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TBG DISCONTINUED OPERATIONS AND RESTRUCTURING | 12 Months Ended
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Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract] |
TBG DISCONTINUED OPERATIONS AND RESTRUCTURING | TBG DISCONTINUED OPERATIONS AND RESTRUCTURING The Beautiful Group (TBG): In October 2017, the Company sold substantially all of its mall-based salon business in North America, representing 858 salons, to The Beautiful Group (TBG), an affiliate of Regent, a private equity firm based in Los Angeles, California, who operated these locations as franchise locations until June 2019. In addition, the Company entered into a share purchase agreement for substantially all of its International segment, representing approximately 250 salons in the UK, with TBG operating these locations as franchise locations until they were transferred to another franchisee in fiscal year 2020. The Company classified the results of its mall-based business and its International segment as a discontinued operation for all periods presented in the Consolidated Statement of Operations. In fiscal years 2018 and 2019, TBG salons were operating at a loss and TBG struggled to pay the Company for the receivables related to the original purchase agreements as well as royalty and product receivables. The Company reserved for $11.7 million of receivables in fiscal 2018 and an additional $20.7 million of receivables in fiscal 2019. In the second quarter of fiscal year 2020, TBG transferred 207 of its North American mall-based salons to the Company. The 207 North American mall-based salons transferred were the salons that the Company was the guarantor of the lease obligation. The transfer of the 207 mall-based salons occurred on December 31, 2019, so the operational results of these mall-based salons are included in the Consolidated Statement of Operations beginning in the third quarter. The assets acquired and liabilities assumed were not material to the Consolidated Balance Sheet. As of June 30, 2020, prior to any mitigation efforts which may be available, the Company remains liable for up to approximately $23 million related to its mall-based salon lease commitments on the 166 salons that remain open, a $18 million reduction from June 30, 2019. The commitments are included in our lease liabilities. The following summarizes the results of TBG related charges and TBG discontinued operations for the periods presented:
|  | Fiscal Years |  |  |  |
|  | 2020 |  | 2019 |  | 2018
|  | (Dollars in thousands) |  |  |  |
Revenue |  | $ | — |  |  | $ | — |  |  | $ | 101,140 |
TBG Mall Restructuring: |  |  |  |  |  |
Accounts and notes receivable reserves |  | — |  |  | 20,711 |  |  | — |
Other charges (1) |  | 2,333 |  |  | 1,105 |  |  | — |
Total TBG mall restructuring |  | $ | 2,333 |  |  | $ | 21,816 |  |  | $ | — |
TBG Discontinued Operations: |  |  |  |  |  |
Working capital and prepaid rent receivable reserve |  | — |  |  | — |  |  | 11,697 |
Other charges (2) (3) |  | (1,063) |  |  | 1,221 |  |  | 47,848 |
(Income) loss from TBG discontinued operations, before taxes |  | (1,063) |  |  | 1,221 |  |  | 59,545 |
Income tax expense (benefit) on TBG discontinued operations (4) |  | 231 |  |  | (7,117) |  |  | (6,360) |
(Income) loss from TBG discontinued operations, net of tax |  | $ | (832) |  |  | $ | (5,896) |  |  | $ | 53,185 |
_______________________________________________________________________________ (1)In fiscal year 2020, the Company recorded professional fees associated with the transfer of the mall salons back to the Company as TBG mall restructuring charges. (2)In fiscal years 2020 and 2019, the Company recorded professional fees related to the transaction, as well as insurance adjustments associated with the discontinued operations. (3)In fiscal year 2018, the Company recorded $43.0 million of asset impairment charges, $6.2 million of cumulative foreign currency translation adjustment, $3.6 million of loss from operations and $6.8 million of professional fees. (4)Income taxes have been allocated to continuing and discontinued operations based on the methodology required by accounting for income taxes guidance. SmartStyle restructuring: In January 2018, the Company closed 597 non-performing company-owned SmartStyle salons. The 597 non-performing salons generated negative cash flow of approximately $15 million during the twelve months ended September 30, 2017. The action delivers on the Company's commitment to restructure its salon portfolio to improve shareholder value and position the Company for long-term growth. A summary of costs associated with the SmartStyle salon restructuring for fiscal year 2018 is as follows:
| Financial Line Item |  | Fiscal Year 2018
|  |  | (Dollars in thousands)
Inventory reserves | Cost of Service |  | $ | 656 |
Inventory reserves | Cost of Product |  | 586 |
Severance | General and administrative |  | 897 |
Long-lived fixed asset impairment | Depreciation and amortization |  | 5,460 |
Asset retirement obligation | Depreciation and amortization |  | 7,680 |
Lease termination and other related closure costs | Rent |  | 27,290 |
Deferred rent | Rent |  | (3,291) |
Total |  |  | $ | 39,278 |
In addition, the Company recorded approximately $1.9 million of other related costs to the SmartStyle restructuring, primarily warehouse related costs. Substantially all related costs associated with the SmartStyle salon restructuring requiring cash outflow were complete as of June 30, 2018. Foreign currency translation adjustment: In fiscal year 2018, the Company incurred $6.2 million of cumulative foreign currency translation adjustment associated with the Company's liquidation of substantially all foreign entities with British pound denominated currencies.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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