SEGMENT INFORMATION:

Segment information is prepared on the same basis the chief operating decision maker reviews financial information for operational decision-making purposes. During the first quarter of fiscal year 2018, the Company redefined its operating segments to reflect how the chief operating decision maker now evaluates the business as a result of the Company's Board of Directors' approval of the mall-based business and International segment sale. See Note 1 to the unaudited Condensed Consolidated Financial Statements. The Company now reports its operations in two operating segments: Company-owned salons and Franchise salons. The Company's operating segments are its reportable operating segments. Prior to this change, the Company had four operating segments: North American Value, North American Premium, North American Franchise, and International. The Company did not operate under the realigned operating segment structure prior to the first quarter of fiscal year 2018.

The Company’s reportable operating segments consisted of the following salons:



	March 31, 2018		June 30, 2017
COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart Stores	1,782		2,652
Supercuts	946		980
Signature Style	1,387		1,468
Mall locations (Regis and MasterCuts)	13		898
Total North American Salons	4,128		5,998
Total International Salons (1)	—		275
Total Company-owned Salons	4,128		6,273
as a percent of total Company-owned and Franchise salons	50.7	%	70.3	%

FRANCHISE SALONS:

SmartStyle/Cost Cutters in Walmart Stores	442		176
Supercuts	1,732		1,687
Signature Style	755		770
Total non-mall franchise locations	2,929		2,633
Mall franchise locations (Regis and MasterCuts)	821		—
Total North American Salons	3,750		2,633
Total International Salons (1)	262		13
Total Franchise Salons	4,012		2,646
as a percent of total Company-owned and Franchise salons	49.3	%	29.7	%

OWNERSHIP INTEREST LOCATIONS:

Equity ownership interest locations	88		89

Grand Total, System-wide	8,228		9,008

____________________________________


(1)	Canadian and Puerto Rican salons are included in the North American salon totals.

As of March 31, 2018, the Company-owned operating segment is comprised primarily of SmartStyle^®, Supercuts^®, Cost Cutters^®, and other regional trade names and the Franchise operating segment is comprised primarily of Supercuts, Regis^®, MasterCuts^®, SmartStyle^®, Cost Cutters^®, First Choice Haircutters^®, Roosters^® and Magicuts^® concepts. The Corporate segment represents home office and other unallocated costs.

Concurrent with the change in reportable segments, the Company recast its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. Financial information concerning the Company's reportable operating segments is shown in the following table:



	For the Three Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	221,926	$	—	$	—		$	221,926
Product	49,956		14,931		—			64,887
Royalties and fees	—		13,988		—			13,988
	271,882		28,919		—			300,801
Operating expenses:
Cost of service	132,081		—		—			132,081
Cost of product	25,137		12,002		—			37,139
Site operating expenses	31,021		—		—			31,021
General and administrative	18,051		6,590		21,086			45,727
Rent	39,094		51		246			39,391
Depreciation and amortization	7,276		92		2,190			9,558
Total operating expenses	252,660		18,735		23,522			294,917
Operating income (loss)	19,222		10,184		(23,522		)	5,884
Other (expense) income:
Interest expense	—		—		(5,095		)	(5,095		)
Interest income and other, net	—		—		1,785			1,785
Income (loss) from continuing operations before income taxes	$	19,222	$	10,184	$	(26,832	)	$	2,574



	For the Three Months Ended March 31, 2017
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	237,998	$	—	$	—		$	237,998
Product	56,326		7,518		—			63,844
Royalties and fees	—		11,636		—			11,636
	294,324		19,154		—			313,478
Operating expenses:
Cost of service	153,008		—		—			153,008
Cost of product	25,499		5,490		—			30,989
Site operating expenses	30,604		—		—			30,604
General and administrative	11,883		5,013		28,798			45,694
Rent	45,606		44		171			45,821
Depreciation and amortization	11,195		89		2,292			13,576
Total operating expenses	277,795		10,636		31,261			319,692
Operating income (loss)	16,529		8,518		(31,261		)	(6,214		)
Other (expense) income:
Interest expense	—		—		(2,125		)	(2,125		)
Interest income and other, net	—		—		357			357
Income (loss) from continuing operations before income taxes	$	16,529	$	8,518	$	(33,029	)	$	(7,982	)



	For the Nine Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	680,699	$	—	$	—		$	680,699
Product	159,922		37,721		—			197,643
Royalties and fees	—		40,847		—			40,847
	840,621		78,568		—			919,189
Operating expenses:
Cost of service	406,767		—		—			406,767
Cost of product	77,628		29,537		—			107,165
Site operating expenses	96,443		—		—			96,443
General and administrative	51,822		19,005		58,658			129,485
Rent	146,376		168		736			147,280
Depreciation and amortization	39,224		275		7,265			46,764
Total operating expenses	818,260		48,985		66,659			933,904
Operating income (loss)	22,361		29,583		(66,659		)	(14,715		)
Other (expense) income:
Interest expense	—		—		(9,402		)	(9,402		)
Interest income and other, net	—		—		5,174			5,174
Income (loss) from continuing operations before income taxes	$	22,361	$	29,583	$	(70,887	)	$	(18,943	)



	For the Nine Months Ended March 31, 2017
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	716,698	$	—	$	—		$	716,698
Product	173,275		22,514		—			195,789
Royalties and fees	—		35,071		—			35,071
	889,973		57,585		—			947,558
Operating expenses:
Cost of service	454,998		—		—			454,998
Cost of product	79,629		16,759		—			96,388
Site operating expenses	95,887		—		—			95,887
General and administrative	35,314		15,378		67,613			118,305
Rent	136,499		127		519			137,145
Depreciation and amortization	30,993		268		7,070			38,331
Total operating expenses	833,320		32,532		75,202			941,054
Operating income (loss)	56,653		25,053		(75,202		)	6,504
Other (expense) income:
Interest expense	—		—		(6,441		)	(6,441		)
Interest income and other, net	—		—		2,136			2,136
Income (loss) from continuing operations before income taxes	$	56,653	$	25,053	$	(79,507	)	$	2,199