Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2013 | Oct. 28, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'REGIS CORP | ' |
Entity Central Index Key | '0000716643 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 56,649,462 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $203,686 | $200,488 |
Receivables, net | 20,278 | 33,062 |
Inventories | 149,224 | 139,607 |
Deferred income taxes | 21,124 | 24,145 |
Income tax receivable | 34,355 | 33,346 |
Other current assets | 57,510 | 57,898 |
Total current assets | 486,177 | 488,546 |
Property and equipment, net | 302,400 | 313,460 |
Goodwill | 461,740 | 460,885 |
Other intangibles, net | 21,287 | 21,496 |
Investment in affiliates | 44,331 | 43,319 |
Other assets | 64,347 | 62,786 |
Total assets | 1,380,282 | 1,390,492 |
Current liabilities: | ' | ' |
Long-term debt, current portion | 174,452 | 173,515 |
Accounts payable | 65,651 | 66,071 |
Accrued expenses | 128,930 | 137,226 |
Total current liabilities | 369,033 | 376,812 |
Long-term debt and capital lease obligations | 15 | 1,255 |
Other noncurrent liabilities | 153,129 | 155,011 |
Total liabilities | 522,177 | 533,078 |
Commitments and contingencies (Note 7) | ' | ' |
Shareholders' equity: | ' | ' |
Common stock, $0.05 par value; issued and outstanding 56,649,378 and 56,630,926 common shares at September 30, 2013 and June 30, 2013, respectively | 2,833 | 2,832 |
Additional paid-in capital | 335,362 | 334,266 |
Accumulated other comprehensive income | 23,591 | 20,556 |
Retained earnings | 496,319 | 499,760 |
Total shareholders' equity | 858,105 | 857,414 |
Total liabilities and shareholders' equity | $1,380,282 | $1,390,492 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEET | ' | ' |
Common stock, par value (in dollars per share) | $0.05 | $0.05 |
Common stock, shares issued | 56,649,378 | 56,630,926 |
Common stock, shares outstanding | 56,649,378 | 56,630,926 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues: | ' | ' |
Service | $371,727 | $393,416 |
Product | 86,743 | 102,284 |
Royalties and fees | 10,113 | 9,660 |
Total revenues | 468,583 | 505,360 |
Operating expenses: | ' | ' |
Cost of service | 225,015 | 232,528 |
Cost of product | 44,024 | 53,132 |
Site operating expenses | 50,841 | 52,347 |
General and administrative | 44,433 | 55,872 |
Rent | 79,010 | 81,499 |
Depreciation and amortization | 23,831 | 20,709 |
Total operating expenses | 467,154 | 496,087 |
Operating income | 1,429 | 9,273 |
Other income (expense): | ' | ' |
Interest expense | -4,491 | -6,829 |
Interest income and other, net | 544 | 34,612 |
(Loss) income before income taxes and equity in income of affiliated companies | -2,518 | 37,056 |
Income taxes | 383 | -2,986 |
Equity in income of affiliated companies, net of income taxes | 1,999 | 577 |
(Loss) income from continuing operations | -136 | 34,647 |
Income from discontinued operations, net of taxes | ' | 3,777 |
Net (loss) income | ($136) | $38,424 |
Basic: | ' | ' |
(Loss) income from continuing operations (in dollars per share) | $0 | $0.60 |
Income from discontinued operations (in dollars per share) | ' | $0.07 |
Net (loss) income per share, basic (in dollars per share) | $0 | $0.67 |
Diluted: | ' | ' |
(Loss) income from continuing operations (in dollars per share) | $0 | $0.54 |
Income from discontinued operations (in dollars per share) | ' | $0.06 |
Net (loss) income per share, diluted (in dollars per share) | $0 | $0.59 |
Weighted average common and common equivalent shares outstanding: | ' | ' |
Basic (in shares) | 56,393 | 57,283 |
Diluted (in shares) | 56,393 | 68,589 |
Cash dividends declared per common share (in dollars per share) | $0.06 | $0.06 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME | ' | ' |
Net (loss) income | ($136) | $38,424 |
Foreign currency translation adjustments: | ' | ' |
Foreign currency translation adjustments during the period | 3,035 | 7,038 |
Reclassification adjustments for gains included in net income (Note 1) | ' | -33,842 |
Net current period foreign currency translation adjustments | 3,035 | -26,804 |
Change in fair market value of financial instruments designated as cash flow hedges | ' | -23 |
Other comprehensive income (loss) | 3,035 | -26,827 |
Comprehensive income | $2,899 | $11,597 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities: | ' | ' |
Net (loss) income | ($136) | $38,424 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 23,831 | 21,161 |
Equity in income of affiliated companies | -1,999 | -907 |
Deferred income taxes | -250 | 7,120 |
Accumulated other comprehensive income reclassification adjustments (Note 1) | ' | -33,842 |
Loss on write down of inventories | 854 | ' |
Stock-based compensation | 1,811 | 1,818 |
Amortization of debt discount and financing costs | 1,843 | 1,749 |
Other non-cash items affecting earnings | -34 | 410 |
Changes in operating assets and liabilities, excluding the effects of acquisitions | -10,164 | -27,467 |
Net cash provided by operating activities | 15,756 | 8,466 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -11,444 | -18,077 |
Proceeds from sale of assets | 5 | 21 |
Asset acquisitions, net of cash acquired | -17 | ' |
Proceeds from loans and investments | 2,968 | 130,281 |
Net cash (used in) provided by investing activities | -8,488 | 112,225 |
Cash flows from financing activities: | ' | ' |
Repayments of long-term debt and capital lease obligations | -1,706 | -8,825 |
Dividends paid | -3,397 | -3,448 |
Net cash used in financing activities | -5,103 | -12,273 |
Effect of exchange rate changes on cash and cash equivalents | 1,033 | 2,097 |
Increase in cash and cash equivalents | 3,198 | 110,515 |
Cash and cash equivalents: | ' | ' |
Beginning of period | 200,488 | 111,943 |
End of period | $203,686 | $222,458 |
BASIS_OF_PRESENTATION_OF_UNAUD
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' | |||||||
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' | |||||||
1. BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ||||||||
The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of September 30, 2013 and for the three months ended September 30, 2013 and 2012, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of September 30, 2013 and the consolidated results of its operations and its cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year. | ||||||||
The Condensed Consolidated Balance Sheet data for June 30, 2013 was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2013 and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year. | ||||||||
Stock-Based Employee Compensation: | ||||||||
During the three months ended September 30, 2013, the Company granted 225,223 restricted stock units (RSUs), 438,523 equity-based stock appreciation rights (SARs), and 284,604 performance share units (PSUs). There were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans that have been approved by the shareholders of the Company. | ||||||||
Total compensation cost for stock-based payment arrangements totaled $1.8 million for both the three months ended September 30, 2013 and 2012 recorded within general and administrative expense on the Condensed Consolidated Statement of Operations. | ||||||||
Goodwill: | ||||||||
For the fiscal year 2013 annual impairment testing of goodwill, the estimated fair value of the Regis salon concept reporting unit exceeded its carrying values by approximately 9.0 percent. Although the Regis salon concept experienced a same-store sales decrease of 7.0 percent during the three months ended September 30, 2013, the Regis salon concept’s cash flows did not significantly differ from the projections used in the fiscal year 2013 annual goodwill impairment test. Any meaningful underperformance against the projections used in the fiscal year 2013 annual goodwill impairment test, reduced outlook for the Regis salon concept or increases to the carrying value of the Regis salon concept could lead to a goodwill impairment charge. The respective fair values of the Company’s remaining reporting units exceeded their carrying values by greater than 20.0 percent. | ||||||||
While the Company has determined that the estimated fair value of Regis is appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that Regis may experience additional impairment in future periods. Because some of the inherent assumptions and estimates used in determining the fair value of each reporting unit are outside the control of management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Regis salon concept is dependent on many factors and cannot be predicted with certainty. | ||||||||
As of September 30, 2013, the Company’s estimated fair value, as determined by the sum of the Company’s reporting units’ fair values, reconciled to within a reasonable range of the Company’s market capitalization which included an assumed control premium. The Company concluded that there were no triggering events requiring the Company to perform an interim goodwill impairment test between the previous annual impairment test and September 30, 2013. | ||||||||
A summary of the Company’s goodwill balance by reporting unit is as follows: | ||||||||
Reporting Unit | September 30, | June 30, | ||||||
2013 | 2013 | |||||||
(Dollars in thousands) | ||||||||
SmartStyle | $ | 49,387 | $ | 49,286 | ||||
Supercuts | 129,728 | 129,610 | ||||||
MasterCuts | 4,652 | 4,652 | ||||||
Regis | 34,974 | 34,953 | ||||||
Promenade | 242,999 | 242,384 | ||||||
Total | $ | 461,740 | $ | 460,885 | ||||
Prior Period Adjustments: | ||||||||
During the three months ended September 30, 2013, the Company recorded certain errors that related to prior periods. The errors related to an overstatement of inventory and self-insurance accruals and an understatement of cash in prior periods. Because these errors were not material to the Company’s consolidated financial statements for any prior periods or the current quarter, the Company recorded a cumulative adjustment to correct the errors during the first quarter of fiscal year 2014. The impact of these items on the Company’s Consolidated Statement of Operations decreased Site Operating expense by $1.3 million, increased Cost of Product expense by $0.3 million and increased net income by $0.6 million. | ||||||||
Foreign Currency Translation: | ||||||||
During the three months ended September 30, 2012, the Company completed its sale of its investment in Provalliance and subsequently liquidated all foreign entities with Euro denominated operations. As a result, the Company recognized a net $33.8 million foreign currency translation gain within interest income and other, net in the Consolidated Statement of Operations for amounts previously classified within accumulated other comprehensive income. | ||||||||
Recent Accounting Standards Adopted by the Company: | ||||||||
Testing Indefinite-Lived Intangible Assets for Impairment | ||||||||
In July 2012, the FASB updated the accounting guidance related to annual and interim indefinite-lived intangible asset impairment testing. The updated accounting guidance allows entities to first assess qualitative factors before performing a quantitative assessment of the fair value of indefinite-lived intangible assets. If it is determined on the basis of qualitative factors that the fair value of indefinite-lived intangible assets is more likely than not less than the carrying amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is required. The Company adopted this guidance in the first quarter of fiscal year 2014; its adoption did not have a material impact on the Company’s financial statements. | ||||||||
Accounting Standards Recently Issued But Not Yet Adopted by the Company: | ||||||||
Accounting for Cumulative Translation Adjustment upon Derecognition of Foreign Entities | ||||||||
In March 2013, the FASB updated the accounting guidance related to the release of cumulative translation adjustments. The updated accounting guidance clarified when to release cumulative translation adjustments into net income. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. | ||||||||
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists | ||||||||
In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of these requirements to have a material impact on the Company’s consolidated financial statements. | ||||||||
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS: | 3 Months Ended | ||||
Sep. 30, 2013 | |||||
DISCONTINUED OPERATIONS: | ' | ||||
DISCONTINUED OPERATIONS: | ' | ||||
2. 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 Company received $162.8 million during fiscal year 2013, which was the purchase price of $163.5 million adjusted for the preliminary working capital provision. During the three months ended September 30, 2013, the Company received the $3.0 million of cash recorded as a receivable as of June 30, 2013, of which $2.0 million was a result of the final working capital provision, resulting in a final purchase price of $164.8 million, and $1.0 million of excess cash from the transaction completion date. | |||||
The Company classified the results of operations of Hair Club as discontinued operations for all periods presented in the Condensed Consolidated Statement of Operations. | |||||
The following summarizes the results of operations of the discontinued Hair Club operations for the three months ended September 30, 2012: | |||||
(Dollars in thousands) | |||||
Revenues | $ | 38,951 | |||
Income from discontinued operations, before income taxes | 5,872 | ||||
Income tax provision on discontinued operations | (2,299 | ) | |||
Equity in income of affiliated companies, net of income taxes | 204 | ||||
Income from discontinued operations, net of income taxes | $ | 3,777 | |||
Income taxes have been allocated to continuing and discontinued operations based on the methodology required by interim reporting and accounting for income taxes guidance. Depreciation and amortization ceased during the three months ended September 30, 2012 in accordance with accounting for discontinued operations. | |||||
INVESTMENT_IN_AFFILIATES
INVESTMENT IN AFFILIATES: | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
INVESTMENT IN AFFILIATES: | ' | |||||||
INVESTMENT IN AFFILIATES: | ' | |||||||
3. INVESTMENT IN AFFILIATES: | ||||||||
Investment in affiliates | ||||||||
The table below presents the carrying amount of investments in affiliates: | ||||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Empire Education Group, Inc. | $ | 44,108 | $ | 43,098 | ||||
MY Style | 223 | 221 | ||||||
$ | 44,331 | $ | 43,319 | |||||
Empire Education Group, Inc. | ||||||||
During the three months ended September 30, 2013 and 2012, the Company recorded $1.0 and ($0.1) million, respectively, of equity earnings (loss) related to its investment in Empire Education Group, Inc. (EEG). The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment. | ||||||||
Based on the Company’s fiscal year 2013 assessment of the carrying value of its investment in EEG, the Company’s estimate of EEG’s fair value exceeds carrying value by approximately 5 percent. During the three months ended September 30, 2013, the Company monitored and assessed the performance of EEG and comparable companies and noted an improvement in EEG’s financial performance and overall industry trends. The Company will continue to closely monitor EEG’s performance and trends in the for-profit secondary educational market to assess the carrying value of its investment. In the event these favorable trends were to reverse in the future, EEG could be required to impair its goodwill. As of September 30, 2013, the Company’s share of EEG’s goodwill balance is approximately $16 million. | ||||||||
The table below presents the summarized Statement of Operations information for EEG: | ||||||||
Three Months Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Gross revenues | $ | 43,965 | $ | 41,351 | ||||
Gross profit | 14,912 | 12,750 | ||||||
Operating income (loss) | 2,904 | (228 | ) | |||||
Net income (loss) | 1,938 | (181 | ) | |||||
MY Style | ||||||||
During the three months ended September 30, 2013, the Company recovered $1.0 million on its previously impaired investment in MY Style’s parent company, Yamano Holding Corporation (“Yamano”), which is reported in equity in income of affiliated companies on the Condensed Consolidated Statement of Operations. During fiscal year 2011, the Company had estimated the fair value of the Yamano Class A Preferred Stock to be negligible and recorded an other than temporary impairment. | ||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE: | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
EARNINGS PER SHARE: | ' | |||||||
EARNINGS PER SHARE: | ' | |||||||
4. EARNINGS PER SHARE: | ||||||||
The Company’s basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards, RSUs and PSUs. The Company’s dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company’s stock based compensation plans. Stock-based awards with exercise prices greater than the average market value of the Company’s common stock are excluded from the computation of diluted earnings per share. The Company’s dilutive earnings per share will also reflect the assumed conversion under the Company’s convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share. | ||||||||
The following table sets forth a reconciliation of the net (loss) income from continuing operations available to common shareholders and the net (loss) income from continuing operations for diluted earnings per share under the if-converted method: | ||||||||
For the Three Months | ||||||||
Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Net (loss) income from continuing operations available to common shareholders | $ | (136 | ) | $ | 34,647 | |||
Effect of dilutive securities: | ||||||||
Interest on convertible debt, net of taxes | — | 2,130 | ||||||
Net (loss) income from continuing operations for diluted earnings per share | $ | (136 | ) | $ | 36,777 | |||
The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share: | ||||||||
For the Three Months | ||||||||
Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Shares in thousands) | ||||||||
Weighted average shares for basic earnings per share | 56,393 | 57,283 | ||||||
Effect of dilutive securities: | ||||||||
Dilutive effect of stock-based compensation (1) | — | 67 | ||||||
Dilutive effect of convertible debt | — | 11,239 | ||||||
Weighted average shares for diluted earnings per share | 56,393 | 68,589 | ||||||
(1) For the three months ended September 30, 2013, 132,392, 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 1,409,169 and 1,028,988 of equity-based compensation awards during the three months ended September 30, 2013 and 2012, respectively as they were not dilutive under the treasury stock method. The computation of weighted average shares outstanding, assuming dilution also excluded 11,289,545 of shares from convertible debt for the three months ended September 30, 2013 as they were not dilutive. | ||||||||
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY: | 3 Months Ended |
Sep. 30, 2013 | |
SHAREHOLDERS' EQUITY: | ' |
SHAREHOLDERS' EQUITY: | ' |
5. SHAREHOLDERS’ EQUITY: | |
Additional Paid-In Capital: | |
The $1.1 million increase in additional paid-in capital during the three months ended September 30, 2013 was primarily due to stock-based compensation expense, partially offset by expiration of unexercised stock options and stock appreciation rights. | |
INCOME_TAXES
INCOME TAXES: | 3 Months Ended |
Sep. 30, 2013 | |
INCOME TAXES: | ' |
INCOME TAXES: | ' |
6. INCOME TAXES: | |
During the three months ended September 30, 2013 and 2012, the Company recognized tax (benefit) expense of $(0.4) million and $3.0 million, respectively, with corresponding effective tax rates of 15.2 and 8.1 percent. | |
The recorded tax benefit and the effective tax rate for the three months ended September 30, 2013 is lower than would be expected due to unique items of tax expense reducing the tax benefit, with a resulting greater impact on the tax rate due to the relatively small amount of pretax loss reported for the quarter. The recorded tax expense and the effective income tax rate for the three months ended September 30, 2012 is significantly lower than would be expected due primarily to the non-taxability of the $33.8 million foreign currency translation gain recognized at the time of the sale of Provalliance. | |
In the United States, after excluding certain deferred tax liabilities related to assets with indefinite lives, the Company has net deferred tax assets of approximately $54.7 million as of September 30, 2013. Realization of deferred tax assets is ultimately dependent upon future taxable income. We assess the likelihood that deferred tax assets will be recovered. If recovery is not likely, we must increase our provision for income taxes by recording a reserve, in the form of a valuation allowance, for the deferred tax assets that will not ultimately be recoverable. Should the Company’s present financial trends continue, it is reasonably possible that the Company could determine that a valuation allowance for the United States deferred tax assets will be required. | |
The Company’s United States federal income tax returns for the fiscal years 2010 and 2011 are currently under audit. All earlier tax years are closed to examination. For state tax audits, the statute of limitations generally runs three to four years resulting in a number of returns being open for tax audits dating back to fiscal year 2009. The Company is currently under audit in a number of states in which the statute of limitations has been extended for fiscal years 2007 and forward. | |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES: | 3 Months Ended |
Sep. 30, 2013 | |
COMMITMENTS AND CONTINGENCIES: | ' |
COMMITMENTS AND CONTINGENCIES: | ' |
7. COMMITMENTS AND CONTINGENCIES: | |
The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. In addition, the Company is a nominal defendant, and nine current and former directors and officers of the Company are named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder action alleges that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. The Board of Directors appointed a Special Litigation Committee to investigate the claims and allegations made in the derivative action, and to decide on behalf of the Company whether the claims and allegations should be pursued. The derivative action has been stayed by the court pending the decision of the Special Litigation Committee. We do not know when the Special Litigation Committee will complete its work, or what it will decide. 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. | |
The exposure to loss related to the Company’s discontinued Trade Secret salon concept is the guarantee of certain operating leases that have future minimum rents of approximately $2.7 million. The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial statements. | |
GOODWILL_AND_OTHER_INTANGIBLES
GOODWILL AND OTHER INTANGIBLES: | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES: | ' | |||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES: | ' | |||||||||||||||||||
8. GOODWILL AND OTHER INTANGIBLES: | ||||||||||||||||||||
The table below contains details related to the Company’s recorded goodwill: | ||||||||||||||||||||
September 30, 2013 | June 30, 2013 | |||||||||||||||||||
Gross | Gross | |||||||||||||||||||
Carrying | Accumulated | Net (2) | Carrying | Accumulated | Net (2) | |||||||||||||||
Value | Impairment (1) | Value | Impairment (1) | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Goodwill | $ | 680,462 | $ | (218,722 | ) | $ | 461,740 | $ | 679,607 | $ | (218,722 | ) | $ | 460,885 | ||||||
(1) The table below contains additional information regarding the Company’s $218.7 million accumulated impairment losses: | ||||||||||||||||||||
Fiscal Year | Impairment Charge | Reporting Unit | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
2009 | $ | 41,661 | International | |||||||||||||||||
2010 | 35,277 | Regis | ||||||||||||||||||
2011 | 74,100 | Promenade | ||||||||||||||||||
2012 | 67,684 | Regis | ||||||||||||||||||
2013 | — | N/A | ||||||||||||||||||
2014 (through 9.30.13) | — | N/A | ||||||||||||||||||
Total | $ | 218,722 | ||||||||||||||||||
(2) Remaining net goodwill relates to the Company’s North American operations. | ||||||||||||||||||||
The table below presents other intangible assets: | ||||||||||||||||||||
September 30, 2013 | June 30, 2013 | |||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||
Cost | Amortization (1) | Net | Cost | Amortization (1) | Net | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||
Brand assets and trade names | $ | 9,408 | $ | (3,340 | ) | $ | 6,068 | $ | 9,310 | $ | (3,226 | ) | $ | 6,084 | ||||||
Franchise agreements | 11,299 | (7,002 | ) | 4,297 | 11,187 | (6,839 | ) | 4,348 | ||||||||||||
Lease intangibles | 14,789 | (6,782 | ) | 8,007 | 14,754 | (6,582 | ) | 8,172 | ||||||||||||
Non-compete agreements | 204 | (158 | ) | 46 | 201 | (147 | ) | 54 | ||||||||||||
Other | 4,754 | (1,885 | ) | 2,869 | 4,614 | (1,776 | ) | 2,838 | ||||||||||||
$ | 40,454 | $ | (19,167 | ) | $ | 21,287 | $ | 40,066 | $ | (18,570 | ) | $ | 21,496 | |||||||
(1) Balance sheet accounts are converted at the applicable exchange rates effective as of the reported balance sheet dates, while income statement accounts are converted at the average exchange rates for the year-to-date periods presented. |
FINANCING_ARRANGEMENTS
FINANCING ARRANGEMENTS: | 3 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
FINANCING ARRANGEMENTS: | ' | |||||||||||
FINANCING ARRANGEMENTS: | ' | |||||||||||
9. FINANCING ARRANGEMENTS: | ||||||||||||
The Company’s long-term debt consisted of the following: | ||||||||||||
Amounts outstanding | ||||||||||||
Maturity Dates | Interest Rate | September 30, | June 30, | |||||||||
2013 | 2013 | |||||||||||
(fiscal year) | (Dollars in thousands) | |||||||||||
Convertible senior notes | 2015 | 5.00% | $ | 167,857 | $ | 166,454 | ||||||
Revolving credit facility | 2018 | — | — | — | ||||||||
Equipment and leasehold notes payable | 2015 - 2016 | 4.90 - 8.75 | 6,610 | 8,316 | ||||||||
174,467 | 174,770 | |||||||||||
Less current portion | (174,452 | ) | (173,515 | ) | ||||||||
Long-term portion | $ | 15 | $ | 1,255 | ||||||||
Convertible Senior Notes | ||||||||||||
In July 2009, the Company issued $172.5 million aggregate principal amount of 5.0% convertible senior notes due July 2014. The notes are unsecured, senior obligations of the Company and interest is payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0% per year. As of September 30, 2013, the conversion rate was 65.5131 shares of the Company’s common stock per $1,000 principal amount of notes, representing a conversion price of approximately $15.26 per share of the Company’s common stock. Interest expense related to the 5.0% contractual interest coupon was $2.2 million during the three months ended September 30, 2013 and 2012. Interest expense related to the amortization of the debt discount was $1.4 and $1.3 million during the three months ended September 30, 2013 and 2012, respectively. | ||||||||||||
Revolving Credit Facility | ||||||||||||
As of September 30, 2013 and June 30, 2013, the Company had no outstanding borrowings under this facility. Additionally, the Company had outstanding standby letters of credit under the facility of $2.2 million at September 30, 2013 and June 30, 2013 primarily related to its self-insurance program. Unused available credit under the facility at September 30, 2013 and June 30, 2013 was $397.8 million. | ||||||||||||
The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three months ended September 30, 2013. | ||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS: | 3 Months Ended |
Sep. 30, 2013 | |
FAIR VALUE MEASUREMENTS: | ' |
FAIR VALUE MEASUREMENTS: | ' |
10. FAIR VALUE MEASUREMENTS: | |
Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). | |
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis | |
As of September 30, 2013, the Company’s financial instruments included cash, cash equivalents, receivables, accounts payable and debt. The fair value of these instruments approximated their carrying values as of September 30, 2013 and June 30, 2013. | |
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis | |
We measure certain assets, including the Company’s equity method investments, tangible fixed 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. There were no assets measured at fair value on a nonrecurring basis during the three months ended September 30, 2013. | |
SEGMENT_INFORMATION
SEGMENT INFORMATION: | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
SEGMENT INFORMATION: | ' | |||||||
SEGMENT INFORMATION: | ' | |||||||
11. SEGMENT INFORMATION: | ||||||||
As of September 30, 2013, the Company owned, franchised, or held ownership interests in 9,752 worldwide locations. The Company’s locations consisted of 9,154 North American salons, including 2,103 franchised salons (located in the United States, Canada and Puerto Rico), 352 international salons (located primarily in the United Kingdom), and 246 locations in which the Company maintains an ownership interest through the Company’s investment in affiliates. See Note 3 to the Condensed Consolidated Financial Statements for discussion of the Company’s investment in affiliates. | ||||||||
Based on the way the Company manages its business, it has reported its North American salons and international salons as two separate reportable segments. | ||||||||
For the Three Months | ||||||||
Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Revenues (1): | ||||||||
North American Salons | $ | 439,531 | $ | 473,882 | ||||
International Salons | 29,052 | 31,478 | ||||||
$ | 468,583 | $ | 505,360 | |||||
Operating income (loss) (1): | ||||||||
North American Salons | $ | 28,808 | $ | 33,978 | ||||
International Salons | (257 | ) | 422 | |||||
Total segment operating income | 28,551 | 34,400 | ||||||
Unallocated Corporate | (27,122 | ) | (25,127 | ) | ||||
Operating income (1) | $ | 1,429 | $ | 9,273 | ||||
(1) See Note 2 to the Condensed Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as a discontinued operation. |
BASIS_OF_PRESENTATION_OF_UNAUD1
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' | |||||||
Stock-Based Employee Compensation | ' | |||||||
Stock-Based Employee Compensation: | ||||||||
During the three months ended September 30, 2013, the Company granted 225,223 restricted stock units (RSUs), 438,523 equity-based stock appreciation rights (SARs), and 284,604 performance share units (PSUs). There were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans that have been approved by the shareholders of the Company. | ||||||||
Total compensation cost for stock-based payment arrangements totaled $1.8 million for both the three months ended September 30, 2013 and 2012 recorded within general and administrative expense on the Condensed Consolidated Statement of Operations. | ||||||||
Goodwill | ' | |||||||
Goodwill: | ||||||||
For the fiscal year 2013 annual impairment testing of goodwill, the estimated fair value of the Regis salon concept reporting unit exceeded its carrying values by approximately 9.0 percent. Although the Regis salon concept experienced a same-store sales decrease of 7.0 percent during the three months ended September 30, 2013, the Regis salon concept’s cash flows did not significantly differ from the projections used in the fiscal year 2013 annual goodwill impairment test. Any meaningful underperformance against the projections used in the fiscal year 2013 annual goodwill impairment test, reduced outlook for the Regis salon concept or increases to the carrying value of the Regis salon concept could lead to a goodwill impairment charge. The respective fair values of the Company’s remaining reporting units exceeded their carrying values by greater than 20.0 percent. | ||||||||
While the Company has determined that the estimated fair value of Regis is appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that Regis may experience additional impairment in future periods. Because some of the inherent assumptions and estimates used in determining the fair value of each reporting unit are outside the control of management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Regis salon concept is dependent on many factors and cannot be predicted with certainty. | ||||||||
As of September 30, 2013, the Company’s estimated fair value, as determined by the sum of the Company’s reporting units’ fair values, reconciled to within a reasonable range of the Company’s market capitalization which included an assumed control premium. The Company concluded that there were no triggering events requiring the Company to perform an interim goodwill impairment test between the previous annual impairment test and September 30, 2013. | ||||||||
A summary of the Company’s goodwill balance by reporting unit is as follows: | ||||||||
Reporting Unit | September 30, | June 30, | ||||||
2013 | 2013 | |||||||
(Dollars in thousands) | ||||||||
SmartStyle | $ | 49,387 | $ | 49,286 | ||||
Supercuts | 129,728 | 129,610 | ||||||
MasterCuts | 4,652 | 4,652 | ||||||
Regis | 34,974 | 34,953 | ||||||
Promenade | 242,999 | 242,384 | ||||||
Total | $ | 461,740 | $ | 460,885 | ||||
Prior Period Adjustments | ' | |||||||
Prior Period Adjustments: | ||||||||
During the three months ended September 30, 2013, the Company recorded certain errors that related to prior periods. The errors related to an overstatement of inventory and self-insurance accruals and an understatement of cash in prior periods. Because these errors were not material to the Company’s consolidated financial statements for any prior periods or the current quarter, the Company recorded a cumulative adjustment to correct the errors during the first quarter of fiscal year 2014. The impact of these items on the Company’s Consolidated Statement of Operations decreased Site Operating expense by $1.3 million, increased Cost of Product expense by $0.3 million and increased net income by $0.6 million. | ||||||||
Foreign Currency Translation | ' | |||||||
Foreign Currency Translation: | ||||||||
During the three months ended September 30, 2012, the Company completed its sale of its investment in Provalliance and subsequently liquidated all foreign entities with Euro denominated operations. As a result, the Company recognized a net $33.8 million foreign currency translation gain within interest income and other, net in the Consolidated Statement of Operations for amounts previously classified within accumulated other comprehensive income. | ||||||||
BASIS_OF_PRESENTATION_OF_UNAUD2
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ' | |||||||
Schedule of goodwill by reporting unit | ' | |||||||
Reporting Unit | September 30, | June 30, | ||||||
2013 | 2013 | |||||||
(Dollars in thousands) | ||||||||
SmartStyle | $ | 49,387 | $ | 49,286 | ||||
Supercuts | 129,728 | 129,610 | ||||||
MasterCuts | 4,652 | 4,652 | ||||||
Regis | 34,974 | 34,953 | ||||||
Promenade | 242,999 | 242,384 | ||||||
Total | $ | 461,740 | $ | 460,885 |
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS: (Tables) | 3 Months Ended | ||||
Sep. 30, 2013 | |||||
DISCONTINUED OPERATIONS: | ' | ||||
Schedule of the results of operations of discontinued Hair Club operations | ' | ||||
(Dollars in thousands) | |||||
Revenues | $ | 38,951 | |||
Income from discontinued operations, before income taxes | 5,872 | ||||
Income tax provision on discontinued operations | (2,299 | ) | |||
Equity in income of affiliated companies, net of income taxes | 204 | ||||
Income from discontinued operations, net of income taxes | $ | 3,777 |
INVESTMENT_IN_AFFILIATES_Table
INVESTMENT IN AFFILIATES: (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
INVESTMENT IN AFFILIATES: | ' | |||||||
Schedule of carrying amount of investments in affiliates | ' | |||||||
September 30, | June 30, | |||||||
2013 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Empire Education Group, Inc. | $ | 44,108 | $ | 43,098 | ||||
MY Style | 223 | 221 | ||||||
$ | 44,331 | $ | 43,319 | |||||
Summary of Statement of Operation of affiliate | ' | |||||||
Three Months Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Gross revenues | $ | 43,965 | $ | 41,351 | ||||
Gross profit | 14,912 | 12,750 | ||||||
Operating income (loss) | 2,904 | (228 | ) | |||||
Net income (loss) | 1,938 | (181 | ) | |||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE: (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
EARNINGS PER SHARE: | ' | |||||||
Reconciliation of the net (loss) income available to common shareholders and the net (loss) income for diluted earnings per share | ' | |||||||
For the Three Months | ||||||||
Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Net (loss) income from continuing operations available to common shareholders | $ | (136 | ) | $ | 34,647 | |||
Effect of dilutive securities: | ||||||||
Interest on convertible debt, net of taxes | — | 2,130 | ||||||
Net (loss) income from continuing operations for diluted earnings per share | $ | (136 | ) | $ | 36,777 | |||
Reconciliation of shares used in the computation of basic and diluted earnings per share | ' | |||||||
For the Three Months | ||||||||
Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Shares in thousands) | ||||||||
Weighted average shares for basic earnings per share | 56,393 | 57,283 | ||||||
Effect of dilutive securities: | ||||||||
Dilutive effect of stock-based compensation (1) | — | 67 | ||||||
Dilutive effect of convertible debt | — | 11,239 | ||||||
Weighted average shares for diluted earnings per share | 56,393 | 68,589 | ||||||
(1) For the three months ended September 30, 2013, 132,392, 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. |
GOODWILL_AND_OTHER_INTANGIBLES1
GOODWILL AND OTHER INTANGIBLES: (Tables) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES: | ' | |||||||||||||||||||
Schedule of the Company's recorded goodwill | ' | |||||||||||||||||||
September 30, 2013 | June 30, 2013 | |||||||||||||||||||
Gross | Gross | |||||||||||||||||||
Carrying | Accumulated | Net (2) | Carrying | Accumulated | Net (2) | |||||||||||||||
Value | Impairment (1) | Value | Impairment (1) | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Goodwill | $ | 680,462 | $ | (218,722 | ) | $ | 461,740 | $ | 679,607 | $ | (218,722 | ) | $ | 460,885 | ||||||
(1) The table below contains additional information regarding the Company’s $218.7 million accumulated impairment losses: | ||||||||||||||||||||
Fiscal Year | Impairment Charge | Reporting Unit | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
2009 | $ | 41,661 | International | |||||||||||||||||
2010 | 35,277 | Regis | ||||||||||||||||||
2011 | 74,100 | Promenade | ||||||||||||||||||
2012 | 67,684 | Regis | ||||||||||||||||||
2013 | — | N/A | ||||||||||||||||||
2014 (through 9.30.13) | — | N/A | ||||||||||||||||||
Total | $ | 218,722 | ||||||||||||||||||
(2) Remaining net goodwill relates to the Company’s North American operations. | ||||||||||||||||||||
Schedule of additional information regarding the accumulated impairment losses of goodwill | ' | |||||||||||||||||||
Fiscal Year | Impairment Charge | Reporting Unit | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
2009 | $ | 41,661 | International | |||||||||||||||||
2010 | 35,277 | Regis | ||||||||||||||||||
2011 | 74,100 | Promenade | ||||||||||||||||||
2012 | 67,684 | Regis | ||||||||||||||||||
2013 | — | N/A | ||||||||||||||||||
2014 (through 9.30.13) | — | N/A | ||||||||||||||||||
Total | $ | 218,722 | ||||||||||||||||||
Schedule of other intangible assets | ' | |||||||||||||||||||
September 30, 2013 | June 30, 2013 | |||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||
Cost | Amortization (1) | Net | Cost | Amortization (1) | Net | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||
Brand assets and trade names | $ | 9,408 | $ | (3,340 | ) | $ | 6,068 | $ | 9,310 | $ | (3,226 | ) | $ | 6,084 | ||||||
Franchise agreements | 11,299 | (7,002 | ) | 4,297 | 11,187 | (6,839 | ) | 4,348 | ||||||||||||
Lease intangibles | 14,789 | (6,782 | ) | 8,007 | 14,754 | (6,582 | ) | 8,172 | ||||||||||||
Non-compete agreements | 204 | (158 | ) | 46 | 201 | (147 | ) | 54 | ||||||||||||
Other | 4,754 | (1,885 | ) | 2,869 | 4,614 | (1,776 | ) | 2,838 | ||||||||||||
$ | 40,454 | $ | (19,167 | ) | $ | 21,287 | $ | 40,066 | $ | (18,570 | ) | $ | 21,496 | |||||||
(1) Balance sheet accounts are converted at the applicable exchange rates effective as of the reported balance sheet dates, while income statement accounts are converted at the average exchange rates for the year-to-date periods presented. |
FINANCING_ARRANGEMENTS_Tables
FINANCING ARRANGEMENTS: (Tables) | 3 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
FINANCING ARRANGEMENTS: | ' | |||||||||||
Schedule of long-term debt | ' | |||||||||||
Amounts outstanding | ||||||||||||
Maturity Dates | Interest Rate | September 30, | June 30, | |||||||||
2013 | 2013 | |||||||||||
(fiscal year) | (Dollars in thousands) | |||||||||||
Convertible senior notes | 2015 | 5.00% | $ | 167,857 | $ | 166,454 | ||||||
Revolving credit facility | 2018 | — | — | — | ||||||||
Equipment and leasehold notes payable | 2015 - 2016 | 4.90 - 8.75 | 6,610 | 8,316 | ||||||||
174,467 | 174,770 | |||||||||||
Less current portion | (174,452 | ) | (173,515 | ) | ||||||||
Long-term portion | $ | 15 | $ | 1,255 |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION: (Tables) | 3 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
SEGMENT INFORMATION: | ' | |||||||
Schedule of summarized financial information of reportable operating segments | ' | |||||||
For the Three Months | ||||||||
Ended September 30, | ||||||||
2013 | 2012 | |||||||
(Dollars in thousands) | ||||||||
Revenues (1): | ||||||||
North American Salons | $ | 439,531 | $ | 473,882 | ||||
International Salons | 29,052 | 31,478 | ||||||
$ | 468,583 | $ | 505,360 | |||||
Operating income (loss) (1): | ||||||||
North American Salons | $ | 28,808 | $ | 33,978 | ||||
International Salons | (257 | ) | 422 | |||||
Total segment operating income | 28,551 | 34,400 | ||||||
Unallocated Corporate | (27,122 | ) | (25,127 | ) | ||||
Operating income (1) | $ | 1,429 | $ | 9,273 | ||||
(1) See Note 2 to the Condensed Consolidated Financial Statements for discussion of the classification of the results of operations of Hair Club as a discontinued operation. |
BASIS_OF_PRESENTATION_OF_UNAUD3
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Stock-based employees compensation | ' | ' |
Total compensation cost | $1.80 | $1.80 |
RSUs | ' | ' |
Stock-based employees compensation | ' | ' |
Stock granted (in shares) | 225,223 | ' |
SARs | ' | ' |
Stock-based employees compensation | ' | ' |
Stock granted (in shares) | 438,523 | ' |
Performance share units | ' | ' |
Stock-based employees compensation | ' | ' |
Stock granted (in shares) | 284,604 | ' |
BASIS_OF_PRESENTATION_OF_UNAUD4
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 2) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Jun. 30, 2013 |
Goodwill | ' | ' |
Minimum excess of fair value over carrying value for reporting units not impaired or likely to be impaired (as a percent) | ' | 20.00% |
Goodwill | $461,740 | $460,885 |
Smart Style | ' | ' |
Goodwill | ' | ' |
Goodwill | 49,387 | 49,286 |
Supercuts | ' | ' |
Goodwill | ' | ' |
Goodwill | 129,728 | 129,610 |
MasterCuts | ' | ' |
Goodwill | ' | ' |
Goodwill | 4,652 | 4,652 |
Regis | ' | ' |
Goodwill | ' | ' |
Excess of fair value over carrying value (as a percent) | ' | 9.00% |
Decline in same-store sales (as a percent) | 7.00% | ' |
Goodwill | 34,974 | 34,953 |
Promenade | ' | ' |
Goodwill | ' | ' |
Goodwill | $242,999 | $242,384 |
BASIS_OF_PRESENTATION_OF_UNAUD5
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 3) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2012 |
Foreign Currency Translation | ' |
Foreign currency translation gain | ($33,842) |
Provalliance | ' |
Foreign Currency Translation | ' |
Foreign currency translation gain | $33,800 |
BASIS_OF_PRESENTATION_OF_UNAUD6
BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details 4) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Site Operating Expenses | ' |
Prior period adjustments | ' |
Adjustment for prior period errors | $1.30 |
Cost of Product | ' |
Prior period adjustments | ' |
Adjustment for prior period errors | -0.3 |
Net Income | ' |
Prior period adjustments | ' |
Adjustment for prior period errors | $0.60 |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS: (Details) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 09, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | |
Income from discontinued operations | ' | ' | ' | ' |
Income from discontinued operations, net of income taxes | ' | ' | $3,777,000 | ' |
Hair Restoration Centers | ' | ' | ' | ' |
Discontinued operations | ' | ' | ' | ' |
Cash received after preliminary closing adjustments | ' | ' | ' | 162,800,000 |
Cash purchase price | 163,500,000 | ' | ' | ' |
Final purchase price after closing adjustments | ' | 164,800,000 | ' | ' |
Cash received as a result of the final working capital provision | ' | 2,000,000 | ' | ' |
Receivable recorded | ' | ' | ' | 3,000,000 |
Cash received as a result of excess cash | ' | 1,000,000 | ' | ' |
Income from discontinued operations | ' | ' | ' | ' |
Revenues | ' | ' | 38,951,000 | ' |
Income from discontinued operations, before income taxes | ' | ' | 5,872,000 | ' |
Income tax provision on discontinued operations | ' | ' | -2,299,000 | ' |
Equity in income of affiliated companies, net of income tax | ' | ' | 204,000 | ' |
Income from discontinued operations, net of income taxes | ' | ' | $3,777,000 | ' |
INVESTMENT_IN_AFFILIATES_Detai
INVESTMENT IN AFFILIATES: (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 |
Investment in affiliates | ' | ' | ' |
Investment in affiliates | $44,331 | ' | $43,319 |
Goodwill balance | 461,740 | ' | 460,885 |
Empire Education Group, Inc. | ' | ' | ' |
Investment in affiliates | ' | ' | ' |
Investment in affiliates | 44,108 | ' | 43,098 |
Equity in income (loss), net of income taxes | 1,000 | -100 | ' |
Percentage that fair value exceeded carrying value | ' | ' | 5.00% |
Goodwill balance | 16,000 | ' | ' |
MY Style | ' | ' | ' |
Investment in affiliates | ' | ' | ' |
Investment in affiliates | $223 | ' | $221 |
INVESTMENT_IN_AFFILIATES_Detai1
INVESTMENT IN AFFILIATES: (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Summarized Statement of Operations Information: | ' | ' |
Equity in income of affiliated companies | $1,999 | $577 |
Empire Education Group, Inc. | ' | ' |
Summarized Statement of Operations Information: | ' | ' |
Gross revenues | 43,965 | 41,351 |
Gross profit | 14,912 | 12,750 |
Operating income (loss) | 2,904 | -228 |
Net income (loss) | 1,938 | -181 |
MY Style | Yamano Holding Corporation | ' | ' |
Summarized Statement of Operations Information: | ' | ' |
Equity in income of affiliated companies | $1,000 | ' |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE: (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Reconciliation of the income (loss) available to common shareholders and the income (loss) for diluted earnings per share | ' | ' |
Net (loss) income from continuing operations available to common shareholders | ($136) | $34,647 |
Effect of dilutive securities: | ' | ' |
Interest on convertible debt, net of taxes | ' | 2,130 |
Net (loss) income from continuing operations for diluted earnings per share | ($136) | $36,777 |
Weighted average common and common equivalent shares outstanding: | ' | ' |
Weighted average shares for basic earnings per share | 56,393,000 | 57,283,000 |
Effect of dilutive securities: | ' | ' |
Dilutive effect of stock-based compensation (in shares) | ' | 67,000 |
Dilutive effect of convertible debt (in shares) | ' | 11,239,000 |
Weighted average shares for diluted earnings per share | 56,393,000 | 68,589,000 |
Common Stock | ' | ' |
Awards excluded from earnings per share calculations | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 132,392 | ' |
Equity-based compensation awards | ' | ' |
Awards excluded from earnings per share calculations | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 1,409,169 | 1,028,988 |
Shares issuable upon conversion of debt | ' | ' |
Awards excluded from earnings per share calculations | ' | ' |
Awards excluded from diluted earnings per share computation (in shares) | 11,289,545 | ' |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY: (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Additional Paid-In Capital: | ' |
Increase in additional paid-in capital | $1.10 |
INCOME_TAXES_Details
INCOME TAXES: (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Investments in and Advances to Affiliates [Line Items] | ' | ' |
Non-taxability of the foreign currency translation gain | ' | ($33,842,000) |
(Benefit) provision for income taxes | ' | ' |
Income tax (benefit) expense | -383,000 | 2,986,000 |
Effective tax rate (as a percent) | 15.20% | 8.10% |
Net deferred tax assets | 54,700,000 | ' |
Provalliance | ' | ' |
Investments in and Advances to Affiliates [Line Items] | ' | ' |
Non-taxability of the foreign currency translation gain | ' | $33,800,000 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
item | |
COMMITMENTS AND CONTINGENCIES: | ' |
Number of current and former directors and officers who are named defendants | 9 |
Future minimum rent | $2.70 |
GOODWILL_AND_OTHER_INTANGIBLES2
GOODWILL AND OTHER INTANGIBLES: (Details) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2010 | Sep. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2011 | Jun. 30, 2009 |
In Thousands, unless otherwise specified | Regis | Regis | Regis | Regis | Promenade | Promenade | Promenade | International | ||
Goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross Carrying Value | $680,462 | $679,607 | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Impairment | -218,722 | -218,722 | ' | ' | 67,684 | 35,277 | ' | ' | 74,100 | 41,661 |
Net | $461,740 | $460,885 | $34,974 | $34,953 | ' | ' | $242,999 | $242,384 | ' | ' |
GOODWILL_AND_OTHER_INTANGIBLES3
GOODWILL AND OTHER INTANGIBLES: (Details 2) (USD $) | Sep. 30, 2013 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Amortized intangible assets: | ' | ' |
Other intangibles, cost | $40,454 | $40,066 |
Other intangibles, accumulated amortization | -19,167 | -18,570 |
Other intangibles, net | 21,287 | 21,496 |
Brand assets and trade names | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 9,408 | 9,310 |
Other intangibles, accumulated amortization | -3,340 | -3,226 |
Other intangibles, net | 6,068 | 6,084 |
Franchise agreements | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 11,299 | 11,187 |
Other intangibles, accumulated amortization | -7,002 | -6,839 |
Other intangibles, net | 4,297 | 4,348 |
Lease intangibles | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 14,789 | 14,754 |
Other intangibles, accumulated amortization | -6,782 | -6,582 |
Other intangibles, net | 8,007 | 8,172 |
Non-compete agreements | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 204 | 201 |
Other intangibles, accumulated amortization | -158 | -147 |
Other intangibles, net | 46 | 54 |
Other | ' | ' |
Amortized intangible assets: | ' | ' |
Other intangibles, cost | 4,754 | 4,614 |
Other intangibles, accumulated amortization | -1,885 | -1,776 |
Other intangibles, net | $2,869 | $2,838 |
FINANCING_ARRANGEMENTS_Details
FINANCING ARRANGEMENTS: (Details) (USD $) | 3 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Jul. 31, 2009 | |
Long-term debt | ' | ' | ' | ' |
Net carrying amount of long-term debt | $174,467,000 | ' | $174,770,000 | ' |
Less current portion | -174,452,000 | ' | -173,515,000 | ' |
Long-term portion | 15,000 | ' | 1,255,000 | ' |
Convertible senior notes | ' | ' | ' | ' |
Long-term debt | ' | ' | ' | ' |
Interest rate percentage | 5.00% | ' | ' | 5.00% |
Net carrying amount of long-term debt | 167,857,000 | ' | 166,454,000 | ' |
Long-term debt, additional disclosures | ' | ' | ' | ' |
Principal amount of long-term debt | ' | ' | ' | 172,500,000 |
Long-term debt conversion ratio | 0.0655131 | ' | ' | ' |
Long-term debt conversion price (in dollars per share) | $15.26 | ' | ' | ' |
Interest expense related to contractual interest coupon | 2,200,000 | 2,200,000 | ' | ' |
Interest cost related to amortization of the discount | 1,400,000 | 1,300,000 | ' | ' |
Revolving credit facility | ' | ' | ' | ' |
Long-term debt, additional disclosures | ' | ' | ' | ' |
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 | ' |
Equipment and leasehold notes payable | ' | ' | ' | ' |
Long-term debt | ' | ' | ' | ' |
Interest rate percentage, minimum | 4.90% | ' | ' | ' |
Interest rate percentage, maximum | 8.75% | ' | ' | ' |
Net carrying amount of long-term debt | $6,610,000 | ' | $8,316,000 | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (Fair value on nonrecurring basis, USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Fair value on nonrecurring basis | ' |
Assets and liabilities measured at fair value on a nonrecurring basis | ' |
Fair value of assets measured on nonrecurring basis | $0 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION: (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
segment | ||
salon | ||
Summarized financial information of reportable operating segments | ' | ' |
Number of stores | 9,752 | ' |
Number of stores in which the entity maintains an ownership interest through investments in affiliates | 246 | ' |
Number of reportable segments | 2 | ' |
Revenues: | ' | ' |
Total revenues | $468,583 | $505,360 |
Operating income | 1,429 | 9,273 |
Reportable Segments | ' | ' |
Revenues: | ' | ' |
Operating income | 28,551 | 34,400 |
North American Salons | ' | ' |
Summarized financial information of reportable operating segments | ' | ' |
Number of stores | 9,154 | ' |
Revenues: | ' | ' |
Total revenues | 439,531 | 473,882 |
Operating income | 28,808 | 33,978 |
International Salons | ' | ' |
Summarized financial information of reportable operating segments | ' | ' |
Number of stores | 352 | ' |
Revenues: | ' | ' |
Total revenues | 29,052 | 31,478 |
Operating income | -257 | 422 |
Franchise salons | ' | ' |
Summarized financial information of reportable operating segments | ' | ' |
Number of stores | 2,103 | ' |
Unallocated Corporate | ' | ' |
Revenues: | ' | ' |
Operating income | ($27,122) | ($25,127) |