000 | ' | ||
Weighted Average Amortization Period | ' | '20 years | [1] | '20 years | [1] | ' |
Future estimated amortization expense related to amortizable intangible assets | ' | ' | ' | ' | ||
Total | $2,892,000 | $2,770,000 | $2,892,000 | ' | ||
[1] | All intangible assets have been assigned an estimated finite useful life and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from one to 40 years). | |||||
[2] | Includes $10.6 million of cash paid for make-whole associated with prepayment of senior notes. |
GOODWILL_Details
GOODWILL (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2009 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2010 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2011 | |||||||
International Salons | North American Premium | North American Premium | North American Premium | North American Premium | North American Value | North American Value | North American Value | North American Value | |||||||||||
Goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||
Gross Carrying Value | $678,925,000 | $679,607,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||
Accumulated Impairment | -253,661,000 | [1] | -218,722,000 | [1] | ' | -41,661,000 | [2] | -34,939,000 | [2],[3] | ' | -67,684,000 | [2] | -35,277,000 | [2] | ' | ' | ' | -74,100,000 | [2] |
Goodwill | $425,264,000 | [4] | $460,885,000 | $462,279,000 | ' | $0 | $34,953,000 | $34,992,000 | ' | $425,264,000 | $425,932,000 | $427,287,000 | ' | ||||||
[1] | The table below contains additional information regarding accumulated impairment losses:Fiscal YearB Impairment ChargeB Reporting Unit (3) (Dollars in thousands) 2009B $(41,661)B International2010B (35,277)B North American Premium2011B (74,100)B North American Value2012B (67,684)B North American Premium2014 (4)B (34,939)B North American PremiumTotalB $(253,661) | ||||||||||||||||||
[2] | See Notes 1 and 14 to the Consolidated Financial Statements. | ||||||||||||||||||
[3] | See Note 1 to the Consolidated Financial Statements. | ||||||||||||||||||
[4] | Remaining net goodwill relates to the Company's North American Value reporting unit. |
GOODWILL_Details_2
GOODWILL (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | ||
Goodwill [Roll Forward] | ' | ' | ' | ' | |
Net goodwill at the beginning of the period | ' | $460,885,000 | $462,279,000 | ' | |
Goodwill impairment | -34,900,000 | -34,939,000 | 0 | -67,684,000 | |
Goodwill acquired | ' | 130,000 | ' | ' | |
Translation rate adjustments | ' | -812,000 | -1,394,000 | ' | |
Net goodwill at the end of the period | ' | 425,264,000 | [1] | 460,885,000 | 462,279,000 |
North American Value | ' | ' | ' | ' | |
Goodwill [Roll Forward] | ' | ' | ' | ' | |
Net goodwill at the beginning of the period | ' | 425,932,000 | 427,287,000 | ' | |
Goodwill impairment | ' | 0 | ' | ' | |
Goodwill acquired | ' | 130,000 | ' | ' | |
Translation rate adjustments | ' | -798,000 | -1,355,000 | ' | |
Net goodwill at the end of the period | ' | 425,264,000 | 425,932,000 | ' | |
North American Premium | ' | ' | ' | ' | |
Goodwill [Roll Forward] | ' | ' | ' | ' | |
Net goodwill at the beginning of the period | ' | 34,953,000 | 34,992,000 | ' | |
Goodwill impairment | ' | -34,939,000 | ' | -67,700,000 | |
Goodwill acquired | ' | 0 | ' | ' | |
Translation rate adjustments | ' | -14,000 | -39,000 | ' | |
Net goodwill at the end of the period | ' | $0 | $34,953,000 | $34,992,000 | |
[1] | Remaining net goodwill relates to the Company's North American Value reporting unit. |
INVESTMENTS_IN_AFFILIATES_Deta
INVESTMENTS IN AFFILIATES (Details) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 27, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 27, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | |
Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Provalliance | Provalliance | Provalliance | Provalliance | Provalliance | Provalliance | MY Style | MY Style | MY Style | MY Style | Yamano Holding Corporation [Member] | ||||
Less than | Less than | Provost Family | Provost Family | MY Style Note | MY Style Note | MY Style | ||||||||||||||
Investments in and Advances to Affiliates [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investment in affiliates | $28,611,000 | $43,319,000 | ' | ' | $28,398,000 | $43,098,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $213,000 | $221,000 | ' | ' | ' |
Ownership percentage in equity method investee | ' | ' | ' | ' | 54.50% | 0.50% | ' | ' | ' | ' | ' | ' | 46.70% | ' | ' | ' | 27.10% | ' | ' | ' |
Impairment Of Goodwill Intangible and Fixed Assets | ' | ' | ' | ' | 21,200,000 | 2,100,000 | 8,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other than temporary impairment | ' | ' | ' | 17,900,000 | ' | 17,900,000 | 19,400,000 | ' | ' | ' | ' | 17,200,000 | ' | ' | 37,400,000 | ' | ' | ' | ' | ' |
Equity Method Investment, Percentage of Fair Value in Excess of Carrying Amount | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred tax asset | 92,948,000 | 89,259,000 | ' | ' | 7,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity in income (loss), net of income taxes | ' | ' | ' | ' | -14,500,000 | 1,300,000 | -4,000,000 | ' | ' | ' | ' | 9,800,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum revolving credit facility provided to equity method investee | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding amount of revolving credit facility provided to equity method investee | ' | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding loan receivable from equity method investee | ' | ' | ' | ' | ' | ' | 11,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments received on revolving credit facility | ' | ' | ' | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal payments on the loan received | ' | ' | ' | ' | ' | 11,400,000 | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest income related to the loan and revolving credit facility | ' | ' | ' | ' | ' | ' | ' | 100,000 | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of equity method investment | ' | ' | ' | ' | ' | ' | ' | ' | ' | 103,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of equity put valuation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600,000 | ' | ' | ' | ' | ' | ' |
Decrease in fair value of equity put valuation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600,000 | ' | ' | 20,200,000 | ' | ' | ' | ' | ' |
Cash dividends received | 0 | 1,095,000 | 4,047,000 | ' | ' | ' | ' | ' | ' | ' | ' | 2,800,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign currency translation rate gain adjustments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 43,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cross-currency swap net loss | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash repatriation net loss | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amounts previously classified within accumulated other comprehensive income recognized in earnings | 0 | 33,842,000 | 0 | ' | ' | ' | ' | ' | ' | ' | 33,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest income (less than) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | 100,000 | ' |
Equity in loss of affiliated companies, net of income taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3,100,000 |
INVESTMENTS_IN_AFFILIATES_Deta1
INVESTMENTS IN AFFILIATES (Details 2) (USD $) | 12 Months Ended | |||||||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 27, 2012 | |||||||
Equity Method Investee Greater Than 50 Percent Owned | Equity Method Investee Greater Than 50 Percent Owned | Equity Method Investee Greater Than 50 Percent Owned | Equity Method Investee Less Than 50 Percent Owned | Equity Method Investee Less Than 50 Percent Owned | Equity Method Investee Less Than 50 Percent Owned | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Provalliance | |||||||
Investments in and Advances to Affiliates [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||
Cost of Services, Depreciation and Amortization | ' | ' | ' | ' | ' | ' | $5,800,000 | $7,400,000 | $7,500,000 | ' | ||||||
Summarized Balance Sheet Information: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||
Current assets | 54,774,000 | [1] | 35,900,000 | [1] | 56,516,000 | [1] | 0 | [2] | 0 | [2] | 84,700,000 | [2] | ' | ' | ' | ' |
Noncurrent assets | 57,803,000 | [1] | 91,847,000 | [1] | 96,639,000 | [1] | 0 | [2] | 0 | [2] | 316,282,000 | [2] | ' | ' | ' | ' |
Current liabilities | 24,797,000 | [1] | 25,317,000 | [1] | 61,074,000 | [1] | 0 | [2] | 0 | [2] | 106,995,000 | [2] | ' | ' | ' | ' |
Noncurrent liabilities | 33,004,000 | [1] | 21,560,000 | [1] | 13,947,000 | [1] | 0 | [2] | 0 | [2] | 78,815,000 | [2] | ' | ' | ' | ' |
Summarized Statement of Operations Information: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||
Gross revenue | 166,540,000 | [1] | 170,964,000 | [1] | 182,326,000 | [1] | 0 | [2] | 0 | [2] | 305,515,000 | [2] | ' | ' | ' | ' |
Gross profit | 52,440,000 | [1] | 58,457,000 | [1] | 67,201,000 | [1] | 0 | [2] | 0 | [2] | 132,647,000 | [2] | ' | ' | ' | ' |
Operating (loss) income | -33,526,000 | [1] | 4,981,000 | [1] | -1,335,000 | [1] | 0 | [2] | 0 | [2] | 35,569,000 | [2] | ' | ' | ' | ' |
Net (loss) income | ($26,699,000) | [1] | $2,359,000 | [1] | ($7,211,000) | [1] | $0 | [2] | $0 | [2] | $24,067,000 | [2] | ' | ' | ' | ' |
Ownership percentage in equity method investee | ' | ' | ' | ' | ' | ' | 54.50% | 0.50% | ' | 46.70% | ||||||
[1] | Represents the summarized financial information of EEG. As EEG is a significant subsidiary for the fiscal year 2014 financial statements, the separate financial statements of EEG are included subsequent to the Company's financial statements. | |||||||||||||||
[2] | The Company previously owned a 46.7% equity interest in Provalliance. During fiscal year 2013, the Company completed the sale of its investment in Provalliance. |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | |
Regis Salon Concept | Regis Salon Concept | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Fair Value on Nonrecurring Basis | |||||
Empire Education Group, Inc. | |||||||||||
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis and Non Recurring Basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill, carrying value | ' | ' | ' | ' | ' | $34,900,000 | ' | ' | ' | ' | ' |
Goodwill, fair value | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' |
Goodwill impairment | 34,900,000 | 34,939,000 | 0 | 67,684,000 | 34,900,000 | 34,900,000 | 12,600,000 | ' | ' | ' | ' |
Carrying value of investment in equity method investment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 59,900,000 |
Implied fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42,000,000 |
Impairment charge | ' | ' | ' | ' | ' | ' | ' | $17,900,000 | $17,900,000 | $19,400,000 | $17,900,000 |
FINANCING_ARRANGEMENTS_Details
FINANCING ARRANGEMENTS (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | ||
Debt Instrument [Line Items] | ' | ' | ||
Net carrying amount of convertible debt | $293,503 | $174,770 | ||
Less current portion | -173,501 | [1] | -173,515 | [1] |
Long-term debt and capital lease obligations | 120,002 | 1,255 | ||
Convertible senior notes | ' | ' | ||
Debt Instrument [Line Items] | ' | ' | ||
Interest rate percentage | 5.00% | [1],[2] | 5.00% | [1],[2] |
Net carrying amount of convertible debt | 172,246 | [1],[2] | 166,454 | [1],[2] |
Senior term notes | ' | ' | ||
Debt Instrument [Line Items] | ' | ' | ||
Interest rate percentage | 5.75% | 0.00% | ||
Net carrying amount of convertible debt | 120,000 | 0 | ||
Revolving credit facility | ' | ' | ||
Debt Instrument [Line Items] | ' | ' | ||
Interest rate percentage | 0.00% | 0.00% | ||
Net carrying amount of convertible debt | 0 | 0 | ||
Equipment and leasehold notes payable | ' | ' | ||
Debt Instrument [Line Items] | ' | ' | ||
Interest rate percentage, minimum | 4.90% | 4.90% | ||
Interest rate percentage, maximum | 8.75% | 8.75% | ||
Net carrying amount of convertible debt | $1,257 | $8,316 | ||
[1] | As of June 30, 2013, the Company included the convertible senior notes within long-term debt, current portion on the Consolidated Balance Sheet as the holders of the senior convertible notes had the option to convert at any time after April 15, 2014. | |||
[2] | In July 2014, the Company settled the convertible senior notes with $172.5 million in cash. |
FINANCING_ARRANGEMENTS_Details1
FINANCING ARRANGEMENTS (Details 2) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Capital Lease Obligations | $1,300,000 | ' |
Long-term Debt, Fiscal Year Maturity [Abstract] | ' | ' |
2015 | 173,501,000 | ' |
2016 | 2,000 | ' |
2017 | 0 | ' |
2018 | 120,000,000 | ' |
2019 | 0 | ' |
Thereafter | 0 | ' |
Net carrying amount of convertible debt | $293,503,000 | $174,770,000 |
FINANCING_ARRANGEMENTS_Details2
FINANCING ARRANGEMENTS (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | ||||||||
Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jul. 31, 2009 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2011 | Jun. 30, 2014 | Jul. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Nov. 30, 2013 | |
Private Shelf Agreement | Convertible senior notes | Convertible senior notes | Convertible senior notes | Revolving credit facility | Revolving credit facility | Equipment and leasehold notes payable | Equipment and leasehold notes payable | Subsequent Event | Senior term notes | Senior term notes | Senior term notes | |||||
Convertible senior notes | Senior Unsecured Notes Due December 2017 | |||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount on the convertible senior notes | ' | ' | ' | ' | ' | $172,500,000 | $172,500,000 | $172,500,000 | ' | ' | ' | $1,300,000 | ' | ' | ' | $120,000,000 |
Interest rate percentage | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' | 4.90% | ' | ' | 5.75% | 0.00% | 5.75% |
Debt Instrument, Convertible, Conversion Ratio | ' | ' | ' | ' | ' | ' | 0.0656019 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt conversion price (in dollars per share) | ' | ' | ' | ' | ' | ' | $15.24 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible long-term debt amount allocated to equity | ' | ' | ' | ' | ' | 24,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized debt discount | ' | ' | ' | ' | ' | 24,700,000 | 254,000 | 6,046,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt discount amortization period | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effective interest rate on the convertible debt (as a percent) | ' | ' | ' | ' | ' | 8.90% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayments of Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 172,500,000 | ' | ' | ' |
Proceeds from issuance of long-term debt, net of fees | ' | 118,058,000 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 118,100,000 |
Revolving credit facility maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | 400,000,000 | ' | ' | ' | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity, optional expansion | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' |
Threshold default of other debt to trigger event of default | ' | ' | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' |
Revolving credit facility outstanding amount | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' |
Outstanding standby letters of credit | ' | ' | ' | ' | ' | ' | ' | ' | 2,200,000 | 2,200,000 | ' | ' | ' | ' | ' | ' |
Revolving credit facility remaining borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | 397,800,000 | 397,800,000 | ' | ' | ' | ' | ' | ' |
Debt instrument term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' |
Capital lease amortization rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9.20% | ' | ' | ' | ' | ' |
Gain (Loss) on Capital Leases Refinance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' |
Prepayment of debt | ' | ' | ' | ' | 89,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Make-whole payments related to repayment of long-term debt | $6,700,000 | ' | $10,600,000 | ' | $10,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FINANCING_ARRANGEMENTS_Details3
FINANCING ARRANGEMENTS (Details 4) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 | Jul. 31, 2009 |
Debt Instrument [Line Items] | ' | ' | ' |
Net carrying amount of convertible debt | $293,503,000 | $174,770,000 | ' |
Convertible senior notes | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Principal amount on the convertible senior notes | 172,500,000 | 172,500,000 | 172,500,000 |
Unamortized debt discount | -254,000 | -6,046,000 | -24,700,000 |
Net carrying amount of convertible debt | $172,246,000 | $166,454,000 | ' |
FINANCING_ARRANGEMENTS_Details4
FINANCING ARRANGEMENTS (Details 5) (Convertible senior notes, USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Convertible senior notes | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Interest cost related to contractual interest couponb5.0% | $8,625 | $8,625 |
Interest cost related to amortization of the discount | 5,792 | 5,320 |
Total interest cost | $14,417 | $13,945 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
operating_lease | |||
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating leases for subleased franchise salons, term | '5 years | ' | ' |
Sublease income | $29,500,000 | $29,100,000 | $28,300,000 |
Rent expense on premises subleased to franchisees | 29,100,000 | 28,700,000 | 27,900,000 |
Sublease arrangements mark-up (as a percent) | 10.00% | ' | ' |
Net rental income from sublease arrangements | 400,000 | 400,000 | 400,000 |
Number of operating leases with guarantees associated | 10 | ' | ' |
Minimum | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating leases term | '1 year | ' | ' |
Operating leases typical renewal term | '5 years | ' | ' |
Maximum | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating leases term | '20 years | ' | ' |
Operating leases typical renewal term | '10 years | ' | ' |
Edina Minnesota | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Rent expense on premises subleased to franchisees | 900,000 | ' | ' |
Operating Leases, Sublease Arrangements, Rental Income | 600,000 | ' | ' |
Future minimum payments due | $2,500,000 | ' | ' |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' | ' |
Minimum rent | $246,687 | $246,787 | $250,487 |
Percentage rent based on sales | 7,164 | 7,566 | 8,938 |
Real estate taxes and other expenses | 68,254 | 70,363 | 72,344 |
Rent Expenses | $322,105 | $324,716 | $331,769 |
COMMITMENTS_AND_CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 3) (USD $) | Jun. 30, 2014 |
In Thousands, unless otherwise specified | |
Corporate leases | ' |
Operating Leased Assets [Line Items] | ' |
2015 | $246,000 |
2016 | 193,779 |
2017 | 138,255 |
2018 | 90,605 |
2019 | 49,327 |
Thereafter | 51,392 |
Total minimum lease payments | 769,358 |
Franchisee leases | ' |
Operating Leased Assets [Line Items] | ' |
2015 | 52,663 |
2016 | 44,600 |
2017 | 34,371 |
2018 | 24,387 |
2019 | 14,197 |
Thereafter | 11,392 |
Total minimum lease payments | 181,610 |
Guaranteed leases | ' |
Operating Leased Assets [Line Items] | ' |
2015 | 404 |
2016 | 310 |
2017 | 195 |
2018 | 85 |
2019 | 34 |
Thereafter | 14 |
Total minimum lease payments | $1,042 |
COMMITMENTS_AND_CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details 4) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 |
director | Pending Litigation | Pending Litigation | ||
Litigation | ' | ' | ' | ' |
Number of current and former directors and officers who are named defendants | 9 | ' | ' | ' |
Expense in conjunction with the derivative shareholder action | ' | ' | $3.30 | $1.20 |
Amount awarded in conjunction with a class-action lawsuit | ' | $1.10 | ' | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | 3 Months Ended | |||||||
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
State | State | Foreign | Foreign | Capital Loss Carryforward | Internal Revenue Service (IRS) | ||||
Minimum | Maximum | Minimum | Maximum | Domestic Tax Authority | |||||
Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other, net | -2.30% | 7.80% | -13.80% | ' | ' | ' | ' | ' | ' |
Rate impact of meals and entertainment expense disallowance (as a percent) | ' | 4.90% | 2.10% | ' | ' | ' | ' | ' | ' |
Rate impact of donated inventory (as a percent) | ' | -3.40% | ' | ' | ' | ' | ' | ' | ' |
Unrecognized tax benefits (as a percent) | ' | 5.50% | -9.10% | ' | ' | ' | ' | ' | ' |
Miscellaneous items (as a percent) | ' | 0.80% | -6.80% | ' | ' | ' | ' | ' | ' |
State net operating loss carryforwards | $3.70 | ' | ' | ' | ' | ' | ' | ' | ' |
U.K. net operating loss carryforwards | 1.1 | ' | ' | ' | ' | ' | ' | ' | ' |
Tax credit carryforward | 20.1 | ' | ' | ' | ' | ' | ' | 12.4 | ' |
Tax credit carryforward amount subject to expiration | 18.6 | ' | ' | ' | ' | ' | ' | ' | ' |
Tax credit carryforward amount not subject to expiration | 1.5 | ' | ' | ' | ' | ' | ' | ' | ' |
Undistributed earnings of international subsidiaries | 23.7 | ' | ' | ' | ' | ' | ' | ' | ' |
Payments for anticipated tax settlements | ' | ' | ' | ' | ' | ' | ' | ' | 9.5 |
Statute of limitation period for state tax audits | ' | ' | ' | '3 years | '4 years | ' | ' | ' | ' |
Statute of limitation period for international tax audits | ' | ' | ' | ' | ' | '3 years | '5 years | ' | ' |
Reserve on unrecognized tax benefits that would benefit the effective tax rate | 1 | ' | ' | ' | ' | ' | ' | ' | ' |
Interest and penalties associated with unrecognized tax benefits recorded | 0.1 | 0.7 | -1.2 | ' | ' | ' | ' | ' | ' |
Accrued interest and penalties related to unrecognized tax benefits | $1.10 | ' | ' | ' | ' | ' | ' | ' | ' |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Income (loss) before income taxes: | ' | ' | ' |
U.S. | ($51,866) | ($25,177) | ($35,430) |
International | -2,462 | 35,275 | 10,116 |
(Loss) income from continuing operations before income taxes and equity in loss of affiliated companies | ($54,328) | $10,098 | ($25,314) |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Current: | ' | ' | ' |
U.S. | $1,460 | ($21,053) | ($1,095) |
International | 890 | 707 | 2,261 |
Deferred: | ' | ' | ' |
U.S. | 67,992 | 10,405 | -5,519 |
International | 787 | -83 | -77 |
Income taxes | $71,129 | ($10,024) | ($4,430) |
INCOME_TAXES_Details_4
INCOME TAXES (Details 4) | 12 Months Ended | |||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | ||||
Provision for income taxes reconciliation | ' | ' | ' | |||
U.S. statutory rate (benefit) | -35.00% | 35.00% | -35.00% | |||
State income taxes, net of federal income tax benefit | -0.20% | 3.60% | 3.50% | |||
Valuation allowance | 160.80% | [1] | 0.00% | [1] | 0.00% | [1] |
Tax effect of goodwill impairment | 11.50% | 0.00% | 47.70% | |||
Foreign income taxes at other than U.S. rates | 1.40% | 4.10% | -0.50% | |||
Tax effect of foreign currency translation gain | 0.00% | -107.00% | 0.00% | |||
Work Opportunity and Welfare-to-Work Tax Credits | -5.30% | -42.80% | -19.40% | |||
Other, net | -2.30% | 7.80% | -13.80% | |||
Total (as a percent) | 130.90% | -99.30% | -17.50% | |||
[1] | See Note 1 to the Consolidated Financial Statements. |
INCOME_TAXES_Details_5
INCOME TAXES (Details 5) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ' | ' |
Deferred rent | $12,625 | $12,953 |
Payroll and payroll related costs | 24,857 | 34,073 |
Net operating loss carryforwards | 17,180 | 2,484 |
Tax Credit Carryforward, Deferred Tax Asset | 20,134 | 4,366 |
Inventories | 2,926 | 7,920 |
Allowance for doubtful accounts/notes | 216 | 7,004 |
Insurance | 6,195 | 6,106 |
Other | 8,815 | 14,353 |
Subtotal | 92,948 | 89,259 |
Valuation allowance | -83,922 | 0 |
Total deferred tax assets | 9,026 | 89,259 |
Deferred tax liabilities: | ' | ' |
Depreciation | -8,086 | -20,684 |
Amortization of intangibles | -77,650 | -72,635 |
Other | -5,689 | -7,206 |
Total deferred tax liabilities | -91,425 | -100,525 |
Net deferred tax (liability) asset | ($82,399) | ($11,266) |
INCOME_TAXES_Details_6
INCOME TAXES (Details 6) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Rollforward of unrecognized tax benefits | ' | ' | ' |
Balance at beginning of period | $10,015 | $4,381 | $13,493 |
(Reductions)/additions based on tax positions related to the current year | -2,114 | 44 | 482 |
(Reductions)/additions based on tax positions of prior years | -505 | 7,132 | -7 |
Reductions on tax positions related to the expiration of the statute of limitations | -994 | -1,403 | -1,571 |
Settlements | -4,934 | -139 | -8,016 |
Balance at end of period | $1,468 | $10,015 | $4,381 |
BENEFIT_PLANS_Details
BENEFIT PLANS (Details) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Oct. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Oct. 31, 2013 | |
Regis Retirement Savings Plan, profit sharing portion | Nonqualified Deferred Salary Plan, profit sharing portion | Nonqualified Deferred Salary Plan, profit sharing portion | Nonqualified Deferred Salary Plan, profit sharing portion | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Former Chief executive officer | Former Chief executive officer | Key executives | Key executives | Key executives | Key executives | Former vice chairman | Former vice chairman | Former vice chairman | Former vice chairman | Stock Purchase Plan (ESPP) | Stock Purchase Plan (ESPP) | Stock Purchase Plan (ESPP) | Accrued Liabilities | Accrued Liabilities | Accrued Liabilities | Accrued Liabilities | General and Administrative Expense | ||
Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Key executives | Key executives | Former vice chairman | Former vice chairman | Former vice chairman | ||||||||||||
Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | Deferred Compensation Contracts | ||||||||||||||||||||||
Benefit Plans [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Eligibility age to participate in 401(k) plan | '18 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Service period for eligibility to participation in 401(k) plan | '1 month | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum period of eligible service to participate in the plan | ' | '1 year | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Requisite service hours in plan year to participate in the plan | ' | '1000 hours | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of noncontributory defined contribution component vested after completing two years of service | ' | 20.00% | 20.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of noncontributory defined contribution component vesting after each additional year of service | ' | 20.00% | 20.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period after which noncontributory defined contribution component becomes fully vested | ' | 'P6Y | 'P6Y | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Employer contribution as percent of stock purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' | ' | ' |
Employer contribution to plan, maximum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $11,800,000 | ' | ' | ' | ' | ' | ' | ' |
Cumulative employer contribution to plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,600,000 | ' | ' | ' | ' | ' | ' | ' |
Period considered for deferred compensation benefits | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '60 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Compensation expense | ' | ' | 203,000 | 311,000 | 394,000 | 1,641,000 | 2,370,000 | 10,452,000 | 3,700,000 | ' | 900,000 | ' | 1,600,000 | 5,900,000 | ' | -2,100,000 | 700,000 | 800,000 | 347,000 | 441,000 | 449,000 | ' | ' | ' | ' | ' |
Tax-effected accumulated other comprehensive loss for deferred compensation contracts | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000 | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Agreed annual payment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600,000 | 600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Agreed annual payment after adjustment for inflation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 900,000 | 900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from life insurance policies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gain on life insurance policies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 |
Total current and noncurrent portion | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,590,000 | 10,590,000 | 12,978,000 | ' | ' | 2,500,000 | 5,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current portion (included in Accrued liabilities) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,913,000 | 3,532,000 | 500,000 | 900,000 | ' |
Amount paid under deferred compensation contract | ' | ' | ' | ' | ' | ' | ' | ' | ' | $15,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Survivor benefit plan for remaining life of spouse as portion of deferred compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
BENEFIT_PLANS_Details_2
BENEFIT PLANS (Details 2) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Long-term portion (included in Other noncurrent liabilities) | $25,965 | $29,378 |
Deferred Compensation Contracts | Key executives | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Total current and noncurrent portion | 10,590 | 12,978 |
Accrued Liabilities | Deferred Compensation Contracts | Key executives | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Current portion (included in Accrued liabilities) | 2,913 | 3,532 |
Other Noncurrent Liabilities | Deferred Compensation Contracts | Key executives | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Long-term portion (included in Other noncurrent liabilities) | $7,677 | $9,446 |
BENEFIT_PLANS_Details_3
BENEFIT PLANS (Details 3) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Deferred Compensation Contracts | ' | ' | ' |
Benefit Plans [Line Items] | ' | ' | ' |
Compensation expense | $1,641,000 | $2,370,000 | $10,452,000 |
Stock Purchase Plan (ESPP) | ' | ' | ' |
Benefit Plans [Line Items] | ' | ' | ' |
Compensation expense | 347,000 | 441,000 | 449,000 |
Nonqualified Deferred Salary Plan, profit sharing portion | ' | ' | ' |
Benefit Plans [Line Items] | ' | ' | ' |
Compensation expense | 203,000 | 311,000 | 394,000 |
Former Chief executive officer | Deferred Compensation Contracts | ' | ' | ' |
Benefit Plans [Line Items] | ' | ' | ' |
Amount paid under deferred compensation contract | ' | 15,100,000 | ' |
Compensation expense | ' | ' | $3,700,000 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Common Stock | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 119,750 | ' | 182,270 |
Equity-based compensation awards | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 1,799,352 | 1,593,228 | 1,987,784 |
Shares issuable upon conversion of debt | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 11,307,605 | 11,260,261 | 11,208,552 |
EARNINGS_PER_SHARE_Details_2
EARNINGS PER SHARE (Details 2) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||
Weighted average common and common equivalent shares outstanding: | ' | ' | ' | |||
Weighted average shares for basic earnings per share | 56,482 | 56,704 | 57,137 | |||
Effect of dilutive securities: | ' | ' | ' | |||
Dilutive effect of stock-based compensation (in shares) | 0 | [1] | 142 | [1] | 0 | [1] |
Weighted average shares for diluted earnings per share | 56,482 | 56,846 | 57,137 | |||
[1] | For fiscal year 2014 and 2012, 119,750 and 182,270 common stock equivalents of potentially dilutive common stock were not included in the diluted earnings per share calculation due to the net loss from continuing operations. |
STOCKBASED_COMPENSATION_STOCKB
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Oct. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
In Millions, except Share data, unless otherwise specified | Stock options & SARs | Stock Options and Stock Appreciation Rights [Member] | SARs | RSAs and RSUs | RSAs and RSUs | RSAs and RSUs | Performance share units | Performance share units | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan | 2004 Plan and 2000 Plan | 2004 Plan and 2000 Plan | 2004 Plan and 2000 Plan | 2004 Plan and 2000 Plan | Issued after July 1, 2012 |
Full Value Awards [Member] | Full Value Awards [Member] | Full Value Awards | Performance share units | Performance share units | Restricted Stock Award and Restricted Stock Units Granted to Employees | Restricted Stock Award and Restricted Stock Units Granted to Employees | RSUs granted to non-employee directors | Stock options & SARs | Stock options & SARs | Stock options & SARs | SARs | 2004 Plan | ||||||||||
Maximum | Minimum | Maximum | Minimum | Maximum | ||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Period To Achieve Cumulative EBITDA | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Granted (in shares) | ' | ' | 470,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Participants' age required under award vesting terms | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '62 years |
Number of shares available for grant | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,029,874 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares available for issuance | ' | ' | ' | ' | ' | ' | ' | ' | 6,750,000 | ' | 3,465,701 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share based Compensation Arrangement by Share based Payment Award Number of Full Shares Authorized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,905,483 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized compensation cost related to unvested stock-based compensation | $2.90 | ' | ' | $6.60 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average period of recognition of unrecognized compensation cost related to unvested stock-based compensation | ' | '1 year 9 months 9 days | ' | '2 years 2 months 13 days | ' | ' | ' | ' | ' | ' | ' | ' | '2 years 2 months 6 days | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | '3 years | '5 years | '1 year | ' | '3 years | '5 years | '3 years | ' |
Expiration period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' | ' |
Performance period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of years of continuous service to be completed by an employee under award vesting terms | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '15 years |
Employees' age required under award vesting terms | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '55 years |
Weighted average fair values per stock based compensation award granted (in dollars per share) | ' | ' | ' | $15.50 | $17.40 | $16.94 | $15.73 | $18.33 | ' | ' | ' | ' | $15.72 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Future compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.90 | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details 2) (USD $) | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |
Stock options & SARs | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Weighted average fair values per stock based compensation award granted (in dollars per share) | $6 | $6.63 | ' |
RSAs and RSUs | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Weighted average fair values per stock based compensation award granted (in dollars per share) | $15.50 | $17.40 | $16.94 |
PSUs | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Weighted average fair values per stock based compensation award granted (in dollars per share) | $15.73 | $18.33 | ' |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details 3) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Assumptions used in determining estimated fair value of stock based compensation awards | ' | ' |
Expected term | '6 years | '6 years |
Minimum | ' | ' |
Assumptions used in determining estimated fair value of stock based compensation awards | ' | ' |
Risk-free interest rate (as a percent) | 1.67% | 0.66% |
Expected volatility (as a percent) | 44.00% | 44.00% |
Expected dividend yield (as a percent) | 1.52% | 1.33% |
Maximum | ' | ' |
Assumptions used in determining estimated fair value of stock based compensation awards | ' | ' |
Risk-free interest rate (as a percent) | 1.96% | 0.87% |
Expected volatility (as a percent) | 44.00% | 47.00% |
Expected dividend yield (as a percent) | 1.61% | 1.46% |
STOCKBASED_COMPENSATION_Detail2
STOCK-BASED COMPENSATION (Details 4) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Total stock-based compensation expense | $6,400 | $5,881 | $7,597 |
Less: Income tax benefit | 0 | -2,235 | -2,898 |
Total stock-based compensation expense, net of tax | 6,400 | 3,646 | 4,699 |
Stock options & SARs | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Total stock-based compensation expense | 2,145 | 1,986 | 1,447 |
RSAs, RSUs, & PSUs | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Total stock-based compensation expense | $4,255 | $3,895 | $6,150 |
STOCKBASED_COMPENSATION_Detail3
STOCK-BASED COMPENSATION (Details 5) (USD $) | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 |
Stock options & SARs | ' |
Weighted Average Exercise Price | ' |
Outstanding balance at the beginning of the period (in dollars per share) | $25.26 |
Granted (in dollars per share) | $15.74 |
Forfeited/Expired (in dollars per share) | $30.06 |
Exercised (in dollars per share) | $16.60 |
Outstanding balance at the end of the period (in dollars per share) | $20.80 |
Exercisable at the end of the period (in dollars per share) | $25.85 |
Unvested options, net of estimated forfeitures (in dollars per share) | $16.68 |
Weighted-Average Remaining Contractual Life | ' |
Outstanding at the end of the period | '6 years 9 months 18 days |
Exercisable at the end of the period | '4 years 6 months |
Unvested options, net of estimated forfeitures | '8 years 8 months 12 days |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Vested | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Outstanding | $0 |
Share Based Compensation Arrangement by Share Based Payment Award, Equity Instruments Other than Options Aggregate Intrinsic Value Nonvested Awards Net of Estimated Forfeitures | $0 |
SARs | ' |
SARs outstanding | ' |
Outstanding balance at the beginning of the period (in shares) | 860,000 |
Granted (in shares) | 470,000 |
Forfeited/Expired (in shares) | -189,000 |
Exercised (in shares) | -1,000 |
Outstanding balance at the end of the period (in shares) | 1,140,000 |
Exercisable at the end of the period (in shares) | 383,000 |
Unvested options, net of estimated forfeitures (in shares) | 686,000 |
Stock Options | ' |
SARs outstanding | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 |
Stock options outstanding | ' |
Outstanding balance at the beginning of the period (in shares) | 429,000 |
Forfeited/Expired (in shares) | -177,000 |
Exercised (in shares) | 0 |
Outstanding balance at the end of the period (in shares) | 252,000 |
Exercisable at the end of the period (in shares) | 246,000 |
Unvested options, net of estimated forfeitures (in shares) | 6,000 |
STOCKBASED_COMPENSATION_Detail4
STOCK-BASED COMPENSATION (Details 6) (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 |
RSAs | ' | ' | ' |
RSAs, RSUs and PSUs outstanding | ' | ' | ' |
Nonvested at the beginning of the period (in shares) | 315 | ' | ' |
Granted (in shares) | 0 | ' | ' |
Forfeited (in shares) | -26 | ' | ' |
Vested (in shares) | -103 | ' | ' |
Nonvested at the end of the period (in shares) | 186 | ' | ' |
Vested (in shares) | 0 | ' | ' |
Unvested options, net of estimated forfeitures (in shares) | 179 | ' | ' |
RSUs | ' | ' | ' |
RSAs, RSUs and PSUs outstanding | ' | ' | ' |
Nonvested at the beginning of the period (in shares) | 250 | ' | ' |
Granted (in shares) | 362 | ' | ' |
Forfeited (in shares) | -19 | ' | ' |
Vested (in shares) | -81 | ' | ' |
Nonvested at the end of the period (in shares) | 512 | ' | ' |
Vested (in shares) | 81 | ' | ' |
Unvested options, net of estimated forfeitures (in shares) | 361 | ' | ' |
RSAs and RSUs | ' | ' | ' |
Weighted Average Grant Date Fair Value of RSAs, RSUs and PSUs | ' | ' | ' |
Nonvested at the beginning of the period (in dollars per share) | $17.46 | ' | ' |
Granted (in dollars per share) | $15.50 | $17.40 | $16.94 |
Forfeited (in dollars per share) | $17.05 | ' | ' |
Vested (in dollars per share) | $17.92 | ' | ' |
Nonvested at the end of the period (in dollars per share) | $16.34 | $17.46 | ' |
Vested (in dollars per share) | $16.42 | ' | ' |
Unvested options, net of estimated forfeitures (in dollars per share) | $16.40 | ' | ' |
Aggregate Intrinsic Value | ' | ' | ' |
Nonvested at the end of the period (in dollars) | $9,817 | ' | ' |
Vested (in dollars) | 1,145 | ' | ' |
Unvested options, net of estimated forfeitures (in dollars) | $7,602 | ' | ' |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | |||
Apr. 26, 2007 | 3-May-05 | Aug. 31, 2003 | 31-May-00 | Jun. 30, 2014 | Jun. 30, 2013 | |
Authorized Shares and Designation of Preferred Class: | ' | ' | ' | ' | ' | ' |
Common stock, authorized shares | ' | ' | ' | ' | 100,000,000 | ' |
Common stock, par value (in dollars per share) | ' | ' | ' | ' | $0.05 | $0.05 |
Series A Junior Participating Preferred Stock, authorized shares | ' | ' | ' | ' | 250,000 | ' |
Preferred stock issued (in shares) | ' | ' | ' | ' | 0 | ' |
Shareholders' Rights Plan: | ' | ' | ' | ' | ' | ' |
Number of preferred share purchase rights held by shareholders for each share of common stock owned | ' | ' | ' | ' | 1 | ' |
Percentage of ownership of outstanding common stock by a person to group to trigger preferred stock purchase rights | ' | ' | ' | ' | 20.00% | ' |
Number of shares of preferred stock that a holder is entitled to purchase, if the rights become exercisable | ' | ' | ' | ' | 0.001 | ' |
Exercise price share of Series A junior participating preferred stock | ' | ' | ' | ' | $140,000 | ' |
Share Repurchase Program: | ' | ' | ' | ' | ' | ' |
Stock repurchase program authorized amount | $300,000,000 | $200,000,000 | $100,000,000 | $50,000,000 | ' | ' |
Repurchases of common stock to date (in shares) | ' | ' | ' | ' | 7,700,000 | ' |
Repurchases of common stock to date | ' | ' | ' | ' | 241,300,000 | ' |
Remaining authorized repurchase amount | ' | ' | ' | ' | $58,700,000 | ' |
SHAREHOLDERS_EQUITY_Details_2
SHAREHOLDERS' EQUITY (Details 2) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Stockholders' Equity Note [Abstract] | ' | ' |
Foreign currency translation | $22,364 | $20,434 |
Unrealized gain (loss) on deferred compensation contracts | 287 | 122 |
Accumulated other comprehensive income | $22,651 | $20,556 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
segment | segment | segment | |
Segment Reporting Information [Line Items] | ' | ' | ' |
Number of reportable segments | 3 | 2 | 3 |
North American Value | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Number of stores | 8,295 | ' | 8,295 |
North American Premium | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Number of stores | 801 | ' | 801 |
International Salons | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Number of stores | 360 | ' | 360 |
SEGMENT_INFORMATION_Details_2
SEGMENT INFORMATION (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | ||||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Revenues | $483,926,000 | $471,561,000 | $468,367,000 | $468,583,000 | [1] | $502,251,000 | [1] | $504,937,000 | $506,165,000 | $505,360,000 | $1,892,437,000 | [2] | $2,018,713,000 | [2] | $2,122,227,000 | [2] | ||||||
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 99,733,000 | 91,755,000 | 104,970,000 | |||||||||||
Operating income (loss) | 2,462,000 | [3] | -3,221,000 | [3] | -34,660,000 | [3] | 1,429,000 | [1],[3] | -8,978,000 | [1],[3] | 3,308,000 | [3] | 8,723,000 | [3] | 9,273,000 | [3] | -33,990,000 | [2],[3] | 12,326,000 | [2],[3] | -2,167,000 | [2] |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | -22,290,000 | -37,594,000 | -28,245,000 | |||||||||||
Interest income and other, net | ' | ' | ' | ' | ' | ' | ' | ' | 1,952,000 | 35,366,000 | 5,098,000 | |||||||||||
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies | ' | ' | ' | ' | ' | ' | ' | ' | -54,328,000 | 10,098,000 | -25,314,000 | |||||||||||
Goodwill impairment charges | ' | ' | 34,900,000 | ' | ' | ' | ' | ' | 34,939,000 | 0 | 67,684,000 | |||||||||||
North American Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 1,430,083,000 | [2] | 1,515,581,000 | [2] | 1,570,542,000 | [2] | ||||||||
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 66,038,000 | [2] | 56,364,000 | [2] | 55,317,000 | [2] | ||||||||
Operating income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 118,935,000 | [2] | 141,103,000 | [2] | 197,478,000 | [2] | ||||||||
Goodwill impairment charges | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | |||||||||||
North American Premium | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 333,858,000 | [2] | 373,820,000 | [2] | 410,563,000 | [2] | ||||||||
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 15,859,000 | [2] | 15,893,000 | [2] | 15,936,000 | [2] | ||||||||
Operating income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | -46,274,000 | [2],[4] | -13,850,000 | [2],[4] | -57,504,000 | [2],[4] | ||||||||
Goodwill impairment charges | ' | ' | ' | ' | ' | ' | ' | ' | 34,939,000 | ' | 67,700,000 | |||||||||||
International Salons | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 128,496,000 | [2] | 129,312,000 | [2] | 141,122,000 | [2] | ||||||||
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 5,227,000 | [2] | 5,222,000 | [2] | 5,297,000 | [2] | ||||||||
Operating income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | -3,356,000 | [2] | -1,380,000 | [2] | 2,505,000 | [2] | ||||||||
Reportable Segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 87,124,000 | [2] | 77,479,000 | [2] | 76,550,000 | [2] | ||||||||
Operating income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 69,305,000 | [2] | 125,873,000 | [2] | 142,479,000 | [2] | ||||||||
Unallocated Corporate [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Depreciation and amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | 12,609,000 | 14,276,000 | 28,420,000 | |||||||||||
Operating income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | ($103,295,000) | ($113,547,000) | ($144,646,000) | |||||||||||
[1] | During the fourth quarter of fiscal year 2013, the Company recorded a cumulative adjustment to correct prior period errors that related to an understatement of interest expense and certain uncertain tax positions. The impact of these items on the Company's Consolidated Statement of Operations increased interest expense by $0.4 million, increased income tax expense by $0.3 million and decreased net income by $0.7 million. During first quarter of fiscal year 2014, the Company recorded adjustments to correct errors related to the fourth quarter of fiscal year 2013 for an overstatement of inventory and self-insurance accruals and an understatement of cash. The impact of these items on the Company's Consolidated Statement of Operations decreased Site Operating expenses by $1.3 million, increased Cost of Product by $0.3 million and decreased net loss by $0.6 million. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or respective fiscal year, the Company recorded adjustments to correct the errors during each respective quarter. | |||||||||||||||||||||
[2] | See NoteB 2 to the Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as discontinued operations. | |||||||||||||||||||||
[3] | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Companybs U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | |||||||||||||||||||||
[4] | Included in the North American Premium salons segment's operating loss for fiscal years 2014 and 2012 are goodwill impairment charges of $34.9 and $67.7 million, respectively. |
SEGMENT_INFORMATION_Details_3
SEGMENT INFORMATION (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||||
Total revenues and long-lived assets associated with business operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||
Total Revenues | $483,926 | $471,561 | $468,367 | $468,583 | [1] | $502,251 | [1] | $504,937 | $506,165 | $505,360 | $1,892,437 | [2] | $2,018,713 | [2] | $2,122,227 | [2] |
Property and equipment, net | 266,538 | ' | ' | ' | 313,460 | ' | ' | ' | 266,538 | 313,460 | 305,799 | |||||
U.S. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||
Total revenues and long-lived assets associated with business operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||
Total Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 1,626,794 | 1,737,517 | 1,815,797 | |||||
Property and equipment, net | 240,460 | ' | ' | ' | 285,111 | ' | ' | ' | 240,460 | 285,111 | 274,711 | |||||
Other countries | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||
Total revenues and long-lived assets associated with business operations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||
Total Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 265,643 | 281,196 | 306,430 | |||||
Property and equipment, net | $26,078 | ' | ' | ' | $28,349 | ' | ' | ' | $26,078 | $28,349 | $31,088 | |||||
[1] | During the fourth quarter of fiscal year 2013, the Company recorded a cumulative adjustment to correct prior period errors that related to an understatement of interest expense and certain uncertain tax positions. The impact of these items on the Company's Consolidated Statement of Operations increased interest expense by $0.4 million, increased income tax expense by $0.3 million and decreased net income by $0.7 million. During first quarter of fiscal year 2014, the Company recorded adjustments to correct errors related to the fourth quarter of fiscal year 2013 for an overstatement of inventory and self-insurance accruals and an understatement of cash. The impact of these items on the Company's Consolidated Statement of Operations decreased Site Operating expenses by $1.3 million, increased Cost of Product by $0.3 million and decreased net loss by $0.6 million. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or respective fiscal year, the Company recorded adjustments to correct the errors during each respective quarter. | |||||||||||||||
[2] | See NoteB 2 to the Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as discontinued operations. |
QUARTERLY_FINANCIAL_DATA_UNAUD2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | |||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||
Revenues | $483,926 | $471,561 | $468,367 | $468,583 | [1] | $502,251 | [1] | $504,937 | $506,165 | $505,360 | $1,892,437 | [2] | $2,018,713 | [2] | $2,122,227 | [2] | ||||||
Cost of service and product revenues, excluding depreciation and amortization | 279,095 | 272,490 | 273,874 | 269,039 | [1] | 296,678 | [1] | 287,597 | 289,329 | 285,660 | 1,094,498 | 1,159,264 | ' | |||||||||
Operating income (loss) | 2,462 | [3] | -3,221 | [3] | -34,660 | [3] | 1,429 | [1],[3] | -8,978 | [1],[3] | 3,308 | [3] | 8,723 | [3] | 9,273 | [3] | -33,990 | [2],[3] | 12,326 | [2],[3] | -2,167 | [2] |
(Loss) income from continuing operations | -17,766 | [3],[4] | -10,093 | [3],[4] | -109,085 | [3],[4] | -136 | [1],[3],[4] | -15,258 | [1],[3],[4] | 896 | [3],[4] | -16,119 | [3],[4] | 34,647 | [3],[4] | -137,080 | [3],[4] | 4,166 | [3],[4] | -51,743 | |
Income from discontinued operations | 744 | [5] | 609 | [5] | 0 | [5] | 0 | [1],[5] | 15,933 | [1],[5] | 1,465 | [5] | 3,853 | [5] | 3,777 | [5] | 1,353 | [5] | 25,028 | [5] | -62,350 | |
Net (loss) income | ($17,022) | [3],[4],[5] | ($9,484) | [3],[4],[5] | ($109,085) | [3],[4],[5] | ($136) | [1],[3],[4],[5] | $675 | [1],[3],[4],[5] | $2,361 | [3],[4],[5] | ($12,266) | [3],[4],[5] | $38,424 | [3],[4],[5] | ($135,727) | [3],[4],[5] | $29,194 | [3],[4],[5] | ($114,093) | |
(Loss) income from continuing operations per share, basic and diluted (in dollars per share) | ($0.31) | [6] | ($0.18) | [6] | ($1.93) | [6] | $0 | [1],[6] | ' | ' | ' | ' | ($2.43) | [6] | $0.07 | ($0.91) | ||||||
Income (loss) from discontinued operations per share, basic and diluted (in usd per share) | $0.01 | [6] | $0.01 | [6] | $0 | [6] | $0 | [1],[6] | ' | ' | ' | ' | $0.02 | [6] | $0.44 | [6] | ($1.09) | |||||
Net income (loss) per share, basic and diluted (in dollars per share) | ($0.30) | [6] | ($0.17) | [6] | ($1.93) | [6] | $0 | [1],[6] | ' | ' | ' | ' | ($2.40) | [6],[7] | $0.51 | [7] | ($2) | [7] | ||||
Income (loss) from continuing operations per share, basic (in dollars per share) | ' | ' | ' | ' | ($0.27) | $0.02 | ($0.28) | $0.60 | ' | $0.07 | ' | |||||||||||
Income (loss) from discontinued operations per share, basic (in dollars per share) | ' | ' | ' | ' | $0.28 | $0.03 | $0.07 | $0.07 | ' | $0.44 | ' | |||||||||||
Net income (loss) per basic share (in dollars per share) | ' | ' | ' | ' | $0.01 | [1],[6] | $0.04 | [6] | ($0.22) | [6] | $0.67 | [6] | ' | $0.51 | [6] | ' | ||||||
Income (loss) from continuing operations per share, diluted (in dollars per share) | ' | ' | ' | ' | ($0.27) | [1] | $0.02 | ($0.28) | $0.54 | ' | $0.07 | ' | ||||||||||
Income (loss) from discontinued operations per share, diluted (in dollar per share) | ' | ' | ' | ' | $0.28 | [1] | $0.03 | $0.07 | $0.06 | ' | $0.44 | ' | ||||||||||
Net income (loss) per share, diluted (in dollars per share) | ' | ' | ' | ' | $0.01 | [1],[6] | $0.04 | [6] | ($0.22) | [6] | $0.59 | [6] | ' | $0.51 | [6] | ' | ||||||
Dividends declared per share (in dollars per share) | $0 | $0 | $0.06 | $0.06 | [1] | $0.06 | [1] | $0.06 | $0.06 | $0.06 | $0.12 | $0.24 | $0.24 | |||||||||
[1] | During the fourth quarter of fiscal year 2013, the Company recorded a cumulative adjustment to correct prior period errors that related to an understatement of interest expense and certain uncertain tax positions. The impact of these items on the Company's Consolidated Statement of Operations increased interest expense by $0.4 million, increased income tax expense by $0.3 million and decreased net income by $0.7 million. During first quarter of fiscal year 2014, the Company recorded adjustments to correct errors related to the fourth quarter of fiscal year 2013 for an overstatement of inventory and self-insurance accruals and an understatement of cash. The impact of these items on the Company's Consolidated Statement of Operations decreased Site Operating expenses by $1.3 million, increased Cost of Product by $0.3 million and decreased net loss by $0.6 million. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or respective fiscal year, the Company recorded adjustments to correct the errors during each respective quarter. | |||||||||||||||||||||
[2] | See NoteB 2 to the Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as discontinued operations. | |||||||||||||||||||||
[3] | During the second quarter of fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million, an $84.4 million non-cash charge to establish a valuation allowance against the Companybs U.S. and U.K. deferred tax assets and non-cash salon asset impairment charge of $4.7 million. During the third quarter of fiscal 2014, the Company recorded non-cash salon impairment of $8.9 million. During the fourth quarter of fiscal year 2013, the Company recorded a $12.6 million ($7.7 million net of tax) inventory write-down associated with the Company's implementation of standardized plan-o-grams. | |||||||||||||||||||||
[4] | During the fourth quarter of fiscal year 2014, the Company recorded a $12.6 million charge representing its share of goodwill impairment charges recorded by EEG. During the first quarter of fiscal year 2013, the Company recorded a $32.2 million net of tax foreign currency gain associated with the sale of Provalliance. During the second quarter of fiscal year 2013, the Company recorded a $17.9 million impairment charge net of tax related to the impairment of EEG. During the fourth quarter of fiscal year 2013, the Company incurred $6.7 million net of tax of expense for a make-whole payment associated with the prepayment of debt. | |||||||||||||||||||||
[5] | During the fourth quarter of fiscal year 2013, the Company recorded a $15.4 million gain, net of professional and transaction fees and taxes, associated with the disposition of Hair Club. | |||||||||||||||||||||
[6] | Total is an annual recalculation; line items calculated quarterly may not sum to total. | |||||||||||||||||||||
[7] | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
QUARTERLY_FINANCIAL_DATA_UNAUD3
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Jun. 30, 2014 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Provalliance | Provalliance | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Empire Education Group, Inc. | Hair Restoration Centers | Interest Expense [Member] | Income Tax Expense [Member] | Net (Loss) Income [Member] | Net (Loss) Income [Member] | Site Operating Expenses [Member] | Cost of Product [Member] | |||||||
Prior Period Adjustment | Prior Period Adjustment | Prior Period Adjustment | Prior Period Adjustment | Prior Period Adjustment | Prior Period Adjustment | ||||||||||||||
Impairment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill impairment charges | ' | $34,900,000 | ' | $34,939,000 | $0 | $67,684,000 | ' | ' | $12,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Establishment of valuation allowance against U.S. & U.K. deferred tax assets | ' | 84,400,000 | ' | 84,391,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Salon asset impairments | 8,900,000 | 4,700,000 | ' | 18,327,000 | 8,224,000 | 6,636,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Inventory reserve recorded | ' | ' | 12,600,000 | 854,000 | 12,557,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Inventory reserve recorded, net of tax | ' | ' | 7,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net of tax foreign currency gain | ' | ' | ' | ' | ' | ' | 32,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment charge | ' | ' | ' | ' | ' | ' | ' | 17,200,000 | ' | 17,900,000 | 17,900,000 | 19,400,000 | ' | ' | ' | ' | ' | ' | ' |
Net of tax of expense for a make-whole payment associated with prepayment of debt | ' | ' | 6,700,000 | ' | 10,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gain associated with the disposition net of professional and transaction fees and taxes | ' | ' | ' | 0 | 17,827,000 | 0 | ' | ' | ' | ' | ' | ' | 15,400,000 | ' | ' | ' | ' | ' | ' |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $400,000 | $300,000 | $600,000 | ($700,000) | $1,300,000 | $300,000 |