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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-0749934
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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7201 Metro Boulevard, Edina, Minnesota
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55439
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Common Stock, $.05 par value
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47,294,647
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Class
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Number of Shares
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December 31, 2015 (Unaudited)
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June 30,
2015 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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130,153
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$
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212,279
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Receivables, net
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27,705
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24,631
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Inventories
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141,934
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128,610
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Other current assets
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63,497
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62,762
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Total current assets
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363,289
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428,282
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Property and equipment, net
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196,714
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218,157
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Goodwill
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414,895
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418,953
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Other intangibles, net
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15,677
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17,069
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Investment in affiliates
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520
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15,321
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Other assets
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63,737
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64,233
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Total assets
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$
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1,054,832
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$
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1,162,015
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current liabilities:
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Long-term debt and capital lease obligations, current
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$
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—
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$
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2
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Accounts payable
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60,515
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63,302
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Accrued expenses
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144,346
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153,362
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Total current liabilities
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204,861
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216,666
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Long-term debt
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120,060
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120,000
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Other noncurrent liabilities
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197,037
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197,905
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Total liabilities
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521,958
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534,571
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Commitments and contingencies (Note 6)
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Shareholders’ equity:
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Common stock, $0.05 par value; issued and outstanding 47,839,093 and 53,664,366 common shares at December 31, 2015 and June 30, 2015, respectively
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2,392
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2,683
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Additional paid-in capital
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226,597
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298,396
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Accumulated other comprehensive income
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2,899
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9,506
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Retained earnings
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300,986
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316,859
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Total shareholders’ equity
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532,874
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627,444
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Total liabilities and shareholders’ equity
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$
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1,054,832
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$
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1,162,015
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Three Months Ended December 31,
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Six Months Ended December 31,
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2015
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2014
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2015
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2014
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Revenues:
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Service
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$
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340,527
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$
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350,322
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$
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690,688
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$
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715,064
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Product
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98,279
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94,691
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186,255
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183,453
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Royalties and fees
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11,661
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10,874
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23,654
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21,921
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450,467
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455,887
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900,597
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920,438
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Operating expenses:
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Cost of service
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216,672
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219,219
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434,440
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442,906
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Cost of product
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50,384
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48,830
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93,420
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93,807
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Site operating expenses
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47,405
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45,369
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95,233
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96,941
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General and administrative
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47,400
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46,667
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91,948
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91,852
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Rent
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74,459
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76,890
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149,278
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154,586
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Depreciation and amortization
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17,030
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19,583
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34,885
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41,771
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Total operating expenses
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453,350
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456,558
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899,204
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921,863
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Operating (loss) income
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(2,883
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(671
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1,393
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(1,425
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Other (expense) income:
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Interest expense
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(2,382
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(2,472
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(4,736
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(5,570
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Interest income and other, net
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997
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1,044
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1,941
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917
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Loss before income taxes and equity in loss of affiliated companies
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(4,268
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(2,099
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(1,402
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(6,078
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Income taxes
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4,207
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(2,592
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1,391
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(8,848
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Equity in loss of affiliated companies, net of income taxes
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(13,925
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(11,972
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(14,783
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(11,580
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)
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Net loss
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$
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(13,986
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)
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$
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(16,663
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$
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(14,794
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$
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(26,506
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Net loss per share:
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Basic and diluted
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$
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(0.29
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$
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(0.30
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)
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$
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(0.29
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$
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(0.48
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Weighted average common and common equivalent shares outstanding:
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Basic and diluted
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48,050
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55,135
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50,422
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55,449
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Three Months Ended December 31,
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Six Months Ended December 31,
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2015
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2014
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2015
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2014
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Net loss
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$
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(13,986
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)
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$
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(16,663
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$
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(14,794
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)
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$
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(26,506
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)
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Other comprehensive loss:
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Foreign currency translation adjustments during the period
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(2,335
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)
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(4,223
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)
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(6,607
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)
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(8,845
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)
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Other comprehensive loss
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(2,335
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)
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(4,223
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)
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(6,607
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)
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(8,845
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)
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Comprehensive loss
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$
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(16,321
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)
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$
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(20,886
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)
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$
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(21,401
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)
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$
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(35,351
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)
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Six Months Ended December 31,
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||||||
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2015
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2014
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Cash flows from operating activities:
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Net loss
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$
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(14,794
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)
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$
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(26,506
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)
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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29,844
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34,819
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Equity in loss of affiliated companies
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14,783
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11,580
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Deferred income taxes
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(1,860
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)
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|
6,359
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Salon asset impairment
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5,041
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6,952
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Gain on sale of salon assets
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(625
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)
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|
(529
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)
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Stock-based compensation
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4,970
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|
4,038
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Amortization of debt discount and financing costs
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|
782
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|
1,001
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|
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Other non-cash items affecting earnings
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|
235
|
|
|
716
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Changes in operating assets and liabilities, excluding the effects of asset sales
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|
(26,478
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)
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|
(801
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)
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Net cash provided by operating activities
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|
11,898
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37,629
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||
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Cash flows from investing activities:
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|
|
|
|
|
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Capital expenditures
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(15,670
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)
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|
(22,493
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)
|
||
Proceeds from sale of assets
|
|
1,190
|
|
|
1,429
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|
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Change in restricted cash
|
|
(943
|
)
|
|
—
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|
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Net cash used in investing activities
|
|
(15,423
|
)
|
|
(21,064
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)
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||
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Cash flows from financing activities:
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|
|
|
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|
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Repayments of long-term debt and capital lease obligations
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(2
|
)
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(173,745
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)
|
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Repurchase of common stock
|
|
(77,033
|
)
|
|
(22,890
|
)
|
||
Purchase of noncontrolling interest
|
|
(684
|
)
|
|
—
|
|
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Net cash used in financing activities
|
|
(77,719
|
)
|
|
(196,635
|
)
|
||
|
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|
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Effect of exchange rate changes on cash and cash equivalents
|
|
(882
|
)
|
|
(2,737
|
)
|
||
|
|
|
|
|
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Decrease in cash and cash equivalents
|
|
(82,126
|
)
|
|
(182,807
|
)
|
||
|
|
|
|
|
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Cash and cash equivalents:
|
|
|
|
|
|
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Beginning of period
|
|
212,279
|
|
|
378,627
|
|
||
End of period
|
|
$
|
130,153
|
|
|
$
|
195,820
|
|
|
|
|
|
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1.
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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
|
|
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For the Periods Ended December 31, 2015
|
||||
|
|
Three Months
|
|
Six Months
|
||
Restricted stock units
|
|
47,965
|
|
|
308,055
|
|
Equity-based stock appreciation rights
|
|
—
|
|
|
690,461
|
|
Performance share units (1)
|
|
—
|
|
|
410,153
|
|
(1)
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Includes
118,967
incremental performance share units earned in connection with the achievement of fiscal year 2015 performance metrics.
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|
|
For the Periods Ended December 31, 2014
|
||||||
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Three Months
|
|
Six Months
|
||||
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(Dollars in thousands)
|
||||||
Net loss, as reported
|
|
$
|
(19,071
|
)
|
|
$
|
(28,123
|
)
|
Revisions:
|
|
|
|
|
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Deferred rent, pre-tax (1)
|
|
38
|
|
|
(189
|
)
|
||
Previous out of period items, pre-tax (2)
|
|
1,506
|
|
|
1,586
|
|
||
Tax impact
|
|
864
|
|
|
220
|
|
||
Total revision impact
|
|
2,408
|
|
|
1,617
|
|
||
|
|
|
|
|
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Net loss, as revised
|
|
$
|
(16,663
|
)
|
|
$
|
(26,506
|
)
|
(1)
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The Company recognizes rental expense on a straight-line basis at the time the leased space becomes available to the Company. During the fourth quarter of fiscal year 2015, the Company determined its deferred rent balance was understated. Accordingly, the unaudited Condensed Consolidated Financial Statements have been revised to correctly state its deferred rent balances and rent expense. This revision had no impact on cash provided by operations or cash and cash equivalents for the quarter.
|
(2)
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Also, in the fourth quarter of fiscal year 2015, the Company revised certain prior year amounts to correctly recognize understatements of self-insurance accruals. This revision had no impact on cash provided by operations or cash and cash equivalents for the quarter.
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
|
||||||||||||||||||||||
|
|
(Dollars in thousands, except per share data)
|
||||||||||||||||||||||
|
|
For the Periods Ended December 31, 2014
|
||||||||||||||||||||||
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||||
|
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
||||||||||||
Site operating expenses
|
|
$
|
46,875
|
|
|
$
|
(1,506
|
)
|
|
$
|
45,369
|
|
|
$
|
98,527
|
|
|
$
|
(1,586
|
)
|
|
$
|
96,941
|
|
Rent
|
|
76,928
|
|
|
(38
|
)
|
|
76,890
|
|
|
154,397
|
|
|
189
|
|
|
154,586
|
|
||||||
Loss before income taxes and equity in loss of affiliated companies
|
|
(3,643
|
)
|
|
1,544
|
|
|
(2,099
|
)
|
|
(7,475
|
)
|
|
1,397
|
|
|
(6,078
|
)
|
||||||
Income taxes
|
|
(3,456
|
)
|
|
864
|
|
|
(2,592
|
)
|
|
(9,068
|
)
|
|
220
|
|
|
(8,848
|
)
|
||||||
Net loss
|
|
$
|
(19,071
|
)
|
|
$
|
2,408
|
|
|
$
|
(16,663
|
)
|
|
$
|
(28,123
|
)
|
|
$
|
1,617
|
|
|
$
|
(26,506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic and diluted earnings per share (1)
|
|
$
|
(0.35
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.30
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.48
|
)
|
(1)
|
Total is a recalculation; line items calculated individually may not sum to total due to rounding.
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME (Unaudited)
|
||||||||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
|
|
For the Periods Ended December 31, 2014
|
||||||||||||||||||||||
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||||
|
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
||||||||||||
Net loss
|
|
$
|
(19,071
|
)
|
|
$
|
2,408
|
|
|
$
|
(16,663
|
)
|
|
$
|
(28,123
|
)
|
|
$
|
1,617
|
|
|
$
|
(26,506
|
)
|
Comprehensive loss
|
|
$
|
(23,294
|
)
|
|
$
|
2,408
|
|
|
$
|
(20,886
|
)
|
|
$
|
(36,968
|
)
|
|
$
|
1,617
|
|
|
$
|
(35,351
|
)
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||
|
|
Six Months Ended December 31, 2014
|
||||||||||
|
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(28,123
|
)
|
|
$
|
1,617
|
|
|
$
|
(26,506
|
)
|
Deferred income taxes
|
|
6,542
|
|
|
(183
|
)
|
|
6,359
|
|
|||
Changes in operating assets and liabilities, excluding the effects of acquisitions
|
|
633
|
|
|
(1,434
|
)
|
|
(801
|
)
|
2.
|
INVESTMENT IN AFFILIATES:
|
|
|
For the Three Months Ended December 31,
|
|
For the Six Months Ended December 31,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
(Unaudited)
|
|
(Dollars in thousands)
|
||||||||||||||
Gross revenues
|
|
$
|
33,724
|
|
|
$
|
38,208
|
|
|
$
|
69,664
|
|
|
$
|
78,801
|
|
Gross profit
|
|
7,365
|
|
|
8,734
|
|
|
15,406
|
|
|
19,341
|
|
||||
Operating loss
|
|
(1,819
|
)
|
|
(1,184
|
)
|
|
(3,290
|
)
|
|
(704
|
)
|
||||
Net loss
|
|
(1,805
|
)
|
|
(13,449
|
)
|
|
(3,358
|
)
|
|
(13,007
|
)
|
3.
|
EARNINGS PER SHARE:
|
4.
|
SHAREHOLDERS’ EQUITY:
|
5.
|
INCOME TAXES:
|
6.
|
COMMITMENTS AND CONTINGENCIES:
|
|
|
December 31, 2015
|
|
June 30, 2015
|
||||||||||||||||||||
|
|
Gross
Carrying Value (3) |
|
Accumulated
Impairment (1)
|
|
Net
|
|
Gross
Carrying Value |
|
Accumulated
Impairment (1) |
|
Net
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Goodwill
|
|
$
|
668,556
|
|
|
$
|
(253,661
|
)
|
|
$
|
414,895
|
|
|
$
|
672,614
|
|
|
$
|
(253,661
|
)
|
|
$
|
418,953
|
|
(1)
|
The table below contains additional information regarding accumulated impairment losses:
|
Fiscal Year
|
|
Impairment Charge
|
|
Reporting Unit (2)
|
||
|
|
(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
|
|
(34,939
|
)
|
|
North American Premium
|
|
Total
|
|
$
|
(253,661
|
)
|
|
|
|
|
December 31, 2015
|
|
June 30, 2015
|
||||||||||||||||||||
|
|
Cost (1)
|
|
Accumulated
Amortization (1)
|
|
Net
|
|
Cost (1)
|
|
Accumulated
Amortization (1)
|
|
Net
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Brand assets and trade names
|
|
$
|
7,872
|
|
|
$
|
(3,473
|
)
|
|
$
|
4,399
|
|
|
$
|
8,415
|
|
|
$
|
(3,551
|
)
|
|
$
|
4,864
|
|
Franchise agreements
|
|
9,469
|
|
|
(6,695
|
)
|
|
2,774
|
|
|
10,093
|
|
|
(6,934
|
)
|
|
3,159
|
|
||||||
Lease intangibles
|
|
14,493
|
|
|
(8,256
|
)
|
|
6,237
|
|
|
14,601
|
|
|
(7,960
|
)
|
|
6,641
|
|
||||||
Other
|
|
5,876
|
|
|
(3,609
|
)
|
|
2,267
|
|
|
6,115
|
|
|
(3,710
|
)
|
|
2,405
|
|
||||||
|
|
$
|
37,710
|
|
|
$
|
(22,033
|
)
|
|
$
|
15,677
|
|
|
$
|
39,224
|
|
|
$
|
(22,155
|
)
|
|
$
|
17,069
|
|
(1)
|
The change in the gross carrying value and accumulated amortization of other intangible assets relates to foreign currency.
|
8.
|
FINANCING ARRANGEMENTS:
|
|
|
|
|
|
|
Amounts outstanding
|
||||||
|
|
Maturity Dates
|
|
Interest Rate
|
|
December 31,
2015 |
|
June 30,
2015 |
||||
|
|
(fiscal year)
|
|
|
|
(Dollars in thousands)
|
||||||
Convertible senior notes
|
|
2015
|
|
5.00%
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior term notes - 5.75%
|
|
2018
|
|
5.75
|
|
—
|
|
|
120,000
|
|
||
Senior term notes - 5.50%
|
|
2020
|
|
5.50
|
|
120,060
|
|
|
—
|
|
||
Revolving credit facility
|
|
2018
|
|
—
|
|
—
|
|
|
—
|
|
||
Equipment and leasehold notes payable
|
|
2015 - 2016
|
|
4.90 - 8.75
|
|
—
|
|
|
2
|
|
||
|
|
|
|
|
|
120,060
|
|
|
120,002
|
|
||
Less current portion
|
|
|
|
|
|
—
|
|
|
(2
|
)
|
||
Long-term portion
|
|
|
|
|
|
$
|
120,060
|
|
|
$
|
120,000
|
|
|
|
December 31, 2015
|
||
|
|
(Dollars in thousands)
|
||
Principal amount on the Senior Term Notes
|
|
$
|
123,000
|
|
Unamortized debt discount
|
|
(2,940
|
)
|
|
Net carrying amount of Senior Term Notes
|
|
$
|
120,060
|
|
9.
|
FAIR VALUE MEASUREMENTS:
|
10.
|
SEGMENT INFORMATION:
|
|
|
Company-owned
|
|
Franchised
|
|
Total
|
|||
North American Value
|
|
5,855
|
|
|
2,427
|
|
|
8,282
|
|
North American Premium
|
|
726
|
|
|
—
|
|
|
726
|
|
International
|
|
347
|
|
|
—
|
|
|
347
|
|
Total
|
|
6,928
|
|
|
2,427
|
|
|
9,355
|
|
|
|
For the Three Months
Ended December 31, |
|
For the Six Months
Ended December 31, |
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Revenues
:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
North American Value
|
|
$
|
349,251
|
|
|
$
|
345,733
|
|
|
$
|
698,222
|
|
|
$
|
700,109
|
|
North American Premium
|
|
73,022
|
|
|
78,751
|
|
|
146,177
|
|
|
157,786
|
|
||||
International
|
|
28,194
|
|
|
31,403
|
|
|
56,198
|
|
|
62,543
|
|
||||
|
|
$
|
450,467
|
|
|
$
|
455,887
|
|
|
$
|
900,597
|
|
|
$
|
920,438
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss) (1):
|
|
|
|
|
|
|
|
|
|
|
||||||
North American Value
|
|
$
|
28,061
|
|
|
$
|
27,675
|
|
|
$
|
58,610
|
|
|
$
|
56,831
|
|
North American Premium
|
|
(3,900
|
)
|
|
(2,249
|
)
|
|
(6,323
|
)
|
|
(6,809
|
)
|
||||
International
|
|
(607
|
)
|
|
396
|
|
|
(501
|
)
|
|
1,026
|
|
||||
Total segment operating income
|
|
23,554
|
|
|
25,822
|
|
|
51,786
|
|
|
51,048
|
|
||||
Unallocated Corporate
|
|
(26,437
|
)
|
|
(26,493
|
)
|
|
(50,393
|
)
|
|
(52,473
|
)
|
||||
Operating (loss) income
|
|
$
|
(2,883
|
)
|
|
$
|
(671
|
)
|
|
$
|
1,393
|
|
|
$
|
(1,425
|
)
|
(1)
|
Amounts for fiscal year 2015 have been revised. See Note 1 to the unaudited Condensed Consolidated Financial Statements.
|
|
|
For the Periods Ended December 31, 2014
|
||||||
|
|
Three Months
|
|
Six Months
|
||||
|
|
(Dollars in thousands)
|
||||||
Net loss, as reported
|
|
$
|
(19,071
|
)
|
|
$
|
(28,123
|
)
|
Revisions:
|
|
|
|
|
||||
Deferred rent, pre-tax (1)
|
|
38
|
|
|
(189
|
)
|
||
Previous out of period items, pre-tax (2)
|
|
1,506
|
|
|
1,586
|
|
||
Tax impact
|
|
864
|
|
|
220
|
|
||
Total revision impact
|
|
2,408
|
|
|
1,617
|
|
||
|
|
|
|
|
||||
Net loss, as revised
|
|
$
|
(16,663
|
)
|
|
$
|
(26,506
|
)
|
(1)
|
The Company recognizes rental expense on a straight-line basis at the time the leased space becomes available to the Company. During the fourth quarter of fiscal year 2015, the Company determined its deferred rent balance was understated. Accordingly, the unaudited Condensed Consolidated Financial Statements have been revised to correctly state its deferred rent balances and rent expense. This revision had no impact on cash provided by operations or cash and cash equivalents for the quarter.
|
(2)
|
Also, in the fourth quarter of fiscal year 2015, the Company revised certain prior year amounts to correctly recognize understatements of self-insurance accruals. This revision had no impact on cash provided by operations or cash and cash equivalents for the quarter.
|
|
For the Periods Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
Three Months
|
|
Six Months
|
||||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||
|
($ in millions)
|
|
% of Total
Revenues
|
|
Basis Point
(Decrease)
Increase
|
|
($ in millions)
|
|
% of Total
Revenues |
|
Basis Point
(Decrease) Increase |
||||||||||||||||||||||||||||
Service revenues
|
$
|
340.5
|
|
|
$
|
350.3
|
|
|
75.6
|
%
|
|
76.8
|
%
|
|
(120
|
)
|
|
(30
|
)
|
|
$
|
690.7
|
|
|
$
|
715.1
|
|
|
76.7
|
%
|
|
77.7
|
%
|
|
(100
|
)
|
|
(50
|
)
|
Product revenues
|
98.3
|
|
|
94.7
|
|
|
21.8
|
|
|
20.8
|
|
|
100
|
|
|
(10
|
)
|
|
186.3
|
|
|
183.5
|
|
|
20.7
|
|
|
19.9
|
|
|
80
|
|
|
20
|
|
||||
Franchise royalties and fees
|
11.7
|
|
|
10.9
|
|
|
2.6
|
|
|
2.4
|
|
|
20
|
|
|
30
|
|
|
23.7
|
|
|
21.9
|
|
|
2.6
|
|
|
2.4
|
|
|
20
|
|
|
30
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of service (1)
|
216.7
|
|
|
219.2
|
|
|
63.6
|
|
|
62.6
|
|
|
100
|
|
|
70
|
|
|
434.4
|
|
|
442.9
|
|
|
62.9
|
|
|
61.9
|
|
|
100
|
|
|
70
|
|
||||
Cost of product (2)
|
50.4
|
|
|
48.8
|
|
|
51.3
|
|
|
51.6
|
|
|
(30
|
)
|
|
—
|
|
|
93.4
|
|
|
93.8
|
|
|
50.2
|
|
|
51.1
|
|
|
(90
|
)
|
|
—
|
|
||||
Site operating expenses
|
47.4
|
|
|
45.4
|
|
|
10.5
|
|
|
10.0
|
|
|
50
|
|
|
(70
|
)
|
|
95.2
|
|
|
96.9
|
|
|
10.6
|
|
|
10.5
|
|
|
10
|
|
|
(40
|
)
|
||||
General and administrative
|
47.4
|
|
|
46.7
|
|
|
10.5
|
|
|
10.2
|
|
|
30
|
|
|
160
|
|
|
91.9
|
|
|
91.9
|
|
|
10.2
|
|
|
10.0
|
|
|
20
|
|
|
100
|
|
||||
Rent
|
74.5
|
|
|
76.9
|
|
|
16.5
|
|
|
16.9
|
|
|
(40
|
)
|
|
10
|
|
|
149.3
|
|
|
154.6
|
|
|
16.6
|
|
|
16.8
|
|
|
(20
|
)
|
|
(10
|
)
|
||||
Depreciation and amortization
|
17.0
|
|
|
19.6
|
|
|
3.8
|
|
|
4.3
|
|
|
(50
|
)
|
|
(100
|
)
|
|
34.9
|
|
|
41.8
|
|
|
3.9
|
|
|
4.5
|
|
|
(60
|
)
|
|
(70
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest expense
|
2.4
|
|
|
2.5
|
|
|
0.5
|
|
|
0.5
|
|
|
—
|
|
|
(60
|
)
|
|
4.7
|
|
|
5.6
|
|
|
0.5
|
|
|
0.6
|
|
|
(10
|
)
|
|
(40
|
)
|
||||
Interest income and other, net
|
1.0
|
|
|
1.0
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
10
|
|
|
1.9
|
|
|
0.9
|
|
|
0.2
|
|
|
0.1
|
|
|
10
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income taxes (3)
|
4.2
|
|
|
(2.6
|
)
|
|
98.6
|
|
|
(123.5
|
)
|
|
N/A
|
|
|
N/A
|
|
|
1.4
|
|
|
(8.8
|
)
|
|
99.2
|
|
|
(145.6
|
)
|
|
N/A
|
|
|
N/A
|
|
||||
Equity in loss of affiliated companies, net of income taxes
|
13.9
|
|
|
12.0
|
|
|
3.1
|
|
|
2.6
|
|
|
50
|
|
|
320
|
|
|
14.8
|
|
|
11.6
|
|
|
1.6
|
|
|
1.3
|
|
|
30
|
|
|
180
|
|
(1)
|
Computed as a percent of service revenues and excludes depreciation and amortization expense.
|
(2)
|
Computed as a percent of product revenues and excludes depreciation and amortization expense.
|
(3)
|
Computed as a percent of loss before income taxes and equity in loss of affiliated companies. The income taxes basis point change is noted as not applicable (N/A) as the discussion within MD&A is related to the effective income tax rate.
|
|
|
For the Three Months
Ended December 31,
|
|
For the Six Months
Ended December 31, |
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
North American Value salons:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
SmartStyle
|
|
$
|
131,470
|
|
|
$
|
122,677
|
|
|
$
|
259,525
|
|
|
$
|
246,149
|
|
Supercuts
|
|
85,220
|
|
|
84,049
|
|
|
171,742
|
|
|
170,769
|
|
||||
MasterCuts
|
|
27,616
|
|
|
29,678
|
|
|
55,012
|
|
|
59,730
|
|
||||
Other Value
|
|
104,945
|
|
|
109,329
|
|
|
211,943
|
|
|
223,461
|
|
||||
Total North American Value salons
|
|
349,251
|
|
|
345,733
|
|
|
698,222
|
|
|
700,109
|
|
||||
North American Premium salons
|
|
73,022
|
|
|
78,751
|
|
|
146,177
|
|
|
157,786
|
|
||||
International salons
|
|
28,194
|
|
|
31,403
|
|
|
56,198
|
|
|
62,543
|
|
||||
Consolidated revenues
|
|
$
|
450,467
|
|
|
$
|
455,887
|
|
|
$
|
900,597
|
|
|
$
|
920,438
|
|
Percent change from prior year
|
|
(1.2
|
)%
|
|
(2.7
|
)%
|
|
(2.2
|
)%
|
|
(1.8
|
)%
|
||||
Salon same-store sales increase (decrease) (1)
|
|
2.2
|
%
|
|
(0.3
|
)%
|
|
1.4
|
%
|
|
0.2
|
%
|
(1)
|
Same-store sales are calculated on a daily basis as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date same-store sales are the sum of the same-store sales computed on a daily basis. Locations relocated within a one-mile radius are included in same-store sales as they are considered to have been open in the prior period. International same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.
|
|
|
For the Three Months
Ended December 31, |
|
For the Six Months
Ended December 31, |
||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
SmartStyle
|
|
6.8
|
%
|
|
2.2
|
%
|
|
5.2
|
%
|
|
2.9
|
%
|
Supercuts
|
|
2.9
|
|
|
0.3
|
|
|
2.6
|
|
|
1.2
|
|
MasterCuts
|
|
(2.1
|
)
|
|
(4.1
|
)
|
|
(2.9
|
)
|
|
(3.2
|
)
|
Other Value
|
|
0.9
|
|
|
(0.3
|
)
|
|
0.3
|
|
|
(0.3
|
)
|
North American Value same-store sales
|
|
3.3
|
|
|
0.4
|
|
|
2.4
|
|
|
0.9
|
|
North American Premium same-store sales
|
|
(1.4
|
)
|
|
(3.2
|
)
|
|
(2.0
|
)
|
|
(2.8
|
)
|
International same-store sales
|
|
(2.8
|
)
|
|
0.9
|
|
|
(1.4
|
)
|
|
0.3
|
|
Consolidated same-store sales
|
|
2.2
|
%
|
|
(0.3
|
)%
|
|
1.4
|
%
|
|
0.2
|
%
|
As of
|
|
Debt to
Capitalization
|
|
Basis Point
Increase (Decrease) (1)
|
||
December 31, 2015
|
|
18.4
|
%
|
|
230
|
|
June 30, 2015
|
|
16.1
|
%
|
|
(1,300
|
)
|
•
|
Enhance rigor around identification and review of key lease terms and dates,
|
•
|
Implement additional monitoring controls to ensure compliance with accounting guidance,
|
•
|
Evaluate accounting software to enhance the use of systematic processes, including current software in use by the Company and other lease accounting software alternatives, and
|
•
|
Review and enhance, as appropriate, organizational structure including training and supervision of individuals responsible for lease accounting.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in thousands)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||
10/1/15 - 10/31/15
|
|
2,346,647
|
|
|
12.89
|
|
|
16,514,055
|
|
|
37,006
|
|
||
11/1/15 - 11/30/15
|
|
—
|
|
|
—
|
|
|
16,514,055
|
|
|
37,006
|
|
||
12/1/15 - 12/31/15
|
|
197,290
|
|
|
15.19
|
|
|
16,711,345
|
|
|
34,010
|
|
||
Total
|
|
2,543,937
|
|
|
$
|
13.07
|
|
|
16,711,345
|
|
|
$
|
34,010
|
|
Exhibit 10(a)
|
|
Form of Exchange Agreement. (Incorporated by reference to Exhibit 10.1 of the Company’s Report on Form 8-K filed on December 4, 2015.)
|
|
|
|
Exhibit 10(b)
|
|
Indenture dated December 1, 2015 by and between Regis Corporation and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.2 of the Company’s Report on Form 8-K filed on December 4, 2015.)
|
|
|
|
Exhibit 10(c)
|
|
First Amendment, dated January 27, 2016, to the Sixth Amended and Restated Credit Agreement, dated June 11, 2013, among the Company, various financial institutions, and JPMorgan Chase Bank, N.A., as Administrative Agent.
|
|
|
|
Exhibit 31.1
|
|
President and Executive Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
Exhibit 31.2
|
|
Executive Vice President and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
Exhibit 32
|
|
Chief Executive Officer and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
Exhibit 101
|
|
The following financial information from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2015, formatted in Extensible Business Reporting Language (XBRL) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.
|
|
REGIS CORPORATION
|
|
|
|
|
Date: January 28, 2016
|
By:
|
/s/ Steven M. Spiegel
|
|
|
Steven M. Spiegel
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Signing on behalf of the registrant and as
Principal Financial Officer)
|
|
|
|
|
|
|
Date: January 28, 2016
|
By:
|
/s/ Kersten D. Zupfer
|
|
|
Kersten D. Zupfer
|
|
|
Vice President, Controller and Chief Accounting Officer
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
REGIS CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/ Steven Spiegel
|
|
|
Name:
|
Steven Spiegel
|
|
|
Title:
|
Chief Financial Officer
|
|
|
JPMORGAN CHASE BANK, N.A.,
|
|
|
|
as Administrative Agent, as an Issuer, as Swing
|
|
|
|
Line Lender and as a Lender
|
|
|
|
|
|
|
|
By:
|
/s/ Krys Szremski
|
|
|
Title:
|
Vice President
|
|
|
BANK OF AMERICA, N.A.,
|
|
|
|
as Syndication Agent, as an Issuer and as a
|
|
|
|
Lender
|
|
|
|
|
|
|
|
By:
|
/s/ Brian Tower
|
|
|
Title:
|
Officer
|
|
|
THE BANK OF TOKYO-MITSUBISHI UFJ,
|
|
|
|
LTD., as a Lender
|
|
|
|
|
|
|
|
By:
|
/s/ Thomas Danielson
|
|
|
Name:
|
Thomas Danielson
|
|
|
Title:
|
Authorized Signatory
|
|
|
U.S. BANK NATIONAL ASSOCIATION, as a
|
|
|
|
Lender
|
|
|
|
|
|
|
|
By:
|
/s/ Ludmila Yakovlev
|
|
|
Title:
|
V.P.
|
|
|
WELLS FARGO BANK, NATIONAL
|
|
|
|
ASSOCIATION, as a Lender
|
|
|
|
|
|
|
|
|
/s/ Mark H. Halldorson
|
|
|
By:
|
Mark H. Halldorson
|
|
|
Title:
|
Director
|
|
|
FIFTH THIRD BANK, as a Lender
|
|
|
|
|
|
|
|
By:
|
/s/ Gary Losey
|
|
|
Title:
|
VP Corporate Banking
|
|
|
PNC BANK, NATIONAL ASSOCIATION, as
|
|
|
|
a Lender
|
|
|
|
|
|
|
|
By:
|
/s/ Philip K. Liebscher
|
|
|
Name:
|
Philip K. Liebscher
|
|
|
Title:
|
Senior Vice President
|
|
|
BANK OF THE WEST, as a Lender
|
|
|
|
|
|
|
|
By:
|
/s/ David Wang
|
|
|
Title:
|
Director
|
|
|
|
|
Lenders
|
Commitment
|
Pro Rata Share
|
JPMorgan Chase Bank, N.A.
|
$37,000,000
|
18.50%
|
Bank of America, N.A.
|
$37,000,000
|
18.50%
|
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
|
$26,500,000
|
13.25%
|
U.S. Bank National Association
|
$26,500,000
|
13.25%
|
Wells Fargo Bank, N.A.
|
$26,500,000
|
13.25%
|
Fifth Third Bank
|
$21,500,000
|
10.75%
|
PNC Bank, National Association
|
$15,000,000
|
7.50%
|
Bank of the West
|
$10,000,000
|
5.00%
|
TOTAL
|
$200,000,000
|
100.00%
|
|
REGIS CORPORATION
|
|
|
|
REGIS INC.
|
|
|
|
SUPERCUTS CORPORATE SHOPS, INC.
|
|
|
|
SUPERCUTS, INC.
|
|
|
|
THE BARBERS, HAIRSTYLING FOR MEN
|
|
|
|
& WOMEN, INC.
|
|
|
|
REGIS CORP.
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
REGIS CORPORATION
|
|
|
|
REGIS INC.
|
|
|
|
SUPERCUTS CORPORATE SHOPS, INC.
|
|
|
|
SUPERCUTS, INC.
|
|
|
|
THE BARBERS, HAIRSTYLING FOR MEN
|
|
|
|
& WOMEN, INC.
|
|
|
|
REGIS CORP.
|
|
|
|
|
|
|
|
By:
|
/s/ Steven Spiegel
|
|
|
Name:
|
Steven Spiegel
|
|
|
Title:
|
Chief Financial Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Regis Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
January 28, 2016
|
|
|
|
|
|
/s/ Daniel J. Hanrahan
|
|
|
Daniel J. Hanrahan, President and Chief Executive Officer
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Regis Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
January 28, 2016
|
|
|
|
|
|
/s/ Steven M. Spiegel
|
|
|
Steven M. Spiegel, Executive Vice President and Chief Financial Officer
|
|
|
(1)
|
The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Quarter Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
January 28, 2016
|
|
|
|
|
|
/s/ Daniel J. Hanrahan
|
|
|
Daniel J. Hanrahan, President and Chief Executive Officer
|
|
|
|
|
|
January 28, 2016
|
|
|
|
|
|
/s/ Steven M. Spiegel
|
|
|
Steven M. Spiegel, Executive Vice President and Chief Financial Officer
|
|
|