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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, 2017
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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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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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Emerging growth company
o
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Page(s)
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June 30,
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2017
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2016
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2015
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Company-owned salons:
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SmartStyle in Walmart stores
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2,652
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2,683
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2,639
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Supercuts
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980
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1,053
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1,092
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MasterCuts
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339
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430
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466
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Signature Style
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1,468
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1,604
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1,711
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Regis
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559
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694
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761
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Total North American salons(1)
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5,998
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6,464
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6,669
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Total International salons(2)
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275
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328
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356
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Total, Company-owned salons
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6,273
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6,792
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7,025
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Franchised salons:
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SmartStyle in Walmart stores(3)
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62
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11
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11
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Cost Cutters in Walmart stores
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114
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114
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116
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Supercuts
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1,687
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1,579
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1,393
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Signature Style
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770
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792
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804
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Total North American salons
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2,633
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2,496
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2,324
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Total International salons(2)
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13
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—
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—
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Total, Franchised salons
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2,646
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2,496
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2,324
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Ownership interest locations:
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Equity ownership interest locations
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89
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195
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207
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Grand Total, System-wide
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9,008
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9,483
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9,556
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Fiscal Years
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2017
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2016
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2015
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Company-owned salons:
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SmartStyle in Walmart stores
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37
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51
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68
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Supercuts
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2
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5
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7
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MasterCuts
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—
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—
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—
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Signature Style
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—
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1
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1
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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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39
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57
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76
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Total International salons(2)
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2
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9
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15
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Total, Company-owned salons
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41
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66
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91
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Franchised salons:
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SmartStyle in Walmart stores(3)
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—
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—
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1
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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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111
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146
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126
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Signature Style
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27
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24
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13
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Total North American salons(1)
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138
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170
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140
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Total International salons(2)
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8
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—
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—
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Total, Franchised salons
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146
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170
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140
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Fiscal Years
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2017
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2016
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2015
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Company-owned salons:
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SmartStyle in Walmart stores
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(11
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)
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(7
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)
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(3
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)
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Supercuts
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(51
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)
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(17
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)
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(36
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)
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MasterCuts
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(91
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)
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(36
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)
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(39
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)
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Signature Style
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(123
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)
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(77
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)
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(114
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)
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Regis
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(135
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)
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(67
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)
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(55
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)
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Total North American salons(1)
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(411
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)
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(204
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)
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(247
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)
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Total International salons(2)
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(50
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)
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(37
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)
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(19
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)
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Total, Company-owned salons
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(461
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)
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(241
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)
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(266
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)
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Franchised salons:
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SmartStyle in Walmart stores(3)
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(1
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)
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—
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—
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Cost Cutters in Walmart stores
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(5
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)
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(2
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)
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—
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Supercuts
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(44
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)
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(22
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)
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(22
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Signature Style
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(43
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)
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(32
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)
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(50
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)
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Total North American salons(1)
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(93
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)
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(56
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)
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(72
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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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(93
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)
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(56
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)
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(72
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)
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Fiscal Years
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|||||||
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2017
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2016
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2015
|
|||
Company-owned salons:
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SmartStyle in Walmart stores
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(57
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)
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—
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—
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Supercuts
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(24
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)
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(27
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)
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(55
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)
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MasterCuts
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—
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—
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—
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Signature Style
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(13
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)
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(31
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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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(94
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)
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(58
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)
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(77
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)
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Total International salons(2)
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(5
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)
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—
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—
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Total, Company-owned salons(5)
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(99
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)
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(58
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)
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(77
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)
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Franchised salons:
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|
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SmartStyle in Walmart stores(3)
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52
|
|
|
—
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|
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—
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Cost Cutters in Walmart stores
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5
|
|
|
—
|
|
|
—
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Supercuts
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41
|
|
|
62
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|
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76
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Signature Style
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(6
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)
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(4
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)
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1
|
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Total North American salons(1)
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92
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58
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|
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77
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Total International salons(2)
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5
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—
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—
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Total, Franchised salons(5)
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97
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58
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77
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(1)
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The North American Value operating segment is comprised primarily of the SmartStyle, Supercuts, MasterCuts and Signature Style 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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Franchised SmartStyle salons in Walmart stores includes salons originally opened as Magicuts locations in Canadian Walmart stores that were rebranded to SmartStyle.
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(4)
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During fiscal years
2017
,
2016
, and
2015
, the Company acquired
one
,
one
, and
zero
salon locations, respectively, from franchisees. During fiscal years
2017
,
2016
, and
2015
, the Company sold
100
,
59
, and
77
salon locations, respectively, to franchisees.
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(5)
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As of
June 30, 2017
, two of the conversions were not yet completed.
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Name
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Age
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Position
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Hugh Sawyer
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63
|
|
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President and Chief Executive Officer
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Andrew Lacko
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47
|
|
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Executive Vice President and Chief Financial Officer
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Eric Bakken
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50
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President of Franchise, Executive Vice President, Chief Administrative Officer, Corporate Secretary and General Counsel
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Jim Lain
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53
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Executive Vice President and Chief Operating Officer
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Andrew Dulka
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43
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|
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Senior Vice President and Chief Information Officer
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Annette Miller
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55
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Senior Vice President and Chief Merchandising Officer
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Shawn Moren
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50
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Senior Vice President and Chief Human Resources Officer
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Rachel Endrizzi
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41
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Senior Vice President and Chief Marketing 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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2017
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2016
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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
|
||||||||
1
st
Quarter
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$
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14.49
|
|
|
$
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12.18
|
|
|
$
|
16.10
|
|
|
$
|
10.60
|
|
2
nd
Quarter
|
|
15.56
|
|
|
11.56
|
|
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18.13
|
|
|
11.81
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||||
3
rd
Quarter
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15.61
|
|
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11.37
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|
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16.55
|
|
|
13.04
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||||
4
th
Quarter
|
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11.71
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|
9.02
|
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16.02
|
|
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10.96
|
|
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June 30,
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||||||||||||||||||||||
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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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2017
|
||||||||||||
Regis
|
|
$
|
100.00
|
|
|
$
|
92.66
|
|
|
$
|
80.08
|
|
|
$
|
89.64
|
|
|
$
|
70.81
|
|
|
$
|
58.41
|
|
S & P 500
|
|
100.00
|
|
|
120.60
|
|
|
150.27
|
|
|
161.43
|
|
|
167.87
|
|
|
197.92
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|
||||||
S & P 400 Midcap
|
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100.00
|
|
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125.18
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156.78
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166.81
|
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169.03
|
|
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200.41
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||||||
Dow Jones Consumer Services Index
|
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100.00
|
|
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128.44
|
|
|
157.01
|
|
|
184.39
|
|
|
187.76
|
|
|
217.77
|
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||||||
Peer Group
|
|
100.00
|
|
|
128.35
|
|
|
133.66
|
|
|
166.92
|
|
|
175.56
|
|
|
189.85
|
|
|
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Fiscal Years
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||||||||||
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2017
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2016
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|
2015
|
||||||
Repurchased Shares
|
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—
|
|
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7,647,819
|
|
|
3,054,387
|
|
|||
Average Price (per share)
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$
|
—
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|
|
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$13.19
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|
|
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$15.64
|
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Price range (per share)
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$
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—
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|
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$10.94 - $15.95
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|
|
$13.72 - $17.32
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|
||
Total
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$
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—
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|
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$101.0 million
|
|
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$47.9 million
|
|
|
|
Fiscal Years
|
||||||||||||||||||
|
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2017
|
|
2016
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2015
|
|
2014
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2013(b)
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||||||||||
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(Dollars in thousands, except per share data)
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||||||||||||||||||
Revenues
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$
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1,691,888
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|
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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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Operating (loss) income(a)
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(1,204
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)
|
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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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)
|
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13,359
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|
|||||
(Loss) income from continuing operations(a)
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(16,140
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)
|
|
(11,316
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)
|
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(33,212
|
)
|
|
(139,874
|
)
|
|
5,478
|
|
|||||
(Loss) income from continuing operations per diluted share
|
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(0.35
|
)
|
|
(0.23
|
)
|
|
(0.60
|
)
|
|
(2.48
|
)
|
|
0.10
|
|
|||||
Dividends declared, per share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.12
|
|
|
0.24
|
|
|
|
June 30,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013(b)
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||
Total assets, including discontinued operations
|
|
$
|
1,011,488
|
|
|
$
|
1,035,932
|
|
|
$
|
1,160,843
|
|
|
$
|
1,414,291
|
|
|
$
|
1,390,447
|
|
Long-term debt and capital lease obligations, including current portion
|
|
120,599
|
|
|
119,606
|
|
|
118,830
|
|
|
291,845
|
|
|
173,818
|
|
(a)
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The following significant items affected each of the years presented:
|
•
|
During fiscal year 2017, the Company recorded $11.4 million of non-cash fixed asset impairment charges, $8.4 million of severance expense related to the termination of former executive officers including the Company's Chief Executive Officer, $7.7 million of non-cash tax expense related to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes and $5.9 million of expense for a one-time non-cash inventory expense related to salon tools.
|
•
|
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, $10.5 million of non-cash fixed asset impairment charges and $7.9 million of non-cash tax expense related to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes.
|
•
|
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, non-cash other than temporary impairment charges of its investment in EEG of $4.7 million, $14.6 million of non-cash fixed asset impairment charges, $8.9 million of non-cash tax expense related to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes and established a non-cash $2.1 million valuation allowance against its Canadian deferred tax assets.
|
•
|
During fiscal year 2014, the Company recorded a non-cash goodwill impairment charge of $34.9 million associated with the Company's Regis salon concept, non-cash fixed asset impairment charges of $18.3 million, non-cash of $15.9 million,
|
•
|
During fiscal year 2013, the Company recorded $7.4 million in restructuring charges and a $12.6 million non-cash 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 non-cash 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.
|
(b)
|
In fiscal year 2013 the Hair Restoration Centers operations were accounted for as discontinued operations.
|
|
|
Fiscal Years
|
||||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
|
(Dollars in millions)
|
|
% of Total Revenues(1)
|
|
Basis Point
Increase (Decrease) |
||||||||||||||||||||||||
Service revenues
|
|
$
|
1,307.7
|
|
|
$
|
1,383.7
|
|
|
$
|
1,429.4
|
|
|
77.3
|
%
|
|
77.3
|
%
|
|
77.8
|
%
|
|
—
|
|
|
(50
|
)
|
|
(40
|
)
|
Product revenues
|
|
335.9
|
|
|
359.7
|
|
|
363.2
|
|
|
19.9
|
|
|
20.1
|
|
|
19.8
|
|
|
(20
|
)
|
|
30
|
|
|
20
|
|
|||
Franchise royalties and fees
|
|
48.3
|
|
|
47.5
|
|
|
44.6
|
|
|
2.9
|
|
|
2.7
|
|
|
2.4
|
|
|
20
|
|
|
30
|
|
|
20
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of service(2)
|
|
838.2
|
|
|
868.2
|
|
|
882.7
|
|
|
64.1
|
|
|
62.7
|
|
|
61.8
|
|
|
140
|
|
|
90
|
|
|
50
|
|
|||
Cost of product(2)
|
|
166.3
|
|
|
179.3
|
|
|
180.6
|
|
|
49.5
|
|
|
49.9
|
|
|
49.7
|
|
|
(40
|
)
|
|
20
|
|
|
(60
|
)
|
|||
Site operating expenses
|
|
168.4
|
|
|
183.0
|
|
|
192.4
|
|
|
10.0
|
|
|
10.2
|
|
|
10.5
|
|
|
(20
|
)
|
|
(30
|
)
|
|
(30
|
)
|
|||
General and administrative
|
|
174.5
|
|
|
178.0
|
|
|
186.1
|
|
|
10.3
|
|
|
9.9
|
|
|
10.1
|
|
|
40
|
|
|
(20
|
)
|
|
100
|
|
|||
Rent
|
|
279.3
|
|
|
297.3
|
|
|
309.1
|
|
|
16.5
|
|
|
16.6
|
|
|
16.8
|
|
|
(10
|
)
|
|
(20
|
)
|
|
(20
|
)
|
|||
Depreciation and amortization
|
|
66.3
|
|
|
67.5
|
|
|
82.9
|
|
|
3.9
|
|
|
3.8
|
|
|
4.5
|
|
|
10
|
|
|
(70
|
)
|
|
(80
|
)
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
8.7
|
|
|
9.3
|
|
|
10.2
|
|
|
0.5
|
|
|
0.5
|
|
|
0.6
|
|
|
—
|
|
|
(10
|
)
|
|
(60
|
)
|
|||
Interest income and other, net
|
|
3.1
|
|
|
4.2
|
|
|
1.7
|
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income taxes(3)
|
|
(9.2
|
)
|
|
(9.0
|
)
|
|
(14.6
|
)
|
|
(135.0
|
)
|
|
72.3
|
|
|
(293.4
|
)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||
Equity in loss of affiliated companies, net of income taxes
|
|
0.1
|
|
|
14.8
|
|
|
13.6
|
|
|
—
|
|
|
0.8
|
|
|
0.7
|
|
|
(80
|
)
|
|
10
|
|
|
10
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss from discontinued operations, net of income taxes
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
(1)
|
Cost of service is computed as a percent of service revenues. Cost of product is computed as a percent of product revenues.
|
(2)
|
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
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
North American Value salons:
|
|
|
|
|
|
|
||||||
SmartStyle
|
|
$
|
523,911
|
|
|
$
|
522,700
|
|
|
$
|
500,562
|
|
Supercuts
|
|
290,051
|
|
|
295,401
|
|
|
298,078
|
|
|||
MasterCuts
|
|
94,313
|
|
|
106,791
|
|
|
117,246
|
|
|||
Signature Style
|
|
372,125
|
|
|
391,518
|
|
|
413,134
|
|
|||
Total North American Value salons
|
|
1,280,400
|
|
|
1,316,410
|
|
|
1,329,020
|
|
|||
North American Franchise salons:
|
|
|
|
|
|
|
||||||
Product
|
|
30,548
|
|
|
31,406
|
|
|
29,756
|
|
|||
Royalties and fees
|
|
47,973
|
|
|
47,523
|
|
|
44,643
|
|
|||
Total North American Franchise salons
|
|
78,521
|
|
|
78,929
|
|
|
74,399
|
|
|||
North American Premium salons
|
|
241,501
|
|
|
283,438
|
|
|
309,600
|
|
|||
International salons
|
|
91,466
|
|
|
112,092
|
|
|
124,268
|
|
|||
Consolidated revenues
|
|
$
|
1,691,888
|
|
|
$
|
1,790,869
|
|
|
$
|
1,837,287
|
|
Percent change from prior year
|
|
(5.5
|
)%
|
|
(2.5
|
)%
|
|
(2.9
|
)%
|
|||
Salon same-store sales (decrease) increase(1)
|
|
(1.8
|
)%
|
|
0.2
|
%
|
|
(0.3
|
)%
|
(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
|
|||||||
Factor
|
|
2017
|
|
2016
|
|
2015
|
|||
Same-store sales
|
|
(1.8
|
)%
|
|
0.2
|
%
|
|
(0.3
|
)%
|
Closed salons
|
|
(3.5
|
)
|
|
(2.7
|
)
|
|
(2.7
|
)
|
New stores and conversions
|
|
0.4
|
|
|
0.5
|
|
|
0.6
|
|
Foreign currency
|
|
(0.8
|
)
|
|
(1.2
|
)
|
|
(0.8
|
)
|
Other
|
|
0.2
|
|
|
0.7
|
|
|
0.3
|
|
|
|
(5.5
|
)%
|
|
(2.5
|
)%
|
|
(2.9
|
)%
|
|
|
Fiscal Years
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
SmartStyle
|
|
(0.4
|
)%
|
|
3.4
|
%
|
|
1.6
|
%
|
Supercuts
|
|
0.4
|
%
|
|
2.0
|
%
|
|
1.3
|
%
|
MasterCuts
|
|
(3.6
|
)%
|
|
(4.4
|
)%
|
|
(4.0
|
)%
|
Signature Style
|
|
(1.4
|
)%
|
|
(0.2
|
)%
|
|
(0.7
|
)%
|
Total North American Value salons
|
|
(0.8
|
)%
|
|
1.3
|
%
|
|
0.3
|
%
|
North American Premium salons
|
|
(5.9
|
)%
|
|
(3.8
|
)%
|
|
(3.0
|
)%
|
International salons
|
|
(5.7
|
)%
|
|
(2.3
|
)%
|
|
0.6
|
%
|
Consolidated same-store sales
|
|
(1.8
|
)%
|
|
0.2
|
%
|
|
(0.3
|
)%
|
|
Fiscal Years
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
(Dollars in millions)
|
|
Increase (Decrease)
|
||||||||||||||||||||
Total revenue
|
$
|
1,280.4
|
|
|
$
|
1,316.4
|
|
|
$
|
1,329.0
|
|
|
$
|
(36.0
|
)
|
|
$
|
(12.6
|
)
|
|
$
|
(30.5
|
)
|
Same-store sales
|
(0.8
|
)%
|
|
1.3
|
%
|
|
0.3
|
%
|
|
(210 bps)
|
|
|
100 bps
|
|
|
480 bps
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating income
|
$
|
83.6
|
|
|
$
|
96.2
|
|
|
$
|
92.2
|
|
|
$
|
(12.6
|
)
|
|
$
|
3.9
|
|
|
$
|
3.9
|
|
|
|
Fiscal Years
|
|||||||
Factor
|
|
2017
|
|
2016
|
|
2015
|
|||
Same-store sales
|
|
(0.8
|
)%
|
|
1.3
|
%
|
|
0.3
|
%
|
Closed salons
|
|
(2.8
|
)
|
|
(2.5
|
)
|
|
(2.6
|
)
|
New stores and conversions
|
|
0.5
|
|
|
0.7
|
|
|
0.7
|
|
Foreign currency
|
|
(0.1
|
)
|
|
(0.9
|
)
|
|
(0.7
|
)
|
Other
|
|
0.5
|
|
|
0.5
|
|
|
0.1
|
|
|
|
(2.7
|
)%
|
|
(0.9
|
)%
|
|
(2.2
|
)%
|
|
Fiscal Years
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
(Dollars in millions)
|
|
Increase (Decrease)
|
||||||||||||||||||||
North American Franchise salons:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
$
|
30.5
|
|
|
$
|
31.4
|
|
|
$
|
29.8
|
|
|
$
|
(0.9
|
)
|
|
$
|
1.7
|
|
|
$
|
0.1
|
|
Royalties and fees
|
48.0
|
|
|
47.5
|
|
|
44.6
|
|
|
0.5
|
|
|
2.9
|
|
|
3.8
|
|
||||||
Total North American Franchise salons
|
$
|
78.5
|
|
|
$
|
78.9
|
|
|
$
|
74.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
4.5
|
|
|
$
|
3.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating income
|
$
|
34.2
|
|
|
$
|
33.8
|
|
|
$
|
30.4
|
|
|
$
|
0.3
|
|
|
$
|
3.5
|
|
|
$
|
0.9
|
|
|
Fiscal Years
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
(Dollars in millions)
|
|
Increase (Decrease)
|
||||||||||||||||||||
Total revenue
|
$
|
241.5
|
|
|
$
|
283.4
|
|
|
$
|
309.6
|
|
|
$
|
(41.9
|
)
|
|
$
|
(26.2
|
)
|
|
$
|
(24.3
|
)
|
Same-store sales
|
(5.9
|
)%
|
|
(3.8
|
)%
|
|
(3.0
|
)%
|
|
(210 bps)
|
|
|
(80 bps)
|
|
|
370 bps
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating loss
|
$
|
(18.3
|
)
|
|
$
|
(12.8
|
)
|
|
$
|
(14.2
|
)
|
|
$
|
(5.5
|
)
|
|
$
|
1.4
|
|
|
$
|
32.1
|
|
|
|
Fiscal Years
|
|||||||
Factor
|
|
2017
|
|
2016
|
|
2015
|
|||
Same-store sales
|
|
(5.9
|
)%
|
|
(3.8
|
)%
|
|
(3.0
|
)%
|
Closed salons
|
|
(7.3
|
)
|
|
(3.8
|
)
|
|
(3.5
|
)
|
Foreign currency
|
|
—
|
|
|
(0.7
|
)
|
|
(0.6
|
)
|
Other
|
|
(1.6
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
|
(14.8
|
)%
|
|
(8.4
|
)%
|
|
(7.3
|
)%
|
|
Fiscal Years
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
(Dollars in millions)
|
|
Increase (Decrease)
|
||||||||||||||||||||
Total revenue
|
$
|
91.5
|
|
|
$
|
112.1
|
|
|
$
|
124.3
|
|
|
$
|
(20.6
|
)
|
|
$
|
(12.2
|
)
|
|
$
|
(4.2
|
)
|
Same-store sales
|
(5.7
|
)%
|
|
(2.3
|
)%
|
|
0.6
|
%
|
|
(340 bps)
|
|
|
(290 bps)
|
|
|
210 bps
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating (loss) income
|
$
|
(1.9
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
(2.2
|
)
|
|
$
|
3.4
|
|
|
|
Fiscal Years
|
|||||||
Factor
|
|
2017
|
|
2016
|
|
2015
|
|||
Same-store sales
|
|
(5.7
|
)%
|
|
(2.3
|
)%
|
|
0.6
|
%
|
Closed salons
|
|
(5.2
|
)
|
|
(4.2
|
)
|
|
(3.1
|
)
|
New stores and conversions
|
|
1.4
|
|
|
0.8
|
|
|
1.5
|
|
Foreign currency
|
|
(12.5
|
)
|
|
(5.4
|
)
|
|
(3.3
|
)
|
Other
|
|
3.6
|
|
|
1.3
|
|
|
1.0
|
|
|
|
(18.4
|
)%
|
|
(9.8
|
)%
|
|
(3.3
|
)%
|
|
|
|
|
Interest rate %
|
|
|
|
|
||||||
|
|
|
|
Fiscal Years
|
|
June 30,
|
||||||||
|
|
Maturity Dates
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
|
|
(fiscal year)
|
|
|
|
|
|
(Dollars in thousands)
|
||||||
Senior Term Notes, net
|
|
2020
|
|
5.50%
|
|
5.50%
|
|
$
|
120,599
|
|
|
$
|
119,606
|
|
Revolving credit facility
|
|
2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
$
|
120,599
|
|
|
$
|
119,606
|
|
As of June 30,
|
|
Debt to
Capitalization
|
|
Basis Point
Increase
(Decrease)(1)
|
||
2017
|
|
19.5
|
%
|
|
40
|
|
2016
|
|
19.1
|
|
|
300
|
|
2015
|
|
16.1
|
|
|
(1,300
|
)
|
(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
|
|
$
|
123,000
|
|
|
$
|
—
|
|
|
$
|
123,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other long-term liabilities
|
|
12,687
|
|
|
2,972
|
|
|
2,473
|
|
|
1,505
|
|
|
5,737
|
|
|||||
Total on-balance sheet
|
|
135,687
|
|
|
2,972
|
|
|
125,473
|
|
|
1,505
|
|
|
5,737
|
|
|||||
Off-balance sheet(a):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating lease obligations
|
|
853,594
|
|
|
274,921
|
|
|
380,614
|
|
|
155,842
|
|
|
42,217
|
|
|||||
Interest on long-term debt
|
|
16,368
|
|
|
6,765
|
|
|
9,603
|
|
|
—
|
|
|
—
|
|
|||||
Total off-balance sheet
|
|
869,962
|
|
|
281,686
|
|
|
390,217
|
|
|
155,842
|
|
|
42,217
|
|
|||||
Total
|
|
$
|
1,005,649
|
|
|
$
|
284,658
|
|
|
$
|
515,690
|
|
|
$
|
157,347
|
|
|
$
|
47,954
|
|
(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
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Equity losses (1)
|
|
$
|
(81
|
)
|
|
$
|
(1,829
|
)
|
|
$
|
(8,975
|
)
|
Other than temporary impairment
|
|
—
|
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|||
Total losses
|
|
$
|
(81
|
)
|
|
$
|
(14,783
|
)
|
|
$
|
(13,629
|
)
|
(1)
|
For fiscal year 2015, includes $6.9 million of expense for a non-cash deferred tax valuation allowance related to EEG.
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
North American Value
|
|
$
|
188,888
|
|
|
$
|
189,218
|
|
North American Franchise
|
|
228,099
|
|
|
228,175
|
|
||
Total
|
|
$
|
416,987
|
|
|
$
|
417,393
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
North American Value
|
|
$
|
8,998
|
|
|
$
|
8,393
|
|
|
$
|
9,612
|
|
North American Premium
|
|
2,105
|
|
|
1,924
|
|
|
4,804
|
|
|||
International
|
|
263
|
|
|
161
|
|
|
188
|
|
|||
Total
|
|
$
|
11,366
|
|
|
$
|
10,478
|
|
|
$
|
14,604
|
|
|
|
|
Index to Consolidated Financial Statements:
|
|
|
|
||
|
|
|
|
||
|
||
|
||
|
||
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
172,396
|
|
|
$
|
147,346
|
|
Receivables, net
|
|
23,475
|
|
|
24,691
|
|
||
Inventories
|
|
122,104
|
|
|
134,212
|
|
||
Other current assets
|
|
52,172
|
|
|
51,765
|
|
||
Total current assets
|
|
370,147
|
|
|
358,014
|
|
||
Property and equipment, net
|
|
146,994
|
|
|
183,321
|
|
||
Goodwill
|
|
416,987
|
|
|
417,393
|
|
||
Other intangibles, net
|
|
13,634
|
|
|
15,185
|
|
||
Other assets
|
|
63,726
|
|
|
62,019
|
|
||
Total assets
|
|
$
|
1,011,488
|
|
|
$
|
1,035,932
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
56,049
|
|
|
$
|
59,884
|
|
Accrued expenses
|
|
122,013
|
|
|
135,431
|
|
||
Total current liabilities
|
|
178,062
|
|
|
195,315
|
|
||
Long-term debt
|
|
120,599
|
|
|
119,606
|
|
||
Other noncurrent liabilities
|
|
204,606
|
|
|
201,610
|
|
||
Total liabilities
|
|
503,267
|
|
|
516,531
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
|
||||
Common stock, $0.05 par value; issued and outstanding, 46,400,367 and 46,154,410 common shares at June 30, 2017 and 2016, respectively
|
|
2,320
|
|
|
2,308
|
|
||
Additional paid-in capital
|
|
214,109
|
|
|
207,475
|
|
||
Accumulated other comprehensive income
|
|
3,336
|
|
|
5,068
|
|
||
Retained earnings
|
|
288,456
|
|
|
304,550
|
|
||
Total shareholders' equity
|
|
508,221
|
|
|
519,401
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
1,011,488
|
|
|
$
|
1,035,932
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Service
|
|
$
|
1,307,732
|
|
|
$
|
1,383,663
|
|
|
$
|
1,429,408
|
|
Product
|
|
335,865
|
|
|
359,683
|
|
|
363,236
|
|
|||
Royalties and fees
|
|
48,291
|
|
|
47,523
|
|
|
44,643
|
|
|||
|
|
1,691,888
|
|
|
1,790,869
|
|
|
1,837,287
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of service
|
|
838,192
|
|
|
868,188
|
|
|
882,717
|
|
|||
Cost of product
|
|
166,344
|
|
|
179,341
|
|
|
180,558
|
|
|||
Site operating expenses
|
|
168,439
|
|
|
182,952
|
|
|
192,442
|
|
|||
General and administrative
|
|
174,502
|
|
|
178,033
|
|
|
186,051
|
|
|||
Rent
|
|
279,288
|
|
|
297,271
|
|
|
309,125
|
|
|||
Depreciation and amortization
|
|
66,327
|
|
|
67,470
|
|
|
82,863
|
|
|||
Total operating expenses
|
|
1,693,092
|
|
|
1,773,255
|
|
|
1,833,756
|
|
|||
Operating (loss) income
|
|
(1,204
|
)
|
|
17,614
|
|
|
3,531
|
|
|||
Other (expense) income:
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(8,703
|
)
|
|
(9,317
|
)
|
|
(10,206
|
)
|
|||
Interest income and other, net
|
|
3,072
|
|
|
4,219
|
|
|
1,697
|
|
|||
(Loss) income from continuing operations before income taxes and equity in loss of affiliated companies
|
|
(6,835
|
)
|
|
12,516
|
|
|
(4,978
|
)
|
|||
Income taxes
|
|
(9,224
|
)
|
|
(9,049
|
)
|
|
(14,605
|
)
|
|||
Equity in loss of affiliated companies, net of income taxes
|
|
(81
|
)
|
|
(14,783
|
)
|
|
(13,629
|
)
|
|||
Loss from continuing operations
|
|
(16,140
|
)
|
|
(11,316
|
)
|
|
(33,212
|
)
|
|||
Loss from discontinued operations, net of income taxes (Note 1)
|
|
—
|
|
|
—
|
|
|
(630
|
)
|
|||
Net loss
|
|
$
|
(16,140
|
)
|
|
$
|
(11,316
|
)
|
|
$
|
(33,842
|
)
|
Net loss per share:
|
|
|
|
|
|
|
||||||
Basic and diluted:
|
|
|
|
|
|
|
||||||
Loss from continuing operations
|
|
$
|
(0.35
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.60
|
)
|
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||
Net loss per share, basic and diluted (1)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.62
|
)
|
Weighted average common and common equivalent shares outstanding:
|
|
|
|
|
|
|
||||||
Basic and diluted
|
|
46,359
|
|
|
48,542
|
|
|
54,992
|
|
(1)
|
Total is a recalculation; line items calculated individually may not sum to total due to rounding.
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
|
$
|
(16,140
|
)
|
|
$
|
(11,316
|
)
|
|
$
|
(33,842
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments during the period
|
|
(1,889
|
)
|
|
(4,276
|
)
|
|
(13,515
|
)
|
|||
Recognition of deferred compensation
|
|
157
|
|
|
(162
|
)
|
|
370
|
|
|||
Other comprehensive loss
|
|
(1,732
|
)
|
|
(4,438
|
)
|
|
(13,145
|
)
|
|||
Comprehensive loss
|
|
$
|
(17,872
|
)
|
|
$
|
(15,754
|
)
|
|
$
|
(46,987
|
)
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Other
Comprehensive
Income
|
|
Retained
Earnings
|
|
Total
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
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 9)
|
|
|
|
|
|
|
|
|
|
|
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 9)
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,140
|
)
|
|
(16,140
|
)
|
|||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
(1,889
|
)
|
|
|
|
|
(1,889
|
)
|
|||||
Proceeds from exercise of SARs & stock options
|
|
4,370
|
|
|
—
|
|
|
(42
|
)
|
|
|
|
|
|
|
|
(42
|
)
|
|||||
Stock-based compensation
|
|
|
|
|
|
|
|
9,991
|
|
|
|
|
|
|
|
|
9,991
|
|
|||||
Shares issued through franchise stock incentive program
|
|
27,819
|
|
|
1
|
|
|
352
|
|
|
|
|
|
|
353
|
|
|||||||
Recognition of deferred compensation (Note 9)
|
|
|
|
|
|
|
|
|
|
|
157
|
|
|
|
|
|
157
|
|
|||||
Net restricted stock activity
|
|
213,768
|
|
|
11
|
|
|
(3,667
|
)
|
|
|
|
|
|
|
|
(3,656
|
)
|
|||||
Minority interest (Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
46
|
|
||||||
Balance, June 30, 2017
|
|
46,400,367
|
|
|
$
|
2,320
|
|
|
$
|
214,109
|
|
|
$
|
3,336
|
|
|
$
|
288,456
|
|
|
$
|
508,221
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(16,140
|
)
|
|
$
|
(11,316
|
)
|
|
$
|
(33,842
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
54,961
|
|
|
56,992
|
|
|
68,259
|
|
|||
Equity in loss of affiliated companies
|
|
81
|
|
|
14,783
|
|
|
13,629
|
|
|||
Deferred income taxes
|
|
7,962
|
|
|
7,023
|
|
|
11,154
|
|
|||
Gain from sale of salon assets, net
|
|
(492
|
)
|
|
(1,000
|
)
|
|
(1,210
|
)
|
|||
Loss on write down of inventories
|
|
5,905
|
|
|
—
|
|
|
—
|
|
|||
Salon asset impairments
|
|
11,366
|
|
|
10,478
|
|
|
14,604
|
|
|||
Stock-based compensation
|
|
13,142
|
|
|
9,797
|
|
|
8,647
|
|
|||
Amortization of debt discount and financing costs
|
|
1,403
|
|
|
1,514
|
|
|
1,722
|
|
|||
Other non-cash items affecting earnings
|
|
935
|
|
|
310
|
|
|
257
|
|
|||
Changes in operating assets and liabilities(1):
|
|
|
|
|
|
|
||||||
Receivables
|
|
724
|
|
|
(577
|
)
|
|
446
|
|
|||
Inventories
|
|
4,010
|
|
|
(7,109
|
)
|
|
6,197
|
|
|||
Income tax receivable
|
|
(535
|
)
|
|
501
|
|
|
5,298
|
|
|||
Other current assets
|
|
820
|
|
|
(460
|
)
|
|
3,049
|
|
|||
Other assets
|
|
(2,586
|
)
|
|
(1,133
|
)
|
|
(4,480
|
)
|
|||
Accounts payable
|
|
(684
|
)
|
|
(4,624
|
)
|
|
(3,261
|
)
|
|||
Accrued expenses
|
|
(13,667
|
)
|
|
(14,280
|
)
|
|
9,031
|
|
|||
Other noncurrent liabilities
|
|
(7,150
|
)
|
|
(5,113
|
)
|
|
(4,756
|
)
|
|||
Net cash provided by operating activities
|
|
60,055
|
|
|
55,786
|
|
|
94,744
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(33,843
|
)
|
|
(31,117
|
)
|
|
(38,257
|
)
|
|||
Proceeds from sale of salon assets
|
|
2,253
|
|
|
1,740
|
|
|
2,986
|
|
|||
Change in restricted cash
|
|
1,123
|
|
|
9,042
|
|
|
(312
|
)
|
|||
Proceeds from company-owned life insurance policies
|
|
876
|
|
|
2,948
|
|
|
—
|
|
|||
Proceeds from sale of investment
|
|
500
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
|
(29,091
|
)
|
|
(17,387
|
)
|
|
(35,583
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Repayments of long-term debt and capital lease obligations
|
|
—
|
|
|
(2
|
)
|
|
(173,751
|
)
|
|||
Repurchase of common stock
|
|
—
|
|
|
(101,035
|
)
|
|
(47,888
|
)
|
|||
Purchase of noncontrolling interest
|
|
—
|
|
|
(760
|
)
|
|
—
|
|
|||
Employee taxes paid for shares withheld
|
|
(3,698
|
)
|
|
(754
|
)
|
|
(782
|
)
|
|||
Settlement of equity awards
|
|
(3,151
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in financing activities
|
|
(6,849
|
)
|
|
(102,551
|
)
|
|
(222,421
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
935
|
|
|
(781
|
)
|
|
(3,088
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
|
25,050
|
|
|
(64,933
|
)
|
|
(166,348
|
)
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||||
Beginning of year
|
|
147,346
|
|
|
212,279
|
|
|
378,627
|
|
|||
End of year
|
|
$
|
172,396
|
|
|
$
|
147,346
|
|
|
$
|
212,279
|
|
(1)
|
Changes in operating assets and liabilities exclude assets and liabilities sold or acquired.
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
North American Value
|
|
$
|
8,998
|
|
|
$
|
8,393
|
|
|
$
|
9,612
|
|
North American Premium
|
|
2,105
|
|
|
1,924
|
|
|
4,804
|
|
|||
International
|
|
263
|
|
|
161
|
|
|
188
|
|
|||
Total
|
|
$
|
11,366
|
|
|
$
|
10,478
|
|
|
$
|
14,604
|
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
North American Value
|
|
$
|
188,888
|
|
|
$
|
189,218
|
|
North American Franchise
|
|
228,099
|
|
|
228,175
|
|
||
Total
|
|
$
|
416,987
|
|
|
$
|
417,393
|
|
|
|
Fiscal Year
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Equity losses (1)
|
|
$
|
(81
|
)
|
|
$
|
(1,829
|
)
|
|
$
|
(8,975
|
)
|
Other than temporary impairment
|
|
—
|
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|||
Total losses
|
|
$
|
(81
|
)
|
|
$
|
(14,783
|
)
|
|
$
|
(13,629
|
)
|
(1)
|
For fiscal year 2015, includes
$6.9 million
of expense for a non-cash deferred tax valuation allowance related to EEG.
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Other current assets:
|
|
|
|
|
||||
Prepaids
|
|
$
|
31,842
|
|
|
$
|
30,710
|
|
Restricted cash
|
|
19,032
|
|
|
20,156
|
|
||
Other
|
|
1,298
|
|
|
899
|
|
||
|
|
$
|
52,172
|
|
|
$
|
51,765
|
|
Property and equipment:
|
|
|
|
|
||||
Land
|
|
$
|
3,864
|
|
|
$
|
3,864
|
|
Buildings and improvements
|
|
47,471
|
|
|
47,031
|
|
||
Equipment, furniture and leasehold improvements
|
|
645,149
|
|
|
694,475
|
|
||
Internal use software
|
|
71,495
|
|
|
69,045
|
|
||
Equipment, furniture and leasehold improvements under capital leases
|
|
57,561
|
|
|
61,213
|
|
||
|
|
825,540
|
|
|
875,628
|
|
||
Less accumulated depreciation and amortization
|
|
(623,873
|
)
|
|
(636,222
|
)
|
||
Less amortization of equipment, furniture and leasehold improvements under capital leases
|
|
(54,673
|
)
|
|
(56,085
|
)
|
||
|
|
$
|
146,994
|
|
|
$
|
183,321
|
|
Accrued expenses:
|
|
|
|
|
||||
Payroll and payroll related costs
|
|
$
|
62,680
|
|
|
$
|
74,013
|
|
Insurance
|
|
14,876
|
|
|
15,559
|
|
||
Other
|
|
44,457
|
|
|
45,859
|
|
||
|
|
$
|
122,013
|
|
|
$
|
135,431
|
|
Other noncurrent liabilities:
|
|
|
|
|
||||
Deferred income taxes
|
|
$
|
108,119
|
|
|
$
|
100,169
|
|
Deferred rent
|
|
36,271
|
|
|
39,057
|
|
||
Insurance
|
|
26,112
|
|
|
28,019
|
|
||
Deferred benefits
|
|
17,302
|
|
|
19,490
|
|
||
Other
|
|
16,802
|
|
|
14,875
|
|
||
|
|
$
|
204,606
|
|
|
$
|
201,610
|
|
|
|
June 30,
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
|
|
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
|
|
$
|
8,187
|
|
|
$
|
(4,013
|
)
|
|
$
|
4,174
|
|
|
31
|
|
$
|
8,206
|
|
|
$
|
(3,746
|
)
|
|
$
|
4,460
|
|
Franchise agreements
|
|
19
|
|
9,832
|
|
|
(7,433
|
)
|
|
2,399
|
|
|
19
|
|
9,853
|
|
|
(7,116
|
)
|
|
2,737
|
|
||||||
Lease intangibles
|
|
20
|
|
14,501
|
|
|
(9,356
|
)
|
|
5,145
|
|
|
20
|
|
14,535
|
|
|
(8,649
|
)
|
|
5,886
|
|
||||||
Other
|
|
21
|
|
5,493
|
|
|
(3,577
|
)
|
|
1,916
|
|
|
21
|
|
5,748
|
|
|
(3,646
|
)
|
|
2,102
|
|
||||||
Total
|
|
22
|
|
$
|
38,013
|
|
|
$
|
(24,379
|
)
|
|
$
|
13,634
|
|
|
22
|
|
$
|
38,342
|
|
|
$
|
(23,157
|
)
|
|
$
|
15,185
|
|
(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 is impacted by foreign currency.
|
Fiscal Year
|
(Dollars in
thousands)
|
||
2018
|
$
|
1,473
|
|
2019
|
1,466
|
|
|
2020
|
1,463
|
|
|
2021
|
1,335
|
|
|
2022
|
1,288
|
|
|
Thereafter
|
6,609
|
|
|
Total
|
$
|
13,634
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Cash paid (received) for:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
7,293
|
|
|
$
|
7,660
|
|
|
$
|
12,336
|
|
Income taxes, net
|
|
2,314
|
|
|
2,237
|
|
|
(1,371
|
)
|
|||
Noncash investing activities:
|
|
|
|
|
|
|
||||||
Unpaid capital expenditures
|
|
2,774
|
|
|
6,627
|
|
|
5,034
|
|
|
|
June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Gross
Carrying
Value (3)
|
|
Accumulated
Impairment (1)
|
|
Net
|
|
Gross
Carrying Value (3) |
|
Accumulated
Impairment (1)
|
|
Net
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Goodwill
|
|
$
|
670,648
|
|
|
$
|
(253,661
|
)
|
|
$
|
416,987
|
|
|
$
|
671,054
|
|
|
$
|
(253,661
|
)
|
|
$
|
417,393
|
|
(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 13 to the Consolidated Financial Statements.
|
(3)
|
The change in the gross carrying value of goodwill relates to foreign currency translation adjustments.
|
|
|
North American Value
|
|
North American Franchise
|
|
Consolidated
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Goodwill, net at June 30, 2015
|
|
$
|
189,925
|
|
|
$
|
229,028
|
|
|
$
|
418,953
|
|
Translation rate adjustments
|
|
(707
|
)
|
|
(853
|
)
|
|
(1,560
|
)
|
|||
Goodwill, net at June 30, 2016
|
|
189,218
|
|
|
228,175
|
|
|
417,393
|
|
|||
Translation rate adjustments
|
|
(63
|
)
|
|
(76
|
)
|
|
(139
|
)
|
|||
Derecognition related to venditioned salons (1)
|
|
(267
|
)
|
|
—
|
|
|
(267
|
)
|
|||
Goodwill, net at June 30, 2017
|
|
$
|
188,888
|
|
|
$
|
228,099
|
|
|
$
|
416,987
|
|
(1)
|
Goodwill is derecognized for salons sold to franchisees with positive cash flows. The amount of goodwill derecognized is determined by a fraction (the numerator of which is the EBITDA of the salon being sold and the denominator of which is the EBITDA of the North American Value reporting unit) that is applied to the total goodwill balance of the North American Value reporting unit.
|
|
|
Fiscal Year
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Equity losses (1)
|
|
$
|
—
|
|
|
$
|
(1,832
|
)
|
|
$
|
(8,958
|
)
|
Other than temporary impairment
|
|
—
|
|
|
(12,954
|
)
|
|
(4,654
|
)
|
|||
Total losses related to EEG
|
|
$
|
—
|
|
|
$
|
(14,786
|
)
|
|
$
|
(13,612
|
)
|
Investment balance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,786
|
|
(1)
|
For fiscal year 2015, includes
$6.9 million
of expense for a non-cash deferred tax valuation allowance related to EEG.
|
|
|
Fiscal Year
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Long-lived assets (1)
|
|
$
|
(11,366
|
)
|
|
$
|
(10,478
|
)
|
|
$
|
(14,604
|
)
|
Investment in EEG (2)
|
|
—
|
|
|
(12,954
|
)
|
|
(4,654
|
)
|
(1)
|
See Note 1 to the Consolidated Financial Statements.
|
(2)
|
See Note 4 to the Consolidated Financial Statements.
|
|
|
|
|
Interest rate %
|
|
|
|
|
||||||
|
|
|
|
Fiscal Years
|
|
June 30,
|
||||||||
|
|
Maturity Dates
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
|
|
(fiscal year)
|
|
|
|
|
|
(Dollars in thousands)
|
||||||
Senior Term Notes, net
|
|
2020
|
|
5.50%
|
|
5.50%
|
|
$
|
120,599
|
|
|
$
|
119,606
|
|
Revolving credit facility
|
|
2018
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
$
|
120,599
|
|
|
$
|
119,606
|
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Principal amount on the Senior Term Notes
|
|
$
|
123,000
|
|
|
$
|
123,000
|
|
Unamortized debt discount
|
|
(1,815
|
)
|
|
(2,565
|
)
|
||
Unamortized debt issuance costs
|
|
(586
|
)
|
|
(829
|
)
|
||
Senior Term Notes, net
|
|
$
|
120,599
|
|
|
$
|
119,606
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Minimum rent
|
|
$
|
217,738
|
|
|
$
|
228,580
|
|
|
$
|
236,137
|
|
Percentage rent based on sales
|
|
7,215
|
|
|
8,256
|
|
|
8,238
|
|
|||
Real estate taxes and other expenses
|
|
54,335
|
|
|
60,435
|
|
|
64,750
|
|
|||
|
|
$
|
279,288
|
|
|
$
|
297,271
|
|
|
$
|
309,125
|
|
Fiscal Year
|
|
Corporate
leases
|
|
Franchisee
leases
|
||||
|
|
(Dollars in thousands)
|
||||||
2018
|
|
$
|
205,901
|
|
|
$
|
69,020
|
|
2019
|
|
160,388
|
|
|
59,194
|
|
||
2020
|
|
115,398
|
|
|
45,634
|
|
||
2021
|
|
72,448
|
|
|
31,289
|
|
||
2022
|
|
34,502
|
|
|
17,603
|
|
||
Thereafter
|
|
21,781
|
|
|
20,436
|
|
||
Total minimum lease payments
|
|
$
|
610,418
|
|
|
$
|
243,176
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
(Loss) income before income taxes:
|
|
|
|
|
|
|
||||||
U.S.
|
|
$
|
(7,759
|
)
|
|
$
|
12,481
|
|
|
$
|
(6,630
|
)
|
International
|
|
924
|
|
|
35
|
|
|
1,652
|
|
|||
|
|
$
|
(6,835
|
)
|
|
$
|
12,516
|
|
|
$
|
(4,978
|
)
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
|
||||||
U.S.
|
|
$
|
994
|
|
|
$
|
819
|
|
|
$
|
1,670
|
|
International
|
|
268
|
|
|
1,207
|
|
|
1,781
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
U.S.
|
|
7,901
|
|
|
6,997
|
|
|
9,439
|
|
|||
International
|
|
61
|
|
|
26
|
|
|
1,715
|
|
|||
|
|
$
|
9,224
|
|
|
$
|
9,049
|
|
|
$
|
14,605
|
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
||||
Deferred rent
|
|
$
|
13,216
|
|
|
$
|
14,542
|
|
Payroll and payroll related costs
|
|
24,666
|
|
|
27,066
|
|
||
Net operating loss carryforwards
|
|
29,171
|
|
|
22,433
|
|
||
Tax credit carryforwards
|
|
32,852
|
|
|
30,386
|
|
||
Inventories
|
|
1,914
|
|
|
2,369
|
|
||
Fixed assets
|
|
7,982
|
|
|
82
|
|
||
Accrued advertising
|
|
2,723
|
|
|
3,076
|
|
||
Insurance
|
|
4,153
|
|
|
4,285
|
|
||
Other
|
|
7,494
|
|
|
7,809
|
|
||
Subtotal
|
|
$
|
124,171
|
|
|
$
|
112,048
|
|
Valuation allowance
|
|
(120,903
|
)
|
|
(110,046
|
)
|
||
Total deferred tax assets
|
|
$
|
3,268
|
|
|
$
|
2,002
|
|
Deferred tax liabilities:
|
|
|
|
|
||||
Goodwill and intangibles
|
|
$
|
(103,889
|
)
|
|
$
|
(95,451
|
)
|
Other
|
|
(7,498
|
)
|
|
(6,720
|
)
|
||
Total deferred tax liabilities
|
|
$
|
(111,387
|
)
|
|
$
|
(102,171
|
)
|
Net deferred tax liability
|
|
$
|
(108,119
|
)
|
|
$
|
(100,169
|
)
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of period
|
|
$
|
1,357
|
|
|
$
|
1,496
|
|
|
$
|
1,468
|
|
Additions based on tax positions related to the current year
|
|
259
|
|
|
138
|
|
|
37
|
|
|||
Additions based on tax positions of prior years
|
|
80
|
|
|
170
|
|
|
352
|
|
|||
Reductions on tax positions related to the expiration of the statute of limitations
|
|
(179
|
)
|
|
(207
|
)
|
|
(361
|
)
|
|||
Settlements
|
|
(129
|
)
|
|
(240
|
)
|
|
—
|
|
|||
Balance at end of period
|
|
$
|
1,388
|
|
|
$
|
1,357
|
|
|
$
|
1,496
|
|
|
|
June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Current portion (included in accrued liabilities)
|
|
$
|
1,658
|
|
|
$
|
1,353
|
|
Long-term portion (included in other noncurrent liabilities)
|
|
5,163
|
|
|
5,898
|
|
||
|
|
$
|
6,821
|
|
|
$
|
7,251
|
|
|
|
Fiscal Years
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Executive plans
|
|
$
|
249
|
|
|
$
|
289
|
|
|
$
|
224
|
|
ESPP
|
|
284
|
|
|
307
|
|
|
325
|
|
|||
Deferred compensation contracts
|
|
514
|
|
|
402
|
|
|
1,195
|
|
|
|
Fiscal Year
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Equity-based compensation awards
|
|
2,407,158
|
|
|
2,133,675
|
|
|
1,948,507
|
|
Shares from convertible debt
|
|
—
|
|
|
—
|
|
|
465,055
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
SARs
|
|
$
|
3.68
|
|
|
$
|
3.51
|
|
|
$
|
6.16
|
|
RSAs & RSUs
|
|
11.73
|
|
|
11.18
|
|
|
15.95
|
|
|||
PSUs
|
|
12.28
|
|
|
12.11
|
|
|
15.15
|
|
|
|
2017
|
|
2016
|
|
2015
|
Risk-free interest rate
|
|
1.99%
|
|
1.71%
|
|
1.53 - 1.84%
|
Expected term (in years)
|
|
6.50
|
|
6.00
|
|
6.00
|
Expected volatility
|
|
31.50%
|
|
30.00%
|
|
38.00 - 44.00%
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
0%
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
SARs
|
|
$
|
3,533
|
|
|
$
|
2,774
|
|
|
$
|
2,652
|
|
RSAs, RSUs, & PSUs
|
|
9,609
|
|
|
7,023
|
|
|
5,995
|
|
|||
Total stock-based compensation expense
|
|
$
|
13,142
|
|
|
$
|
9,797
|
|
|
$
|
8,647
|
|
|
|
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, 2016
|
|
2,209
|
|
|
98
|
|
|
$
|
16.39
|
|
|
|
|
|
||
Granted
|
|
1,000
|
|
|
—
|
|
|
11.15
|
|
|
|
|
|
|
||
Forfeited/Expired
|
|
(243
|
)
|
|
(44
|
)
|
|
19.33
|
|
|
|
|
|
|
||
Exercised
|
|
(82
|
)
|
|
—
|
|
|
10.84
|
|
|
|
|
|
|
||
Outstanding balance at June 30, 2017
|
|
2,884
|
|
|
54
|
|
|
$
|
14.47
|
|
|
7.3
|
|
$
|
—
|
|
Exercisable at June 30, 2017
|
|
1,571
|
|
|
54
|
|
|
$
|
17.06
|
|
|
5.7
|
|
$
|
—
|
|
Unvested awards, net of estimated forfeitures
|
|
1,294
|
|
|
—
|
|
|
$
|
11.26
|
|
|
9.4
|
|
$
|
—
|
|
|
|
Shares/Units
(in thousands)
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate Intrinsic
Value
(in thousands)
|
||||||||
|
|
RSAs
|
|
RSUs
|
|
|
||||||||
Outstanding balance at June 30, 2016
|
|
122
|
|
|
908
|
|
|
$
|
14.91
|
|
|
|
||
Granted
|
|
—
|
|
|
517
|
|
|
11.73
|
|
|
|
|||
Forfeited
|
|
—
|
|
|
(82
|
)
|
|
13.78
|
|
|
|
|||
Vested
|
|
(121
|
)
|
|
(534
|
)
|
|
14.91
|
|
|
|
|||
Outstanding balance at June 30, 2017
|
|
1
|
|
|
809
|
|
|
$
|
12.77
|
|
|
$
|
8,326
|
|
Vested at June 30, 2017
|
|
1
|
|
|
203
|
|
|
$
|
14.69
|
|
|
$
|
2,103
|
|
Unvested awards, net of estimated forfeitures
|
|
—
|
|
|
565
|
|
|
$
|
12.07
|
|
|
$
|
5,802
|
|
|
|
Shares/Units
(in thousands)
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate Intrinsic
Value
(in thousands)(1)
|
|||||
|
|
PSUs
|
|
|
|||||||
Outstanding balance at June 30, 2016
|
|
556
|
|
|
$
|
13.00
|
|
|
$
|
7,679
|
|
Granted
|
|
393
|
|
|
12.28
|
|
|
|
|
||
Forfeited
|
|
(508
|
)
|
|
12.68
|
|
|
|
|
||
Vested
|
|
—
|
|
|
—
|
|
|
|
|
||
Outstanding balance at June 30, 2017
|
|
441
|
|
|
$
|
12.74
|
|
|
$
|
4,531
|
|
Vested at June 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unvested awards, net of estimated forfeitures
|
|
412
|
|
|
$
|
12.74
|
|
|
$
|
4,230
|
|
(1)
|
Includes actual or expected payout rates as set forth in the performance criteria.
|
|
|
June 30,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Foreign currency translation
|
|
$
|
2,684
|
|
|
$
|
4,573
|
|
|
$
|
8,849
|
|
Unrealized gain on deferred compensation contracts
|
|
652
|
|
|
495
|
|
|
657
|
|
|||
Accumulated other comprehensive income
|
|
$
|
3,336
|
|
|
$
|
5,068
|
|
|
$
|
9,506
|
|
|
|
For the Year Ended June 30, 2017
|
||||||||||||||||||||||
|
|
North American Value
|
|
North American Franchise
|
|
North American Premium
|
|
International
|
|
Corporate
|
|
Consolidated
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service
|
|
$
|
1,035,900
|
|
|
$
|
—
|
|
|
$
|
200,732
|
|
|
$
|
71,100
|
|
|
$
|
—
|
|
|
$
|
1,307,732
|
|
Product
|
|
244,500
|
|
|
30,548
|
|
|
40,769
|
|
|
20,048
|
|
|
—
|
|
|
335,865
|
|
||||||
Royalties and fees
|
|
—
|
|
|
47,973
|
|
|
—
|
|
|
318
|
|
|
—
|
|
|
48,291
|
|
||||||
|
|
1,280,400
|
|
|
78,521
|
|
|
241,501
|
|
|
91,466
|
|
|
—
|
|
|
1,691,888
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of service
|
|
657,013
|
|
|
—
|
|
|
140,743
|
|
|
40,436
|
|
|
—
|
|
|
838,192
|
|
||||||
Cost of product
|
|
112,156
|
|
|
22,640
|
|
|
20,571
|
|
|
10,977
|
|
|
—
|
|
|
166,344
|
|
||||||
Site operating expenses
|
|
136,895
|
|
|
—
|
|
|
24,885
|
|
|
6,659
|
|
|
—
|
|
|
168,439
|
|
||||||
General and administrative
|
|
44,344
|
|
|
21,193
|
|
|
12,130
|
|
|
8,480
|
|
|
88,355
|
|
|
174,502
|
|
||||||
Rent
|
|
200,700
|
|
|
170
|
|
|
53,253
|
|
|
24,321
|
|
|
844
|
|
|
279,288
|
|
||||||
Depreciation and amortization
|
|
45,737
|
|
|
357
|
|
|
8,260
|
|
|
2,515
|
|
|
9,458
|
|
|
66,327
|
|
||||||
Total operating expenses
|
|
1,196,845
|
|
|
44,360
|
|
|
259,842
|
|
|
93,388
|
|
|
98,657
|
|
|
1,693,092
|
|
||||||
Operating income (loss)
|
|
83,555
|
|
|
34,161
|
|
|
(18,341
|
)
|
|
(1,922
|
)
|
|
(98,657
|
)
|
|
(1,204
|
)
|
||||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,703
|
)
|
|
(8,703
|
)
|
||||||
Interest income and other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,072
|
|
|
3,072
|
|
||||||
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies
|
|
$
|
83,555
|
|
|
$
|
34,161
|
|
|
$
|
(18,341
|
)
|
|
$
|
(1,922
|
)
|
|
$
|
(104,288
|
)
|
|
$
|
(6,835
|
)
|
|
|
For the Year Ended June 30, 2016
|
||||||||||||||||||||||
|
|
North American Value
|
|
North American Franchise
|
|
North American Premium
|
|
International
|
|
Corporate
|
|
Consolidated
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service
|
|
$
|
1,064,109
|
|
|
$
|
—
|
|
|
$
|
233,520
|
|
|
$
|
86,034
|
|
|
$
|
—
|
|
|
$
|
1,383,663
|
|
Product
|
|
252,301
|
|
|
31,406
|
|
|
49,918
|
|
|
26,058
|
|
|
—
|
|
|
359,683
|
|
||||||
Royalties and fees
|
|
—
|
|
|
47,523
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,523
|
|
||||||
|
|
1,316,410
|
|
|
78,929
|
|
|
283,438
|
|
|
112,092
|
|
|
—
|
|
|
1,790,869
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of service
|
|
659,140
|
|
|
—
|
|
|
161,466
|
|
|
47,582
|
|
|
—
|
|
|
868,188
|
|
||||||
Cost of product
|
|
117,464
|
|
|
23,086
|
|
|
24,573
|
|
|
14,218
|
|
|
—
|
|
|
179,341
|
|
||||||
Site operating expenses
|
|
145,494
|
|
|
—
|
|
|
29,751
|
|
|
7,707
|
|
|
—
|
|
|
182,952
|
|
||||||
General and administrative
|
|
44,881
|
|
|
21,472
|
|
|
14,408
|
|
|
10,663
|
|
|
86,609
|
|
|
178,033
|
|
||||||
Rent
|
|
206,948
|
|
|
162
|
|
|
58,144
|
|
|
30,961
|
|
|
1,056
|
|
|
297,271
|
|
||||||
Depreciation and amortization
|
|
46,313
|
|
|
363
|
|
|
7,892
|
|
|
2,843
|
|
|
10,059
|
|
|
67,470
|
|
||||||
Total operating expenses
|
|
1,220,240
|
|
|
45,083
|
|
|
296,234
|
|
|
113,974
|
|
|
97,724
|
|
|
1,773,255
|
|
||||||
Operating income (loss)
|
|
96,170
|
|
|
33,846
|
|
|
(12,796
|
)
|
|
(1,882
|
)
|
|
(97,724
|
)
|
|
17,614
|
|
||||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,317
|
)
|
|
(9,317
|
)
|
||||||
Interest income and other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,219
|
|
|
4,219
|
|
||||||
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies
|
|
$
|
96,170
|
|
|
$
|
33,846
|
|
|
$
|
(12,796
|
)
|
|
$
|
(1,882
|
)
|
|
$
|
(102,822
|
)
|
|
$
|
12,516
|
|
|
|
For the Year Ended June 30, 2015
|
||||||||||||||||||||||
|
|
North American Value
|
|
North American Franchise
|
|
North American Premium
|
|
International
|
|
Corporate
|
|
Consolidated
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service
|
|
$
|
1,081,704
|
|
|
$
|
—
|
|
|
$
|
253,520
|
|
|
$
|
94,184
|
|
|
$
|
—
|
|
|
$
|
1,429,408
|
|
Product
|
|
247,316
|
|
|
29,756
|
|
|
56,080
|
|
|
30,084
|
|
|
—
|
|
|
363,236
|
|
||||||
Royalties and fees
|
|
—
|
|
|
44,643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,643
|
|
||||||
|
|
1,329,020
|
|
|
74,399
|
|
|
309,600
|
|
|
124,268
|
|
|
—
|
|
|
1,837,287
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of service
|
|
656,069
|
|
|
—
|
|
|
174,733
|
|
|
51,915
|
|
|
—
|
|
|
882,717
|
|
||||||
Cost of product
|
|
115,116
|
|
|
22,031
|
|
|
28,095
|
|
|
15,316
|
|
|
—
|
|
|
180,558
|
|
||||||
Site operating expenses
|
|
152,739
|
|
|
—
|
|
|
30,769
|
|
|
8,934
|
|
|
—
|
|
|
192,442
|
|
||||||
General and administrative
|
|
44,562
|
|
|
21,296
|
|
|
15,431
|
|
|
11,533
|
|
|
93,229
|
|
|
186,051
|
|
||||||
Rent
|
|
211,885
|
|
|
292
|
|
|
61,716
|
|
|
33,109
|
|
|
2,123
|
|
|
309,125
|
|
||||||
Depreciation and amortization
|
|
56,407
|
|
|
425
|
|
|
13,094
|
|
|
3,148
|
|
|
9,789
|
|
|
82,863
|
|
||||||
Total operating expenses
|
|
1,236,778
|
|
|
44,044
|
|
|
323,838
|
|
|
123,955
|
|
|
105,141
|
|
|
1,833,756
|
|
||||||
Operating income (loss)
|
|
92,242
|
|
|
30,355
|
|
|
(14,238
|
)
|
|
313
|
|
|
(105,141
|
)
|
|
3,531
|
|
||||||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,206
|
)
|
|
(10,206
|
)
|
||||||
Interest income and other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,697
|
|
|
1,697
|
|
||||||
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies
|
|
$
|
92,242
|
|
|
$
|
30,355
|
|
|
$
|
(14,238
|
)
|
|
$
|
313
|
|
|
$
|
(113,650
|
)
|
|
$
|
(4,978
|
)
|
|
|
June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
|
|
Total
Revenues
|
|
Property and
Equipment, Net
|
|
Total
Revenues
|
|
Property and
Equipment, Net
|
|
Total
Revenues
|
|
Property and
Equipment, Net
|
||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
U.S.
|
|
$
|
1,486,502
|
|
|
$
|
132,554
|
|
|
$
|
1,563,023
|
|
|
$
|
167,613
|
|
|
$
|
1,585,672
|
|
|
$
|
198,471
|
|
Other countries
|
|
205,386
|
|
|
14,440
|
|
|
227,846
|
|
|
15,708
|
|
|
251,615
|
|
|
19,686
|
|
||||||
Total
|
|
$
|
1,691,888
|
|
|
$
|
146,994
|
|
|
$
|
1,790,869
|
|
|
$
|
183,321
|
|
|
$
|
1,837,287
|
|
|
$
|
218,157
|
|
|
|
Quarter Ended
|
|
|
||||||||||||||||
|
|
September 30
|
|
December 31
|
|
March 31(a)
|
|
June 30(b)
|
|
Year Ended
|
||||||||||
|
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
431,042
|
|
|
$
|
424,043
|
|
|
$
|
412,603
|
|
|
$
|
424,200
|
|
|
$
|
1,691,888
|
|
Cost of service and product revenues, excluding depreciation and amortization
|
|
251,242
|
|
|
254,841
|
|
|
248,509
|
|
|
249,944
|
|
|
1,004,536
|
|
|||||
Operating income (loss)
|
|
7,715
|
|
|
(847
|
)
|
|
(12,784
|
)
|
|
4,712
|
|
|
(1,204
|
)
|
|||||
Net income (loss)
|
|
3,281
|
|
|
(2,219
|
)
|
|
(18,455
|
)
|
|
1,253
|
|
|
(16,140
|
)
|
|||||
Net income (loss) per basic and diluted share(d)
|
|
0.07
|
|
|
(0.05
|
)
|
|
(0.40
|
)
|
|
0.03
|
|
|
(0.35
|
)
|
|
|
Quarter Ended
|
|
|
||||||||||||||||
|
|
September 30
|
|
December 31(c)
|
|
March 31
|
|
June 30
|
|
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
|
|
(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
|
)
|
(a)
|
During the third quarter of fiscal year 2017, the Company recorded
$7.9 million
of severance expense related to the termination of former executive officers including the Company's Chief Executive Officer.
|
(b)
|
During the fourth quarter of fiscal year 2017, the Company recorded
$5.9 million
for a one-time inventory expense related to salon tools.
|
(c)
|
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.
|
(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 Annual Report on Form 10-K/A filed on September 26, 2014.)
|
|
|
|
3(b)
|
|
Bylaws of the Company. (Incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed on October 31, 2006.)
|
|
|
|
4(a)
|
|
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(b)
|
|
Indenture, dated December 1, 2015, by and between the Company and Wells Fargo Bank, National Association, as Trustee, in respect of the 5.50% Senior Notes due 2019 (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed on December 4, 2015.)
|
|
|
|
10(a)*
|
|
Regis Corporation 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.)
|
|
|
|
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 Annual Report on Form 10-K filed on August 29, 2007). (Incorporated by reference to Exhibit 10(a) of the Company's Quarterly 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 Current 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 Quarterly 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 Quarterly 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. (Incorporated by reference to Exhibit 10(f) of the Company’s Annual Report on Form 10-K filed on August 23, 2016.)
|
|
|
|
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 Quarterly 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 Quarterly 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 Quarterly 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 Quarterly 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 Annual Report on Form 10-K filed August 28, 2015.)
|
|
|
|
10(l)*
|
|
Letter Agreement with Huron Consulting Services LLC for CFO Services, dated January 25, 2017. (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on May 4, 2017.)
|
|
|
|
10(m)*
|
|
Employment Agreement, dated April 17, 2017, between the Company and Hugh E. Sawyer.
|
|
|
|
10(n)*
|
|
Restricted Stock Unit Agreement, dated April 17, 2017, between the Company and Hugh E. Sawyer.
|
|
|
|
10(o)*
|
|
Stock Appreciation Right Agreement, dated April 17, 2017, between the Company and Hugh E. Sawyer.
|
|
|
|
10(p)*
|
|
Separation Agreement, dated April 16, 2017, between the Company and Daniel Hanrahan.
|
|
|
|
10(q)*
|
|
Separation Agreement, dated February 28, 2017, between the Company and Heather Passe.
|
|
|
|
10(r)*
|
|
Employment Offer Letter, dated June 16, 2017, between the Company and Andrew H. Lacko.
|
|
|
|
10(s)*
|
|
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 Current Report on Form 8-K filed on October 11, 2013.)
|
|
|
|
10(t)*
|
|
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 Quarterly Report on Form 10-Q filed on November 4, 2014.)
|
|
|
|
10(u)*
|
|
Form of Restricted Stock Unit Award (Annual Executive Grants).
|
|
|
|
10(v)*
|
|
Form of Stock Appreciation Right Award (Annual Executive Grants).
|
|
|
|
10(w)*
|
|
Form of Performance Stock Unit Award (Fiscal 2017 Executive Grants).
|
|
|
|
10(x)*
|
|
Regis Corporation 2016 Long Term Incentive Plan, effective October 18, 2016. (Incorporated by reference to Appendix A of the Company’s Proxy Statement on Definitive Form 14A filed on September 7, 2016.)
|
|
|
|
10(y)*
|
|
Regis Corporation Amended and Restated 1991 Contributory Stock Purchase Plan, as amended and restated effective October 18, 2016. (Incorporated by reference to Appendix B of the Company’s Proxy Statement on Definitive Form 14A filed on September 7, 2016.)
|
|
|
|
10(z)*
|
|
Supplemental Performance-Based Cash Retention Bonus Plan, dated January 2017. (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on May 4, 2017.)
|
|
|
|
10(aa)*
|
|
Changes to Severance Program, dated January 23, 2017. (Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed on May 4, 2017.)
|
|
|
|
10(bb)
|
|
Sixth Amended and Restated Credit Agreement, dated June 11, 2013, among the Company, the various financial institutions party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and an Issuer, Bank of America, N.A., 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 Current Report on Form 8-K filed on June 14, 2013.)
|
|
|
|
10(cc)
|
|
First Amendment, dated as of January 27, 2016, to the Sixth Amended and Restated Credit Agreement, dated June 11, 2013, among the Company, the various financial institutions party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10(c) of the Company’s Quarterly Report on Form 10-Q filed on January 28, 2016).
|
|
|
|
21
|
|
List of Subsidiaries of the Company.
|
|
|
|
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/ HUGH. E SAWYER
|
|
|
Hugh E. Sawyer,
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
By
|
/s/ ANDREW H. LACKO
|
|
|
Andrew H. Lacko,
Executive Vice President and 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, 2017
|
/s/ DAVID P. WILLIAMS
|
|
|
David P. Williams,
Chairman of the Board of Directors
|
|
Date: August 23, 2017
|
|
|
|
/s/ HUGH E. SAWYER
|
|
|
Hugh E. Sawyer,
Director
|
|
Date: August 23, 2017
|
|
|
|
/s/ DANIEL G. BELTZMAN
|
|
|
Daniel G. Beltzman,
Director
|
|
Date: August 23, 2017
|
|
|
|
/s/ M. ANN RHOADES
|
|
|
M. Ann Rhoades,
Director
|
|
Date: August 23, 2017
|
|
|
|
/s/ MICHAEL J. MERRIMAN
|
|
|
Michael J. Merriman,
Director
|
|
Date: August 23, 2017
|
|
|
|
/s/ STEPHEN E. WATSON
|
|
|
Stephen E. Watson,
Director
|
|
Date: August 23, 2017
|
|
|
|
/s/ DAVID J. GRISSEN
|
|
|
David J. Grissen,
Director
|
|
Date: August 23, 2017
|
|
|
|
/s/ MARK LIGHT
|
|
|
Mark Light,
Director
|
|
Date: August 23, 2017
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Financial Statements
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheet
|
|
|
|
|
|
|
|
|
|
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
Consolidated
Statement of Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Consolidated
Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
Current Assets
|
|
|
|
|
Current liabilities
|
|
|
|
||||||||||||||
|
Cash and cash equivalents
|
$
|
25,352,516
|
|
|
$
|
40,974,612
|
|
|
|
Current maturities, capital lease obligation
|
|
|
|
||||||||
|
Restricted cash
|
1,493,311
|
|
|
139,264
|
|
|
|
|
and long term debt
|
$
|
284,962
|
|
|
$
|
481,346
|
|
|||||
|
Accounts receivable:
|
|
|
|
|
|
Accounts payable, trade
|
1,591,499
|
|
|
1,618,751
|
|
||||||||||
|
|
Students (net of allowance of $6,173,459 and
|
|
|
|
|
|
Affiliates
|
—
|
|
|
3,118
|
|
|||||||||
|
|
$5,921,211 in 2017 and 2016, respectively)
|
2,658,271
|
|
|
2,529,767
|
|
|
|
Accounts payable, accrued
|
2,172,315
|
|
|
2,358,180
|
|
|||||||
|
|
Other
|
60,297
|
|
|
137,306
|
|
|
|
Accrued payroll
|
1,813,196
|
|
|
1,285,360
|
|
|||||||
|
|
Affiliates, unsecured
|
14,377
|
|
|
17,992
|
|
|
|
Accrued expenses
|
1,688,190
|
|
|
1,368,572
|
|
|||||||
|
Inventories
|
2,139,962
|
|
|
2,145,571
|
|
|
|
Trust liabilities
|
243,311
|
|
|
139,264
|
|
||||||||
|
Prepaid expenses
|
896,441
|
|
|
723,143
|
|
|
|
Unearned tuition
|
10,591,801
|
|
|
10,905,463
|
|
||||||||
|
Prepaid corporate income taxes
|
34,127
|
|
|
65,303
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
Total current liabilities
|
18,385,274
|
|
|
18,160,054
|
|
||||||||
|
|
|
Total current assets
|
32,649,302
|
|
|
46,732,958
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Capital Lease Obligation
|
6,485,948
|
|
|
6,770,910
|
|
|||||||||
Property and Equipment, Net
|
29,171,576
|
|
|
32,117,007
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
Long-Term Debt
|
—
|
|
|
14,921,514
|
|
||||||||||||
Other Assets
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Intangibles, not subject to amortization
|
8,704,186
|
|
|
8,704,186
|
|
|
Deferred Rent
|
5,695,401
|
|
|
7,063,670
|
|
|||||||||
|
Intangibles, net
|
84,586
|
|
|
110,740
|
|
|
|
|
|
|
|||||||||||
|
Prepublication costs (net of accumulated
|
|
|
|
|
|
|
|
Total liabilities
|
30,566,623
|
|
|
46,916,148
|
|
||||||||
|
|
amortization of $212,552 and $149,037 in 2017
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
and 2016, respectively)
|
104,089
|
|
|
167,604
|
|
|
Commitments and Contingencies (Notes 11, 14)
|
|
|
|
||||||||||
|
Notes receivable, employees, secured
|
217,883
|
|
|
216,791
|
|
|
|
|
|
|
|||||||||||
|
Deposits and other assets
|
928,336
|
|
|
1,063,936
|
|
|
Shareholders' Equity
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
Preferred stock:
|
|
|
|
||||||||||||
|
|
|
Total other assets
|
10,039,080
|
|
|
10,263,257
|
|
|
|
|
Series A, 8% cumulative, redeemable, $0.001
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
par value, 150 shares authorized, 100
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
issued and outstanding
|
10,000,000
|
|
|
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
|
|
|
66,346,025
|
|
||||||||
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
(35,052,691
|
)
|
|
(34,148,952
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
41,293,335
|
|
|
42,197,074
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Total
|
$
|
71,859,958
|
|
|
$
|
89,113,222
|
|
|
|
|
|
Total
|
$
|
71,859,958
|
|
|
$
|
89,113,222
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
||||||
Revenue
|
|
|
|
|
|
||||||||
|
Educational services
|
$
|
102,419,283
|
|
|
$
|
110,684,320
|
|
|
$
|
132,946,719
|
|
|
|
Products
|
23,067,181
|
|
|
19,617,360
|
|
|
22,050,047
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total revenue
|
125,486,464
|
|
|
130,301,680
|
|
|
154,996,766
|
|
|||
|
|
|
|
|
|
|
|
||||||
Operating Expenses
|
|
|
|
|
|
||||||||
|
Cost of educational services, exclusive of
|
|
|
|
|
|
|||||||
|
depreciation and amortization
|
72,080,948
|
|
|
83,330,808
|
|
|
97,804,550
|
|
||||
|
Cost of product sales
|
12,308,256
|
|
|
12,386,245
|
|
|
14,545,443
|
|
||||
|
General, selling, and administrative, exclusive of
|
|
|
|
|
|
|||||||
|
depreciation and amortization
|
33,963,801
|
|
|
32,679,233
|
|
|
38,269,157
|
|
||||
|
Depreciation and amortization
|
4,388,765
|
|
|
4,909,281
|
|
|
5,352,592
|
|
||||
|
Other operating expenses
|
2,498,050
|
|
|
2,723,148
|
|
|
2,902,235
|
|
||||
|
Loss on disposal and sale of assets
|
20,427
|
|
|
38,678
|
|
|
167,942
|
|
||||
|
Impairment loss
|
877,088
|
|
|
91,258
|
|
|
218,950
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total operating expenses
|
126,137,335
|
|
|
136,158,651
|
|
|
159,260,869
|
|
|||
|
|
|
|
|
|
|
|
||||||
Loss from Operations
|
(650,871
|
)
|
|
(5,856,971
|
)
|
|
(4,264,103
|
)
|
|||||
|
|
|
|
|
|
||||||||
Other Income (Expense)
|
|
|
|
|
|
||||||||
|
Interest expense
|
(801,796
|
)
|
|
(800,875
|
)
|
|
(655,523
|
)
|
||||
|
Interest income
|
51,098
|
|
|
70,531
|
|
|
73,156
|
|
||||
|
Miscellaneous income
|
185,541
|
|
|
513,823
|
|
|
733,594
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total other income (expense), net
|
(565,157
|
)
|
|
(216,521
|
)
|
|
151,227
|
|
|||
|
|
|
|
|
|
|
|
||||||
Loss Before (Benefit) Provision for Income Taxes
|
(1,216,028
|
)
|
|
(6,073,492
|
)
|
|
(4,112,876
|
)
|
|||||
|
|
|
|
|
|
||||||||
(Benefit) Provision for Income Taxes
|
(317,001
|
)
|
|
(522,484
|
)
|
|
12,625,065
|
|
|||||
|
|
|
|
|
|
|
|
||||||
|
|
Net loss
|
$
|
(899,027
|
)
|
|
$
|
(5,551,008
|
)
|
|
$
|
(16,737,941
|
)
|
|
Series A
|
|
|
|
|
|
Additional
|
|
Retained Earnings
|
|
|
||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Paid-in
|
|
(Accumulated
|
|
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit)
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, June 30, 2014
|
—
|
|
|
$
|
—
|
|
|
889.938
|
|
|
$
|
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
|
—
|
|
|
—
|
|
|
887.938
|
|
|
1
|
|
|
66,400,281
|
|
|
(28,593,560
|
)
|
|
37,806,722
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,551,008
|
)
|
|
(5,551,008
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cancellation of Non-Qualified Stock Options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|
|
887.938
|
|
|
1
|
|
|
66,346,025
|
|
|
(34,148,952
|
)
|
|
42,197,074
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(899,027
|
)
|
|
(899,027
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Redemption of Preferred Stock
|
(100
|
)
|
|
(10,000,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,000,000
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Issuance of Preferred Stock
|
100
|
|
|
10,000,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,712
|
)
|
|
(4,712
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance, June 30, 2017
|
100
|
|
|
$
|
10,000,000
|
|
|
887.938
|
|
|
$
|
1
|
|
|
$
|
66,346,025
|
|
|
$
|
(35,052,691
|
)
|
|
$
|
41,293,335
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
||||||||||
|
Net loss
|
$
|
(899,027
|
)
|
|
$
|
(5,551,008
|
)
|
|
$
|
(16,737,941
|
)
|
|||
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|||||||||
|
provided by operating activities:
|
|
|
|
|
|
|||||||||
|
|
Depreciation
|
4,299,097
|
|
|
4,798,864
|
|
|
5,214,764
|
|
|||||
|
|
Amortization of intangibles
|
26,154
|
|
|
46,901
|
|
|
76,714
|
|
|||||
|
|
Amortization of prepublication costs
|
63,515
|
|
|
63,516
|
|
|
61,114
|
|
|||||
|
|
Provision for uncollectible accounts
|
252,248
|
|
|
(2,743,629
|
)
|
|
1,953,954
|
|
|||||
|
|
Impairment loss
|
877,088
|
|
|
91,258
|
|
|
218,950
|
|
|||||
|
|
Deferred compensation
|
—
|
|
|
(217,768
|
)
|
|
—
|
|
|||||
|
|
Compensation cost from stock options
|
—
|
|
|
—
|
|
|
30,981
|
|
|||||
|
|
Loss on disposal and sale of equipment
|
20,427
|
|
|
38,678
|
|
|
167,942
|
|
|||||
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
||||||||
|
|
|
|
Accounts receivable, student
|
(380,752
|
)
|
|
6,581,543
|
|
|
(5,083,059
|
)
|
|||
|
|
|
|
Deferred income taxes
|
—
|
|
|
(54,256
|
)
|
|
13,998,601
|
|
|||
|
|
|
|
Inventories
|
5,609
|
|
|
487,047
|
|
|
1,338,430
|
|
|||
|
|
|
|
Prepaid expenses and other assets
|
74,102
|
|
|
1,534,039
|
|
|
3,635,353
|
|
|||
|
|
|
|
Restricted cash and trust liabilities
|
(1,250,000
|
)
|
|
250,062
|
|
|
(250,062
|
)
|
|||
|
|
|
|
Notes receivable, employee, secured
|
(1,092
|
)
|
|
(1,090
|
)
|
|
(1,156
|
)
|
|||
|
|
|
|
Accounts payable and accrued expenses
|
631,219
|
|
|
(2,006,772
|
)
|
|
(1,904,515
|
)
|
|||
|
|
|
|
Unearned tuition
|
(313,662
|
)
|
|
1,421,952
|
|
|
(4,225,365
|
)
|
|||
|
|
|
|
Deferred rent
|
(1,368,269
|
)
|
|
184,956
|
|
|
2,639,824
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Total adjustments
|
2,935,684
|
|
|
10,475,301
|
|
|
17,872,470
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Net cash provided by operating activities
|
2,036,657
|
|
|
4,924,293
|
|
|
1,134,529
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities
|
|
|
|
|
|
||||||||||
|
Purchases of property and equipment
|
(2,252,871
|
)
|
|
(3,661,895
|
)
|
|
(4,223,078
|
)
|
||||||
|
Proceeds from sale of property and equipment
|
1,690
|
|
|
1,523,510
|
|
|
242,003
|
|
||||||
|
Investment in prepublication costs
|
—
|
|
|
—
|
|
|
(13,100
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Net cash used in investing activities
|
(2,251,181
|
)
|
|
(2,138,385
|
)
|
|
(3,994,175
|
)
|
||||
|
|
|
|
|
|
||||||||||
Cash Flows from Financing Activities
|
|
|
|
|
|
||||||||||
|
Net repayment of long-term debt
|
(15,142,677
|
)
|
|
(5,721,163
|
)
|
|
(636,163
|
)
|
||||||
|
Repayment of capital lease obligation
|
(260,183
|
)
|
|
(237,560
|
)
|
|
(244,149
|
)
|
||||||
|
Proceeds from preferred stock issuance
|
10,000,000
|
|
|
10,000,000
|
|
|
—
|
|
||||||
|
Repayment of preferred stock
|
(10,000,000
|
)
|
|
—
|
|
|
—
|
|
||||||
|
Preferred stock dividends
|
(4,712
|
)
|
|
(4,384
|
)
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Net cash (used in) provided by financing activities
|
(15,407,572
|
)
|
|
4,036,893
|
|
|
(880,312
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
(15,622,096
|
)
|
|
6,822,801
|
|
|
(3,739,958
|
)
|
|||||||
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents, Beginning
|
40,974,612
|
|
|
34,151,811
|
|
|
37,891,769
|
|
|||||||
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents, Ending
|
$
|
25,352,516
|
|
|
$
|
40,974,612
|
|
|
$
|
34,151,811
|
|
||||
|
|
|
|
|
|
||||||||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||||||||||
|
Interest paid, net of capitalized interest
|
$
|
803,776
|
|
|
$
|
805,595
|
|
|
$
|
648,105
|
|
|||
|
|
|
|
|
|
|
|||||||||
|
Income taxes refunded, net
|
$
|
(317,001
|
)
|
|
$
|
(1,722,836
|
)
|
|
$
|
(3,736,501
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Non-Cash Operating and Financing Activities
|
|
|
|
|
|
||||||||||
|
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)
|
2.
|
Restricted Cash
|
|
2017
|
|
2016
|
||||
Third party scholarship funds
|
$
|
162,000
|
|
|
$
|
71,000
|
|
Charitable contribution pledges and other
|
66,227
|
|
|
58,606
|
|
||
State agencies student funds
|
15,084
|
|
|
6,963
|
|
||
Title IV program funds
|
—
|
|
|
2,695
|
|
||
Collateral trust agreement
|
1,250,000
|
|
|
—
|
|
||
Total restricted cash
|
$
|
1,493,311
|
|
|
$
|
139,264
|
|
3.
|
Property and Equipment, Net
|
|
|
|
2017
|
|
2016
|
||||
|
Capital lease asset (Note 5)
|
$
|
8,200,000
|
|
|
$
|
8,200,000
|
|
|
|
Leasehold improvements
|
41,558,940
|
|
|
41,456,342
|
|
|||
|
Furniture, fixtures, and equipment
|
24,988,785
|
|
|
24,120,131
|
|
|||
|
Automotive equipment
|
267,389
|
|
|
225,021
|
|
|||
|
Audio-video equipment
|
2,156,995
|
|
|
2,191,302
|
|
|||
|
Signs
|
1,500,899
|
|
|
1,478,098
|
|
|||
|
Construction in progress
|
1,122,931
|
|
|
702,295
|
|
|||
|
|
|
|
|
|
||||
|
|
Total cost
|
79,795,939
|
|
|
78,373,189
|
|
||
|
|
|
|
|
|
||||
|
Less accumulated depreciation and amortization
|
50,624,362
|
|
|
46,256,182
|
|
|||
|
|
|
|
|
|
||||
|
Property and equipment, net
|
$
|
29,171,577
|
|
|
$
|
32,117,007
|
|
4.
|
Intangible Assets
|
|
|
|
2017
|
||||||||||
|
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
Carrying Amount
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Copyrights and trade names
|
$
|
2,623,883
|
|
|
$
|
2,606,384
|
|
|
$
|
17,499
|
|
|
|
Below market rate leases
|
1,100,614
|
|
|
1,033,527
|
|
|
67,087
|
|
||||
|
Business covenants
|
725,100
|
|
|
725,100
|
|
|
—
|
|
||||
|
Customer lists
|
50,000
|
|
|
50,000
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
|
Total
|
$
|
4,499,597
|
|
|
$
|
4,415,011
|
|
|
$
|
84,586
|
|
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
|
|
|
Years ending June 30:
|
|
|
||||
|
|
2018
|
$
|
15,596
|
|
|
|
|
|
2019
|
15,595
|
|
|
||
|
|
2020
|
12,289
|
|
|
||
|
|
2021
|
8,885
|
|
|
||
|
|
2022
|
8,707
|
|
|
||
|
|
|
|
|
|
||
|
|
|
Total
|
$
|
61,072
|
|
|
5.
|
Capital Lease Obligation
|
6.
|
Long-Term Debt
|
7.
|
Income Taxes
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
U.S.
|
$
|
(1,216,028
|
)
|
|
$
|
(6,073,492
|
)
|
|
$
|
(4,112,876
|
)
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
Current
|
|
|
|
|
|
||||||||
|
|
Federal
|
$
|
—
|
|
|
$
|
(417,286
|
)
|
|
$
|
(1,570,540
|
)
|
|
|
|
State
|
(317,001
|
)
|
|
(105,198
|
)
|
|
197,006
|
|
||||
|
Deferred
|
|
|
|
|
|
||||||||
|
|
Federal
|
—
|
|
|
—
|
|
|
10,264,661
|
|
||||
|
|
State
|
—
|
|
|
—
|
|
|
3,733,938
|
|
||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Total
|
$
|
(317,001
|
)
|
|
$
|
(522,484
|
)
|
|
$
|
12,625,065
|
|
7.
|
Income Taxes (Continued)
|
|
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
|
||||
|
Current assets
|
|
$
|
2,678,771
|
|
|
$
|
2,595,819
|
|
|
|
Less: valuation allowance
|
|
(2,678,771
|
)
|
|
(2,595,819
|
)
|
|||
|
|
Net current deferred income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||
|
Noncurrent assets
|
|
8,518,245
|
|
|
9,528,383
|
|
|||
|
Less: valuation allowance
|
|
(8,518,245
|
)
|
|
(9,528,383
|
)
|
|||
|
|
Net noncurrent deferred income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
7.
|
Income Taxes (Continued)
|
|
|
2017
|
|
2016
|
|||||
|
Deferred tax assets:
|
|
|
|
|||||
|
|
Net operating loss carryforwards
|
$
|
7,937,767
|
|
|
$
|
6,474,957
|
|
|
|
Capital lease
|
2,650,584
|
|
|
2,830,757
|
|
||
|
|
Deferred rent
|
2,209,617
|
|
|
2,818,259
|
|
||
|
|
Allowance for doubtful accounts
|
2,396,003
|
|
|
2,363,849
|
|
||
|
|
State deferred bonus depreciation
|
424,862
|
|
|
751,304
|
|
||
|
|
Payroll and payroll related costs
|
537,144
|
|
|
487,056
|
|
||
|
|
Other
|
171,073
|
|
|
106,380
|
|
||
|
|
Depreciation and amortization
|
(1,094,656
|
)
|
|
(461,080
|
)
|
||
|
Less: valuation allowance
|
(15,232,394
|
)
|
|
(15,371,482
|
)
|
|||
|
|
|
|
|
|||||
|
|
Total deferred income tax assets
|
$
|
—
|
|
|
$
|
—
|
|
9.
|
Stock Transactions
|
9.
|
Stock Transactions (Continued)
|
10.
|
Commitments
|
12.
|
Related Party Transactions
|
13.
|
Contingencies
|
14.
|
Concentrations of Credit Risk
|
15.
|
Stock Options
|
|
|
Number of
Shares
|
|
Exercise Price
(per share)
|
|
Remaining
Contractual
Life (per share)
|
||||
|
Outstanding, June 30, 2016
|
20
|
|
|
$
|
129,400
|
|
|
1.75
|
|
|
No activity
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
Total Outstanding, June 30, 2017
|
20
|
|
|
$
|
129,400
|
|
|
0.75
|
|
Weighted Average fair value of options granted:
|
|
|
$55,929
|
Option Price Range (Fair Value):
|
|
|
$45,233 - $109,408
|
16.
|
Fair Value of Financial Instruments
|
|
|
|
|
2017
|
|
2016
|
||||||||||||
|
|
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash, cash equivalents,
|
|
|
|
|
|
|
|
|
|||||||||
|
|
and restricted cash
|
|
$
|
26,845,827
|
|
|
$
|
26,845,827
|
|
|
$
|
41,113,876
|
|
|
$
|
41,113,876
|
|
|
Accounts receivable, net
|
|
2,718,568
|
|
|
2,718,568
|
|
|
2,667,073
|
|
|
2,667,073
|
|
|||||
|
Accounts receivable,
|
|
|
|
|
|
|
|
|
|||||||||
|
|
affiliates
|
|
14,377
|
|
|
N/A
|
|
|
17,992
|
|
|
N/A
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||||
|
Long-term debt - other
|
|
—
|
|
|
—
|
|
|
15,142,677
|
|
|
15,142,677
|
|
|||||
|
Accounts payable, trade
|
|
1,591,499
|
|
|
1,591,499
|
|
|
1,618,751
|
|
|
1,618,751
|
|
|||||
|
Deferred rent
|
|
1,771,162
|
|
|
1,771,162
|
|
|
2,900,839
|
|
|
2,900,839
|
|
▪
|
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, and affiliates; - 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 a 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)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
877,088
|
|
Deferred rent
(2)
|
|
$
|
1,771,162
|
|
|
$
|
1,771,162
|
|
|
N/A
|
|
Description
|
|
Value
|
|
Level 3
|
|
Impairment
|
||||||
Long-lived assets
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
91,258
|
|
Deferred rent
(2)
|
|
$
|
2,900,839
|
|
|
$
|
2,900,839
|
|
|
N/A
|
|
If to the Executive:
|
To the Executive’s address on file with the Company
|
|
REGIS CORPORATION
|
|
|
|
/s/ Eric Bakken
|
|
By: Eric Bakken
|
|
Its: Executive Vice President, Chief Administrative Officer, Corporate Secretary and General Counsel
|
|
|
|
EXECUTIVE
|
|
|
|
/s/ Hugh Sawyer
|
|
Hugh Sawyer
|
1.
|
Definitions
.
|
2.
|
Grant of Restricted Stock Units, Term and Vesting
.
|
3.
|
Forfeiture of RSUs
.
|
6.
|
Dividend Equivalents
.
|
|
REGIS CORPORATION
|
|
|
|
By:
/s/ Eric Bakken
|
|
Name: Eric Bakken
|
|
Title: EVP, CAO, General Counsel and Secretary
|
|
|
|
PARTICIPANT:
|
|
|
|
/s/ Hugh Sawyer
|
|
Hugh Sawyer
|
1.
|
Inducement Grant
.
|
2.
|
Grant of Stock Appreciation Right, Term and Vesting
.
|
3.
|
Exercise of Vested Portion of the Stock Appreciation Right
.
|
1.
|
Forfeiture of SAR Upon Termination of Employment
.
|
2.
|
Exercise of Vested Portion of SAR After Termination of Employment
.
|
3.
|
Tax Consequences and Payment of Withholding Taxes
.
|
4.
|
Nontransferable; Requirements of Law
.
|
5.
|
Administration
.
|
6.
|
Certain Plan Provisions; Recoupment Policy
.
|
7.
|
No Shareholder Rights until Exercise
.
|
8.
|
No Employment Rights
.
|
9.
|
Governing Law
.
|
10.
|
Entire Agreement
.
|
11.
|
Amendment
.
|
12.
|
Waiver; Cumulative Rights
.
|
13.
|
Counterparts
.
|
14.
|
Headings
.
|
15.
|
Severability
.
|
16.
|
Successors and Assigns
.
|
|
REGIS CORPORATION
|
|
|
|
By:
/s/ Eric Bakken
|
|
Name: Eric Bakken
|
|
Title: EVP, CAO, General Counsel and Secretary
|
|
|
|
PARTICIPANT:
|
|
|
|
/s/ Hugh Sawyer
|
|
Hugh Sawyer
|
1.
|
Termination
. Regis has terminated your employment effective April 16, 2017 (“Departure Date”).
|
2.
|
Payments Upon Termination
.
|
a.
|
Whether or not you sign this Agreement, Regis will pay you:
|
1)
|
All wages you have earned through and including the Departure Date; and
|
2)
|
Your accrued but unused PTO benefit.
|
1)
|
Any medical expenses incurred under the ExecMed Program that are incurred on or before the Departure Date, which reimbursements shall be made in the normal course upon timely presentation of claims;
|
2)
|
Reimbursement for all necessary business expenses you have incurred through the Departure Date, if any, for which you seek reimbursement. Any such request for reimbursement must be submitted within one month after the Departure Date to comply with Regis’ policies regarding reimbursement requests and be directed to Debbie Mueller, Regis Corp., 7201 Metro Boulevard, Minneapolis, MN 55439. Thereafter, you agree that you will be ineligible for further expense reimbursement from Regis, unless otherwise required by law. Upon submission of your timely request for reimbursement, Regis will reimburse you for all necessary business expenses you incurred pursuant to the Company’s regular business practices; and
|
3)
|
All compensation accrued as of the date of your termination under each plan or program of the Corporation in which you may be participating at the time of termination in accordance with the terms of such plan or program, including but not limited to the Executive Retirement Savings Plan, the Regis Individual Secured Retirement Plan, and the Long-Term Incentive plans and equity awards thereunder. This Agreement has no effect on such plans, and the amount to which Employee is entitled under the foregoing is subject to each plan’s terms and conditions. For sake of clarity, “all compensation accrued as of the date of your termination under each plan or program of the corporation” shall specifically include Employee’s contributions and all matching contributions made by Regis to the Executive Retirement Savings Plan and/or the Regis Individual Secured Retirement Plan.
|
c.
|
Severance Payment
. Subject to Employee signing and not revoking this Agreement, including the General Release set forth in Section 9 of this Agreement, and Employee remaining in compliance with the terms of this Agreement, the Employment Agreement, and any other written agreements between Regis and Employee, you shall be entitled to receive the following amount as severance pay subject to such amounts being reduced as provided for in the Employment Agreement (except to the extent such reduction is modified by this Agreement):
|
1)
|
The amount of One Million, Seven Hundred Thousand and 00/100 Dollars ($1,700,000.00) which is the equivalent of two times your base salary as of the date of your termination (the “Severance Payment”), paid in substantially equal installments in accordance with the Corporation’s normal payroll policies commencing on the Departure Date and continuing for twenty-four (24) consecutive months, provided, however, that any Severance Payment installments payable under this paragraph 2.c.1) that would otherwise be paid prior to the first day of the seventh (7th) month will be paid on the Corporation’s first regular payroll date that is after the first day of the seventh (7th) month following the Departure Date and included with the installment payable on such payroll date, if any, without adjustment for interest or earnings during the period of delay. Each of the foregoing payments shall be subject to statutory payroll deductions and other legally required withholdings; no deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan or for any insurance coverage, including, but not necessarily limited to health and dental insurance coverage. Regis shall issue an IRS Form W-2 for the full amount of these payments.
|
2)
|
An amount equal to the Bonus (as defined in the Employment Agreement) that you would have earned for the Fiscal Year ending June 30, 2017 had you remained employed by Regis through the payment date of such Bonus, and to the extent bonuses for Fiscal Year 2017 are earned pursuant to the terms of the Annual Incentive Plan. This amount shall be payable at the same time as bonuses, if any, are paid to other current officers of the corporation. Payment shall be subject to all statutory deductions and other legally required withholdings. No deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan. Regis shall issue an IRS Form W-2 for the full amount of this payment.
|
d.
|
Benefits Continuation.
Subject to Employee signing and not revoking this Agreement, including the General Release set forth in Section 9 of this Agreement, and Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between Regis and Employee, and in exchange for the General Release set forth below, Regis agrees to pay to you:
|
1)
|
The Employer portion of your COBRA premiums for health and dental insurance coverage under the Corporation’s group health and dental insurance plans for up to eighteen (18) months, provided Employee timely elects COBRA coverage. Notwithstanding the foregoing, the Corporation will discontinue COBRA premium payments if, and at such time as, Employee (A) is eligible to be covered under the health and/or dental insurance policy of a new employer, (B) ceases to participate, for whatever reason, in the Corporation’s group insurance plan, or (C) ceases to be eligible to receive the Severance Payment set forth in section 2.c. above. Regis shall issue an IRS Form W-2 for the full amount of this payment. This amount shall be paid in substantially equal installments in accordance with the Corporation’s normal payroll policies following the expiration of the rescission periods referred to in Sections 10, 11 and 12 and commencing on the first payroll date that is more than sixty (60) days after the Departure Date. All payments shall be subject to payroll deductions and other legally required withholdings. No deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan.
|
e.
|
Restricted Stock Units and Stock Appreciation Rights.
Subject to Employee signing and not revoking this Agreement and Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between Regis and Employee, and in exchange for the General Release set forth in Section 9 below, all unvested portions of Employee’s Restricted Stock Units and Stock Appreciation Rights, a complete and accurate summary of which is attached hereto as Exhibit A, will be accelerated in accordance with the policy for involuntary terminations without Cause (as defined in the Employment Agreement) adopted by the Compensation Committee in January 2017, with such acceleration to be effective as of the expiration of all applicable rescission periods under this Agreement, and your AST stock account shall be updated to reflect this change no later than ten (10) business days after all applicable rescission periods have expired under this Agreement. Such benefit shall be subject to all statutory deductions and other legally required withholdings. Regis shall issue an IRS Form W-2 for the full value of the acceleration of Employee’s Restricted Stock units and, to the extent Employee exercises Employee’s Stock Appreciation Rights, the income realized upon the exercise of such Stock Appreciation Rights.
|
f.
|
PSU Payment
. Subject to Employee signing and not revoking this Agreement, including the General Release set forth in Section 9 of this Agreement, and Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between Regis and Employee, and in exchange for the General Release set forth below, Regis shall compensate you in cash for the value of the Fiscal 2014 and Fiscal 2015 performance-based restricted stock units (“PSUs”) which you have earned but are not yet vested by their terms, a complete and accurate summary of which is attached hereto as Exhibit B. You will receive this as an additional cash payment based on the closing stock price on April 14, 2017, less all applicable taxes and withholdings, and this payment right shall vest as of the expiration of all applicable rescission periods under this Agreement and payment shall be made to you no later than ten (10) business days after all applicable rescission periods have expired under this Agreement. No deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan. Regis shall issue an IRS Form W-2 for the full amount of this payment.
|
3.
|
Confidentiality and Non-Disparagement
. Except for information publicly disclosed by the Company, to the fullest extent permitted by law, you will not, directly or indirectly, disclose the terms of this Agreement to anyone other than your attorney, spouse, or significant other, or except as required for accounting, tax, or other legally-mandated or legally-permitted purposes, provided that, unless there is a legal reason for the disclosure, any such person to whom disclosure is made shall, prior to disclosure, specifically agree to keep this Agreement confidential. To the fullest extent permitted by law, you also agree not to make or endorse any disparaging or negative remarks or statements (whether oral, written, or otherwise) concerning Regis or its predecessors, successors, and/or assigns, as well as past and present officers, directors, agents, and/or employees. To the fullest extent permitted by law, the Company agrees to direct its current officers and board members not to make or endorse any disparaging or negative remarks or statements (whether oral, written, or otherwise) about you. Nothing in this paragraph shall prevent Regis or you from providing truthful testimony and/or information in response to a lawful subpoena, court order or governmental inquiry.
|
4.
|
Non-Disclosure of Confidential or Proprietary Information
. Employee shall not disclose to any third party any confidential or proprietary information of the Company and/or its clients regardless of how acquired or learned. By way of example and not limitation, such information includes client information, compensation structures and data, rate structures, management organization or other organization charts, sales or marketing plans, research and development plans, and other business and/or activities and plans. This paragraph shall not restrict Employee’s obligation to disclose such information pursuant to legal requirements, provided that, to the extent legally permissible to do so, Employee first gives the Company prompt notice of such legal process in order that it shall have the opportunity to object to the disclosure of such information. This paragraph does not limit Employee’s obligations under Section 8 of the Employment Agreement, which is incorporated herein by reference. Furthermore, the restrictions contained in this Section 4 shall not apply to information which is publicly known.
|
5.
|
Return of Corporate Property
. By signing below, you represent and warrant that all Regis property has been returned to Regis, and that you have not retained any copies, electronic or otherwise, of any Regis property. Notwithstanding this paragraph of this Agreement, you may keep your phone, laptop, iPad, and documents pertaining to your compensation and/or benefits.
|
6.
|
Non-Competition and Non-Solicitation
.
|
a.
|
Non-competition
. For a period of twenty-four (24) months immediately following Employee’s termination of employment hereunder (the “Non-Competition Period”), Employee shall not enter into endeavors that are competitive with the business or operations of the Corporation in the beauty industry, and shall not own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as
|
b.
|
Non-solicitation
. During the Non-Competition Period, Employee shall not (i) hire or attempt to hire any employee of the Corporation, assist in such hiring by any person or encourage any employee to terminate Employee’s relationship with the Corporation; or (ii) solicit, induce, or influence any proprietor, franchisee, partner, stockholder, lender, director, officer, employee, joint venturer, investor, consultant, agent, lessor, supplier, customer or any other person or entity which has a business relationship with the Corporation or its affiliates at any time during the Non-Competition Period, to discontinue or reduce or modify the extent of such relationship with the Corporation or any of its subsidiaries.
|
c.
|
Employee agrees that, if he violates these non-competition and/or non-solicitation covenants, and such violation continues after the Employee is notified in writing by the Company that he is in violation of the restrictive covenant, then Regis shall have no further obligation to pay any portion of any payments and benefits provided pursuant to Section 2.c), d), e) and f) of this Agreement and that Employee must (i) repay to Regis any previously paid installments of the Severance Payment detailed in Section 2.b, (ii) repay to Regis the value of any Restricted Stock Units or Stock Appreciation Rights accelerated as detailed in Section 2.e and (iii) repay to Regis the cash payment detailed in Section 2.f). With respect to Restricted Stock Units accelerated as described in Section 2.e, the repayment shall be in the form of the number of shares received in connection with such acceleration, or, if such shares have been sold prior to the date of recovery, a cash amount equal to the sale proceeds received by Employee with respect to such shares. With respect to Stock Appreciation Rights accelerated as described in Section 2.e, the repayment shall be in the form of the cancellation of such Stock Appreciation Rights, or, if such Stock Appreciation Rights have been exercised, the number of shares received upon exercise of such Stock Appreciation Rights, or, if the shares subject to such Stock Appreciation Rights have been sold, a cash amount equal to the sale proceeds received by Employee with respect to such shares. The Company reserves the right to enforce Sections 3, 4, and 6 hereof to the fullest extent permitted by law. Section 10 of the Employment Agreement is incorporated herein by reference and references to Sections 8 and 9 therein shall be deemed to include Sections 3, 4, and 6 in this Agreement.
|
7.
|
Litigation and Other Legal Matters
. Employee agrees to be reasonably available upon reasonable notice from Regis, with or without subpoena, to be interviewed, review documents or things, give depositions, testify, or engage in other reasonable activities, including in connection with any pending and future litigation, investigations, arbitrations, and/or other fact-finding or adjudicative proceedings, public or private, internal or external to Regis or any of the other Released Parties, with respect to matters of which Employee has knowledge. Regis will cooperate with Employee’s reasonable scheduling needs; will reimburse Employee for his reasonable expenses incurred in connection with Employee’s obligations under this paragraph; and will negotiate in good faith and agree upon an appropriate per diem or hourly rate for any cooperation and/or assistance provided by Employee after the Departure Date.
|
8.
|
Taxes
. The Corporation may withhold from any amounts payable under this Agreement such federal, state and local income and employment taxes as the Corporation determines are required or authorized to be withheld pursuant to any applicable law or regulation. Except for any employer taxes required to be paid by the Corporation under applicable laws or regulations, Employee is solely responsible for payment of any and all taxes owed in connection with any compensation, benefits, reimbursement amounts or other payments Employee receives from the Corporation under this
|
9.
|
General Release
. In exchange for the benefits promised you in this Agreement, you agree to irrevocably and unconditionally release and discharge Regis, its predecessors, successors, and assigns, as well as past and present officers, directors, employees, and agents (collectively, the “Released Parties”), from any and all claims, liabilities, or promises, whether known or unknown, arising out of or relating to your employment and termination of employment with Regis through the date you sign this Agreement, other than any claims, liabilities or promises arising under this Agreement. You waive these claims on behalf of yourself and your heirs, assigns, and anyone making a claim through you. The claims waived and discharged include, but are not limited to:
|
•
|
Title VII of the Civil Rights Act of 1964;
|
•
|
Sections 1981 through 1988 of Title 42 of the United Sates Code;
|
•
|
Civil Rights Act of 1991;
|
•
|
The Employee Retirement Income Security Act of 1974 (except for any vested benefits under any tax qualified benefit plan);
|
•
|
The Age Discrimination in Employment Act of 1967 (the “ADEA”);
|
•
|
The Rehabilitation Act of 1973;
|
•
|
The Immigration Reform and Control Act;
|
•
|
The Americans with Disabilities Act of 1990;
|
•
|
The Americans with Disabilities Amendments Act of 2008;
|
•
|
The Fair Credit Reporting Act;
|
•
|
The Sarbanes-Oxley Act of 2002, to the extent permitted by law;
|
•
|
The Occupational Safety and Health Act;
|
•
|
The Family and Medical Leave Act of 1993;
|
•
|
The Equal Pay Act;
|
•
|
The Genetic Information Nondiscrimination Act;
|
•
|
The Worker Adjustment and Retraining Notification Act;
|
•
|
The Minnesota Human Rights Act, Minn. Stat. § 363A.01, et seq.;
|
•
|
The Minnesota wage-hour and wage-payment laws;
|
•
|
The Minnesota’s Whistleblower Act, Minn. Stat. § 181.932;
|
•
|
Minn. Stat. § 176.82;
|
•
|
The non-discrimination and anti-retaliation provisions of the Minnesota State Workers’ Compensation and/or Disability Benefits Laws;
|
•
|
Any other federal, state or local civil or human rights law or any other local, state or federal law, rule, regulation, code, guideline or ordinance, including but not limited to those relating to bias, whistleblower, discrimination, retaliation, compensation, employment, labor or taxes;
|
•
|
Any public policy, contract (oral or written, express or implied), tort, or common law;
|
•
|
Any claims for vacation, sick or personal leave, pay or payment pursuant to any practice, policy, handbook, or manual of Regis; or
|
•
|
Any statute, common law, agreement or other basis for recovering any costs, fees, taxes, or other expenses, including attorneys’ fees and/or costs.
|
10.
|
Compliance with the ADEA and Notice of Right to Consider and Rescind Agreement
. You understand that this Agreement has to meet certain requirements to validly release any claims you might have under the ADEA (including under the Older Workers’ Benefit Protection Act), and you represent that all such requirements have been satisfied, including that:
|
a.
|
This Agreement is written in a manner that is understandable to you;
|
b.
|
You are specifically waiving ADEA rights;
|
c.
|
You are not waiving ADEA rights arising after the date of your signing this Agreement;
|
d.
|
You are receiving valuable consideration in exchange for execution of this Agreement that you would not otherwise be entitled to receive;
|
e.
|
Regis is hereby, in writing, encouraging you to consult with an attorney before signing this Agreement; and
|
f.
|
You received 21 days to consider this Agreement and at least 7 days to rescind it (you are actually receiving 15 days to rescind).
|
11.
|
Notice of Right to Consider and Rescind Agreement
. Regis hereby advises Employee to consult with an attorney of his choice before signing this Agreement releasing any rights or claims that he believes he may have under the ADEA. Once this Separation Agreement is executed, Employee may rescind this Separation Agreement within fifteen (15) calendar days to reinstate any claims under the ADEA. To be effective, any rescission within the relevant time period must be in writing and delivered to Regis, in care of Ms. Katherine M. Merrill, 7201 Metro Boulevard, Minneapolis, MN 55439, by hand or by mail within the fifteen (15) day period. If delivered by mail, the rescission must be (1) postmarked within the fifteen (15) day period; (2) properly addressed to Regis; and (3) sent by certified mail, return receipt requested.
|
12.
|
Compliance with the Minnesota Human Rights Act and Notice of Right to Consider and Rescind Agreement
. Regis hereby advises Employee to consult with an attorney of his choice before signing this Agreement releasing any rights or claims that Employee believes she may have under the Minnesota Human Rights Act (MHRA). Once this Separation Agreement is executed, Employee may rescind this Separation Agreement within fifteen (15) calendar days to reinstate any claims under the MHRA. To be effective, any rescission within the relevant time period must be in writing and delivered to Employer, in care of Ms. Katherine M. Merrill, 7201 Metro Boulevard, Minneapolis, MN 55439 by hand or by mail within the fifteen (15) day period. If delivered by mail, the rescission must be (1) postmarked within the fifteen (15) day period; (2) properly addressed to Employer; and (3) sent by certified mail, return receipt requested.
|
13.
|
Binding Nature of Agreement
. This Agreement is binding on the parties and their heirs, administrators, representatives, executors, successors, and assigns.
|
14.
|
No Assignment
. Employee warrants that he has not assigned, transferred nor purported to assign or transfer any claim against Regis or the Released Parties, and that he will not assign or transfer nor purport to assign or transfer hereafter any claim against Regis or the Released Parties.
|
15.
|
No Unlawful Restriction
. You understand that nothing in this Agreement is intended to or shall: (a) impose any condition, penalty, or other limitation affecting your right to challenge this Agreement; (b) constitute an unlawful release of any of your rights; or (c) prevent or interfere with your ability and/or right to: (1) provide truthful testimony if under subpoena to do so; (2) file any charge with or participate in any investigation or proceeding conducted by the Equal Employment Opportunity
|
16.
|
Recovery of Monetary Awards
. You understand and agree that, with the exception of money provided to you by a governmental agency as an award for providing information, you are not entitled to receive any money or other relief in connection with the claims you are releasing in this Agreement, regardless of who initiated or filed the charge or other proceeding.
|
17.
|
Severability
. The provisions of this Agreement are severable. If any provision (excluding the General Release above) is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.
|
18.
|
Entire Agreement
. Except to the extent that you have an arbitration agreement with Regis, this Agreement and the Employment Agreement set out the entire agreement between you and Regis and supersede any and all prior oral or written agreements or understandings between you and Regis concerning your termination of employment. Any arbitration agreement that you have with Regis will continue in full force and effect.
|
19.
|
Employee Representations
. You represent that you:
|
a.
|
have the right and we have encouraged you to review all aspects of this Agreement with an attorney of your choice;
|
b.
|
have had the opportunity to consult with an attorney of your choice and have either done so or freely chosen not to do so;
|
c.
|
have carefully read and fully understand all the provisions of this Agreement; and
|
d.
|
are freely, knowingly, and voluntarily entering into this Separation and Non-Disparagement Agreement and General Release.
|
20.
|
Effective Date of Agreement
. This Agreement will become effective on the sixteenth day after you sign it, provided that you have not rescinded this Agreement.
|
21.
|
No Admission of Liability
. You understand and agree that this Agreement is not an admission of wrongdoing or liability, including, but not limited to, any violation of any federal, state, and/or local law, statute, ordinance, contract, and/or principle of common law by Regis and/or any individuals and/or entities associated with Regis.
|
22.
|
Attorneys’ Fees
. You agree that you are responsible for your own attorneys’ fees and costs, if any, incurred in any respect, including but not limited to in connection: with your employment with Regis; with the termination of your employment with Regis; and with negotiating and executing this Agreement.
|
23.
|
Governing Law
. This Agreement shall be construed and enforced in accordance with the laws of the State of Minnesota and the laws of the United States, where applicable.
|
Dated: April 17, 2017
|
|
/s/ Daniel Hanrahan
|
|
|
|
Employee (print name): Daniel Hanrahan
|
|
|
|
REGIS CORPORATION:
|
|
|
|
|
|
|
|
|
|
Dated: April 17, 2017
|
By:
|
/s/ Eric Bakken
|
|
|
|
Eric Bakken, EVP, General Counsel and Secretary
|
1.
|
Termination
. Regis has terminated your employment effective on February 28, 2017 (“Departure Date”).
|
2.
|
Payments Upon Termination
.
|
a.
|
Whether or not you sign this Agreement, Regis will pay you:
|
1)
|
All wages you have earned through and including February 28, 2017; and
|
2)
|
Your accrued but unused PTO benefit.
|
1)
|
Any medical expenses incurred under the ExecMed Program that are incurred on or before the Departure Date, which reimbursements shall be made in the normal course upon timely presentation of claims;
|
2)
|
Reimbursement for all necessary business expenses you have incurred through the Departure Date, if any, for which you seek reimbursement. Any such request for
|
3)
|
All compensation accrued as of the date of your termination under each plan or program of the corporation in which you may be participating at the time of termination in accordance with the terms of such plan or program, including but not limited to the Executive Retirement Savings Plan, the Regis Individual Secured Retirement Plan (the “Post-Tax Plan”), and the Long-Term Incentive plans and equity awards thereunder. This Agreement has no effect on such plans, and the amount to which Employee is entitled under the foregoing is subject to each plan’s terms and conditions. For sake of clarity, “all compensation accrued as of the date of your termination under each plan or program of the corporation” shall specifically include Employee’s contributions and all matching contributions made by Regis to the Executive Retirement Savings Plan and/or the Regis Individual Secured Retirement Plan. In addition, all unvested portions of Employee’s Restricted Stock Units and Stock Appreciation Rights will be accelerated in accordance with the policy for involuntary terminations without cause adopted by the Compensation Committee in January 2017 and your AST stock account shall be updated to reflect this change no later than ten (10) days after February 28, 2017. Further, Regis shall compensate you in cash for the value of the Fiscal 2014 and Fiscal 2015 performance-based restricted stock units (“PSUs”) which you have earned but are not yet vested by their terms. You will receive this as an additional cash payment based on the closing stock price on February 28, 2017, less all applicable taxes and withholdings and this payment shall be made to you no later than five (5) days after you sign the Agreement and applicable rescission periods have expired or five (5) days after February 28, 2017, whichever occurs later.
|
c.
|
Severance Payment
. Subject to Employee signing and not revoking this Agreement, to include a Release of all Claims, and the Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between Regis and Employee, you shall be entitled to receive the following amount as severance pay subject to such amounts being reduced as provided for in the Employment Agreement entered into between Employee and Regis Corporation on August 31, 2012, except as provided and/or modified herein. In exchange for the General Release set forth below, Regis agrees to provide:
|
1)
|
The amount of Three Hundred Seventy-Five Thousand and 00/100 Dollars ($375,000.00) which is the equivalent of one times your base salary as of the date of your termination. This amount shall be paid in a single lump sum following the expiration of the rescission periods referred to in paragraphs 10, 11 and 12 and on the first payroll date that is more than sixty (60) days after the Date of Termination. This payment shall be subject to statutory payroll deductions and other legally required withholdings; no deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan or for any insurance coverage, including, but not necessarily limited to health and dental insurance coverage. Regis shall issue an IRS Form W-2 for the full amount of this payment.
|
2)
|
Your pro rata bonus (243/365
th
) for the Fiscal Year ending June 30, 2017. This amount shall be payable at the same time as bonuses, if any, are paid to other current officers of the corporation. Payment shall be subject to all statutory deductions and other legally required withholdings. No deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan. Regis shall issue an IRS Form W-2 for the full amount of this payment.
|
d.
|
Benefits Continuation.
Subject to Employee signing and not revoking this Agreement, to include a Release of all Claims, and the Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between Regis and Employee, and in exchange for the General Release set forth below, Regis agrees to pay to you:
|
e.
|
Supplemental Performance-Based Cash Retention Bonus Plan.
Subject to Employee signing and not revoking this Agreement, to include a Release of all Claims, and the Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between Regis and Employee, and in exchange for the General Release set forth below, Regis agrees to pay to you the applicable Cash Award based on the Company’s performance against a specific goal for the Performance Period January 1, 2017 through June 30, 2018. Said award, if any, shall be paid in August 2018 in an amount not to exceed $281,300. This payment shall be subject to statutory payroll deductions and other legally required withholdings.
|
f.
|
Career Transitions Services
. Subject to Employee signing and not revoking this Agreement to include a Release of all Claims and the Employee remaining in strict compliance with the terms of this Agreement and any other written agreements between the Corporation and Employee, Regis agrees to provide:
|
1)
|
Career Transition Services to be provided by a vendor selected by you in an amount not to exceed $10,000. All invoices for these services must be billed to Regis Corporation and submitted to Russ Testa, Regis Corporation, 7201 Metro Boulevard, Minneapolis, MN 55439 for payment on or before August 31, 2017.
|
3.
|
Confidentiality and Non-Disparagement
. To the fullest extent permitted by law, you will not, directly or indirectly, disclose the terms of this Agreement to anyone other than your attorney, spouse, or significant other, or except as required for accounting, tax, or other legally-mandated or legally-permitted purposes, provided that, unless there is a legal reason for the disclosure, any such person to whom disclosure is made shall, prior to disclosure, specifically agree to keep this Agreement confidential. To the fullest extent permitted by law, you also agree not to make or endorse any disparaging or negative remarks or statements (whether oral, written, or otherwise) concerning Regis or its predecessors, successors, and/or assigns, as well as past and present officers, directors, agents, and/or employees. To the fullest extent permitted by law, the Company’s current officers agree not to make or endorse any disparaging or negative remarks or statements (whether oral, written, or otherwise) about you. Nothing in this paragraph shall prevent Regis or you from providing truthful testimony and/or information in response to a lawful subpoena, court order or governmental inquiry.
|
4.
|
Non-Disclosure of Confidential or Proprietary Information
. Employee shall not disclose to any third party any confidential or proprietary information of the Company and/or its clients regardless of how acquired or learned. By way of example and not limitation, such information includes client information, compensation structures and data, rate structures, management organization or other organization charts, sales or marketing plans, research and development plans, and other business and/or activities and plans. This Paragraph shall not restrict Employee’s obligation to disclose such information pursuant to legal requirements, provided Employee first gives the Company prompt notice of such legal process in order that it shall have the opportunity to object to the disclosure of such information.
|
5.
|
Return of Corporate Property
. By signing below, you represent and warrant that all Regis property has been returned to Regis, and that you have not retained any copies, electronic or otherwise, of any Regis property. Notwithstanding this paragraph of this Agreement, you may keep documents pertaining to your compensation and/or benefits.
|
6.
|
Non-Competition and Non-Solicitation
.
|
a.
|
Non-competition
. For a period of twenty-four (24) months immediately following the Employee’s termination of employment hereunder (the “
Non-Competition Period
”), the Employee shall not enter into endeavors that are competitive with the business or operations of the Corporation in the beauty industry, and shall not own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as an officer, employee, director, partner, member, stockholder (except for passive investments of not more than a one percent (1%) interest in the securities of a publicly held corporation regularly traded on a national securities exchange or in an over-the-counter securities market), consultant, independent contractor, or otherwise, any individual, partnership, firm, corporation or other business organization or entity that engages in a business which competes with the Corporation.
|
b.
|
Non-solicitation
. During the Non-Competition Period, the Employee shall not (i) hire or attempt to hire any employee of the Corporation, assist in such hiring by any person or encourage any employee to terminate the Employee’s relationship with the Corporation; or (ii) solicit, induce, or influence any proprietor, franchisee, partner, stockholder, lender, director, officer, employee, joint venturer, investor, consultant, agent, lessor, supplier, customer or any other person or entity which has a business relationship with the Corporation or its affiliates at any time during the Non-Competition Period, to discontinue or reduce or modify the extent of such relationship with the Corporation or any of its subsidiaries.
|
c.
|
Employee agrees that, if she violates these non-competition and/or non-solicitation covenants, she must repay to Regis the Severance Payment detailed in 2.b. prorated to reflect the portion of the Non-Competition Period after which the violation occurred.
|
7.
|
Litigation and Other Legal Matters
. Employee agrees to be reasonably available upon reasonable notice from Regis, with or without subpoena, to be interviewed, review documents or things, give depositions, testify, or engage in other reasonable activities, including in connection with any pending and future litigation, investigations, arbitrations, and/or other fact-finding or adjudicative proceedings, public or private, internal or external to Regis or any of the other Released Parties, with respect to matters of which Employee has knowledge or should have knowledge. Regis will cooperate with Employee’s reasonable scheduling needs; will reimburse Employee for her reasonable expenses incurred in connection with Employee’s obligations under this paragraph; and will negotiate in good faith and agree upon an appropriate per diem or hourly rate for any cooperation and/or assistance provided by Employee after February 28, 2018.
|
8.
|
References
. You agree that you will refer all reference checks regarding your employment with Regis to Russ Testa at 952-947-7387. For all reference checks that are referred to such person, references will be limited to confirmation of your dates of employment and last position held.
|
9.
|
General Release
. In exchange for the benefits promised you in this Agreement, you agree to irrevocably and unconditionally release and discharge Regis, its predecessors, successors, and assigns, as well as past and present officers, directors, employees, and agents, from any and all claims, liabilities, or promises, whether known or unknown, arising out of or relating to your employment with Regis through the date you sign this Agreement. You waive these claims on behalf of yourself and your heirs, assigns, and anyone making a claim through you. The claims waived and discharged include, but are not limited to:
|
•
|
Title VII of the Civil Rights Act of 1964;
|
•
|
Sections 1981 through 1988 of Title 42 of the United Sates Code;
|
•
|
Civil Rights Act of 1991;
|
•
|
The Employee Retirement Income Security Act of 1974 (except for any vested benefits under any tax qualified benefit plan);
|
•
|
The Age Discrimination in Employment Act of 1967;
|
•
|
The Rehabilitation Act of 1973;
|
•
|
The Immigration Reform and Control Act;
|
•
|
The Americans with Disabilities Act of 1990;
|
•
|
The Americans with Disabilities Amendments Act of 2008;
|
•
|
The Fair Credit Reporting Act;
|
•
|
The Sarbanes-Oxley Act of 2002, to the extent permitted by law;
|
•
|
The Occupational Safety and Health Act;
|
•
|
The Family and Medical Leave Act of 1993;
|
•
|
The Equal Pay Act;
|
•
|
The Genetic Information Nondiscrimination Act;
|
•
|
The Worker Adjustment and Retraining Notification Act;
|
•
|
The Worker Adjustment and Retraining Notification Act;
|
•
|
The Minnesota Human Rights Act, Minn. Stat. § 363A.01, et seq.;
|
•
|
The Minnesota wage-hour and wage-payment laws;
|
•
|
The Minnesota’s Whistleblower Act, Minn. Stat. § 181.932;
|
•
|
Minn. Stat. § 176.82;
|
•
|
The non-discrimination and anti-retaliation provisions of the Minnesota State Workers’ Compensation and/or Disability Benefits Laws;
|
•
|
Any other federal, state or local civil or human rights law or any other local, state or federal law, rule, regulation, code, guideline or ordinance, including but not limited to those relating to bias, whistleblower, discrimination, retaliation, compensation, employment or labor;
|
•
|
Any public policy, contract (oral or written, express or implied), tort, or common law;
|
•
|
Any claims for vacation, sick or personal leave, pay or payment pursuant to any practice, policy, handbook, or manual of Regis; or
|
•
|
Any statute, common law, agreement or other basis for recovering any costs, fees, or other expenses, including attorneys’ fees and/or costs.
|
10.
|
Compliance with the Age Discrimination in Employment Act (“ADEA”) and Notice of Right to Consider and Rescind Agreement
. You understand that this Agreement has to meet certain requirements to validly release any claims you might have under the ADEA (including under the Older Workers’ Benefit Protection Act), and you represent that all such requirements have been satisfied, including that:
|
a.
|
The Agreement is written in a manner that is understandable to you;
|
b.
|
You are specifically waiving ADEA rights;
|
c.
|
You are not waiving ADEA rights arising after the date of your signing this Agreement;
|
d.
|
You are receiving valuable consideration in exchange for execution of this Agreement that you would not otherwise be entitled to receive;
|
e.
|
Regis is hereby, in writing, encouraging you to consult with an attorney before signing this Agreement; and
|
f.
|
You received 21 days to consider this Agreement and at least 7 days to rescind it (you are actually receiving 15 days to rescind).
|
11.
|
Notice of Right to Consider and Rescind Agreement
. Regis hereby advises Employee to consult with an attorney of her choice before signing this agreement releasing any rights or claims that she believes she may have under the Age Discrimination in Employment Act (“ADEA”). Once this Separation Agreement is executed, Employee may rescind this Separation Agreement within fifteen (15) calendar days to reinstate any claims under the ADEA. To be effective, any rescission within the relevant time period must be in writing and delivered to Regis, in care of Ms. Katherine M. Merrill, 7201 Metro Boulevard, Minneapolis, MN 55439, by hand or by mail within the fifteen (15) day period. If delivered by mail, the rescission must be (1) postmarked within the fifteen (15) day period; (2) properly addressed to Regis; and (3) sent by certified mail, return receipt requested.
|
12.
|
Compliance with the Minnesota Human Rights Act and Notice of Right to Consider and Rescind Agreement
. Regis hereby advises Employee to consult with an attorney of her choice before signing this Agreement releasing any rights or claims that Employee believes she may have under the Minnesota Human Rights Act (MHRA). Once this Separation Agreement is executed, Employee may rescind this Separation Agreement within fifteen (15) calendar days to reinstate any claims under the MHRA. To be effective, any rescission within the relevant time period must be in writing and delivered to Employer, in care of Ms. Katherine M. Merrill, 7201 Metro Boulevard, Minneapolis, MN 55439 by hand or by mail within the fifteen (15) day period. If delivered by mail, the rescission must be (1) postmarked within the fifteen (15) day period; (2) properly addressed to Employer; and (3) sent by certified mail, return receipt requested.
|
13.
|
Binding Nature of Agreement
. This Agreement is binding on the parties and their heirs, administrators, representatives, executors, successors, and assigns.
|
14.
|
No Assignment
. Employee warrants that she has not assigned, transferred nor purported to assign or transfer any claim against Regis or the Released Parties, and that she will not assign or transfer nor purport to assign or transfer hereafter any claim against Regis or the Released Parties.
|
15.
|
No Unlawful Restriction
. You understand that nothing in this Agreement is intended to or shall: (a) impose any condition, penalty, or other limitation affecting your right to challenge this Agreement; (b) constitute an unlawful release of any of your rights; or (c) prevent or interfere with your ability and/or right to: (1) provide truthful testimony if under subpoena to do so; (2) file any charge with or participate in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, the Securities and Exchange Commission, or any other federal, state, and/or local governmental entity; and/or (3) respond as otherwise provided by law.
|
16.
|
Recovery of Monetary Awards
. You understand and agree that, with the exception of money provided to you by a governmental agency as an award for providing information, you are not entitled to receive any money or other relief in connection with the claims you are releasing in this Agreement, regardless of who initiated or filed the charge or other proceeding.
|
17.
|
Severability
. The provisions of this Agreement are severable. If any provision (excluding the General Release above) is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.
|
18.
|
Entire Agreement
. Except to the extent that you have an arbitration agreement with Regis, this Agreement and the Employment Agreement made by and between Regis Corporation and Heather Passe as of August 31, 2012, set out the entire agreement between you and Regis and supersede any and all prior oral or written agreements or understandings between you and Regis concerning your termination of employment. Any arbitration agreement that you have with Regis will continue in full force and effect.
|
19.
|
Employee Representations
. You represent that you:
|
20.
|
Effective Date of Agreement
. This Agreement will become effective on the sixteenth day after you sign it, provided that you have not rescinded the Agreement.
|
21.
|
Valid Agreement
. As stated above, you agree that this Agreement and its releases fully comply with the ADEA. You also agree that this Agreement and its releases fully comply with the Minnesota Human Rights Act, and all other laws, statutes, ordinances, regulations, and/or principles of common law governing releases.
|
22.
|
No Admission of Liability
. Regis denies any and all liability to you. You understand and agree that this Agreement is not an admission of wrongdoing or liability, including, but not limited to, any violation of any federal, state, and/or local law, statute, ordinance, contract, and/or principle of common law by Regis and/or any individuals and/or entities associated with Regis.
|
23.
|
Attorneys’ Fees
. You agree that you are responsible for your own attorneys’ fees and costs, if any, incurred in any respect, including but not limited to in connection: with your employment with Regis; with the termination of your employment with Regis; and with negotiating and executing this Agreement.
|
24.
|
Governing Law
. This Agreement shall be construed and enforced in accordance with the laws of the State of Minnesota and the laws of the United States, where applicable.
|
Dated: _3/2/17___
|
|
/s/ Heather Passe
|
|
|
|
Employee (print name): Heather Passe
|
|
|
|
REGIS CORPORATION:
|
|
|
|
|
|
|
|
|
|
Dated: _3/7/17___
|
|
By:
/s/ Katherine Merrill
|
|
|
|
Its:
Vice President
|
•
|
Base salary
: $495,000
|
•
|
Perk compensation
: $32,000
|
•
|
Annual Bonus Opportunity
: 60% of base compensation
|
•
|
Equity Grant August 2017
: $400,000 (Estimate: 60% PSU’s and 40% RSU’s consistent with company policy).
|
•
|
Moving Costs
: Up to $50,000 based on actual receipts
|
•
|
Real Estate Commission
: Up to $50,000 should you sell your home in the first year of employment
|
•
|
Signing Bonus
: $125,000
|
•
|
Additional Equity Award
: $350,000 (in form of RSU’s priced at DOH)
|
/s/ Hugh Sawyer / by EAB
|
|
/s/ Andrew Lacko
|
|
Hugh Sawyer
|
|
Andrew Lacko
|
|
President & CEO
|
|
|
|
1.
|
Definitions
.
|
2.
|
Grant of Restricted Stock Units, Term and Vesting
.
|
3.
|
Forfeiture of Unvested RSUs
.
|
6.
|
Dividend Equivalents
.
|
|
REGIS CORPORATION
|
|
|
|
By:_____________________________________
|
|
Name:___________________________________
|
|
Title:____________________________________
|
|
|
|
PARTICIPANT:
|
|
|
|
________________________________________
|
|
[Name]
|
1.
|
Definitions
.
|
2.
|
Grant of Stock Appreciation Right, Term and Vesting
.
|
3.
|
Exercise of Vested Portion of the Stock Appreciation Right
.
|
1.
|
Forfeiture of SAR Upon Termination of Employment
.
|
2.
|
Exercise of Vested Portion of SAR After Termination of Employment
.
|
3.
|
Tax Consequences and Payment of Withholding Taxes
.
|
4.
|
Nontransferable; Requirements of Law
.
|
5.
|
Administration
.
|
6.
|
Plan and Agreement; Recoupment Policy
.
|
7.
|
No Shareholder Rights until Exercise
.
|
8.
|
No Employment Rights
.
|
9.
|
Governing Law
.
|
10.
|
Entire Agreement
.
|
11.
|
Amendment
.
|
12.
|
Waiver; Cumulative Rights
.
|
13.
|
Counterparts
.
|
14.
|
Headings
.
|
15.
|
Severability
.
|
16.
|
Successors and Assigns
.
|
|
REGIS CORPORATION
|
|
|
|
By:___________________
|
|
|
|
Eric A. Bakken
|
|
Executive Vice President and General Counsel
|
|
|
|
PARTICIPANT:
|
|
|
|
________________________________________
|
|
Name:
|
1.
|
Definitions
.
|
2.
|
Award of Performance Units
.
|
8.
|
Dividend Equivalents
.
|
10.
|
Restrictions on Transfer
.
|
12.
|
Administration
.
|
13.
|
Plan and Agreement; Recoupment Policy
.
|
14.
|
No Employment Rights
.
|
15.
|
Governing Law
.
|
16.
|
Entire Agreement
.
|
17.
|
Amendment
.
|
18.
|
Waiver; Cumulative Rights
.
|
|
REGIS CORPORATION
|
|
|
|
By:_____________________________________
|
|
Name:___________________________________
|
|
Title:____________________________________
|
|
|
|
PARTICIPANT:
|
|
|
|
________________________________________
|
|
[Name]
|
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
|
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Oklahoma
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RPC Acquisition Corp.
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Minnesota
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RPC Corporate Shops, Inc.
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Minnesota
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Regis Corp.
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Minnesota
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Regis Insurance Group, Inc.
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Vermont
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Regis, Inc.
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Minnesota
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First Choice Haircutters International Corp.
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Delaware
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Cutco Acquisition Corp.
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Minnesota
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Regis International Ltd.
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Minnesota
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N.A.H.C. Acquisition LLC*
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Minnesota
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EEG, Inc.
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Delaware
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Salon Management Corporation
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California
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Salon Management Corporation of New York*
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New York
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Regis Netherlands, Inc*
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Minnesota
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Roger Merger Subco LLC
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Delaware
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RGS International SNC
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Luxemburg
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Regis International Holdings SARL
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Luxemburg
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Regis Holdings (Canada), Ltd
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Nova Scotia
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First Choice Haircutters, Ltd
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Nova Scotia
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Magicuts, Ltd
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Nova Scotia
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RHS UK Holdings Ltd
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United Kingdom
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Haircare Ltd
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United Kingdom
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Haircare Gmbh
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Germany
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York Ave Beauty Salons, Ltd.
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Canada
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Sagestyle Ltd*
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United Kingdom
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Haircare UK Ltd*
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United Kingdom
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Regis UK Limited
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United Kingdom
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4 Inactive Subsidiaries*
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United Kingdom
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Blinkers Group, Ltd
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United Kingdom
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Blinkers Property, Ltd*
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United Kingdom
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HCUK Hair, Ltd*
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United Kingdom
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Mark Anthony, Inc.
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North Carolina
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Supercuts UK (Franchise) Ltd.
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United Kingdom
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*Inactive Entities
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/s/ PRICEWATERHOUSECOOPERS LLP
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Minneapolis, Minnesota
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August 23, 2017
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/s/ BAKER TILLY VIRCHOW KRAUSE, LLP
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Wilkes-Barre, Pennsylvania
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August 22, 2017
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1.
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I have reviewed this annual report on Form 10-K of Regis Corporation;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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August 23, 2017
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/s/ Hugh E. Sawyer
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Hugh E. Sawyer, President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Regis Corporation;
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2.
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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;
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3.
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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;
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4.
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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:
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(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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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August 23, 2017
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/s/ Andrew H. Lacko
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Andrew H. Lacko, Executive Vice President and Chief Financial Officer
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(1)
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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
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(2)
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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.
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August 23, 2017
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/s/ Hugh E. Sawyer
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Hugh E. Sawyer, President and Chief Executive Officer
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August 23, 2017
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/s/ Andrew H. Lacko
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Andrew H. Lacko, Executive Vice President and Chief Financial Officer
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