Minnesota | 1-12725 | 41-0749934 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No) |
EXHIBIT NUMBER | ||
99 | Regis Corporation News Release dated April 30, 2015. |
REGIS CORPORATION | |||
Dated: April 30, 2015 | By: | /s/ Eric Bakken | |
Name: Eric Bakken, Title: Secretary |
EXHIBIT NUMBER | ||
99 | Regis Corporation News Release dated April 30, 2015. |
Exhibit No. 99 | |
![]() | CONTACT: REGIS CORPORATION: Mark Fosland – SVP, Finance and Investor |
Relations, 952-806-1707 |
◦ | Same-store service and product sales decreased 0.7% and 0.9%, respectively. |
◦ | Includes ($0.07) per share due to the impact of the non-cash deferred tax valuation allowance on income tax expense and net discrete expense. |
• | EBITDA, as adjusted, of $22.8 million compares to $26.0 million in the prior year quarter. |
◦ | Decrease of ($1.4) million from same-store sales declines. |
◦ | Decline of ($1.8) million mainly from planned strategic investments, higher incentives as we lap an incentive-lite year, minimum wage and other inflationary increases and lapping of certain one-time benefits, partly offset by improved salon productivity, cost savings, higher franchise royalties and fees, and reduced health insurance costs. |
• | Diluted EPS, as adjusted, was ($0.07), an increase of $0.08 compared to the prior year quarter. |
◦ | Excluding the impact of the deferred tax valuation allowance, Diluted EPS, as adjusted, increased $0.11 per share compared to the prior year quarter. |
◦ | Lower depreciation, improved salon productivity, lower interest, cost savings, higher franchise royalties and fees and reduced health insurance costs were partly offset by same-store sales declines, planned strategic investments, higher incentives as we lap an incentive-lite year, minimum wage and other inflationary increases, lapping of certain one-time benefits and lower non-cash equity in earnings of Empire Education Group. |
• | The current quarter GAAP net loss includes net discrete expense of $0.1 million. The prior year quarter GAAP net loss includes net discrete expense of $1.3 million. See non-GAAP reconciliations. |
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Comparable Profitability Measures | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | Fiscal Years Ended June 30, | |||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2014 | 2013 | ||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
Revenue | $ | 454.0 | $ | 471.6 | $ | 1,374.4 | $ | 1,408.5 | $ | 1,892.4 | $ | 2,018.7 | |||||||||||
Revenue decline % | (3.7 | ) | (6.6 | ) | (2.4 | ) | (7.1 | ) | (6.3 | ) | (4.9 | ) | |||||||||||
Same-Store Sales % | (0.7 | ) | (5.7 | ) | (0.1 | ) | (5.8 | ) | (4.8 | ) | (2.4 | ) | |||||||||||
Same-Store Average Ticket % Change | 1.7 | 1.0 | 1.6 | 1.3 | 1.3 | 0.6 | |||||||||||||||||
Same-Store Guest Count % Change | (2.4 | ) | (6.7 | ) | (1.7 | ) | (7.1 | ) | (6.1 | ) | (3.0 | ) | |||||||||||
Cost of Service and Product % (1) | 59.1 | 59.0 | 59.5 | 59.1 | 59.1 | 58.6 | |||||||||||||||||
Cost of Service and Product %, as re-casted (1) (2) | N/A | N/A | N/A | N/A | N/A | 59.6 | |||||||||||||||||
Cost of Service and Product %, as adjusted (1) | 59.1 | 59.0 | 59.5 | 59.1 | 59.1 | 59.0 | |||||||||||||||||
Cost of Service % (1) | 61.6 | 61.6 | 61.8 | 61.3 | 61.3 | 59.5 | |||||||||||||||||
Cost of Service %, as re-casted (1) (2) | N/A | N/A | N/A | N/A | N/A | 60.9 | |||||||||||||||||
Cost of Product % (1) | 49.5 | 48.9 | 50.6 | 50.4 | 50.4 | 55.0 | |||||||||||||||||
Cost of Product %, as adjusted (1) | 49.5 | 48.9 | 50.6 | 50.1 | 50.2 | 52.0 | |||||||||||||||||
Site operating expense as % of total revenues, U.S. GAAP reported | 10.4 | 10.6 | 10.6 | 10.7 | 10.7 | 10.1 | |||||||||||||||||
Site operating expense as % of total revenues, as re-casted (2) | N/A | N/A | N/A | N/A | N/A | 10.5 | |||||||||||||||||
Site operating expense as % of total revenues, as adjusted | 10.5 | 10.6 | 10.8 | 10.8 | 10.8 | 10.6 | |||||||||||||||||
General and administrative as % of total revenues, U.S. GAAP reported | 9.7 | 9.1 | 9.9 | 9.1 | 9.1 | 11.2 | |||||||||||||||||
General and administrative as % of total revenues, as re-casted (2) | N/A | N/A | N/A | N/A | N/A | 9.8 | |||||||||||||||||
General and administrative as % of total revenues, as adjusted | 10.0 | 9.0 | 9.9 | 9.1 | 9.1 | 9.4 | |||||||||||||||||
Operating income (loss) as % of total revenues, U.S. GAAP reported | 1.2 | (0.7 | ) | 0.2 | (2.6 | ) | (1.8 | ) | 0.6 | ||||||||||||||
Operating income (loss) as % of total revenues, as adjusted | 0.7 | (0.5 | ) | 0.0 | (0.1 | ) | 0.0 | 1.7 | |||||||||||||||
EBITDA | 24.4 | 26.0 | 52.7 | 46.9 | 57.4 | 148.5 | |||||||||||||||||
EBITDA, as adjusted | 22.8 | 26.0 | 62.1 | 76.0 | 101.8 | 125.4 |
1) | Excludes depreciation and amortization. |
2) | During the fourth quarter of fiscal year 2013, the Company reorganized its field organization, excluding salons within the North American Premium segment. Beginning in the first quarter of fiscal year 2014, costs associated with field leaders that were previously recorded within General and Administrative expenses are now reported within Cost of Service and Site Operating expenses. |
• | Deferred tax asset valuation allowance of $2.0 million. |
• | Legal settlement, net of fees of $1.0 million. |
• | Prior years' self-insurance reserves adjustment of $0.7 million. |
• | Deferred compensation adjustment of $0.2 million. |
March 31, 2015 | June 30, 2014 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 212,951 | $ | 378,627 | ||||
Receivables, net | 23,993 | 25,808 | ||||||
Inventories | 131,883 | 137,151 | ||||||
Other current assets | 63,972 | 71,680 | ||||||
Total current assets | 432,799 | 613,266 | ||||||
Property and equipment, net | 228,195 | 266,538 | ||||||
Goodwill | 418,158 | 425,264 | ||||||
Other intangibles, net | 17,283 | 19,812 | ||||||
Investment in affiliates | 17,024 | 28,611 | ||||||
Other assets | 61,864 | 62,458 | ||||||
Total assets | $ | 1,175,323 | $ | 1,415,949 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Long-term debt, current portion | $ | 4 | $ | 173,501 | ||||
Accounts payable | 63,284 | 68,491 | ||||||
Accrued expenses | 143,794 | 142,720 | ||||||
Total current liabilities | 207,082 | 384,712 | ||||||
Long-term debt and capital lease obligations | 120,000 | 120,002 | ||||||
Other noncurrent liabilities | 201,661 | 190,454 | ||||||
Total liabilities | 528,743 | 695,168 | ||||||
Shareholders’ equity: | ||||||||
Common stock, $0.05 par value; issued and outstanding 54,579,808 and 56,651,166 common shares at March 31, 2015 and June 30, 2014, respectively | 2,729 | 2,833 | ||||||
Additional paid-in capital | 311,264 | 337,837 | ||||||
Accumulated other comprehensive income | 6,955 | 22,651 | ||||||
Retained earnings | 325,632 | 357,460 | ||||||
Total shareholders’ equity | 646,580 | 720,781 | ||||||
Total liabilities and shareholders’ equity | $ | 1,175,323 | $ | 1,415,949 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues: | ||||||||||||||||
Service | $ | 352,015 | $ | 367,230 | $ | 1,067,079 | $ | 1,099,916 | ||||||||
Product | 91,143 | 94,309 | 274,596 | 278,821 | ||||||||||||
Royalties and fees | 10,802 | 10,022 | 32,723 | 29,774 | ||||||||||||
453,960 | 471,561 | 1,374,398 | 1,408,511 | |||||||||||||
Operating expenses: | ||||||||||||||||
Cost of service | 216,830 | 226,344 | 659,736 | 674,772 | ||||||||||||
Cost of product | 45,117 | 46,146 | 138,924 | 140,631 | ||||||||||||
Site operating expenses | 47,116 | 50,215 | 145,643 | 151,260 | ||||||||||||
General and administrative | 44,082 | 43,120 | 135,934 | 127,758 | ||||||||||||
Rent | 76,516 | 80,614 | 230,913 | 238,788 | ||||||||||||
Depreciation and amortization | 19,044 | 28,343 | 60,815 | 76,815 | ||||||||||||
Goodwill impairment | — | — | — | 34,939 | ||||||||||||
Total operating expenses | 448,705 | 474,782 | 1,371,965 | 1,444,963 | ||||||||||||
Operating income (loss) | 5,255 | (3,221 | ) | 2,433 | (36,452 | ) | ||||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (2,273 | ) | (6,299 | ) | (7,843 | ) | (15,956 | ) | ||||||||
Interest income and other, net | 390 | 261 | 1,307 | 1,144 | ||||||||||||
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies | 3,372 | (9,259 | ) | (4,103 | ) | (51,264 | ) | |||||||||
Income taxes | (6,797 | ) | (857 | ) | (15,865 | ) | (72,812 | ) | ||||||||
Equity in (loss) income of affiliated companies, net of income taxes | (285 | ) | 23 | (11,865 | ) | 4,762 | ||||||||||
Loss from continuing operations | (3,710 | ) | (10,093 | ) | (31,833 | ) | (119,314 | ) | ||||||||
Income from discontinued operations, net of taxes | — | 609 | — | 609 | ||||||||||||
Net loss | $ | (3,710 | ) | $ | (9,484 | ) | $ | (31,833 | ) | $ | (118,705 | ) | ||||
Net loss per share: | ||||||||||||||||
Loss from continuing operations, basic and diluted | (0.07 | ) | (0.18 | ) | (0.58 | ) | (2.11 | ) | ||||||||
Income from discontinued operations, basic and diluted | — | 0.01 | — | 0.01 | ||||||||||||
Net loss per share, basic and diluted | $ | (0.07 | ) | $ | (0.17 | ) | $ | (0.58 | ) | $ | (2.10 | ) | ||||
Weighted average common and common equivalent shares outstanding: | ||||||||||||||||
Basic and diluted | 54,837 | 56,473 | 55,248 | 56,450 | ||||||||||||
Cash dividends declared per common share | $ | — | $ | — | $ | — | $ | 0.12 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net loss | $ | (3,710 | ) | $ | (9,484 | ) | $ | (31,833 | ) | $ | (118,705 | ) | ||||
Other comprehensive loss, net of tax: | ||||||||||||||||
Foreign currency translation adjustments during the period | (6,851 | ) | (2,208 | ) | (15,696 | ) | (1,225 | ) | ||||||||
Other comprehensive loss | (6,851 | ) | (2,208 | ) | (15,696 | ) | (1,225 | ) | ||||||||
Comprehensive loss | $ | (10,561 | ) | $ | (11,692 | ) | $ | (47,529 | ) | $ | (119,930 | ) |
Nine Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (31,833 | ) | $ | (118,705 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||
Depreciation and amortization | 51,478 | 61,540 | ||||||
Equity in loss (income) of affiliated companies | 11,865 | (4,762 | ) | |||||
Deferred income taxes | 12,631 | 68,669 | ||||||
Salon asset impairment | 9,337 | 15,275 | ||||||
Gain on sale of salon assets | (723 | ) | — | |||||
Loss on write down of inventories | — | 854 | ||||||
Goodwill impairment | — | 34,939 | ||||||
Stock-based compensation | 6,342 | 4,899 | ||||||
Amortization of debt discount and financing costs | 1,336 | 6,027 | ||||||
Other non-cash items affecting earnings | 266 | 177 | ||||||
Changes in operating assets and liabilities, excluding the effects of sales and acquisitions | 11,628 | 14,801 | ||||||
Net cash provided by operating activities | 72,327 | 83,714 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (29,689 | ) | (34,977 | ) | ||||
Proceeds from sale of assets (asset acquisitions, net of cash acquired), net | 1,961 | (1 | ) | |||||
Proceeds from loans and investments | — | 5,056 | ||||||
Net cash used in investing activities | (27,728 | ) | (29,922 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt, net of fees | — | 118,058 | ||||||
Repayments of long-term debt and capital lease obligations | (173,749 | ) | (5,234 | ) | ||||
Repurchase of common stock | (32,890 | ) | — | |||||
Dividends paid | — | (6,793 | ) | |||||
Net cash (used in) provided by financing activities | (206,639 | ) | 106,031 | |||||
Effect of exchange rate changes on cash and cash equivalents | (3,636 | ) | 489 | |||||
(Decrease) increase in cash and cash equivalents | (165,676 | ) | 160,312 | |||||
Cash and cash equivalents: | ||||||||
Beginning of period | 378,627 | 200,488 | ||||||
End of period | $ | 212,951 | $ | 360,800 |
For the Three Months Ended | ||||||||||||||||||
March 31, 2015 | March 31, 2014 | |||||||||||||||||
Service | Retail | Total | Service | Retail | Total | |||||||||||||
SmartStyle | 1.5 | (2.2 | ) | 0.3 | (4.7 | ) | (9.1 | ) | (6.1 | ) | ||||||||
Supercuts | 1.0 | 5.2 | 1.4 | 0.3 | (10.0 | ) | (0.7 | ) | ||||||||||
MasterCuts | (4.8 | ) | (6.3 | ) | (5.1 | ) | (8.5 | ) | (10.0 | ) | (8.7 | ) | ||||||
Other Value | (1.2 | ) | 2.5 | (0.8 | ) | (6.5 | ) | (7.2 | ) | (6.6 | ) | |||||||
North American Value | (0.2 | )% | (0.9 | )% | (0.3 | )% | (4.6 | )% | (8.9 | )% | (5.4 | )% | ||||||
North American Premium | (3.3 | )% | (0.7 | )% | (2.8 | )% | (7.4 | )% | (10.9 | )% | (8.1 | )% | ||||||
International | 0.8 | % | (1.2 | )% | 0.2 | % | 0.1 | % | (3.6 | )% | (1.1 | )% | ||||||
Consolidated | (0.7 | )% | (0.9 | )% | (0.7 | )% | (4.9 | )% | (8.9 | )% | (5.7 | )% |
For the Nine Months Ended | ||||||||||||||||||
March 31, 2015 | March 31, 2014 | |||||||||||||||||
Service | Retail | Total | Service | Retail | Total | |||||||||||||
SmartStyle | 2.8 | 0.1 | 2.0 | (4.0 | ) | (11.4 | ) | (6.5 | ) | |||||||||
Supercuts | 1.0 | 4.4 | 1.3 | (0.1 | ) | (12.4 | ) | (1.4 | ) | |||||||||
MasterCuts | (4.0 | ) | (2.9 | ) | (3.8 | ) | (9.0 | ) | (16.0 | ) | (10.3 | ) | ||||||
Other Value | (1.1 | ) | 5.0 | (0.5 | ) | (5.6 | ) | (11.0 | ) | (6.2 | ) | |||||||
North American Value | 0.3 | % | 1.1 | % | 0.5 | % | (4.2 | )% | (11.9 | )% | (5.7 | )% | ||||||
North American Premium | (3.3 | )% | (0.9 | )% | (2.8 | )% | (6.6 | )% | (10.0 | )% | (7.2 | )% | ||||||
International | 1.0 | % | (1.4 | )% | 0.3 | % | (0.2 | )% | (3.4 | )% | (1.2 | )% | ||||||
Consolidated | (0.3 | )% | 0.6 | % | (0.1 | )% | (4.5 | )% | (10.9 | )% | (5.8 | )% |
March 31, 2015 | June 30, 2014 | |||||
COMPANY-OWNED SALONS: | ||||||
SmartStyle/Cost Cutters in Walmart Stores | 2,616 | 2,574 | ||||
Supercuts | 1,115 | 1,176 | ||||
MasterCuts | 476 | 505 | ||||
Other Value | 1,740 | 1,846 | ||||
Regis salons | 770 | 816 | ||||
Total North American Salons (1) | 6,717 | 6,917 | ||||
Total International Salons (2) | 362 | 360 | ||||
Total Company-owned Salons | 7,079 | 7,277 | ||||
FRANCHISE SALONS: | ||||||
SmartStyle/Cost Cutters in Walmart Stores | 127 | 126 | ||||
Supercuts | 1,336 | 1,213 | ||||
Other Value | 810 | 840 | ||||
Total North American Salons (1) | 2,273 | 2,179 | ||||
Total International Salons (2) | — | — | ||||
Total Franchise Salons | 2,273 | 2,179 | ||||
OWNERSHIP INTEREST LOCATIONS: | ||||||
Equity ownership interest locations | 215 | 218 | ||||
Grand Total, System-wide | 9,567 | 9,674 |
(1) | The North American Value operating segment is comprised primarily of the SmartStyle, Supercuts, MasterCuts and Other Value salon brands. The North American Premium operating segment is comprised primarily of the Regis salon brands. |
(2) | Canadian and Puerto Rican salons are included in the North American salon totals. |
• | Inventory reserves attributed to our inventory simplification program. |
• | Self-insurance reserves adjustments. |
• | Expense associated with legal cases, net of settlements. |
• | Professional fees associated with the evaluation and sale of non-core assets. |
• | Deferred compensation adjustments. |
• | Accelerated depreciation related to our corporate office consolidation. |
• | Goodwill impairment charge related to our Regis salon concept reporting unit. |
• | Our portion of a deferred tax asset valuation allowance established by Empire Education Group (EEG) and other than temporary impairment associated with our investment in EEG. |
• | Recovery of previously impaired investments in an affiliate. |
• | Tax benefit associated with a discontinued operation. |
Reconciliation of U.S. GAAP operating income (loss) and net loss to equivalent non-GAAP measures | ||||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||
U.S. GAAP financial line item | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
U.S. GAAP revenue | $ | 453,960 | $ | 471,561 | $ | 1,374,398 | $ | 1,408,511 | ||||||||||
U.S. GAAP operating income (loss) | $ | 5,255 | $ | (3,221 | ) | $ | 2,433 | $ | (36,452 | ) | ||||||||
Non-GAAP operating expense adjustments: | ||||||||||||||||||
Inventory reserves | Cost of product | — | — | — | 854 | |||||||||||||
Self-insurance reserves adjustments | Site operating expense | (678 | ) | — | (2,140 | ) | (673 | ) | ||||||||||
Legal fees, net of settlements | General and administrative | (1,052 | ) | 780 | (98 | ) | 2,693 | |||||||||||
Professional fees | General and administrative | — | (150 | ) | — | 339 | ||||||||||||
Deferred compensation adjustments | General and administrative | (184 | ) | — | (184 | ) | (3,703 | ) | ||||||||||
Corporate office accelerated depreciation | Depreciation and amortization | — | — | — | 746 | |||||||||||||
Goodwill impairment | Goodwill impairment | — | — | — | 34,939 | |||||||||||||
Total non-GAAP operating expense adjustments | (1,914 | ) | 630 | (2,422 | ) | 35,195 | ||||||||||||
Non-GAAP operating income (loss) (1) | $ | 3,341 | $ | (2,591 | ) | $ | 11 | $ | (1,257 | ) | ||||||||
U.S. GAAP net loss (2) | $ | (3,710 | ) | $ | (9,484 | ) | $ | (31,833 | ) | $ | (118,705 | ) | ||||||
U.S. GAAP net loss adjustments: | ||||||||||||||||||
Non-GAAP operating expense adjustments | (1,914 | ) | 630 | (2,422 | ) | 35,195 | ||||||||||||
Tax provision adjustments (3) | Income taxes | 2,031 | 1,251 | 2,031 | 77,663 | |||||||||||||
EEG deferred tax asset valuation allowance and impairment | Equity in (loss) income of affiliated companies, net of income taxes | — | — | 11,510 | — | |||||||||||||
Recovery of previously impaired investments in affiliate | Equity in (loss) income of affiliated companies, net of income taxes | — | — | — | (3,077 | ) | ||||||||||||
Tax benefit associated with a discontinued operation | Income from discontinued operations, net of taxes | — | (609 | ) | — | (609 | ) | |||||||||||
Total non-GAAP net loss adjustments: | 117 | 1,272 | 11,119 | 109,172 | ||||||||||||||
Non-GAAP net loss (2) | $ | (3,593 | ) | $ | (8,212 | ) | $ | (20,714 | ) | $ | (9,533 | ) |
(1) | Adjusted operating margins for the three months ended March 31, 2015 and 2014, were 0.7% and (0.5%), respectively, and were 0.0% and (0.1%) for the nine months ended March 31, 2015 and 2014, respectively, and are calculated as non-GAAP operating income (loss) divided by U.S. GAAP revenue for each respective period. |
(2) | For the three months ended March 31, 2015, income tax expense of $6.8 million relates primarily to a discrete, non-cash charge of $2.0 million to establish a valuation allowance against the majority of Canadian deferred tax assets and a $4.3 million non-cash charge relating to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes. For the nine months ended March 31, 2015, income tax expense of $15.9 million relates to primarily to a discrete, non-cash charge of $2.0 million to establish a valuation allowance against the majority of Canadian deferred tax assets and a $10.9 million non-cash charge relating to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes. The presence of a valuation allowance, including the non-cash tax expense on certain indefinite-lived assets, affects comparability of income tax expense, as adjusted. This plus the discrete, non-cash charge to establish a valuation allowance affect comparability of reported tax expense. |
(3) | During the three months ended December 31, 2013, the Company recorded a valuation allowance against the majority of its deferred tax assets. Any non-GAAP adjustments identified after the establishment of the valuation allowance were not tax effected in the table. For the nine months ended March 31, 2014, non-GAAP operating expense adjustments identified prior to the valuation allowance, except the goodwill impairment, were tax effected using 37%. The goodwill impairment had a tax benefit of approximately $6.3 million for the nine months ended March 31, 2014 as the charge was only partly deductible for income tax purposes. |
Reconciliation of U.S. GAAP net loss per diluted share to non-GAAP net loss per diluted share | ||||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
U.S. GAAP net loss per share (1) | $ | (0.068 | ) | $ | (0.168 | ) | $ | (0.576 | ) | $ | (2.103 | ) | ||||
Non-GAAP adjustments (2): | ||||||||||||||||
Inventory reserves | — | — | — | 0.009 | ||||||||||||
Self-insurance reserves adjustments | (0.012 | ) | — | (0.039 | ) | (0.008 | ) | |||||||||
Legal fees, net of settlements | (0.019 | ) | 0.014 | (0.002 | ) | 0.035 | ||||||||||
Professional fees | — | (0.003 | ) | — | 0.003 | |||||||||||
Deferred compensation adjustments | (0.003 | ) | — | (0.003 | ) | (0.049 | ) | |||||||||
Corporate office accelerated depreciation | — | — | — | 0.008 | ||||||||||||
Goodwill impairment | — | — | — | 0.507 | ||||||||||||
Deferred tax asset valuation | 0.037 | 0.022 | 0.037 | 1.495 | ||||||||||||
Impact of income tax rate difference | — | — | — | (0.002 | ) | |||||||||||
EEG deferred tax asset valuation allowance and impairment | — | — | 0.208 | — | ||||||||||||
Recovery of previously impaired investments in affiliate | — | — | — | (0.055 | ) | |||||||||||
Tax benefit associated with a discontinued operation | — | (0.011 | ) | — | (0.011 | ) | ||||||||||
Non-GAAP net loss per share (1) (3) | $ | (0.066 | ) | $ | (0.145 | ) | $ | (0.375 | ) | $ | (0.169 | ) | ||||
U.S. GAAP Weighted average shares - basic and diluted | 54,837 | 56,473 | 55,248 | 56,450 | ||||||||||||
Non-GAAP Weighted average shares - diluted | 54,837 | 56,473 | 55,248 | 56,450 |
(1) | For the three months ended March 31, 2015, income tax expense of $6.8 million relates primarily to a discrete, non-cash charge of $2.0 million to establish a valuation allowance against the majority of Canadian deferred tax assets and a $4.3 million non-cash charge relating to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes. For the nine months ended March 31, 2015, income tax expense of $15.9 million relates to primarily to a discrete, non-cash charge of $2.0 million to establish a valuation allowance against the majority of Canadian deferred tax assets and a $10.9 million non-cash charge relating to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes. The presence of a valuation allowance, including the non-cash tax expense on certain indefinite-lived assets, affects comparability of income tax expense, as adjusted. This plus the discrete, non-cash charge to establish a valuation allowance affect comparability of reported tax expense. For the three months ended March 31, 2015, the Company evaluated GAAP diluted EPS with and without the full effects of the valuation allowance and calculated an impact of $0.07, including net discrete expense. The same evaluation on diluted EPS, as adjusted, resulted in a $0.08 and $0.05 impact on the three months ended March 31, 2015 and 2014, respectively, an increase of $0.03 when comparing the three months ended March 31, 2015 to the comparable prior year period. Excluding the $0.03 increase for the full effects of the valuation allowance, Diluted EPS, as adjusted, increased $0.11 when comparing the three months ended March 31, 2015 to the comparable prior year period. |
(2) | During the three months ended December 31, 2013, the Company recorded a valuation allowance against the majority of its deferred tax assets. Any non-GAAP adjustments identified after the establishment of the valuation allowance were not tax effected in the table. For the nine months ended March 31, 2014, non-GAAP operating expense adjustments identified prior to the valuation allowance, except the goodwill impairment, were tax effected using 37%. The goodwill impairment had a tax benefit of approximately $6.3 million for the nine months ended March 31, 2014 as the charge was only partly deductible for income tax purposes. |
(3) | Total is a recalculation; line items calculated individually may not sum to total due to rounding. |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Consolidated reported net loss, as reported (U.S. GAAP) | $ | (3,710 | ) | $ | (9,484 | ) | $ | (31,833 | ) | $ | (118,705 | ) | ||||
Interest expense, as reported | 2,273 | 6,299 | 7,843 | 15,956 | ||||||||||||
Income taxes, as reported | 6,797 | 857 | 15,865 | 72,812 | ||||||||||||
Depreciation and amortization, as reported | 19,044 | 28,343 | 60,815 | 76,815 | ||||||||||||
EBITDA (as defined above) | $ | 24,404 | $ | 26,015 | $ | 52,690 | $ | 46,878 | ||||||||
Equity in loss (income) of affiliated companies, net of income taxes, as reported | 285 | (23 | ) | 11,865 | (4,762 | ) | ||||||||||
Inventory reserves | — | — | — | 854 | ||||||||||||
Self-insurance reserves adjustments | (678 | ) | — | (2,140 | ) | (673 | ) | |||||||||
Legal fees, net of settlements | (1,052 | ) | 780 | (98 | ) | 2,693 | ||||||||||
Professional fees | — | (150 | ) | — | 339 | |||||||||||
Deferred compensation adjustments | (184 | ) | — | (184 | ) | (3,703 | ) | |||||||||
Goodwill impairment | — | — | — | 34,939 | ||||||||||||
Income from discontinued operations, net of income taxes, as reported | — | (609 | ) | — | (609 | ) | ||||||||||
Adjusted EBITDA, non-GAAP financial measure | $ | 22,775 | $ | 26,013 | $ | 62,133 | $ | 75,956 | ||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Revenue decrease, as reported (U.S. GAAP) | (3.7 | )% | (6.6 | )% | (2.4 | )% | (7.1 | )% | ||||
Effect of new stores and conversions | (0.6 | ) | (0.7 | ) | (0.7 | ) | (0.8 | ) | ||||
Effect of closed salons | 2.9 | 2.3 | 2.6 | 2.7 | ||||||||
Effect of foreign currency | 1.3 | 0.3 | 0.6 | 0.3 | ||||||||
Other | (0.6 | ) | (1.0 | ) | (0.2 | ) | (0.9 | ) | ||||
Same-store sales, non-GAAP | (0.7 | )% | (5.7 | )% | (0.1 | )% | (5.8 | )% |
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