XML 40 R18.htm IDEA: XBRL DOCUMENT
v2.4.0.8

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 9 Months Ended
--- | ---
Mar. 31, 2014
Accounting Policies [Abstract] |
Stock-Based Employee Compensation | Stock-Based Employee Compensation: During the three and nine months ended March 31, 2014, the Company granted various equity awards including restricted stock units (RSUs), equity-based stock appreciation rights (SARs), and performance share units (PSUs). There were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans that have been approved by the shareholders of the Company. A summary of equity granted is as follows:
|  | For the Periods Ended March 31, 2014
|  | Three Months |  | Nine Months
Restricted stock units |  | 10,169 |  |  | 360,252 |
Equity-based stock appreciation rights |  | — |  |  | 469,482 |
Performance share units |  | — |  |  | 304,550 |
Total compensation cost for stock-based payment arrangements totaled $1.3 and $1.4 million for the three months ended March 31, 2014 and 2013, respectively, and $4.9 and $4.7 million for the nine months ended March 31, 2014 and 2013, respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations.
Long-Lived Asset Impairment Assessments, Excluding Goodwill | Long-Lived Asset Impairment Assessments, Excluding Goodwill: The Company assesses the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Impairment is evaluated based on the sum of undiscounted estimated cash flows expected to result from the use of long-lived assets that do not recover their carrying values. If the undiscounted estimated future cash flows are less than the carrying value of the asset, the Company calculates an impairment charge based on the asset's estimated fair value. The fair value of the long-lived asset is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. During the three and nine months ended March 31, 2014 and 2013, the Company recorded non-cash impairment charges primarily as a result of continued negative same-store sales. A summary of these impairment charges is as follows:
|  | Three Months Ended March 31, |  | Nine Months Ended March 31,
|  | 2014 |  | 2013 |  | 2014 |  | 2013
|  | (Dollars in thousands)
North American Value |  | $ | 5,919 |  |  | $ | 1,056 |  |  | $ | 9,105 |  |  | $ | 3,172 |
North American Premium |  | 1,626 |  |  | 539 |  |  | 4,625 |  |  | 1,617 |
International |  | 1,377 |  |  | 81 |  |  | 1,545 |  |  | 246 |
Total |  | $ | 8,922 |  |  | $ | 1,676 |  |  | $ | 15,275 |  |  | $ | 5,035 |
Goodwill | Goodwill: Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired. Goodwill is tested for impairment annually during the Company’s fourth fiscal quarter or at the time of a triggering event. The Company concluded there were no triggering events requiring an interim goodwill impairment test during the three months ended March 31, 2014. In addition, the Company's fair value, as determined by the sum of its reporting units’ fair values, reconciled to within a reasonable range of the Company’s market capitalization as of March 31, 2014, which included an assumed control premium of 30.0%. Accordingly, the fair value of the North American Value reporting unit, the only unit with goodwill at March 31, 2014, continues to exceed its carrying value by greater than 20.0%. During the second quarter of fiscal year 2014, the Company experienced two triggering events that resulted in the Company testing its goodwill for impairment. First, the Company redefined its operating segments to reflect how the chief operating decision maker evaluates the business as a result of restructuring the Company's North American field organization. The field reorganization, which impacted all North American salons except for salons in the mass premium category, was announced in the fourth quarter of fiscal year 2013 and completed in the second quarter of fiscal year 2014. The Company did not completely operate under the realigned operating structure prior to the second quarter of fiscal year 2014. Second, the Regis and Promenade salon concepts reported lower than projected same-store sales that were unfavorable compared to the Company’s projections used in the fiscal year 2013 annual goodwill impairment test. The disruptive impact of strategic initiatives announced in the fourth quarter of fiscal year 2013 on the first two fiscal quarters of 2014 was greater than anticipated. Pursuant to the change in operating segments and the lower than projected same-store sales, during the second quarter of fiscal year 2014, the Company performed interim goodwill impairment tests on its Regis and Promenade salon concept reporting units. The impairment tests resulted in a $34.9 million non-cash goodwill impairment charge on the Regis salon concept reporting unit and no impairment on the Promenade salon concept, as its estimated fair value exceeded its carrying value by approximately 12.0%. The Company considered the negative impact of the fourth quarter fiscal year 2013 strategic initiatives on the results of the remaining reporting units and determined their fair values were significantly greater than their carrying values at December 31, 2013 and therefore did not perform interim goodwill impairment tests on these remaining reporting units. In connection with the change in operating segment structure, the Company changed its North American reporting units from five reporting units: SmartStyle, Supercuts, MasterCuts, Regis and Promenade, to two reporting units: North American Value and North American Premium. Subsequent to the interim impairment test of goodwill, the Company compared the carrying value, including goodwill, of the reporting units under the new reporting unit structure to their estimated fair values. The fair value of the North American Value reporting unit exceeded its carrying value by greater than 20.0%. The North American Premium reporting unit does not have any goodwill, as it was fully impaired as of December 31, 2013. Based on the changes to the Company's operating segment structure, goodwill was reallocated to the new reporting units at December 31, 2013 and June 30, 2013.
Income Tax, Policy | Income Taxes: As of March 31, 2014, after excluding certain deferred tax liabilities related to assets with indefinite lives, the Company had net deferred tax assets of $89.5 million, which generally expire many years into the future or have no definite expiration period. On a quarterly basis, the Company is required to assess the realizability of deferred tax assets. Realization of deferred tax assets is ultimately dependent upon future taxable income. While the determination of whether or not to record a valuation allowance is not fully governed by a specific objective test, accounting guidance places significant weight on recent financial performance. During the second quarter of fiscal year 2014, the impacts from strategic initiatives implemented late in fiscal year 2013 continued to negatively impact the Company’s financial performance. Accordingly, the Company incurred a non-cash charge of $83.1 million to establish a valuation allowance against its United States (U.S.) deferred tax assets. During the third quarter of fiscal year 2014, the Company incurred a non-cash charge of $1.3 million to establish a valuation allowance against its United Kingdom (U.K.) deferred tax assets. The primary reason for this charge was the U.K. operations reported cumulative pretax losses for the twelve consecutive quarters ended March 31, 2014. A summary of the activity for the deferred tax asset valuation allowance is as follows:
| For the Nine Months Ended March 31, 2014
| (Dollars in thousands)
Balance, September 30, 2013 | $ | — |
U.S. deferred tax asset valuation allowance | 83,140 |
Balance, December 31, 2013 | 83,140 |
U.K. deferred tax asset valuation allowance | 1,251 |
Changes in deferred tax asset valuation allowance | 2,750 |
Balance, March 31, 2014 | $ | 87,141 |
The Company will continue to assess the ability to realize its deferred tax assets on a quarterly basis, and will reverse the valuation allowance and record a tax benefit when the Company generates sustainable pretax earnings.
Foreign Currency Translation | Foreign Currency Translation: During the nine months ended March 31, 2013, the Company completed the sale of its investment in Provalliance and subsequently liquidated all foreign entities with Euro denominated operations. As a result, the Company recognized a net $33.8 million foreign currency translation gain within interest income and other, net in the unaudited Condensed Consolidated Statement of Operations for amounts previously classified within accumulated other comprehensive income.
Accounting Standards Recently Issued But Not Yet Adopted by the Company | Accounting Standards Recently Issued But Not Yet Adopted by the Company: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity In April 2014, the Financial Accounting Standards Board (FASB) updated the accounting guidance related to the definition of a discontinued operation and the related disclosures. The updated accounting guidance defines a discontinued operation as a disposal of a component or a group of components that is to be disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. Accounting for Cumulative Translation Adjustment upon Derecognition of Foreign Entities In March 2013, the FASB updated the accounting guidance related to the release of cumulative translation adjustments. The updated accounting guidance clarified when to release cumulative translation adjustments into net income. The updated guidance is effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of this update to have a material impact on the Company’s consolidated financial statements. Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company does not expect the adoption of these requirements to have a material impact on the Company’s consolidated financial statements.

X
- Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for (1) transactions denominated in a currency other than the reporting enterprise's functional currency, (2) translating foreign currency financial statements that are incorporated into the financial statements of the reporting enterprise by consolidation, combination, or the equity method of accounting, and (3) remeasurement of the financial statements of a foreign reporting enterprise in a hyperinflationary economy. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 830 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2175856 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 830 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2175826 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 830 -SubTopic 30 -URI http://asc.fasb.org/subtopic&trid=2175892 + Details
Name: | us-gaap_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for goodwill. This accounting policy also may address how an entity assesses and measures impairment of goodwill, how reporting units are determined, how goodwill is allocated to such units, and how the fair values of the reporting units are determined. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2144439 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsGoodwillPolicy
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for recognizing and measuring the impairment of long-lived assets. An entity also may disclose its accounting policy for long-lived assets to be sold. This policy excludes goodwill and intangible assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section CC -Subsection 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2155824 + Details
Name: | us-gaap_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2144681 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -URI http://asc.fasb.org/subtopic&trid=2144749 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 19 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32840-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 954 -SubTopic 740 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6491622&loc=d3e9504-115650 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32809-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 45 -Paragraph 25 -URI http://asc.fasb.org/extlink&oid=21917399&loc=d3e32247-109318 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 45 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=21917399&loc=d3e32280-109318 + Details
Name: | us-gaap_IncomeTaxPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact. + References No definition available. + Details
Name: | us-gaap_NewAccountingPronouncementsPolicyPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for stock option and stock incentive plans. This disclosure may include (1) the types of stock option or incentive plans sponsored by the entity (2) the groups that participate in (or are covered by) each plan (3) significant plan provisions and (4) how stock compensation is measured, and the methodologies and significant assumptions used to determine that measurement. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (b),(f) -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2228939 + Details
Name: | us-gaap_ShareBasedCompensationOptionAndIncentivePlansPolicy
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration