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(Mark One)
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2016
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Minnesota
State or other jurisdiction of
incorporation or organization
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41-0749934
(I.R.S. Employer
Identification No.)
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7201 Metro Boulevard, Edina, Minnesota
(Address of principal executive offices)
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55439
(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.05 per share
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New York Stock Exchange
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Preferred Share Purchase Rights
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New York Stock Exchange
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
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Smaller reporting company
o
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Page(s)
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1.
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Earn the Hearts and Minds of Our Team
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2.
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Develop High Performing Leaders
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3.
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Attain Operational Excellence through Simplicity
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4.
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Achieve Each Salon's Potential
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5.
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Deliver Exceptional Guest Experiences
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June 30,
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|||||||
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2016
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2015
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2014
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Company-owned salons:
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SmartStyle/Cost Cutters in Walmart stores
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2,683
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2,639
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2,574
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Supercuts
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1,053
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1,092
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1,176
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MasterCuts
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430
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466
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505
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Other Value
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1,604
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1,711
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1,846
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Regis
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694
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761
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816
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Total North American salons(1)
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6,464
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6,669
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6,917
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Total International salons(2)
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328
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356
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360
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Total, Company-owned salons
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6,792
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7,025
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7,277
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Franchised salons:
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SmartStyle/Cost Cutters in Walmart stores
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125
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127
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126
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Supercuts
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1,579
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1,393
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1,213
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Other Value
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792
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804
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840
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Total North American salons
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2,496
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2,324
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2,179
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Total International salons(2)
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—
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—
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—
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Total, Franchised salons
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2,496
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2,324
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2,179
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Ownership interest locations:
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Equity ownership interest locations
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195
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207
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218
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Grand Total, System-wide
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9,483
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9,556
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9,674
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Fiscal Years
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2016
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2015
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2014
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Company-owned salons:
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SmartStyle/Cost Cutters in Walmart stores
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51
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68
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85
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Supercuts
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5
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7
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13
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MasterCuts
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—
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—
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1
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Other Value
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1
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1
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4
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Regis
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—
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—
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1
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Total North American salons(1)
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57
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76
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104
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Total International salons(2)
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9
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15
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23
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Total, Company-owned salons
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66
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91
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127
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Franchised salons:
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SmartStyle/Cost Cutters in Walmart stores
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—
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1
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3
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Supercuts
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146
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126
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94
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Other Value
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24
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13
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37
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Total North American salons(1)
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170
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140
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134
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Total International salons(2)
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—
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—
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—
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Total, Franchised salons
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170
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140
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134
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Fiscal Years
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2016
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2015
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2014
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Company-owned salons:
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SmartStyle/Cost Cutters in Walmart stores
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(7
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)
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(3
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)
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(1
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)
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Supercuts
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(17
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)
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(36
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)
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(44
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)
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MasterCuts
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(36
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)
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(39
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)
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(27
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)
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Other Value
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(77
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)
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(114
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)
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(126
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)
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Regis
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(67
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)
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(55
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)
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(47
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)
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Total North American salons(1)
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(204
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)
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(247
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)
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(245
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)
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Total International salons(2)
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(37
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)
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(19
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)
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(14
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)
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Total, Company-owned salons
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(241
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)
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(266
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)
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(259
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)
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Franchised salons:
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SmartStyle/Cost Cutters in Walmart Stores
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(2
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)
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—
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—
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Supercuts
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(22
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)
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(22
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)
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(19
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Other Value
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(32
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)
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(50
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)
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(44
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)
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Total North American salons(1)
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(56
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)
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(72
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)
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(63
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)
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Total International salons(2)
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—
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—
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—
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Total, Franchised salons
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(56
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)
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(72
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)
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(63
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Fiscal Years
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|||||||
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2016
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2015
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2014
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Company-owned salons:
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SmartStyle/Cost Cutters in Walmart stores
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—
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—
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—
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Supercuts
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(27
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)
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(55
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)
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(3
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MasterCuts
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—
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—
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(1
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)
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Other Value
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(31
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)
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(22
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)
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(22
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)
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Regis
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—
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—
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—
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Total North American salons(1)
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(58
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)
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(77
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)
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(26
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)
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Total International salons(2)
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—
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—
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—
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Total, Company-owned salons
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(58
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)
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(77
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)
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(26
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)
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Franchised salons:
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|||
SmartStyle/Cost Cutters in Walmart Stores
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—
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—
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—
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Supercuts
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62
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76
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22
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Other Value
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(4
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)
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1
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4
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Total North American salons(1)
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58
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77
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26
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Total International salons(2)
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—
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—
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—
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Total, Franchised salons
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58
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77
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26
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(1)
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The North American Value operating segment is comprised primarily of the SmartStyle, Supercuts, MasterCuts and Other Value salon brands. The North American Premium operating segment is comprised primarily of the Regis salon brands.
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(2)
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Canadian and Puerto Rican salons are included in the North American salon totals.
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(3)
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During fiscal years
2016
,
2015
, and
2014
, the Company acquired
one
,
zero
, and
two
salon locations, respectively, from franchisees. During fiscal years
2016
,
2015
, and
2014
, the Company sold
59
,
77
, and
28
salon locations, respectively, to franchisees.
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Name
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Age
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Position
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Daniel Hanrahan
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59
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President and Chief Executive Officer
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Steven Spiegel
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54
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Executive Vice President and Chief Financial Officer
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Eric Bakken
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49
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Executive Vice President, Chief Administrative Officer, Corporate Secretary and General Counsel
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Jim Lain
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52
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Executive Vice President and Chief Operating Officer
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Andrew Dulka
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42
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Senior Vice President and Chief Information Officer
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Annette Miller
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54
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Senior Vice President and Chief Merchandising Officer
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Heather Passe
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45
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Senior Vice President and Chief Marketing Officer
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Carmen Thiede
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49
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Senior Vice President and Chief Human Resources Officer
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchase of Equity Securities
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Fiscal Years
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||||||||||||||
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2016
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2015
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||||||||||||
Fiscal Quarter
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High
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Low
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High
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Low
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||||||||
1
st
Quarter
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$
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16.10
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$
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10.60
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$
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17.51
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$
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13.50
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2
nd
Quarter
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18.13
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11.81
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17.76
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14.58
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||||
3
rd
Quarter
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16.55
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13.04
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17.41
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14.70
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||||
4
th
Quarter
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16.02
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10.96
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17.91
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15.76
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June 30,
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||||||||||||||||||||||
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2011
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2012
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2013
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2014
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2015
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2016
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||||||||||||
Regis
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$
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100.00
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$
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118.95
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$
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110.22
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$
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95.25
|
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$
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106.62
|
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$
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84.23
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S & P 500
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100.00
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105.45
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127.17
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158.46
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170.22
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177.02
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||||||
S & P 400 Midcap
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100.00
|
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97.67
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122.27
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153.12
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162.92
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165.09
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||||||
Dow Jones Consumer Service Index
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100.00
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113.30
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145.52
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177.89
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208.91
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212.73
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||||||
Peer Group
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100.00
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109.28
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143.21
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159.01
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191.76
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|
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194.95
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Fiscal Years
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||||||||||
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2016
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2015
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2014
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||||||
Repurchased Shares
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7,647,819
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3,054,387
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—
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|||
Average Price (per share)
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$13.19
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$15.64
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$
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—
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Price range (per share)
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$10.94 - $15.95
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$13.72 - $17.32
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$
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—
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||
Total
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$101.0 million
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$47.9 million
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$
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—
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in thousands)
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||||||
4/1/16 - 4/30/16
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—
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$
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—
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18,103,403
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$
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64,037
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|
5/1/16 - 5/31/16
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292,767
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|
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13.65
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18,396,170
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60,041
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||
6/1/16 - 6/30/16
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—
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—
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18,396,170
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|
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60,041
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||
Total
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292,767
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|
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$
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13.65
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|
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18,396,170
|
|
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$
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60,041
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|
|
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Fiscal Years
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||||||||||||||||||
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2016
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2015
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2014
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2013(b)
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2012(b)
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||||||||||
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(Dollars in thousands, except per share data)
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||||||||||||||||||
Revenues
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$
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1,790,869
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$
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1,837,287
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$
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1,892,437
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$
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2,018,713
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$
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2,122,227
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Operating income (loss)(a)
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17,614
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|
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3,531
|
|
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(34,958
|
)
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13,359
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|
|
(2,226
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)
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|||||
(Loss) income from continuing operations(a)
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(11,316
|
)
|
|
(33,212
|
)
|
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(139,874
|
)
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5,478
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|
|
(51,950
|
)
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|||||
(Loss) income from continuing operations per diluted share
|
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(0.23
|
)
|
|
(0.60
|
)
|
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(2.48
|
)
|
|
0.10
|
|
|
(0.91
|
)
|
|||||
Dividends declared, per share
|
|
—
|
|
|
—
|
|
|
0.12
|
|
|
0.24
|
|
|
0.24
|
|
|
|
June 30,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013(b)
|
|
2012(b)
|
||||||||||
|
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(Dollars in thousands)
|
||||||||||||||||||
Total assets, including discontinued operations
|
|
$
|
1,036,761
|
|
|
$
|
1,162,015
|
|
|
$
|
1,415,949
|
|
|
$
|
1,391,399
|
|
|
$
|
1,572,725
|
|
Long-term debt and capital lease obligations, including current portion
|
|
120,435
|
|
|
120,002
|
|
|
293,503
|
|
|
174,770
|
|
|
287,674
|
|
(a)
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The following significant items affected each of the years presented:
|
•
|
During fiscal year 2016, the Company recorded a $13.0 million other than temporary non-cash impairment charge to fully impair its investment in EEG and $10.5 million of fixed asset impairment charges.
|
•
|
During fiscal year 2015, the Company recorded its share of a non-cash deferred tax asset valuation allowance recorded by EEG of $6.9 million, other than temporary impairment charges of its investment in EEG of $4.7 million, $14.6 million of fixed asset impairment charges and established a $2.1 million valuation allowance against its Canadian deferred tax assets.
|
•
|
During fiscal year 2014, the Company recorded a goodwill impairment charge of $34.9 million associated with Company's Regis salon concept, fixed asset impairment charges of $18.3 million, $15.9 million, net of tax for the Company's share of goodwill and fixed asset impairment charges recorded by EEG and established an $86.6 million valuation allowance against the U.S. and U.K. deferred tax assets.
|
•
|
During fiscal year 2013, the Company recorded $7.4 million in restructuring charges and a $12.6 million inventory write-down. In addition, the Company recognized a net $33.8 million foreign currency translation gain in connection with the sale of Provalliance, recorded net other than temporary impairment charges of $17.9 million associated with the Company's investment in EEG and incurred a $10.6 million make-whole payment in connection with the prepayment of $89.3 million of senior term notes in June 2013.
|
•
|
During fiscal year 2012, the Company recorded a goodwill impairment charge of $67.7 million associated with the Company's Regis salon concept, incremental amortization expense of $16.2 million associated with an adjustment to the useful life of the Company's previously internally developed POS system, $14.4 million for senior management and other restructuring charges, $8.9 million for the Company's share of intangible and fixed asset impairments recorded by EEG and $36.6 million of other than temporary impairment charges associated with the Company's investments in affiliated companies.
|
(b)
|
In fiscal year 2013 the Hair Restoration Centers operations were accounted for as discontinued operations. Fiscal year 2012 is presented to reflect the Hair Restoration Centers as discontinued operations.
|
|
|
Fiscal Years
|
||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
|
|
(Dollars in millions)
|
|
% of Total Revenues
|
|
Basis Point
Increase (Decrease)
|
||||||||||||||||||||||||
Service revenues
|
|
$
|
1,383.7
|
|
|
$
|
1,429.4
|
|
|
$
|
1,480.1
|
|
|
77.3
|
%
|
|
77.8
|
%
|
|
78.2
|
%
|
|
(50
|
)
|
|
(40
|
)
|
|
70
|
|
Product revenues
|
|
359.7
|
|
|
363.2
|
|
|
371.5
|
|
|
20.1
|
|
|
19.8
|
|
|
19.6
|
|
|
30
|
|
|
20
|
|
|
(100
|
)
|
|||
Franchise royalties and fees
|
|
47.5
|
|
|
44.6
|
|
|
40.9
|
|
|
2.7
|
|
|
2.4
|
|
|
2.2
|
|
|
30
|
|
|
20
|
|
|
30
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of service(1)
|
|
868.2
|
|
|
882.7
|
|
|
907.3
|
|
|
62.7
|
|
|
61.8
|
|
|
61.3
|
|
|
90
|
|
|
50
|
|
|
180
|
|
|||
Cost of product(2)
|
|
179.3
|
|
|
180.6
|
|
|
186.9
|
|
|
49.9
|
|
|
49.7
|
|
|
50.3
|
|
|
20
|
|
|
(60
|
)
|
|
(480
|
)
|
|||
Site operating expenses
|
|
183.0
|
|
|
192.4
|
|
|
203.5
|
|
|
10.2
|
|
|
10.5
|
|
|
10.8
|
|
|
(30
|
)
|
|
(30
|
)
|
|
80
|
|
|||
General and administrative
|
|
178.0
|
|
|
186.1
|
|
|
172.8
|
|
|
9.9
|
|
|
10.1
|
|
|
9.1
|
|
|
(20
|
)
|
|
100
|
|
|
(210
|
)
|
|||
Rent
|
|
297.3
|
|
|
309.1
|
|
|
322.3
|
|
|
16.6
|
|
|
16.8
|
|
|
17.0
|
|
|
(20
|
)
|
|
(20
|
)
|
|
90
|
|
|||
Depreciation and amortization
|
|
67.5
|
|
|
82.9
|
|
|
99.7
|
|
|
3.8
|
|
|
4.5
|
|
|
5.3
|
|
|
(70
|
)
|
|
(80
|
)
|
|
80
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
34.9
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
(180
|
)
|
|
180
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
9.3
|
|
|
10.2
|
|
|
22.3
|
|
|
0.5
|
|
|
0.6
|
|
|
1.2
|
|
|
(10
|
)
|
|
(60
|
)
|
|
(60
|
)
|
|||
Interest income and other, net
|
|
4.2
|
|
|
1.7
|
|
|
2.0
|
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|
10
|
|
|
—
|
|
|
(170
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income taxes(3)
|
|
(9.0
|
)
|
|
(14.6
|
)
|
|
(73.0
|
)
|
|
72.3
|
|
|
(293.4
|
)
|
|
(131.9
|
)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||
Equity in loss of affiliated companies, net of income taxes
|
|
14.8
|
|
|
13.6
|
|
|
11.6
|
|
|
0.8
|
|
|
0.7
|
|
|
0.6
|
|
|
10
|
|
|
10
|
|
|
(20
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(Loss) income from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.6
|
)
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(10
|
)
|
|
(110
|
)
|
(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
income (loss) from continuing operations 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 below is related to the effective income tax rate.
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
North American Value salons:
|
|
|
|
|
|
|
||||||
SmartStyle
|
|
$
|
522,700
|
|
|
$
|
500,562
|
|
|
$
|
487,722
|
|
Supercuts
|
|
345,094
|
|
|
343,299
|
|
|
343,372
|
|
|||
MasterCuts
|
|
106,791
|
|
|
117,246
|
|
|
127,758
|
|
|||
Other Value
|
|
420,754
|
|
|
442,312
|
|
|
471,231
|
|
|||
Total North American Value salons
|
|
1,395,339
|
|
|
1,403,419
|
|
|
1,430,083
|
|
|||
North American Premium salons
|
|
283,438
|
|
|
309,600
|
|
|
333,858
|
|
|||
International salons
|
|
112,092
|
|
|
124,268
|
|
|
128,496
|
|
|||
Consolidated revenues
|
|
$
|
1,790,869
|
|
|
$
|
1,837,287
|
|
|
$
|
1,892,437
|
|
Percent change from prior year
|
|
(2.5
|
)%
|
|
(2.9
|
)%
|
|
(6.3
|
)%
|
|||
Salon same-store sales increase (decrease)(1)
|
|
0.2
|
%
|
|
(0.3
|
)%
|
|
(4.8
|
)%
|
(1)
|
Same-store sales are calculated on a daily basis as the total change in sales for company-owned locations which were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and fiscal year 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.
|
|
|
Fiscal Years
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
SmartStyle
|
|
3.4
|
%
|
|
1.6
|
%
|
|
(5.4
|
)%
|
Supercuts
|
|
2.0
|
%
|
|
1.3
|
%
|
|
0.5
|
%
|
MasterCuts
|
|
(4.4
|
)%
|
|
(4.0
|
)%
|
|
(9.4
|
)%
|
Other Value
|
|
(0.2
|
)%
|
|
(0.7
|
)%
|
|
(5.4
|
)%
|
Total North American Value salons
|
|
1.3
|
%
|
|
0.3
|
%
|
|
(4.5
|
)%
|
North American Premium salons
|
|
(3.8
|
)%
|
|
(3.0
|
)%
|
|
(6.7
|
)%
|
International salons
|
|
(2.3
|
)%
|
|
0.6
|
%
|
|
(1.5
|
)%
|
Consolidated same-store sales
|
|
0.2
|
%
|
|
(0.3
|
)%
|
|
(4.8
|
)%
|
|
|
|
|
Interest rate %
|
|
|
|
|
||||||
|
|
|
|
Fiscal Years
|
|
June 30,
|
||||||||
|
|
Maturity Dates
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
|
|
(fiscal year)
|
|
|
|
|
|
(Dollars in thousands)
|
||||||
Senior term notes - 5.75%
|
|
2018
|
|
—
|
|
5.75
|
|
$
|
—
|
|
|
$
|
120,000
|
|
Senior term notes - 5.50%
|
|
2020
|
|
5.50
|
|
—
|
|
120,435
|
|
|
—
|
|
||
Revolving credit facility
|
|
2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||
Equipment and leasehold notes payable
|
|
2015 - 2016
|
|
4.90 - 8.75
|
|
4.90 - 8.75
|
|
—
|
|
|
2
|
|
||
|
|
|
|
|
|
|
|
120,435
|
|
|
120,002
|
|
||
Less current portion (included in accrued expenses)
|
|
|
|
|
|
|
|
—
|
|
|
(2
|
)
|
||
Long-term portion
|
|
|
|
|
|
|
|
$
|
120,435
|
|
|
$
|
120,000
|
|
As of June 30,
|
|
Debt to
Capitalization
|
|
Basis Point
Increase
(Decrease)(1)
|
||
2016
|
|
18.8
|
%
|
|
270
|
|
2015
|
|
16.1
|
|
|
(1,300
|
)
|
2014
|
|
29.1
|
|
|
1,210
|
|
(1)
|
Represents the basis point change in debt to capitalization as compared to prior fiscal year-end (June 30).
|
|
|
|
|
Payments due by period
|
||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Within
1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than
5 years
|
||||||||||
|
|
|
|
(Dollars in thousands)
|
||||||||||||||||
On-balance sheet:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt obligations
|
|
$
|
120,435
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
120,435
|
|
|
$
|
—
|
|
Other long-term liabilities
|
|
14,127
|
|
|
2,458
|
|
|
3,182
|
|
|
1,593
|
|
|
6,894
|
|
|||||
Total on-balance sheet
|
|
134,562
|
|
|
2,458
|
|
|
3,182
|
|
|
122,028
|
|
|
6,894
|
|
|||||
Off-balance sheet(a):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating lease obligations
|
|
930,324
|
|
|
290,621
|
|
|
406,511
|
|
|
184,413
|
|
|
48,779
|
|
|||||
Interest on long-term debt
|
|
23,133
|
|
|
6,765
|
|
|
13,530
|
|
|
2,838
|
|
|
—
|
|
|||||
Total off-balance sheet
|
|
953,457
|
|
|
297,386
|
|
|
420,041
|
|
|
187,251
|
|
|
48,779
|
|
|||||
Total
|
|
$
|
1,088,019
|
|
|
$
|
299,844
|
|
|
$
|
423,223
|
|
|
$
|
309,279
|
|
|
$
|
55,673
|
|
(a)
|
In accordance with accounting principles generally accepted in the United States of America, these obligations are not reflected in the Consolidated Balance Sheet.
|
|
|
Fiscal Year
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Equity losses (1)
|
|
$
|
(1,829
|
)
|
|
$
|
(8,975
|
)
|
|
$
|
(11,623
|
)
|
Other than temporary impairment
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|
—
|
|
|||
Total losses
|
|
$
|
(14,783
|
)
|
|
$
|
(13,629
|
)
|
|
$
|
(11,623
|
)
|
(1)
|
For fiscal year 2015, includes $6.9 million of expense for a non-cash deferred tax valuation allowance related to EEG. For fiscal year 2014, includes $21.2 million of pretax non-cash impairment charges related to EEG for goodwill and fixed and intangible asset impairments.
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
North American Value
|
|
$
|
8,393
|
|
|
$
|
9,612
|
|
|
$
|
11,714
|
|
North American Premium
|
|
1,924
|
|
|
4,804
|
|
|
5,014
|
|
|||
International
|
|
161
|
|
|
188
|
|
|
1,599
|
|
|||
Total
|
|
$
|
10,478
|
|
|
$
|
14,604
|
|
|
$
|
18,327
|
|
|
|
|
Index to Consolidated Financial Statements:
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
147,346
|
|
|
$
|
212,279
|
|
Receivables, net
|
|
24,691
|
|
|
24,631
|
|
||
Inventories
|
|
134,212
|
|
|
128,610
|
|
||
Other current assets
|
|
51,765
|
|
|
62,762
|
|
||
Total current assets
|
|
358,014
|
|
|
428,282
|
|
||
Property and equipment, net
|
|
183,321
|
|
|
218,157
|
|
||
Goodwill
|
|
417,393
|
|
|
418,953
|
|
||
Other intangibles, net
|
|
15,185
|
|
|
17,069
|
|
||
Investment in affiliates
|
|
520
|
|
|
15,321
|
|
||
Other assets
|
|
62,328
|
|
|
64,233
|
|
||
Total assets
|
|
$
|
1,036,761
|
|
|
$
|
1,162,015
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
59,884
|
|
|
$
|
63,302
|
|
Accrued expenses
|
|
135,431
|
|
|
153,364
|
|
||
Total current liabilities
|
|
195,315
|
|
|
216,666
|
|
||
Long-term debt
|
|
120,435
|
|
|
120,000
|
|
||
Other noncurrent liabilities
|
|
201,610
|
|
|
197,905
|
|
||
Total liabilities
|
|
517,360
|
|
|
534,571
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
|
||||
Common stock, $0.05 par value; issued and outstanding, 46,154,410 and 53,664,366 common shares at June 30, 2016 and 2015, respectively
|
|
2,308
|
|
|
2,683
|
|
||
Additional paid-in capital
|
|
207,475
|
|
|
298,396
|
|
||
Accumulated other comprehensive income
|
|
5,068
|
|
|
9,506
|
|
||
Retained earnings
|
|
304,550
|
|
|
316,859
|
|
||
Total shareholders' equity
|
|
519,401
|
|
|
627,444
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
1,036,761
|
|
|
$
|
1,162,015
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Service
|
|
$
|
1,383,663
|
|
|
$
|
1,429,408
|
|
|
$
|
1,480,103
|
|
Product
|
|
359,683
|
|
|
363,236
|
|
|
371,454
|
|
|||
Royalties and fees
|
|
47,523
|
|
|
44,643
|
|
|
40,880
|
|
|||
|
|
1,790,869
|
|
|
1,837,287
|
|
|
1,892,437
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of service
|
|
868,188
|
|
|
882,717
|
|
|
907,294
|
|
|||
Cost of product
|
|
179,341
|
|
|
180,558
|
|
|
186,924
|
|
|||
Site operating expenses
|
|
182,952
|
|
|
192,442
|
|
|
203,450
|
|
|||
General and administrative
|
|
178,033
|
|
|
186,051
|
|
|
172,793
|
|
|||
Rent
|
|
297,271
|
|
|
309,125
|
|
|
322,262
|
|
|||
Depreciation and amortization
|
|
67,470
|
|
|
82,863
|
|
|
99,733
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
34,939
|
|
|||
Total operating expenses
|
|
1,773,255
|
|
|
1,833,756
|
|
|
1,927,395
|
|
|||
Operating income (loss)
|
|
17,614
|
|
|
3,531
|
|
|
(34,958
|
)
|
|||
Other (expense) income:
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(9,317
|
)
|
|
(10,206
|
)
|
|
(22,290
|
)
|
|||
Interest income and other, net
|
|
4,219
|
|
|
1,697
|
|
|
1,952
|
|
|||
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies
|
|
12,516
|
|
|
(4,978
|
)
|
|
(55,296
|
)
|
|||
Income taxes
|
|
(9,049
|
)
|
|
(14,605
|
)
|
|
(72,955
|
)
|
|||
Equity in loss of affiliated companies, net of income taxes
|
|
(14,783
|
)
|
|
(13,629
|
)
|
|
(11,623
|
)
|
|||
Loss from continuing operations
|
|
(11,316
|
)
|
|
(33,212
|
)
|
|
(139,874
|
)
|
|||
(Loss) income from discontinued operations, net of income taxes (Note 2)
|
|
—
|
|
|
(630
|
)
|
|
1,353
|
|
|||
Net loss
|
|
$
|
(11,316
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(138,521
|
)
|
Net loss per share:
|
|
|
|
|
|
|
||||||
Basic and diluted:
|
|
|
|
|
|
|
||||||
Loss from continuing operations
|
|
$
|
(0.23
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(2.48
|
)
|
(Loss) income from discontinued operations
|
|
—
|
|
|
(0.01
|
)
|
|
0.02
|
|
|||
Net loss per share, basic and diluted (1)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(2.45
|
)
|
Weighted average common and common equivalent shares outstanding:
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
48,542
|
|
|
54,992
|
|
|
56,482
|
|
|||
Cash dividends declared per common share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
(1)
|
Total is a recalculation; line items calculated individually may not sum to total due to rounding.
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
|
$
|
(11,316
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(138,521
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments during the period
|
|
(4,276
|
)
|
|
(13,515
|
)
|
|
1,930
|
|
|||
Recognition of deferred compensation
|
|
(162
|
)
|
|
370
|
|
|
165
|
|
|||
Other comprehensive (loss) income
|
|
(4,438
|
)
|
|
(13,145
|
)
|
|
2,095
|
|
|||
Comprehensive loss
|
|
$
|
(15,754
|
)
|
|
$
|
(46,987
|
)
|
|
$
|
(136,426
|
)
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Other
Comprehensive
Income
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance, June 30, 2013
|
|
56,630,926
|
|
|
$
|
2,832
|
|
|
$
|
334,266
|
|
|
$
|
20,556
|
|
|
$
|
495,765
|
|
|
$
|
853,419
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(138,521
|
)
|
|
(138,521
|
)
|
|||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
1,930
|
|
|
|
|
|
1,930
|
|
|||||
Proceeds from exercise of SARs & stock options
|
|
11
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
|
|
|
|
|
|
6,400
|
|
|
|
|
|
|
|
|
6,400
|
|
|||||
Shares issued through franchise stock incentive program
|
|
20,095
|
|
|
1
|
|
|
289
|
|
|
|
|
|
|
|
|
290
|
|
|||||
Recognition of deferred compensation (Note 10)
|
|
|
|
|
|
|
|
|
|
|
165
|
|
|
|
|
|
165
|
|
|||||
Net restricted stock activity
|
|
134
|
|
|
—
|
|
|
(2,603
|
)
|
|
|
|
|
|
|
|
(2,603
|
)
|
|||||
Vested stock option expirations
|
|
|
|
|
|
|
|
(515
|
)
|
|
|
|
|
|
|
|
(515
|
)
|
|||||
Minority interest (Note 1)
|
|
|
|
|
|
|
|
|
|
220
|
|
|
220
|
|
|||||||||
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,793
|
)
|
|
(6,793
|
)
|
|||||
Balance, June 30, 2014
|
|
56,651,166
|
|
|
2,833
|
|
|
337,837
|
|
|
22,651
|
|
|
350,671
|
|
|
713,992
|
|
|||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,842
|
)
|
|
(33,842
|
)
|
|||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
(13,515
|
)
|
|
|
|
|
(13,515
|
)
|
|||||
Stock repurchase program
|
|
(3,054,387
|
)
|
|
(153
|
)
|
|
(47,735
|
)
|
|
|
|
|
|
|
|
(47,888
|
)
|
|||||
Proceeds from exercise of SARs & stock options
|
|
623
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
|
|
|
|
|
|
8,647
|
|
|
|
|
|
|
|
|
8,647
|
|
|||||
Shares issued through franchise stock incentive program
|
|
27,276
|
|
|
1
|
|
|
460
|
|
|
|
|
|
|
|
|
461
|
|
|||||
Recognition of deferred compensation (Note 10)
|
|
|
|
|
|
|
|
|
|
|
370
|
|
|
|
|
|
370
|
|
|||||
Net restricted stock activity
|
|
39,688
|
|
|
2
|
|
|
(813
|
)
|
|
|
|
|
|
|
|
(811
|
)
|
|||||
Minority interest (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
30
|
|
|||||
Balance, June 30, 2015
|
|
53,664,366
|
|
|
2,683
|
|
|
298,396
|
|
|
9,506
|
|
|
316,859
|
|
|
627,444
|
|
|||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,316
|
)
|
|
(11,316
|
)
|
|||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
(4,276
|
)
|
|
|
|
|
(4,276
|
)
|
|||||
Stock repurchase program
|
|
(7,647,819
|
)
|
|
(382
|
)
|
|
(100,653
|
)
|
|
|
|
|
|
(101,035
|
)
|
|||||||
Proceeds from exercise of SARs & stock options
|
|
107
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
|
|
|
|
|
|
9,797
|
|
|
|
|
|
|
|
|
9,797
|
|
|||||
Shares issued through franchise stock incentive program
|
|
22,084
|
|
|
1
|
|
|
330
|
|
|
|
|
|
|
331
|
|
|||||||
Recognition of deferred compensation (Note 10)
|
|
|
|
|
|
|
|
|
|
|
(162
|
)
|
|
|
|
|
(162
|
)
|
|||||
Net restricted stock activity
|
|
115,672
|
|
|
6
|
|
|
(734
|
)
|
|
|
|
|
|
|
|
(728
|
)
|
|||||
Minority interest (Note 1)
|
|
|
|
|
|
|
|
339
|
|
|
|
|
|
(993
|
)
|
|
(654
|
)
|
|||||
Balance, June 30, 2016
|
|
46,154,410
|
|
|
$
|
2,308
|
|
|
$
|
207,475
|
|
|
$
|
5,068
|
|
|
$
|
304,550
|
|
|
$
|
519,401
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(11,316
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(138,521
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
56,992
|
|
|
68,259
|
|
|
81,406
|
|
|||
Equity in loss of affiliated companies
|
|
14,783
|
|
|
13,629
|
|
|
11,623
|
|
|||
Deferred income taxes
|
|
7,023
|
|
|
11,154
|
|
|
70,635
|
|
|||
Gain from sale of salon assets, net
|
|
(1,000
|
)
|
|
(1,210
|
)
|
|
—
|
|
|||
Loss on write down of inventories
|
|
—
|
|
|
—
|
|
|
854
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
34,939
|
|
|||
Salon asset impairments
|
|
10,478
|
|
|
14,604
|
|
|
18,327
|
|
|||
Stock-based compensation
|
|
9,797
|
|
|
8,647
|
|
|
6,400
|
|
|||
Amortization of debt discount and financing costs
|
|
1,514
|
|
|
1,722
|
|
|
8,152
|
|
|||
Other non-cash items affecting earnings
|
|
310
|
|
|
257
|
|
|
224
|
|
|||
Changes in operating assets and liabilities(1):
|
|
|
|
|
|
|
||||||
Receivables
|
|
(577
|
)
|
|
446
|
|
|
5,681
|
|
|||
Inventories
|
|
(7,109
|
)
|
|
6,197
|
|
|
2,275
|
|
|||
Income tax receivable
|
|
501
|
|
|
5,298
|
|
|
26,884
|
|
|||
Other current assets
|
|
(460
|
)
|
|
3,049
|
|
|
(5,979
|
)
|
|||
Other assets
|
|
(1,133
|
)
|
|
(4,480
|
)
|
|
(88
|
)
|
|||
Accounts payable
|
|
(4,624
|
)
|
|
(3,261
|
)
|
|
1,907
|
|
|||
Accrued expenses
|
|
(15,034
|
)
|
|
8,249
|
|
|
3,955
|
|
|||
Other noncurrent liabilities
|
|
(5,113
|
)
|
|
(4,756
|
)
|
|
(11,919
|
)
|
|||
Net cash provided by operating activities
|
|
55,032
|
|
|
93,962
|
|
|
116,755
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(31,117
|
)
|
|
(38,257
|
)
|
|
(49,439
|
)
|
|||
Proceeds from sale of assets
|
|
1,740
|
|
|
2,986
|
|
|
14
|
|
|||
Asset acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|||
Proceeds from loans and investments
|
|
—
|
|
|
—
|
|
|
5,056
|
|
|||
Change in restricted cash
|
|
9,042
|
|
|
(312
|
)
|
|
—
|
|
|||
Proceeds from company-owned life insurance policies
|
|
2,948
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
|
(17,387
|
)
|
|
(35,583
|
)
|
|
(44,384
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt, net of fees
|
|
—
|
|
|
—
|
|
|
118,058
|
|
|||
Repayments of long-term debt and capital lease obligations
|
|
(2
|
)
|
|
(173,751
|
)
|
|
(7,059
|
)
|
|||
Repurchase of common stock
|
|
(101,035
|
)
|
|
(47,888
|
)
|
|
—
|
|
|||
Purchase of noncontrolling interest
|
|
(760
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid
|
|
—
|
|
|
—
|
|
|
(6,793
|
)
|
|||
Net cash (used in) provided by financing activities
|
|
(101,797
|
)
|
|
(221,639
|
)
|
|
104,206
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(781
|
)
|
|
(3,088
|
)
|
|
914
|
|
|||
(Decrease) increase in cash and cash equivalents
|
|
(64,933
|
)
|
|
(166,348
|
)
|
|
177,491
|
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||||
Beginning of year
|
|
212,279
|
|
|
378,627
|
|
|
201,136
|
|
|||
End of year
|
|
$
|
147,346
|
|
|
$
|
212,279
|
|
|
$
|
378,627
|
|
(1)
|
Changes in operating assets and liabilities exclude assets and liabilities sold or acquired.
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
North American Value
|
|
$
|
8,393
|
|
|
$
|
9,612
|
|
|
$
|
11,714
|
|
North American Premium
|
|
1,924
|
|
|
4,804
|
|
|
5,014
|
|
|||
International
|
|
161
|
|
|
188
|
|
|
1,599
|
|
|||
Total
|
|
$
|
10,478
|
|
|
$
|
14,604
|
|
|
$
|
18,327
|
|
|
|
Fiscal Year
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Equity losses (1)
|
|
$
|
(1,829
|
)
|
|
$
|
(8,975
|
)
|
|
$
|
(11,623
|
)
|
Other than temporary impairment
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|
—
|
|
|||
Total losses
|
|
$
|
(14,783
|
)
|
|
$
|
(13,629
|
)
|
|
$
|
(11,623
|
)
|
(1)
|
For fiscal year 2015, includes
$6.9 million
of expense for a non-cash deferred tax valuation allowance related to EEG. For fiscal year 2014, includes
$21.2 million
of pretax non-cash impairment charges related to EEG for goodwill and fixed and intangible asset impairments.
|
|
|
June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(Dollars in thousands)
|
||||||
Other current assets:
|
|
|
|
|
||||
Prepaids
|
|
$
|
30,710
|
|
|
$
|
33,184
|
|
Restricted cash
|
|
20,156
|
|
|
27,811
|
|
||
Other
|
|
899
|
|
|
1,767
|
|
||
|
|
$
|
51,765
|
|
|
$
|
62,762
|
|
Property and equipment:
|
|
|
|
|
||||
Land
|
|
$
|
3,864
|
|
|
$
|
3,864
|
|
Buildings and improvements
|
|
47,031
|
|
|
48,563
|
|
||
Equipment, furniture and leasehold improvements
|
|
694,475
|
|
|
748,737
|
|
||
Internal use software
|
|
69,045
|
|
|
97,740
|
|
||
Equipment, furniture and leasehold improvements under capital leases
|
|
61,213
|
|
|
73,492
|
|
||
|
|
875,628
|
|
|
972,396
|
|
||
Less accumulated depreciation and amortization
|
|
(636,222
|
)
|
|
(689,128
|
)
|
||
Less amortization of equipment, furniture and leasehold improvements under capital leases
|
|
(56,085
|
)
|
|
(65,111
|
)
|
||
|
|
$
|
183,321
|
|
|
$
|
218,157
|
|
Accrued expenses:
|
|
|
|
|
||||
Payroll and payroll related costs
|
|
$
|
74,013
|
|
|
$
|
79,778
|
|
Insurance
|
|
15,559
|
|
|
21,145
|
|
||
Other
|
|
45,859
|
|
|
52,441
|
|
||
|
|
$
|
135,431
|
|
|
$
|
153,364
|
|
Other noncurrent liabilities:
|
|
|
|
|
||||
Deferred income taxes
|
|
$
|
100,169
|
|
|
$
|
91,197
|
|
Deferred rent
|
|
39,057
|
|
|
39,417
|
|
||
Insurance
|
|
28,019
|
|
|
29,910
|
|
||
Deferred benefits
|
|
19,490
|
|
|
20,710
|
|
||
Other
|
|
14,875
|
|
|
16,671
|
|
||
|
|
$
|
201,610
|
|
|
$
|
197,905
|
|
|
|
June 30,
|
||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||||||
|
|
Weighted Average Amortization Periods (1)
|
|
Cost (2)
|
|
Accumulated
Amortization (2)
|
|
Net
|
|
Weighted Average Amortization Periods (1)
|
|
Cost (2)
|
|
Accumulated
Amortization (2) |
|
Net
|
||||||||||||
|
|
(In years)
|
|
(Dollars in thousands)
|
|
(In years)
|
|
(Dollars in thousands)
|
||||||||||||||||||||
Brand assets and trade names
|
|
31
|
|
$
|
8,206
|
|
|
$
|
(3,746
|
)
|
|
$
|
4,460
|
|
|
32
|
|
$
|
8,415
|
|
|
$
|
(3,551
|
)
|
|
$
|
4,864
|
|
Franchise agreements
|
|
19
|
|
9,853
|
|
|
(7,116
|
)
|
|
2,737
|
|
|
19
|
|
10,093
|
|
|
(6,934
|
)
|
|
3,159
|
|
||||||
Lease intangibles
|
|
20
|
|
14,535
|
|
|
(8,649
|
)
|
|
5,886
|
|
|
20
|
|
14,601
|
|
|
(7,960
|
)
|
|
6,641
|
|
||||||
Other
|
|
21
|
|
5,748
|
|
|
(3,646
|
)
|
|
2,102
|
|
|
20
|
|
6,115
|
|
|
(3,710
|
)
|
|
2,405
|
|
||||||
Total
|
|
22
|
|
$
|
38,342
|
|
|
$
|
(23,157
|
)
|
|
$
|
15,185
|
|
|
22
|
|
$
|
39,224
|
|
|
$
|
(22,155
|
)
|
|
$
|
17,069
|
|
(1)
|
All intangible assets have been assigned an estimated finite useful life and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from
three
to
40 years
).
|
(2)
|
The change in the gross carrying value and accumulated amortization of other intangible assets partly relates to foreign currency.
|
Fiscal Year
|
(Dollars in
thousands)
|
||
2017
|
$
|
1,480
|
|
2018
|
1,478
|
|
|
2019
|
1,470
|
|
|
2020
|
1,468
|
|
|
2021
|
1,339
|
|
|
Thereafter
|
7,950
|
|
|
Total
|
$
|
15,185
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Cash paid (received) for:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
7,660
|
|
|
$
|
12,336
|
|
|
$
|
21,173
|
|
Income taxes, net
|
|
2,237
|
|
|
(1,371
|
)
|
|
(16,266
|
)
|
|||
Noncash investing activities:
|
|
|
|
|
|
|
||||||
Unpaid capital expenditures
|
|
6,627
|
|
|
5,034
|
|
|
6,392
|
|
|
|
June 30,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||
|
|
Gross
Carrying
Value (3)
|
|
Accumulated
Impairment (1)
|
|
Net
|
|
Gross
Carrying Value (3) |
|
Accumulated
Impairment (1)
|
|
Net
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Goodwill
|
|
$
|
671,054
|
|
|
$
|
(253,661
|
)
|
|
$
|
417,393
|
|
|
$
|
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
|
)
|
|
|
(2)
|
See Note 14 to the Consolidated Financial Statements.
|
(3)
|
The change in the gross carrying value of goodwill relates to foreign currency translation adjustments of
$(1.6)
and
$(6.3) million
in fiscal years 2016 and 2015, respectively. All goodwill resides in the Company's North American Value reporting unit.
|
|
|
Fiscal Year
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Equity losses (1)
|
|
$
|
(1,832
|
)
|
|
$
|
(8,958
|
)
|
|
$
|
(14,701
|
)
|
Other than temporary impairment
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|
—
|
|
|||
Total losses related to EEG
|
|
$
|
(14,786
|
)
|
|
$
|
(13,612
|
)
|
|
$
|
(14,701
|
)
|
Investment balance
|
|
$
|
—
|
|
|
$
|
14,786
|
|
|
$
|
28,398
|
|
(1)
|
For fiscal year 2015, includes
$6.9 million
of expense for a non-cash deferred tax valuation allowance related to EEG. For fiscal year 2014, includes
$21.2 million
of pretax non-cash impairment charges related to EEG for goodwill and fixed and intangible asset impairments.
|
|
|
Fiscal Year
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Long-lived assets (1)
|
|
$
|
(10,478
|
)
|
|
$
|
(14,604
|
)
|
|
$
|
(18,327
|
)
|
Investment in EEG (2)
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|
—
|
|
|||
Goodwill (3)
|
|
—
|
|
|
—
|
|
|
(34,939
|
)
|
(1)
|
See Note 1 to the Consolidated Financial Statements.
|
(2)
|
See Note 5 to the Consolidated Financial Statements.
|
(3)
|
See Notes 1 and 4 to the Consolidated Financial Statements.
|
|
|
|
|
Interest rate %
|
|
|
|
|
||||||
|
|
|
|
Fiscal Years
|
|
June 30,
|
||||||||
|
|
Maturity Dates
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
|
|
(fiscal year)
|
|
|
|
|
|
(Dollars in thousands)
|
||||||
Senior term notes - 5.75%
|
|
2018
|
|
—
|
|
5.75
|
|
$
|
—
|
|
|
$
|
120,000
|
|
Senior term notes - 5.50%
|
|
2020
|
|
5.5
|
|
—
|
|
120,435
|
|
|
—
|
|
||
Revolving credit facility
|
|
2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||
Equipment and leasehold notes payable
|
|
2015 - 2016
|
|
4.90 - 8.75
|
|
4.90 - 8.75
|
|
—
|
|
|
2
|
|
||
|
|
|
|
|
|
|
|
120,435
|
|
|
120,002
|
|
||
Less current portion (included in accrued expenses)
|
|
|
|
|
|
|
|
—
|
|
|
(2
|
)
|
||
Long-term portion
|
|
|
|
|
|
|
|
$
|
120,435
|
|
|
$
|
120,000
|
|
|
|
June 30, 2016
|
||
|
|
(Dollars in thousands)
|
||
Principal amount on the Senior Term Notes
|
|
$
|
123,000
|
|
Unamortized debt discount
|
|
(2,565
|
)
|
|
Net carrying amount of Senior Term Notes
|
|
$
|
120,435
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Minimum rent
|
|
$
|
228,580
|
|
|
$
|
236,137
|
|
|
$
|
246,844
|
|
Percentage rent based on sales
|
|
8,256
|
|
|
8,238
|
|
|
7,164
|
|
|||
Real estate taxes and other expenses
|
|
60,435
|
|
|
64,750
|
|
|
68,254
|
|
|||
|
|
$
|
297,271
|
|
|
$
|
309,125
|
|
|
$
|
322,262
|
|
Fiscal Year
|
|
Corporate
leases
|
|
Franchisee
leases
|
||||
|
|
(Dollars in thousands)
|
||||||
2017
|
|
$
|
225,782
|
|
|
$
|
64,839
|
|
2018
|
|
175,970
|
|
|
55,405
|
|
||
2019
|
|
130,487
|
|
|
44,649
|
|
||
2020
|
|
88,439
|
|
|
31,673
|
|
||
2021
|
|
46,269
|
|
|
18,032
|
|
||
Thereafter
|
|
30,951
|
|
|
17,828
|
|
||
Total minimum lease payments
|
|
$
|
697,898
|
|
|
$
|
232,426
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Income (loss) before income taxes:
|
|
|
|
|
|
|
||||||
U.S.
|
|
$
|
12,481
|
|
|
$
|
(6,630
|
)
|
|
$
|
(52,815
|
)
|
International
|
|
35
|
|
|
1,652
|
|
|
(2,481
|
)
|
|||
|
|
$
|
12,516
|
|
|
$
|
(4,978
|
)
|
|
$
|
(55,296
|
)
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
|
||||||
U.S.
|
|
$
|
819
|
|
|
$
|
1,670
|
|
|
$
|
1,430
|
|
International
|
|
1,207
|
|
|
1,781
|
|
|
890
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
U.S.
|
|
6,997
|
|
|
9,439
|
|
|
69,854
|
|
|||
International
|
|
26
|
|
|
1,715
|
|
|
781
|
|
|||
|
|
$
|
9,049
|
|
|
$
|
14,605
|
|
|
$
|
72,955
|
|
|
|
Fiscal Years
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
U.S. statutory rate (benefit)
|
|
35.0
|
%
|
|
(35.0
|
)%
|
|
(35.0
|
)%
|
State income taxes, net of federal income tax benefit
|
|
5.4
|
|
|
3.7
|
|
|
(0.3
|
)
|
Valuation allowance (1)
|
|
66.5
|
|
|
362.8
|
|
|
161.9
|
|
Tax effect of goodwill impairment
|
|
—
|
|
|
—
|
|
|
11.3
|
|
Foreign income taxes at other than U.S. rates
|
|
2.5
|
|
|
5.3
|
|
|
1.4
|
|
Officer life insurance
|
|
(7.6
|
)
|
|
(9.6
|
)
|
|
(1.3
|
)
|
Work Opportunity and Welfare-to-Work Tax Credits
|
|
(24.7
|
)
|
|
(53.3
|
)
|
|
(5.2
|
)
|
Expiration of capital loss carryforward
|
|
—
|
|
|
9.5
|
|
|
—
|
|
Other, net
|
|
(4.8
|
)
|
|
10.0
|
|
|
(0.9
|
)
|
|
|
72.3
|
%
|
|
293.4
|
%
|
|
131.9
|
%
|
|
|
June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(Dollars in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
||||
Deferred rent
|
|
$
|
14,542
|
|
|
$
|
14,561
|
|
Payroll and payroll related costs
|
|
27,066
|
|
|
27,646
|
|
||
Net operating loss carryforwards
|
|
22,433
|
|
|
17,946
|
|
||
Tax credit carryforwards
|
|
30,386
|
|
|
25,296
|
|
||
Inventories
|
|
2,369
|
|
|
2,684
|
|
||
Accrued advertising
|
|
3,076
|
|
|
4,853
|
|
||
Insurance
|
|
4,285
|
|
|
6,779
|
|
||
Other
|
|
7,891
|
|
|
6,329
|
|
||
Subtotal
|
|
$
|
112,048
|
|
|
$
|
106,094
|
|
Valuation allowance
|
|
(110,046
|
)
|
|
(103,240
|
)
|
||
Total deferred tax assets
|
|
$
|
2,002
|
|
|
$
|
2,854
|
|
Deferred tax liabilities:
|
|
|
|
|
||||
Fixed assets
|
|
$
|
—
|
|
|
$
|
(2,372
|
)
|
Goodwill and intangibles
|
|
(95,451
|
)
|
|
(87,383
|
)
|
||
Other
|
|
(6,720
|
)
|
|
(6,309
|
)
|
||
Total deferred tax liabilities
|
|
$
|
(102,171
|
)
|
|
$
|
(96,064
|
)
|
Net deferred tax liability
|
|
$
|
(100,169
|
)
|
|
$
|
(93,210
|
)
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of period
|
|
$
|
1,496
|
|
|
$
|
1,468
|
|
|
$
|
10,015
|
|
Additions (reductions) based on tax positions related to the current year
|
|
138
|
|
|
37
|
|
|
(2,114
|
)
|
|||
Additions (reductions) based on tax positions of prior years
|
|
170
|
|
|
352
|
|
|
(505
|
)
|
|||
Reductions on tax positions related to the expiration of the statute of limitations
|
|
(207
|
)
|
|
(361
|
)
|
|
(994
|
)
|
|||
Settlements
|
|
(240
|
)
|
|
—
|
|
|
(4,934
|
)
|
|||
Balance at end of period
|
|
$
|
1,357
|
|
|
$
|
1,496
|
|
|
$
|
1,468
|
|
|
|
June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(Dollars in thousands)
|
||||||
Current portion (included in accrued liabilities)
|
|
$
|
1,353
|
|
|
$
|
2,845
|
|
Long-term portion (included in other noncurrent liabilities)
|
|
5,898
|
|
|
5,853
|
|
||
|
|
$
|
7,251
|
|
|
$
|
8,698
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Executive plans
|
|
$
|
289
|
|
|
$
|
224
|
|
|
$
|
203
|
|
ESPP
|
|
307
|
|
|
325
|
|
|
347
|
|
|||
Deferred compensation contracts
|
|
402
|
|
|
1,195
|
|
|
1,641
|
|
|
|
Fiscal Year
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Equity-based compensation awards
|
|
2,133,675
|
|
|
1,948,507
|
|
|
1,799,352
|
|
Shares from convertible debt
|
|
—
|
|
|
465,055
|
|
|
11,307,605
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Stock options & SARs
|
|
$
|
3.51
|
|
|
$
|
6.16
|
|
|
$
|
6.00
|
|
RSAs & RSUs
|
|
11.18
|
|
|
15.95
|
|
|
15.50
|
|
|||
PSUs
|
|
12.11
|
|
|
15.15
|
|
|
15.73
|
|
|
|
2016
|
|
2015
|
|
2014
|
Risk-free interest rate
|
|
1.71%
|
|
1.53 - 1.84%
|
|
1.67 - 1.96%
|
Expected term (in years)
|
|
6.00
|
|
6.00
|
|
6.00
|
Expected volatility
|
|
30.00%
|
|
38.00 - 44.00%
|
|
44.00%
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
1.52 - 1.61%
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
SARs & stock options
|
|
$
|
2,774
|
|
|
$
|
2,652
|
|
|
$
|
2,145
|
|
RSAs, RSUs, & PSUs
|
|
7,023
|
|
|
5,995
|
|
|
4,255
|
|
|||
Total stock-based compensation expense
|
|
$
|
9,797
|
|
|
$
|
8,647
|
|
|
$
|
6,400
|
|
|
|
Shares
(in thousands)
|
|
Weighted
Average
Exercise Price
|
|
Weighted-
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||||||
|
|
SARs
|
|
Stock
Options
|
|
|
|
||||||||||
Outstanding balance at June 30, 2015
|
|
1,755
|
|
|
179
|
|
|
$
|
19.16
|
|
|
6.9
|
|
|
$
|
287
|
|
Granted
|
|
690
|
|
|
—
|
|
|
10.84
|
|
|
|
|
|
|
|
||
Forfeited/Expired
|
|
(234
|
)
|
|
(81
|
)
|
|
21.24
|
|
|
|
|
|
|
|
||
Exercised
|
|
(2
|
)
|
|
—
|
|
|
15.50
|
|
|
|
|
|
|
|
||
Outstanding balance at June 30, 2016
|
|
2,209
|
|
|
98
|
|
|
$
|
16.39
|
|
|
7.0
|
|
|
$
|
1,043
|
|
Exercisable at June 30, 2016
|
|
832
|
|
|
98
|
|
|
$
|
18.81
|
|
|
5.7
|
|
|
$
|
—
|
|
Unvested awards, net of estimated forfeitures
|
|
1,305
|
|
|
—
|
|
|
$
|
14.84
|
|
|
7.8
|
|
|
$
|
985
|
|
|
|
Shares/Units
(in thousands)
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate Intrinsic
Value
(in thousands)
|
||||||||
|
|
RSAs
|
|
RSUs
|
|
|
||||||||
Outstanding balance at June 30, 2015
|
|
133
|
|
|
809
|
|
|
$
|
15.86
|
|
|
$
|
14,830
|
|
Granted
|
|
—
|
|
|
308
|
|
|
11.18
|
|
|
|
|||
Forfeited
|
|
—
|
|
|
(47
|
)
|
|
13.58
|
|
|
|
|||
Vested
|
|
(11
|
)
|
|
(162
|
)
|
|
15.88
|
|
|
|
|||
Outstanding balance at June 30, 2016
|
|
122
|
|
|
908
|
|
|
$
|
14.91
|
|
|
$
|
12,825
|
|
Vested at June 30, 2016
|
|
—
|
|
|
153
|
|
|
$
|
15.45
|
|
|
$
|
1,920
|
|
Unvested awards, net of estimated forfeitures
|
|
121
|
|
|
709
|
|
|
$
|
14.90
|
|
|
$
|
10,328
|
|
|
|
Shares/Units
(in thousands)
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate Intrinsic
Value
(in thousands)(1)
|
|||||
|
|
PSUs
|
|
|
|||||||
Outstanding balance at June 30, 2015
|
|
299
|
|
|
$
|
15.28
|
|
|
$
|
5,020
|
|
Granted
|
|
414
|
|
|
12.11
|
|
|
|
|
||
Forfeited
|
|
(140
|
)
|
|
15.02
|
|
|
|
|
||
Vested
|
|
(17
|
)
|
|
15.11
|
|
|
|
|
||
Outstanding balance at June 30, 2016
|
|
556
|
|
|
$
|
13.00
|
|
|
$
|
7,679
|
|
Vested at June 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unvested awards, net of estimated forfeitures
|
|
507
|
|
|
$
|
12.97
|
|
|
$
|
7,114
|
|
(1)
|
Includes actual or expected payout rates as set forth in the performance criteria.
|
|
|
June 30,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Foreign currency translation
|
|
$
|
4,573
|
|
|
$
|
8,849
|
|
|
$
|
22,364
|
|
Unrealized gain on deferred compensation contracts
|
|
495
|
|
|
657
|
|
|
287
|
|
|||
Accumulated other comprehensive income
|
|
$
|
5,068
|
|
|
$
|
9,506
|
|
|
$
|
22,651
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
North American Value salons
|
|
$
|
1,395,339
|
|
|
$
|
1,403,419
|
|
|
$
|
1,430,083
|
|
North American Premium salons
|
|
283,438
|
|
|
309,600
|
|
|
333,858
|
|
|||
International salons
|
|
112,092
|
|
|
124,268
|
|
|
128,496
|
|
|||
|
|
$
|
1,790,869
|
|
|
$
|
1,837,287
|
|
|
$
|
1,892,437
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
||||||
North American Value salons
|
|
$
|
46,676
|
|
|
$
|
56,832
|
|
|
$
|
66,038
|
|
North American Premium salons
|
|
7,892
|
|
|
13,094
|
|
|
15,859
|
|
|||
International salons
|
|
2,843
|
|
|
3,148
|
|
|
5,227
|
|
|||
Total segment depreciation and amortization expense
|
|
57,411
|
|
|
73,074
|
|
|
87,124
|
|
|||
Unallocated Corporate
|
|
10,059
|
|
|
9,789
|
|
|
12,609
|
|
|||
|
|
$
|
67,470
|
|
|
$
|
82,863
|
|
|
$
|
99,733
|
|
Operating income (loss):
|
|
|
|
|
|
|
||||||
North American Value salons
|
|
$
|
130,016
|
|
|
$
|
122,597
|
|
|
$
|
117,832
|
|
North American Premium salons(1)
|
|
(12,796
|
)
|
|
(14,238
|
)
|
|
(46,419
|
)
|
|||
International salons
|
|
(1,882
|
)
|
|
313
|
|
|
(3,076
|
)
|
|||
Total segment operating income
|
|
115,338
|
|
|
108,672
|
|
|
68,337
|
|
|||
Unallocated Corporate
|
|
(97,724
|
)
|
|
(105,141
|
)
|
|
(103,295
|
)
|
|||
Operating income (loss)
|
|
17,614
|
|
|
3,531
|
|
|
(34,958
|
)
|
|||
Interest expense
|
|
(9,317
|
)
|
|
(10,206
|
)
|
|
(22,290
|
)
|
|||
Interest income and other, net
|
|
4,219
|
|
|
1,697
|
|
|
1,952
|
|
|||
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies
|
|
$
|
12,516
|
|
|
$
|
(4,978
|
)
|
|
$
|
(55,296
|
)
|
(1)
|
Included in the North American Premium salons segment's operating loss for fiscal year
2014
is a goodwill impairment charge of
$34.9 million
.
|
|
|
June 30,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
|
|
Total
Revenues
|
|
Property and
Equipment, Net
|
|
Total
Revenues
|
|
Property and
Equipment, Net
|
|
Total
Revenues
|
|
Property and
Equipment, Net
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
U.S.
|
|
$
|
1,563,023
|
|
|
$
|
167,613
|
|
|
$
|
1,585,672
|
|
|
$
|
198,471
|
|
|
$
|
1,626,794
|
|
|
$
|
240,460
|
|
Other countries
|
|
227,846
|
|
|
15,708
|
|
|
251,615
|
|
|
19,686
|
|
|
265,643
|
|
|
26,078
|
|
||||||
Total
|
|
$
|
1,790,869
|
|
|
$
|
183,321
|
|
|
$
|
1,837,287
|
|
|
$
|
218,157
|
|
|
$
|
1,892,437
|
|
|
$
|
266,538
|
|
|
|
Quarter Ended
|
|
|
||||||||||||||||
|
|
September 30
|
|
December 31
|
|
March 31(a)
|
|
June 30(a)
|
|
Year Ended
|
||||||||||
|
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
450,130
|
|
|
$
|
450,467
|
|
|
$
|
442,565
|
|
|
$
|
447,707
|
|
|
$
|
1,790,869
|
|
Cost of service and product revenues, excluding depreciation and amortization
|
|
260,804
|
|
|
267,056
|
|
|
260,046
|
|
|
259,623
|
|
|
1,047,529
|
|
|||||
Operating income (loss)
|
|
4,276
|
|
|
(2,883
|
)
|
|
5,621
|
|
|
10,600
|
|
|
17,614
|
|
|||||
Net (loss) income(b)
|
|
(808
|
)
|
|
(13,986
|
)
|
|
(2,084
|
)
|
|
5,562
|
|
|
(11,316
|
)
|
|||||
Net (loss) income per basic and diluted share(d)
|
|
(0.02
|
)
|
|
(0.29
|
)
|
|
(0.04
|
)
|
|
0.12
|
|
|
(0.23
|
)
|
|
|
Quarter Ended
|
|
|
||||||||||||||||
|
|
September 30
|
|
December 31
|
|
March 31
|
|
June 30
|
|
Year Ended
|
||||||||||
|
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
464,551
|
|
|
$
|
455,887
|
|
|
$
|
453,960
|
|
|
$
|
462,889
|
|
|
$
|
1,837,287
|
|
Cost of service and product revenues, excluding depreciation and amortization
|
|
268,664
|
|
|
268,049
|
|
|
261,947
|
|
|
264,615
|
|
|
1,063,275
|
|
|||||
Operating (loss) income
|
|
(754
|
)
|
|
(671
|
)
|
|
5,402
|
|
|
(446
|
)
|
|
3,531
|
|
|||||
Loss from continuing operations(b)
|
|
(9,843
|
)
|
|
(16,663
|
)
|
|
(4,763
|
)
|
|
(1,943
|
)
|
|
(33,212
|
)
|
|||||
Loss from discontinued operations(c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(630
|
)
|
|
(630
|
)
|
|||||
Net loss(b)(c)
|
|
(9,843
|
)
|
|
(16,663
|
)
|
|
(4,763
|
)
|
|
(2,573
|
)
|
|
(33,842
|
)
|
|||||
Loss from continuing operations per share, basic and diluted(d)
|
|
(0.18
|
)
|
|
(0.30
|
)
|
|
(0.09
|
)
|
|
(0.04
|
)
|
|
(0.60
|
)
|
|||||
Loss from discontinued operations per share, basic and diluted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|||||
Net loss per basic and diluted share(d)
|
|
(0.18
|
)
|
|
(0.30
|
)
|
|
(0.09
|
)
|
|
(0.05
|
)
|
|
(0.62
|
)
|
(a)
|
During the third quarter of fiscal year 2016, the Company recorded a cumulative adjustment to correct prior period errors that related to the overstatement of interest expense, insurance expense and telephone expense, and the understatement of depreciation expense in prior periods. The impact of these items on the Company's Consolidated Statement of Operations decreased interest expense by
$0.6 million
, decreased site operating expenses by
$0.5 million
, increased depreciation expense by
$0.3 million
, and decreased net loss by
$0.8 million
. During the fourth quarter of fiscal year 2016, the Company recorded an adjustment to correct an error related to the overstatement of depreciation expense in prior periods. The impact of this item on the Company's Consolidated Statement of Operations decreased depreciation expense and net loss by
$1.1 million
. Because these errors were not material to the Company's consolidated financial statements for any prior periods, the respective quarter, or fiscal year, the Company recorded adjustments to correct the errors during each respective quarter for fiscal 2016.
|
(b)
|
During the second quarter of fiscal year 2016, the Company recorded a
$13.0 million
other than temporary impairment charge on its investment in EEG. During the second quarter of fiscal year 2015, the Company recorded a
$4.7 million
other than temporary impairment charge and
$6.9 million
of its share of a deferred tax valuation allowance on its investment in EEG.
|
(c)
|
During the fourth quarter of fiscal year 2015, the Company recorded expenses of
$0.6 million
in discontinued operations related to legal fees related to Trade Secret.
|
(d)
|
Total is an annual recalculation; line items calculated quarterly may not sum to total.
|
(b)
|
(1). All financial statements:
|
(c)
|
Exhibits:
|
3(a)
|
|
Election of the Company to become governed by Minnesota Statutes Chapter 302A and Restated Articles of Incorporation of the Company, dated March 11, 1983; Articles of Amendment to Restated Articles of Incorporation, dated October 29, 1984; Articles of Amendment to Restated Articles of Incorporation, dated August 14, 1987; Articles of Amendment to Restated Articles of Incorporation, dated October 21, 1987; Articles of Amendment to Restated Articles of Incorporation, dated November 20, 1996; Articles of Amendment to Restated Articles of Incorporation, dated July 25, 2000; Articles of Amendment to Restated Articles of Incorporation, dated October 22, 2013. (Incorporated by reference to Exhibit 3(a) of the Company's Report on 10-K/A filed on September 26, 2014.)
|
|
|
|
3(b)
|
|
By-Laws of the Company. (Incorporated by reference to Exhibit 3.1 of the Company's Report on Form 8-K filed on October 31, 2006.)
|
|
|
|
3(c)
|
|
Certificate of the Voting Powers, Designations, Preferences and Relative Participating, Optional and Other Special Rights and Qualifications, Limitations or Restrictions of Series A Junior Participating Preferred Stock of the Company. (Attached as Exhibit A to the Rights Agreement dated December 26, 2006, and incorporated by reference to Exhibit 2 of the Company's Registration Statement on Form 8-A12B filed on December 26, 2006.)
|
|
|
|
4(a)
|
|
Shareholder Rights Agreement, dated December 23, 1996, between the Company and Norwest Bank Minnesota, N.A. as Rights Agent. (Incorporated by reference to Exhibit 4 of the Company's Report on Form 8-A12G filed on February 4, 1997 (File No. 000-11230).)
|
|
|
|
4(b)
|
|
Rights Agreement, dated December 26, 2006, between the Company and Wells Fargo Bank, N.A., as Rights Agent, and Form of Right Certificate attached as Exhibit B to the Rights Agreement. (Incorporated by reference to Exhibits 1 and 3 of the Company's Registration Statement on Form 8-A12B, filed on December 26, 2006.)
|
|
|
|
4(c)
|
|
Amendment No. 1, dated as of October 29, 2008, to Rights Agreement, dated December 26, 2006, between Regis Corporation and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 4 to the Company’s Form 8-A12B/A filed on October 29, 2008.)
|
|
|
|
4(d)
|
|
Amendment No. 2, dated as of June 13, 2013, to Rights Agreement, dated December 26, 2006, between Regis Corporation and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 4 to the Company's Registration Statement on Form 8-A12B/A filed on June 19, 2013.)
|
|
|
|
4(e)
|
|
Form of Stock Certificate. (Incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-1 (Reg. No. 40142).)
|
|
|
|
4(f)
|
|
Indenture dated November 27, 2013 by and between the Company and Wells Fargo Bank, N.A, as Trustee. (Incorporated by reference to Exhibit 10.4 of the Company's Report on Form 8-K filed December 4, 2013.)
|
|
|
|
4(g)
|
|
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.)
|
|
|
|
10(a)*
|
|
Short Term Incentive Compensation Plan, effective August 19, 2014. (Incorporated by reference to Appendix A of the Company's Proxy Statement on Definitive Form 14A filed on September 10, 2014, for the year ended June 30, 2014.)
|
|
|
|
10(b)*
|
|
Regis Corporation Executive Retirement Savings Plan Adoption Agreement and Trust Agreement, dated November 15, 2008 between the Company and Fidelity Management Trust Company (The CORPORATE Plan for Retirement EXECUTIVE PLAN basic plan document is incorporated by reference to Exhibit 10(c) to the Company's Report on Form 10-K filed on August 29, 2007, for the year ended June 30, 2007). (Incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q filed February 9, 2009.)
|
10(c)*
|
|
Employment Agreement, dated August 31, 2012, between the Company and Daniel J. Hanrahan. (Incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q filed November 9, 2012.)
|
|
|
|
10(d)*
|
|
Amendment to Employment Agreement, dated January 13, 2015, between the Company and Daniel J. Hanrahan. (Incorporated by reference to Exhibit 10(b) of the Company's Report on Form 10-Q filed January 29, 2015.)
|
|
|
|
10(e)*
|
|
Employment Agreement, dated November 28, 2012, between the Company and Steven M. Spiegel. (Incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q filed February 4, 2013.)
|
|
|
|
10(f)*
|
|
Amendment No. 1 to Employment Agreement, dated June 30, 2016, between the Company and Steven M. Spiegel.
|
|
|
|
10(g)*
|
|
Form of Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated August 31, 2012, between the Company and certain senior executive officers. (Incorporated by reference to Exhibit 10(b) of the Company's Report on Form 10-Q filed November 9, 2012.)
|
|
|
|
10(h)*
|
|
Employment Agreement, dated November 11, 2013, between the Company and Jim B. Lain. (Incorporated by reference to Exhibit 10(c) of the Company's Report on Form 10-Q filed February 3, 2014.)
|
|
|
|
10(i)*
|
|
Employment Agreement, dated October 21, 2013, between the Company and Carmen Thiede. (Incorporated by reference to Exhibit 10(b) of the Company's Report on Form 10-Q filed February 3, 2014.)
|
|
|
|
10(j)*
|
|
Employment Agreement, dated December 15, 2014, between the Company and Annette Miller. (Incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q filed January 29, 2015.)
|
|
|
|
10(k)*
|
|
Amended and Restated Employment Agreement, dated May 1, 2015, between the Company and Andrew Dulka. (Incorporated by reference to Exhibit 10(k) of the Company’s Report on Form 10-K filed August 28, 2015.)
|
|
|
|
10(l)*
|
|
Amended and Restated 2004 Long Term Incentive Plan, as amended and restated effective October 22, 2013. (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed on October 11, 2013.)
|
|
|
|
10(m)*
|
|
Amendment to the Amended and Restated 2004 Long Term Incentive Plan, effective August 29, 2014. (Incorporated by reference to Exhibit 10(b) of the Company's Report on Form 10-Q filed November 4, 2014.)
|
|
|
|
10(n)
|
|
Sixth Amended and Restated Credit Agreement, dated June 11, 2013, among the Company, and various financial institutions party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender, and Issuer, Bank of America, as Syndication Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, and Wells Fargo Bank, N.A., as Documentation Agents. (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed June 14, 2013.)
|
|
|
|
10(o)
|
|
First Amendment, dated as of 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. (Incorporated by reference to Exhibit 10(c) of the Company’s Report on Form 10-Q filed January 28, 2016).
|
|
|
|
10(p)
|
|
Purchase Agreement dated November 27, 2013 by and between the Company and an Initial Purchaser. (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed December 4, 2013.)
|
|
|
|
10(q)
|
|
Purchase Agreement dated November 27, 2013 by and between the Company and an Initial Purchaser. (Incorporated by reference to Exhibit 10.2 of the Company's Report on Form 8-K filed December 4, 2013.)
|
|
|
|
10(r)
|
|
Purchase Agreement dated November 27, 2013 by and between the Company and an Initial Purchaser. (Incorporated by reference to Exhibit 10.3 of the Company's Report on Form 8-K filed December 4, 2013.)
|
|
|
|
10(s)
|
|
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.)
|
|
|
|
21
|
|
List of Subsidiaries of Regis Corporation
|
|
|
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP
|
|
|
|
23.2
|
|
Consent of Baker Tilly Virchow Krause, LLP
|
|
|
|
31.1
|
|
Chief Executive Officer of the Company: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Executive Vice President and Chief Financial Officer of the Company: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32
|
|
Chief Executive Officer and Chief Financial Officer of the Company: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
(*)
|
Management contract, compensatory plan or arrangement required to be filed as an exhibit to the Company's Report on Form 10-K.
|
|
REGIS CORPORATION
|
|
|
By
|
/s/ DANIEL J. HANRAHAN
|
|
|
Daniel J. Hanrahan,
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
By
|
/s/ STEVEN M. SPIEGEL
|
|
|
Steven M. Spiegel,
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
By
|
/s/ KERSTEN D. ZUPFER
|
|
|
Kersten D. Zupfer,
Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer)
|
|
DATE: August 23, 2016
|
/s/ STEPHEN E. WATSON
|
|
|
Stephen E. Watson,
Chairman of the Board of Directors
|
|
Date: August 23, 2016
|
|
|
|
/s/ DANIEL J. HANRAHAN
|
|
|
Daniel J. Hanrahan,
Director
|
|
Date: August 23, 2016
|
|
|
|
/s/ DANIEL G. BELTZMAN
|
|
|
Daniel G. Beltzman,
Director
|
|
Date: August 23, 2016
|
|
|
|
/s/ M. ANN RHOADES
|
|
|
M. Ann Rhoades,
Director
|
|
Date: August 23, 2016
|
|
|
|
/s/ MICHAEL J. MERRIMAN
|
|
|
Michael J. Merriman,
Director
|
|
Date: August 23, 2016
|
|
|
|
/s/ DAVID P. WILLIAMS
|
|
|
David P. Williams,
Director
|
|
Date: August 23, 2016
|
|
|
|
/s/ DAVID J. GRISSEN
|
|
|
David J. Grissen,
Director
|
|
Date: August 23, 2016
|
|
|
|
/s/ MARK LIGHT
|
|
|
Mark Light,
Director
|
|
Date: August 23, 2016
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
Current Assets
|
|
|
|
|
Current liabilities
|
|
|
|
||||||||||||||
|
Cash and cash equivalents
|
$
|
40,974,612
|
|
|
$
|
34,151,811
|
|
|
|
Current maturities, capital lease obligation
|
|
|
|
||||||||
|
Restricted cash
|
139,264
|
|
|
449,243
|
|
|
|
|
and long term debt
|
$
|
481,346
|
|
|
$
|
458,722
|
|
|||||
|
Accounts receivable:
|
|
|
|
|
|
Accounts payable, trade
|
1,618,751
|
|
|
2,389,701
|
|
||||||||||
|
|
Students (net of allowance of $5,921,211 and
|
|
|
|
|
|
Affiliates
|
3,118
|
|
|
—
|
|
|||||||||
|
|
$8,664,840 in 2016 and 2015, respectively)
|
2,529,767
|
|
|
6,367,681
|
|
|
|
Accounts payable, accrued
|
2,358,180
|
|
|
3,431,053
|
|
|||||||
|
|
Other
|
137,306
|
|
|
80,833
|
|
|
|
Accrued payroll
|
1,285,360
|
|
|
1,535,836
|
|
|||||||
|
|
Affiliates, unsecured
|
17,992
|
|
|
45,859
|
|
|
|
Accrued expenses
|
1,368,572
|
|
|
1,284,163
|
|
|||||||
|
Inventories
|
2,145,571
|
|
|
2,632,618
|
|
|
|
Trust liabilities
|
139,264
|
|
|
199,181
|
|
||||||||
|
Prepaid expenses
|
723,143
|
|
|
1,278,926
|
|
|
|
Unearned tuition
|
10,905,463
|
|
|
9,483,511
|
|
||||||||
|
Prepaid corporate income taxes
|
65,303
|
|
|
1,431,345
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total current liabilities
|
18,160,054
|
|
|
18,782,167
|
|
||||||||
|
|
|
Total current assets
|
46,732,958
|
|
|
46,438,316
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Capital Lease Obligation
|
6,770,910
|
|
|
7,031,094
|
|
|||||||||
Property and Equipment, Net
|
32,117,007
|
|
|
34,907,422
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
Long-Term Debt
|
14,921,514
|
|
|
20,642,677
|
|
||||||||||||
Other Assets
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Intangibles, not subject to amortization
|
8,704,186
|
|
|
8,704,186
|
|
|
Deferred Rent
|
7,063,670
|
|
|
6,878,714
|
|
|||||||||
|
Intangibles, net
|
110,740
|
|
|
157,641
|
|
|
|
|
|
|
|||||||||||
|
Prepublication costs (net of accumulated
|
|
|
|
|
Deferred Compensation
|
—
|
|
|
217,768
|
|
|||||||||||
|
|
amortization of $149,037 and $85,522 in 2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
and 2015, respectively)
|
167,604
|
|
|
231,120
|
|
|
|
|
|
Total liabilities
|
46,916,148
|
|
|
53,552,420
|
|
|||||
|
Notes receivable, employees, secured
|
216,791
|
|
|
215,701
|
|
|
Commitments and Contingencies (Notes 11, 14)
|
|
|
|
|||||||||||
|
Deposits and other assets
|
1,063,936
|
|
|
704,756
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|||||||||||||
|
|
|
Total other assets
|
10,263,257
|
|
|
10,013,404
|
|
|
|
Preferred stock:
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
Series A, 8% cumulative, redeemable, $0.001
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
par value, 150 shares authorized, 100
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
issued and outstanding
|
10,000,000
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
Series B, 8% cumulative, redeemable, $0.001
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
par value, 114 shares authorized,
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
none issued and outstanding
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 10,000 shares
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
authorized, 897.938 shares issued and outstanding
|
1
|
|
|
1
|
|
||||||
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
66,346,025
|
|
|
66,400,281
|
|
||||||||
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
(34,148,952
|
)
|
|
(28,593,560
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
42,197,074
|
|
|
37,806,722
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Total
|
$
|
89,113,222
|
|
|
$
|
91,359,142
|
|
|
|
|
|
Total
|
$
|
89,113,222
|
|
|
$
|
91,359,142
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
|
|
|
|
|
||||||||
|
Educational services
|
$
|
110,684,320
|
|
|
$
|
132,946,719
|
|
|
$
|
146,462,085
|
|
|
|
Products
|
19,617,360
|
|
|
22,050,047
|
|
|
20,078,121
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total revenue
|
130,301,680
|
|
|
154,996,766
|
|
|
166,540,206
|
|
|||
|
|
|
|
|
|
|
|
||||||
Operating Expenses
|
|
|
|
|
|
||||||||
|
Cost of educational services, exclusive of depreciation and amortization
|
83,330,808
|
|
|
97,804,550
|
|
|
95,493,987
|
|
||||
|
Cost of product sales
|
12,386,245
|
|
|
14,545,443
|
|
|
12,815,299
|
|
||||
|
General, selling, and administrative, exclusive of depreciation and amortization
|
32,679,233
|
|
|
38,269,157
|
|
|
42,850,496
|
|
||||
|
Depreciation and amortization
|
4,909,281
|
|
|
5,352,592
|
|
|
7,385,895
|
|
||||
|
Other operating expenses
|
2,723,148
|
|
|
2,902,235
|
|
|
3,052,561
|
|
||||
|
Loss on disposal and sale of assets
|
38,678
|
|
|
167,942
|
|
|
14,026
|
|
||||
|
Impairment loss
|
91,258
|
|
|
218,950
|
|
|
38,454,344
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total operating expenses
|
136,158,651
|
|
|
159,260,869
|
|
|
200,066,608
|
|
|||
|
|
|
|
|
|
|
|
||||||
Loss from Operations
|
(5,856,971
|
)
|
|
(4,264,103
|
)
|
|
(33,526,402
|
)
|
|||||
|
|
|
|
|
|
||||||||
Other Income (Expense)
|
|
|
|
|
|
||||||||
|
Interest expense
|
(800,875
|
)
|
|
(655,523
|
)
|
|
(661,863
|
)
|
||||
|
Interest income
|
70,531
|
|
|
73,156
|
|
|
38,702
|
|
||||
|
Miscellaneous income
|
513,823
|
|
|
733,594
|
|
|
185,167
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total other income (expense), net
|
(216,521
|
)
|
|
151,227
|
|
|
(437,994
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
Loss Before (Benefit) Provision for Income Taxes
|
(6,073,492
|
)
|
|
(4,112,876
|
)
|
|
(33,964,396
|
)
|
|||||
|
|
|
|
|
|
||||||||
(Benefit) Provision for Income Taxes
|
(522,484
|
)
|
|
12,625,065
|
|
|
(7,265,186
|
)
|
|||||
|
|
|
|
|
|
|
|
||||||
|
|
Net Loss
|
$
|
(5,551,008
|
)
|
|
$
|
(16,737,941
|
)
|
|
$
|
(26,699,210
|
)
|
|
Series A
|
|
|
|
|
|
Additional
|
|
Retained Earnings
|
|
|
||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Paid-in
|
|
(Accumulated
|
|
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit)
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, June 30, 2013
|
—
|
|
|
$
|
—
|
|
|
889.938
|
|
|
$
|
1
|
|
|
$
|
65,990,071
|
|
|
$
|
14,878,850
|
|
|
$
|
80,868,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Loss
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(26,699,210
|
)
|
|
(26,699,210
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock Option Exercise
|
|
|
|
|
10
|
|
|
—
|
|
|
234,020
|
|
|
—
|
|
|
234,020
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation Costs from Stock Options
|
|
|
|
|
|
|
—
|
|
|
371,777
|
|
|
—
|
|
|
371,777
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, June 30, 2014
|
—
|
|
|
—
|
|
|
899.938
|
|
|
1
|
|
|
66,595,868
|
|
|
(11,820,360
|
)
|
|
54,775,509
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Loss
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(16,737,941
|
)
|
|
(16,737,941
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repurchase & Cancellation of Shares
|
|
|
|
|
(2
|
)
|
|
—
|
|
|
(46,804
|
)
|
|
(35,259
|
)
|
|
(82,063
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cancellation of Non-Qualified Stock Option
|
|
|
|
|
|
|
—
|
|
|
(179,764
|
)
|
|
—
|
|
|
(179,764
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation Costs from Stock Options
|
|
|
|
|
|
|
—
|
|
|
30,981
|
|
|
—
|
|
|
30,981
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, June 30, 2015
|
—
|
|
|
—
|
|
|
897.938
|
|
|
1
|
|
|
66,400,281
|
|
|
(28,593,560
|
)
|
|
37,806,722
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Loss
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(5,551,008
|
)
|
|
(5,551,008
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cancellation of Non-Qualified Stock Option
|
|
|
|
|
|
|
—
|
|
|
(54,256
|
)
|
|
—
|
|
|
(54,256
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Issuance of Preferred Stock
|
100
|
|
|
10,000,000
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred stock dividends
|
|
|
|
|
|
|
|
|
|
|
(4,384
|
)
|
|
(4,384
|
)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, June 30, 2016
|
100
|
|
|
$
|
10,000,000
|
|
|
897.938
|
|
|
$
|
1
|
|
|
$
|
66,346,025
|
|
|
$
|
(34,148,952
|
)
|
|
$
|
42,197,074
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
||||||||||
|
Net loss
|
$
|
(5,551,008
|
)
|
|
$
|
(16,737,941
|
)
|
|
$
|
(26,699,210
|
)
|
|||
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|||||||||
|
provided by operating activities:
|
|
|
|
|
|
|||||||||
|
|
Depreciation
|
4,798,864
|
|
|
5,214,764
|
|
|
7,269,278
|
|
|||||
|
|
Amortization of intangibles
|
46,901
|
|
|
76,714
|
|
|
92,210
|
|
|||||
|
|
Amortization of prepublication costs
|
63,516
|
|
|
61,114
|
|
|
24,408
|
|
|||||
|
|
Impairment loss
|
91,258
|
|
|
218,950
|
|
|
38,454,344
|
|
|||||
|
|
Deferred compensation
|
(217,768
|
)
|
|
—
|
|
|
—
|
|
|||||
|
|
Compensation cost from stock options
|
—
|
|
|
30,981
|
|
|
371,777
|
|
|||||
|
|
Loss on disposal and sale of equipment
|
38,678
|
|
|
167,942
|
|
|
14,026
|
|
|||||
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
||||||||
|
|
|
|
Accounts receivable, student
|
6,581,543
|
|
|
(5,083,059
|
)
|
|
(178,954
|
)
|
|||
|
|
|
|
Deferred income taxes
|
(54,256
|
)
|
|
13,998,601
|
|
|
(6,772,707
|
)
|
|||
|
|
|
|
Provision for uncollectible accounts
|
(2,743,629
|
)
|
|
1,953,954
|
|
|
(1,114,546
|
)
|
|||
|
|
|
|
Inventories
|
487,047
|
|
|
1,338,430
|
|
|
(1,776,362
|
)
|
|||
|
|
|
|
Prepaid expenses and other assets
|
1,534,039
|
|
|
3,635,353
|
|
|
(1,472,144
|
)
|
|||
|
|
|
|
Restricted cash and trust liabilities
|
250,062
|
|
|
(250,062
|
)
|
|
—
|
|
|||
|
|
|
|
Notes receivable, employee, secured
|
(1,090
|
)
|
|
(1,156
|
)
|
|
(35,734
|
)
|
|||
|
|
|
|
Accounts payable and accrued expenses
|
(2,006,772
|
)
|
|
(1,904,515
|
)
|
|
760,895
|
|
|||
|
|
|
|
Unearned tuition
|
1,421,952
|
|
|
(4,225,365
|
)
|
|
(1,249,956
|
)
|
|||
|
|
|
|
Deferred rent
|
184,956
|
|
|
2,639,824
|
|
|
(5,857
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Total adjustments
|
10,475,301
|
|
|
17,872,470
|
|
|
34,380,678
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Net cash provided by operating activities
|
4,924,293
|
|
|
1,134,529
|
|
|
7,681,468
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities
|
|
|
|
|
|
||||||||||
|
Purchases of property and equipment
|
(3,661,895
|
)
|
|
(4,223,078
|
)
|
|
(4,336,333
|
)
|
||||||
|
Proceeds from sale of property and equipment
|
1,523,510
|
|
|
242,003
|
|
|
54,626
|
|
||||||
|
Investment in prepublication costs
|
—
|
|
|
(13,100
|
)
|
|
(254,010
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Net cash used in investing activities
|
(2,138,385
|
)
|
|
(3,994,175
|
)
|
|
(4,535,717
|
)
|
||||
|
|
|
|
|
|
||||||||||
Cash Flows from Financing Activities
|
|
|
|
|
|
||||||||||
|
Net (repayment) proceeds of long-term debt
|
(5,721,163
|
)
|
|
(636,163
|
)
|
|
11,653,536
|
|
||||||
|
Repayment of capital lease obligation
|
(237,560
|
)
|
|
(244,149
|
)
|
|
(225,701
|
)
|
||||||
|
Proceeds from preferred stock issuance
|
10,000,000
|
|
|
—
|
|
|
—
|
|
||||||
|
Preferred stock dividends
|
(4,384
|
)
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Net cash provided (used in) by financing activities
|
4,036,893
|
|
|
(880,312
|
)
|
|
11,427,835
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
6,822,801
|
|
|
(3,739,958
|
)
|
|
14,573,586
|
|
|||||||
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents, Beginning
|
34,151,811
|
|
|
37,891,769
|
|
|
23,318,183
|
|
|||||||
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents, Ending
|
$
|
40,974,612
|
|
|
$
|
34,151,811
|
|
|
$
|
37,891,769
|
|
||||
|
|
|
|
|
|
||||||||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||||||||||
|
Interest paid, net of capitalized interest
|
$
|
805,595
|
|
|
$
|
648,105
|
|
|
$
|
667,278
|
|
|||
|
|
|
|
|
|
|
|||||||||
|
Income taxes (refunded) paid, net
|
$
|
(1,722,836
|
)
|
|
$
|
(3,736,501
|
)
|
|
$
|
81,264
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Non-Cash Operating and Financing Activities
|
|
|
|
|
|
||||||||||
|
Shareholders note receivable exchanged for common stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
234,020
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Additional paid-in capital - repurchase and cancellation of shares
|
$
|
—
|
|
|
$
|
101,757
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Retained earnings - repurchase and cancellation of shares
|
$
|
—
|
|
|
$
|
35,259
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Notes receivable, employee, secured - repurchase and cancellation of shares
|
$
|
—
|
|
|
$
|
(110,163
|
)
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Accrued expenses - repurchase and cancellation of shares
|
$
|
—
|
|
|
$
|
(26,853
|
)
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Additional paid-in capital - non-qualifying stock option cancellation after vesting
|
$
|
54,256
|
|
|
$
|
179,764
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Deferred tax asset - non-qualifying stock option cancelled after vesting
|
$
|
(54,256
|
)
|
|
$
|
(179,764
|
)
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Deferred compensation liability
|
$
|
217,768
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
Stock based employee compensation
|
$
|
(217,768
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
1.
|
Nature of Operations and Summary of Significant Accounting Policies
|
1.
|
Nature of Operations and Summary of Significant Accounting Policies (Continued)
|
1.
|
Nature of Operations and Summary of Significant Accounting Policies (Continued)
|
1.
|
Nature of Operations and Summary of Significant Accounting Policies (Continued)
|
1.
|
Nature of Operations and Summary of Significant Accounting Policies (Continued)
|
2.
|
Restricted Cash
|
|
2016
|
|
2015
|
||||
Third party scholarship funds
|
$
|
71,000
|
|
|
$
|
113,000
|
|
Charitable contribution pledges
|
58,400
|
|
|
67,774
|
|
||
State agencies student funds
|
6,963
|
|
|
16,090
|
|
||
Title IV program funds
|
2,695
|
|
|
2,180
|
|
||
Other
|
206
|
|
|
137
|
|
||
Certificate of deposit
|
—
|
|
|
250,062
|
|
||
Total restricted cash
|
$
|
139,264
|
|
|
$
|
449,243
|
|
3.
|
Property and Equipment, Net
|
|
|
2016
|
|
2015
|
||||
Land
|
$
|
—
|
|
|
$
|
900,000
|
|
|
Building
|
—
|
|
|
200,000
|
|
|||
Capital lease asset (Note 5)
|
8,200,000
|
|
|
8,200,000
|
|
|||
Leasehold improvements
|
41,456,342
|
|
|
42,964,878
|
|
|||
Furniture, fixtures, and equipment
|
24,120,131
|
|
|
24,832,102
|
|
|||
Automotive equipment
|
225,021
|
|
|
275,235
|
|
|||
Audio-video equipment
|
2,191,302
|
|
|
2,377,130
|
|
|||
Signs
|
1,478,098
|
|
|
1,519,957
|
|
|||
Construction in progress
|
702,295
|
|
|
577,327
|
|
|||
|
|
|
|
|
||||
|
Total cost
|
78,373,189
|
|
|
81,846,629
|
|
||
|
|
|
|
|
||||
Less accumulated depreciation and
|
|
|
|
|||||
amortization
|
46,256,182
|
|
|
46,939,207
|
|
|||
|
|
|
|
|||||
Property and equipment, net
|
$
|
32,117,007
|
|
|
$
|
34,907,422
|
|
4.
|
Intangible Assets
|
4.
|
Intangible Assets (Continued)
|
|
|
2016
|
||||||||||
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
Carrying Amount
|
||||||
|
|
|
|
|
|
|
|
|
|
|||
Copyrights and trade names
|
$
|
2,623,883
|
|
|
$
|
2,603,792
|
|
|
$
|
20,091
|
|
|
Below market rate leases
|
1,100,614
|
|
|
1,012,470
|
|
|
88,144
|
|
||||
Business covenants
|
725,100
|
|
|
722,595
|
|
|
2,505
|
|
||||
Customer lists
|
50,000
|
|
|
50,000
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||
|
Total
|
$
|
4,499,597
|
|
|
$
|
4,388,857
|
|
|
$
|
110,740
|
|
|
|
2015
|
||||||||||
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
Carrying Amount
|
||||||
|
|
|
|
|
|
|
||||||
Copyrights and trade names
|
$
|
2,623,883
|
|
|
$
|
2,601,200
|
|
|
$
|
22,683
|
|
|
Below market rate leases
|
1,100,614
|
|
|
978,181
|
|
|
122,433
|
|
||||
Business covenants
|
730,100
|
|
|
717,575
|
|
|
12,525
|
|
||||
Customer lists
|
50,000
|
|
|
50,000
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
||||||
|
Total
|
$
|
4,504,597
|
|
|
$
|
4,346,956
|
|
|
$
|
157,641
|
|
5.
|
Capital Lease Obligation
|
6.
|
Long-Term Debt
|
7.
|
Deferred Compensation
|
8.
|
Income Taxes
|
|
2016
|
|
2015
|
|
2014
|
||||||
U.S.
|
$
|
(6,073,492
|
)
|
|
$
|
(4,112,876
|
)
|
|
$
|
(33,964,396
|
)
|
8.
|
Income Taxes (Continued)
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current
|
|
|
|
|
|
||||||||
|
Federal
|
$
|
(417,286
|
)
|
|
$
|
(1,570,540
|
)
|
|
$
|
(157,680
|
)
|
|
|
State
|
(105,198
|
)
|
|
197,006
|
|
|
(334,799
|
)
|
||||
Deferred
|
|
|
|
|
|
||||||||
|
Federal
|
—
|
|
|
10,264,661
|
|
|
(5,698,153
|
)
|
||||
|
State
|
—
|
|
|
3,733,938
|
|
|
(1,074,554
|
)
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total
|
$
|
(522,484
|
)
|
|
$
|
12,625,065
|
|
|
$
|
(7,265,186
|
)
|
|
|
|
2016
|
|
2015
|
||||
Beginning Balance
|
$
|
12,691,196
|
|
|
$
|
—
|
|
||
Establishment of valuation allowance on deferred tax assets
|
—
|
|
|
12,564,735
|
|
||||
Changes to deferred tax asset valuation allowance
|
(566,994
|
)
|
|
126,461
|
|
||||
Ending Balance, June 30
|
$
|
12,124,202
|
|
|
$
|
12,691,196
|
|
8.
|
Income Taxes (Continued)
|
|
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
|
||||
Current assets
|
|
$
|
2,595,819
|
|
|
$
|
3,752,805
|
|
|
Less: valuation allowance
|
|
(2,595,819
|
)
|
|
(3,752,805
|
)
|
|||
|
Net current deferred income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||
Noncurrent assets
|
|
9,528,383
|
|
|
8,938,391
|
|
|||
Less: valuation allowance
|
|
(9,528,383
|
)
|
|
(8,938,391
|
)
|
|||
|
Net noncurrent deferred income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2016
|
|
2015
|
|
2014
|
|||
|
|
|
|
|
|
|||
Statutory U.S. federal income tax rate
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State and local income taxes
|
—
|
|
|
(6.6
|
)
|
|
2.4
|
|
Nondeductible goodwill
|
—
|
|
|
—
|
|
|
(15.7
|
)
|
Deferred tax valuation allowance
|
(34.0
|
)
|
|
(308.6
|
)
|
|
—
|
|
Estimate to actual rate true up
|
8.6
|
|
|
(19.6
|
)
|
|
—
|
|
Other
|
—
|
|
|
(6.2
|
)
|
|
0.7
|
|
Effective income tax rate
|
8.6
|
%
|
|
(307.0
|
)%
|
|
21.4
|
%
|
8.
|
Income Taxes (Continued)
|
|
2016
|
|
2015
|
|||||
Deferred tax assets:
|
|
|
|
|||||
Net operating loss carryforwards
|
$
|
3,227,677
|
|
|
$
|
—
|
|
|
Capital lease
|
2,830,757
|
|
|
2,858,920
|
|
|||
Deferred rent
|
2,818,259
|
|
|
2,681,882
|
|
|||
Allowance for doubtful accounts
|
2,363,849
|
|
|
3,377,935
|
|
|||
State deferred bonus depreciation
|
751,304
|
|
|
722,034
|
|
|||
Payroll and payroll related costs
|
487,056
|
|
|
860,321
|
|
|||
Other
|
106,380
|
|
|
767,989
|
|
|||
Depreciation and amortization
|
(461,080
|
)
|
|
1,422,115
|
|
|||
Less: valuation allowance
|
(12,124,202
|
)
|
|
(12,691,196
|
)
|
|||
Total deferred income tax assets
|
$
|
—
|
|
|
$
|
—
|
|
10.
|
Stock Transactions
|
10.
|
Stock Transactions (Continued)
|
11.
|
Commitments
|
14.
|
Contingencies
|
15.
|
Concentrations of Credit Risk
|
16.
|
Stock Options
|
|
Number of
Shares
|
Exercise
Price
(per share)
|
Remaining
Contractual
Life (per
share)
|
||||
Outstanding, June 30, 2015
|
40
|
|
$
|
129,400
|
|
3.00
|
|
Less: Options cancelled after vesting, May 2016
|
20
|
|
$
|
129,400
|
|
0.00
|
|
Total Outstanding, June 30, 2016
|
20
|
|
$
|
129,400
|
|
2.00
|
|
Weighted Average fair value of options granted:
|
|
|
$55,929
|
Option Price Range (Fair Value):
|
|
|
$45,233 - $109,408
|
17.
|
Fair Value of Financial Instruments
|
|
|
|
|
2016
|
|
2015
|
||||||||||||
|
|
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash, cash
|
|
|
|
|
|
|
|
|
|||||||||
|
|
equivalents, and restricted cash
|
|
$
|
41,113,876
|
|
|
$
|
41,113,876
|
|
|
$
|
34,601,054
|
|
|
$
|
34,601,054
|
|
|
Accounts
|
|
|
|
|
|
|
|
|
|||||||||
|
|
receivable, net
|
|
2,667,073
|
|
|
2,667,073
|
|
|
6,448,514
|
|
|
6,448,514
|
|
||||
|
Accounts
|
|
|
|
|
|
|
|
|
|||||||||
|
|
receivable, affiliates
|
|
17,992
|
|
|
N/A
|
|
|
45,859
|
|
|
N/A
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||||
|
Long Term
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Debt, other
|
|
15,142,677
|
|
|
15,142,677
|
|
|
20,863,840
|
|
|
20,863,840
|
|
||||
|
Accounts
|
|
|
|
|
|
|
|
|
|||||||||
|
|
payable, trade
|
|
1,618,751
|
|
|
1,618,751
|
|
|
2,389,701
|
|
|
2,389,701
|
|
||||
|
Deferred rent
|
|
2,900,839
|
|
|
2,900,839
|
|
|
2,634.351
|
|
|
2,634.351
|
|
▪
|
Cash, cash equivalents, and restricted cash; accounts receivable, net; and accounts payable, trade - the carrying amounts approximate fair value because of the short-term maturity of these instruments and they are considered level 2 inputs under Fair Value Measurements.
|
▪
|
Accounts receivable, affiliate; accounts payable, affiliates; and long-term debt, affiliate - estimating the fair value of these instruments is not practicable because the terms of these transactions would not necessarily be duplicated in the market.
|
▪
|
Long-term debt, other - the carrying amounts of long-term debt, other approximate fair value based on borrowing rates available to the Company for debt with similar terms and they are considered level 2 inputs under Fair Value Measurements.
|
▪
|
Deferred rent - the values are the component of Deferred Rent liability which represents the carrying value and estimated fair value of the future rent liabilities associated with school closings in advance of lease terminations. These values have been determined via discounted cash flow models and are classified as level 3 Fair Value Measurements.
|
Description
|
Value
|
|
Level 3
|
|
Impairment
|
||||||
Long-lived assets
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
91,258
|
|
Deferred rent
(2)
|
$
|
2,900,839
|
|
|
$
|
2,900,839
|
|
|
N/A
|
|
Description
|
Value
|
|
Level 3
|
|
Impairment
|
||||||
Long-lived assets
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
218,950
|
|
Deferred rent
(2)
|
$
|
2,634,351
|
|
|
$
|
2,634,351
|
|
|
N/A
|
|
|
|
|
|
Exhibit 10(f)*
|
|
|
REGIS CORPORATION
|
|
|
|
|
|
|
|
/s/ Dan Hanrahan
|
|
|
|
By: Dan Hanrahan
|
|
|
|
Its: CEO
|
|
|
|
|
|
|
|
/s/ Steven Spiegel
|
|
|
|
Steven Spiegel
|
|
|
|
|
|
|
|
|
|
Company Name
|
|
Country or State of
Incorporation/Formation |
The Barbers, Hairstyling for Men & Women, Inc.
|
|
Minnesota
|
WCH, Inc.*
|
|
Minnesota
|
We Care Hair Realty, Inc.*
|
|
Delaware
|
Roosters MGC International LLC
|
|
Michigan
|
Supercuts, Inc.
|
|
Delaware
|
Supercuts Corporate Shops, Inc.
|
|
Delaware
|
Tulsa’s Best Haircut LLC
|
|
Oklahoma
|
RPC Acquisition Corp.
|
|
Minnesota
|
RPC Corporate Shops, Inc.
|
|
Minnesota
|
Regis Corp.
|
|
Minnesota
|
Regis Insurance Group, Inc.
|
|
Vermont
|
Regis, Inc.
|
|
Minnesota
|
First Choice Haircutters International Corp.
|
|
Delaware
|
Cutco Acquisition Corp.
|
|
Minnesota
|
Great Expectations Precision Haircutters of Evans Towne Center, Inc.
|
|
Minnesota
|
Great Expectations Precision Haircutters of Northlake Mall, Inc.
|
|
Minnesota
|
Regis International Ltd.
|
|
Minnesota
|
N.A.H.C. Acquisition LLC*
|
|
Minnesota
|
EEG, Inc.
|
|
Delaware
|
Salon Management Corporation
|
|
California
|
Salon Management Corporation of New York*
|
|
New York
|
Regis Netherlands, Inc
|
|
Minnesota
|
Roger Merger Subco LLC
|
|
Delaware
|
RGS International SNC
|
|
Luxemburg
|
Regis International Holdings SARL
|
|
Luxemburg
|
Regis Holdings (Canada), Ltd
|
|
Nova Scotia
|
First Choice Haircutters, Ltd
|
|
Nova Scotia
|
Magicuts, Ltd
|
|
Nova Scotia
|
RHS UK Holdings Ltd*
|
|
United Kingdom
|
Haircare Ltd*
|
|
United Kingdom
|
Haircare Gmbh
|
|
Germany
|
York Ave Beauty Salons
|
|
Canada
|
Sagestyle Ltd*
|
|
United Kingdom
|
Haircare UK Ltd*
|
|
United Kingdom
|
Regis UK Limited
|
|
United Kingdom
|
4 Inactive Subsidiaries*
|
|
United Kingdom
|
Blinkers Group, Ltd*
|
|
United Kingdom
|
Blinkers Property, Ltd*
|
|
United Kingdom
|
HCUK Hair, Ltd*
|
|
United Kingdom
|
My Style Co., Ltd
|
|
Japan
|
Mark Anthony, Inc.
|
|
North Carolina
|
|
|
|
*Inactive Entities
|
|
|
|
|
|
/s/ PRICEWATERHOUSECOOPERS LLP
|
|
|
|
|
|
Minneapolis, Minnesota
|
|
|
August 23, 2016
|
|
|
|
|
|
/s/ BAKER TILLY VIRCHOW KRAUSE, LLP
|
|
|
|
|
|
Wilkes-Barre, Pennsylvania
|
|
|
August 22, 2016
|
|
|
1.
|
I have reviewed this annual report on Form 10-K 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.
|
August 23, 2016
|
|
|
|
/s/ Daniel J. Hanrahan
|
|
Daniel J. Hanrahan, President and Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K 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.
|
August 23, 2016
|
|
|
|
/s/ Steven M. Spiegel
|
|
Steven M. Spiegel, Executive Vice President and Chief Financial Officer
|
|
(1)
|
The Annual Report on Form 10-K 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 Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
August 23, 2016
|
|
|
|
/s/ Daniel J. Hanrahan
|
|
Daniel J. Hanrahan, President and Chief Executive Officer
|
|
|
|
August 23, 2016
|
|
|
|
/s/ Steven M. Spiegel
|
|
Steven M. Spiegel, Executive Vice President and Chief Financial Officer
|
|