10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to  

Commission file number 1-12725

Regis Corporation

(Exact name of registrant as specified in its charter)

Minnesota	41-0749934
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7201 Metro Boulevard, Edina, Minnesota	55439
(Address of principal executive offices)	(Zip Code)

(952) 947-7777

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to be submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨
(Do not check if a smaller reporting company)
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of April 24, 2019:

Common Stock, $.05 par value	39,326,526
Class	Number of Shares

REGIS CORPORATION

INDEX

Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited):
		Condensed Consolidated Balance Sheet as of March 31, 2019 and June 30, 2018	3
		Condensed Consolidated Statement of Operations for the three and nine months ended March 31, 2019 and 2018	4
		Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended March 31, 2019 and 2018	5
		Condensed Consolidated Statement of Shareholders' Equity for the three and nine months ended March 31, 2019 and March 31, 2018	6
		Condensed Consolidated Statement of Cash Flows for the nine months ended March 31, 2019 and 2018	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
	Item 4.	Controls and Procedures	40
Part II.	Other Information		40
	Item 1.	Legal Proceedings	40
	Item 1A.	Risk Factors	41
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 6.	Exhibits	42
	Signatures		43

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(Dollars in thousands, except share data)

	March 31, 2019		June 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	71,146	$	110,399
Receivables, net	33,737		52,430
Inventories	90,869		79,363
Other current assets	32,386		47,867
Total current assets	228,138		290,059
Property and equipment, net	83,629		99,288
Goodwill	378,560		412,643
Other intangibles, net	9,346		10,557
Other assets	32,768		37,616
Non-current assets held for sale (Note 1)	6,529		6,572
Total assets	$	738,970	$	856,735
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	57,021	$	57,738
Accrued expenses	83,490		100,716
Total current liabilities	140,511		158,454
Long-term debt	90,000		90,000
Long-term lease liability	17,505		—
Other noncurrent liabilities	115,144		121,843
Total liabilities	363,160		370,297
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively	1,972		2,263
Additional paid-in capital	93,515		194,436
Accumulated other comprehensive income	9,050		9,656
Retained earnings	271,273		280,083
Total shareholders’ equity	375,810		486,438
Total liabilities and shareholders’ equity	$	738,970	$	856,735

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

3

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three and Nine Months Ended March 31, 2019 and 2018

(Dollars and shares in thousands, except per share data amounts)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2019			2018
Revenues:
Service	$	181,809		$	222,022		$	580,076		$	680,930
Product	53,766			64,911			173,006			197,701
Royalties and fees	22,768			18,850			67,767			56,465
	258,343			305,783			820,849			935,096
Operating expenses:
Cost of service	111,632			132,081			348,060			406,767
Cost of product	31,167			37,139			99,698			107,165
Site operating expenses	34,339			37,548			106,723			116,175
General and administrative	41,694			45,727			135,257			129,485
Rent	32,332			39,391			102,952			147,280
Depreciation and amortization	8,630			9,558			27,732			46,764
TBG mall location restructuring (Note 3)	20,711			—			20,711			—
Total operating expenses	280,505			301,444			841,133			953,636
Operating (loss) income	(22,162		)	4,339			(20,284		)	(18,540		)
Other (expense) income:
Interest expense	(1,354		)	(5,095		)	(3,432		)	(9,402		)
Gain from sale of salon assets to franchisees, net	11,489			237			10,394			255
Interest income and other, net	464			1,495			1,453			3,934
(Loss) income from continuing operations before income taxes	(11,563		)	976			(11,869		)	(23,753		)
Income tax (expense) benefit	(3,248		)	2,609			(2,988		)	77,875
(Loss) income from continuing operations	(14,811		)	3,585			(14,857		)	54,122
Income (loss) from TBG discontinued operations, net of taxes	178			(10,605		)	6,027			(50,973		)
Net (loss) income	$	(14,633	)	$	(7,020	)	$	(8,830	)	$	3,149
Net (loss) income per share:
Basic:
(Loss) income from continuing operations	$	(0.37	)	$	0.08		$	(0.35	)	$	1.16
Income (loss) from TBG discontinued operations	0.00			(0.23		)	0.14			(1.09		)
Net (loss) income per share, basic (1)	$	(0.36	)	$	(0.15	)	$	(0.21	)	$	0.07
Diluted:
(Loss) income from continuing operations	$	(0.37	)	$	0.08		$	(0.35	)	$	1.15
Income (loss) from TBG discontinued operations	0.00			(0.22		)	0.14			(1.08		)
Net (loss) income per share, diluted (1)	$	(0.36	)	$	(0.15	)	$	(0.21	)	$	0.07
Weighted average common and common equivalent shares outstanding:
Basic	40,314			46,612			42,900			46,684
Diluted	40,314			47,153			42,900			47,093

_______________________________________________________________________________

(1) Total is a recalculation; line items calculated individually may not sum to total due to rounding.

 The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

4

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For The Three and Nine Months Ended March 31, 2019 and 2018

(Dollars in thousands)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2019			2018
Net (loss) income	$	(14,633	)	$	(7,020	)	$	(8,830	)	$	3,149
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments during the period:
Foreign currency translation adjustments	905			(1,372		)	(606		)	904
Reclassification adjustments for losses included in net (loss) income (Note 3)	—			—			—			6,152
Net current period foreign currency translation adjustments	905			(1,372		)	(606		)	7,056
Comprehensive (loss) income	$	(13,728	)	$	(8,392	)	$	(9,436	)	$	10,205

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

5

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)

(Dollars and shares in thousands, except per share data amounts)

	Three Months Ended March 31, 2019
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings			Total
	Shares		Amount
Balance, December 31, 2018	41,472,468		$	2,074		$	128,964		$	8,145	$	285,827		$	425,010
Net loss	—		—			—			—		(14,633		)	(14,633		)
Foreign currency translation adjustments	—		—			—			905		—			905
Stock repurchase program	(2,050,430	)	(102		)	(37,818		)	—		—			(37,920		)
Exercise of SARs	7,080		—			(101		)	—		—			(101		)
Stock-based compensation	—		—			2,512			—		—			2,512
Net restricted stock activity	4,006		—			(42		)	—		—			(42		)
Minority interest	—		—			—			—		79			79
Balance, March 31, 2019	39,433,124		$	1,972		$	93,515		$	9,050	$	271,273		$	375,810

	Three Months Ended March 31, 2018
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings			Total
	Shares		Amount
Balance, December 31, 2017	46,688,423		$	2,335		$	216,301		$	11,843		$	283,694		$	514,173
Net loss	—		—			—			—			(7,020		)	(7,020		)
Foreign currency translation adjustments	—		—			—			(1,372		)	—			(1,372		)
Stock repurchase program	(585,967	)	(30		)	(9,605		)	—			—			(9,635		)
Exercise of SARs	18,697		1			(184		)	—			—			(183		)
Stock-based compensation	—		—			1,690			—			—			1,690
Net restricted stock activity	5,096		—			(53		)	—			—			(53		)
Minority interest	—		—			—			—			67			67
Balance, March 31, 2018	46,126,249		$	2,306		$	208,149		$	10,471		$	276,741		$	497,667

	Nine Months Ended March 31, 2019
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings			Total
	Shares		Amount
Balance, June 30, 2018	45,258,571		$	2,263		$	194,436		$	9,656		$	280,083		$	486,438
Net loss	—		—			—			—			(8,830		)	(8,830		)
Foreign currency translation adjustments	—		—			—			(606		)	—			(606		)
Stock repurchase program	(6,023,523	)	(301		)	(105,951		)	—			—			(106,252		)
Exercise of SARs	15,412		1			(205		)	—			—			(204		)
Stock-based compensation	—		—			7,065			—			—			7,065
Net restricted stock activity	182,664		9			(1,830		)	—			—			(1,821		)
Minority interest	—		—			—			—			20			20
Balance, March 31, 2019	39,433,124		$	1,972		$	93,515		$	9,050		$	271,273		$	375,810

	Nine Months Ended March 31, 2018
	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings			Total
	Shares		Amount
Balance, June 30, 2017	46,400,367		$	2,320		$	214,109		$	3,415	$	273,776		$	493,620
Net income	—		—			—			—		3,149			3,149
Foreign currency translation adjustments	—		—			—			7,056		—			7,056
Stock repurchase program	(585,967	)	(30		)	(9,605		)	—		—			(9,635		)
Exercise of SARs	27,793		2			(278		)	—		—			(276		)
Stock-based compensation	—		—			5,933			—		—			5,933
Shares issued through franchise stock incentive program	522		—			7			—		—			7
Net restricted stock activity	283,534		14			(2,017		)	—		—			(2,003		)
Minority interest	—		—			—			—		(184		)	(184		)
Balance, March 31, 2018	46,126,249		$	2,306		$	208,149		$	10,471	$	276,741		$	497,667

The accompanying notes are an integral part of the Consolidated Financial Statements.

6

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For The Nine Months Ended March 31,2019 and 2018

(Dollars in thousands)

	Nine Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net (loss) income	$	(8,830	)	$	3,149
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Non-cash impairment and other adjustments related to TBG discontinued operations	(163		)	37,020
Depreciation and amortization	24,727			29,736
Depreciation related to TBG discontinued operations	—			3,723
Deferred income taxes	(6,034		)	(85,026		)
Gain on life insurance	—			(7,986		)
Non-cash TBG mall location restructuring charge	20,711			—
Gain from sale of salon assets to franchisees, net	(10,394		)	(255		)
Salon asset impairments	3,005			11,099
Accumulated other comprehensive income reclassification adjustment	—			6,152
Stock-based compensation	7,065			6,483
Amortization of debt discount and financing costs	206			4,011
Other non-cash items affecting earnings	(492		)	(287		)
Changes in operating assets and liabilities, excluding the effects of asset sales	(50,074		)	(29,483		)
Net cash used in operating activities	(20,273		)	(21,664		)
Cash flows from investing activities:
Capital expenditures	(23,160		)	(20,065		)
Capital expenditures related to TBG discontinued operations	—			(1,171		)
Proceeds from sale of assets to franchisees	54,619			5,620
Proceeds from company-owned life insurance policies	24,617			18,108
Net cash provided by investing activities	56,076			2,492
Cash flows from financing activities:
Borrowings on revolving credit facilities	—			90,000
Repayment of long-term debt and capital lease obligations	—			(124,230		)
Repurchase of common stock	(105,364		)	(9,634		)
Settlement of equity awards	—			(550		)
Taxes paid for shares withheld	(2,447		)	(2,279		)
Net proceeds from sale and leaseback transaction	18,068			—
Net cash used in financing activities	(89,743		)	(46,693		)
Effect of exchange rate changes on cash and cash equivalents	5			(30		)
Decrease in cash, cash equivalents, and restricted cash	(53,935		)	(65,895		)
Cash, cash equivalents and restricted cash:
Beginning of period	148,774			208,634
Cash, cash equivalents and restricted cash included in current assets held for sale	—			1,352
Beginning of period, total cash, cash equivalents and restricted cash	148,774			209,986
End of period	$	94,839		$	144,091

__________________________________________________________

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

7

REGIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the "Company") as of March 31, 2019 and for the three and nine months ended March 31, 2019 and 2018, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2019 and its consolidated results of operations, comprehensive (loss) income, changes in equity and cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2018 and other documents filed or furnished with the SEC during the current fiscal year.

Goodwill:

As of March 31, 2019 and June 30, 2018, the Company-owned reporting unit had $151.1 million and $184.8 million of goodwill, respectively, and the Franchise salons reporting unit had $227.4 million and $227.9 million of goodwill, respectively. See Note 9 to the unaudited interim Condensed Consolidated Financial Statements. The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An interim impairment analysis was not required in the nine months ended March 31, 2019.

The Company performs its annual impairment assessment as of April 30. For the fiscal year 2018 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Company-owned and Franchise reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of our reporting units exceeded their carrying value.  The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 24%. The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis and comparable market multiples. The assumptions used in determining fair value were the number and pace of salons sold to franchisees, proceeds for salon sales, weighted average cost of capital, general and administrative expenses and utilization of net operating loss benefits. We selected the assumptions by considering our historical financial performance and trends, historical salon sale proceeds and estimated salon sale activities. The preparation of our fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. A 100 basis point increase in our weighted average cost of capital within the Company-owned reporting unit would result in a reduction in headroom to approximately 17%.

Other uncertain factors or events exist which may result in a future triggering event and require us to perform an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to our annual assessment. These internal and external factors include but are not limited to the following:

• Changes in the company-owned salon strategy,

• Franchise expansion and sales opportunities,

• Future market earnings multiples deterioration,

• Our financial performance falls short of our projections due to internal operating factors,

• Economic recession,

• Reduced salon traffic, as defined by total transactions, and/or revenue,

• Deterioration of industry trends,

• Increased competition,

• Inability to reduce general and administrative expenses as company-owned salon count potentially decreases,

• Other factors causing our cash flow to deteriorate.

8

If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 24% headroom, we may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill.

Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses in its goodwill impairment assessment. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material.

Non-Current Assets Held for Sale:

In March 2019, the Company announced that entered into a ten year lease for a new corporate headquarters and would be selling the land and buildings in Edina, MN, currently used for its headquarters. The non-current assets held for sale represent the net book value of the land of $1.7 and $1.7 million and buildings of $4.8 and $4.9 million, as of March 31, 2019 and June 30, 2018, respectively. No impairments were identified as of March 31, 2019.

Accounting Standards Recently Adopted by the Company:

Revenue from Contracts with Customers

In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company retrospectively adopted these standards on July 1, 2018. The impact of these standards was applied to all periods presented and the cumulative effect of applying the standard was recognized at the beginning of the earliest period presented. See Note 2 to the unaudited Condensed Consolidated Financial Statements for additional information regarding the impact of the adoption of the revenue recognition guidance.

Restricted Cash

In November 2016, the FASB issued cash flow guidance requiring restricted cash and restricted cash equivalents to be included in the cash and cash equivalent balances in the statement of cash flows. Transfers between cash and cash equivalents and restricted cash are no longer presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The Company retrospectively adopted this guidance on July 1, 2018. The impact of this standard was applied to all periods presented. As a result of including restricted cash in the beginning and end of period balances, cash, cash equivalents and restricted cash presented in the statement of cash flows increased $38.4 million, $23.6 million and $37.6 million as of June 30, 2018, March 31, 2019 and June 30, 2017, respectively.

Statement of Cash Flows

In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The Company retrospectively adopted this guidance on July 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated statement of cash flows.

Accounting Standards Recently Issued But Not Yet Adopted by the Company:

Leases

In February 2016, the FASB issued updated guidance requiring organizations that lease assets to recognize the rights and obligations created by those leases on the consolidated balance sheet. The new standard is effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company will elect this optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods.  The Company will also elect the package of practical expedients that do not require reassessment of whether existing contracts are or contain leases, lease classification or initial direct costs. The Company is leveraging its lease management system to facilitate the adoption of this standard and is evaluating business processes and internal controls related to lease accounting to assist in the application of the new guidance. The Company is continuing to evaluate the effect the new standard will have on the Company's consolidated financial

9

statements but expects this adoption will result in a material increase in the assets and liabilities on the Company's consolidated balance sheet, as substantially all its operating lease commitments, including leases signed on behalf of franchisees, will be subject to the new guidance. The Company does not expect the adoption of the new guidance to have a material impact on net income, cash flows or compliance with debt agreements.

2.REVENUE RECOGNITION:

In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted the amended revenue recognition guidance, ASC Topic 606, on July 1, 2018 using the full retrospective transition method which required the adjustment of each prior reporting period presented. The adjusted amounts include the application of a practical expedient that permitted the Company to reflect the aggregate effect of all modifications that occurred prior to fiscal year 2017 when identifying the satisfied and unsatisfied performance obligation, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. As a result of adopting this new standard, the Company is providing its updated revenue recognition policies.

Revenue Recognition and Deferred Revenue:

Revenue recognized at point of sale

Company-owned salon revenues are recognized at the time when the services are provided. Product revenues for Company-owned salons are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the customer. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales by the Company to its franchisees are included within product revenues in the unaudited Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 days of delivery.

Revenue recognized over time

Franchise revenues primarily include royalties, advertising fund fees, franchise fees and other fees. Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenue is billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the unaudited Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Upon adoption of the new revenue recognition guidance, recognition of these fees is deferred until the salon opening and is then recognized over the term of the franchise agreement, typically ten years. Under previous guidance the initial franchise fees were recognized in full upon salon opening.

The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows:

	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Company-owned		Franchise		Company-owned		Franchise
	(in thousands)
Revenue recognized at a point in time:
Service	$	181,809	$	—	$	222,022	$	—
Product	39,427		14,339		49,980		14,931
Total revenue recognized at a point in time	$	221,236	$	14,339	$	272,002	$	14,931
Revenue recognized over time:
Royalty and other franchise fees	$	—	$	14,339	$	—	$	12,322
Advertising fund fees	—		8,429		—		6,528
Total revenue recognized over time	—		22,768		—		18,850
Total revenue	$	221,236	$	37,107	$	272,002	$	33,781

10

	Nine Months Ended March 31, 2019				Nine Months Ended March 31, 2018
	Company-owned		Franchise		Company-owned		Franchise
	(in thousands)
Revenue recognized at a point in time:
Service	$	580,076	$	—	$	680,930	$	—
Product	125,220		47,786		159,980		37,721
Total revenue recognized at a point in time	$	705,296	$	47,786	$	840,910	$	37,721
Revenue recognized over time:
Royalty and other franchise fees	$	—	$	43,495	$	—	$	36,733
Advertising fund fees	—		24,272		—		19,732
Total revenue recognized over time	—		67,767		—		56,465
Total revenue	$	705,296	$	115,553	$	840,910	$	94,186

Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows:

	March 31, 2019		June 30, 2018		Balance Sheet Classification
	(in thousands)
Receivables from contracts with customers, net	$	23,904	$	21,504	Accounts receivable, net
Broker fees	$	16,904	$	14,002	Other assets
Deferred revenue:
Current
Gift card liability	$	3,439	$	3,320	Accrued expenses
Deferred franchise fees unopened salons	137		2,306		Accrued expenses
Deferred franchise fees open salons	3,767		3,030		Accrued expenses
Total current deferred revenue	$	7,343	$	8,656
Non-current
Deferred franchise fees unopened salons	$	13,941	$	11,161	Other non-current liabilities
Deferred franchise fees open salons	21,943		18,346		Other non-current liabilities
Total non-current deferred revenue	$	35,884	$	29,507

Receivables relate primarily to payments due for royalties, franchise fees, advertising fees, and sales of salon services and product. The receivables balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from franchisees. As of March 31, 2019 and June 30, 2018, the balance in the allowance for doubtful accounts was $15.7 and $1.2 million, respectively. The increase in the allowance for doubtful accounts is due to reserving for $12.7 million of TBG receivables in the three months ended March 31, 2019 (see Note 3). Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as General and Administrative expense over the term of the agreement. The adoption of the amended revenue recognition guidance did not significantly change the Company's accounting for broker fees.

11

The following table is a rollforward of the broker fee balance for the periods indicated (in thousands):

Balance as of June 30, 2018	$	14,002
Additions	4,393
Amortization	(1,484		)
Write-offs	(7		)
Balance as of March 31, 2019	$	16,904

Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons. Gift card revenue for the three months ended March 31, 2019 and 2018 was $1.8 and $1.9 million, respectively, and for the nine months ended March 31, 2019 and 2018 was $4.0 and $4.6 million, respectively. Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue for the three months ended March 31, 2019 and 2018 was $0.9 and $0.7 million, respectively, and for the nine months ended March 31, 2019 and 2018 was $2.6 and $2.0 million. Estimated revenue expected to the recognized in the future related to deferred franchise fees for open salons as of March 31, 2019 is as follows (in thousands):

Remainder of 2019	$	840
2020	3,631
2021	3,543
2022	3,423
2023	3,246
Thereafter	11,027
Total	$	25,710

12

The amended revenue recognition guidance impacted the Company's previously reported financial statements as follows:

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

June 30, 2018

(Dollars in thousands)

			Adjustments for new revenue recognition guidance
	Previously		Franchise			Advertising		Gift Card
	Reported		Fees			Funds		Breakage			Taxes			Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	110,399	$	—		$	—	$	—		$	—		$	110,399
Receivables, net	52,430		—			—		—			—			52,430
Inventories	79,363		—			—		—			—			79,363
Other current assets	47,867		—			—		—			—			47,867
Total current assets	290,059		—			—		—			—			290,059
Property and equipment, net	99,288		—			—		—			—			99,288
Goodwill	412,643		—			—		—			—			412,643
Other intangibles, net	10,557		—			—		—			—			10,557
Other assets	37,616		—			—		—			—			37,616
Non-current assets held for sale (Note 1)	6,572		—			—		—			—			6,572
Total assets	$	856,735	$	—		$	—	$	—		$	—		$	856,735
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	57,738	$	—		$	—	$	—		$	—		$	57,738
Accrued expenses	97,630		3,030			—		56			—			100,716
Total current liabilities	155,368		3,030			—		56			—			158,454
Long-term debt	90,000		—			—		—			—			90,000
Other noncurrent liabilities	107,875		18,346			—		—			(4,378		)	121,843
Total liabilities	353,243		21,376			—		56			(4,378		)	370,297
Commitments and contingencies (Note 7)
Shareholders’ equity:			0
Common stock	2,263		—			—		—			—			2,263
Additional paid-in capital	194,436		—			—		—			—			194,436
Accumulated other comprehensive income	9,568		88			—		—			—			9,656
Retained earnings	297,225		(21,464		)	—		(56		)	4,378			280,083
Total shareholders’ equity	503,492		(21,376		)	—		(56		)	4,378			486,438
Total liabilities and shareholders’ equity	$	856,735	$	—		$	—	$	—		$	—		$	856,735

13

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three Months Ended March 31, 2018

(Dollars and shares in thousands, except per share data amounts)

				Adjustments for new revenue recognition guidance
	Previously			Franchise			Advertising		Gift Card
	Reported			Fees			Funds		Breakage			Taxes		Adjusted
Revenues:
Service	$	221,926		$	—		$	—	$	96		$	—	$	222,022
Product	64,887			—			—		24			—		64,911
Royalties and fees	13,988			(1,666		)	6,528		—			—		18,850
	300,801			(1,665		)	6,527		120			—		305,783
Operating expenses:
Cost of service	132,081			—			—		—			—		132,081
Cost of product	37,139			—			—		—			—		37,139
Site operating expenses	31,021			—			6,527		—			—		37,548
General and administrative	45,727			—			—		—			—		45,727
Rent	39,391			—			—		—			—		39,391
Depreciation and amortization	9,558			—			—		—			—		9,558
Total operating expenses	294,917			—			6,527		—			—		301,444
Operating income	5,884			(1,665		)	—		120			—		4,339
Other (expense) income:
Interest expense	(5,095		)	—			—		—			—		(5,095		)
Gain from sale of salon assets to franchisees, net	237			—			—		—			—		237
Interest income and other, net	1,548			—			—		(53		)	—		1,495
Income from continuing operations before income taxes	2,574			(1,665		)	—		67			—		976
Income tax expense	2,225			—			—		—			384		2,609
Income from continuing operations	4,799			(1,665		)	—		67			384		3,585
Loss from TBG discontinued operations, net of taxes	(10,605		)	—			—		—			—		(10,605		)
Net loss	$	(5,806	)	$	(1,665	)	$	—	$	67		$	384	$	(7,020	)
Net loss per share:
Basic:
Income from continuing operations (1)	$	0.10		$	(0.04	)	$	0.00	$	0.00		$	0.01	$	0.08
Loss from TBG discontinued operations	(0.23		)	0.00			0.00		0.00			0.00		(0.23		)
Net loss per share, basic (1)	$	(0.12	)	$	(0.04	)	$	0.00	$	0.00		$	0.01	$	(0.15	)
Diluted:
Income from continuing operations (1)	$	0.10		$	(0.04	)	$	0.00	$	0.00		$	0.01	$	0.08
Loss from TBG discontinued operations	(0.22		)	0.00			0.00		0.00			0.00		(0.22		)
Net loss per share, diluted (1)	$	(0.12	)	$	(0.04	)	$	0.00	$	0.00		$	0.01	$	(0.15	)
Weighted average common and common equivalent shares outstanding:
Basic	46,612			46,612			46,612		46,612			46,612		46,612
Diluted	47,153			47,153			47,153		47,153			47,153		47,153

_____________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

14

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Nine Months Ended March 31, 2018

(Dollars and shares in thousands, except per share data amounts)

				Adjustments for new revenue recognition guidance
	Previously			Franchise			Advertising		Gift Card
	Reported			Fees			Funds		Breakage			Taxes		Adjusted
Revenues:
Service	$	680,699		$	—		$	—	$	231		$	—	$	680,930
Product	197,643			—			—		58			—		197,701
Royalties and fees	40,847			(4,114		)	19,732		—			—		56,465
	919,189			(4,114		)	19,732		289			—		935,096
Operating expenses:
Cost of service	406,767			—			—		—			—		406,767
Cost of product	107,165			—			—		—			—		107,165
Site operating expenses	96,443			—			19,732		—			—		116,175
General and administrative	129,485			—			—		—			—		129,485
Rent	147,280			—			—		—			—		147,280
Depreciation and amortization	46,764			—			—		—			—		46,764
Total operating expenses	933,904			—			19,732		—			—		953,636
Operating income	(14,715		)	(4,114		)	—		289			—		(18,540		)
Other (expense) income:
Interest expense	(9,402		)	—			—		—			—		(9,402		)
Gain from sale of salon assets to franchisees, net	255			—			—		—			—		255
Interest income and other, net	4,919			—			—		(985		)	—		3,934
Income from continuing operations before income taxes	(18,943		)	(4,114		)	—		(696		)	—		(23,753		)
Income tax expense	73,855			—			—		—			4,020		77,875
Income from continuing operations	54,912			(4,114		)	—		(696		)	4,020		54,122
Loss from TBG discontinued operations, net of taxes	(50,973		)	—			—		—			—		(50,973		)
Net loss	$	3,939		$	(4,114	)	$	—	$	(696	)	$	4,020	$	3,149
Net loss per share:
Basic:
Income from continuing operations (1)	$	1.18		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	1.16
Loss from TBG discontinued operations	(1.09		)	0.00			0.00		0.00			0.00		(1.09		)
Net loss per share, basic (1)	$	0.08		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	0.07
Diluted:
Income from continuing operations (1)	$	1.17		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	1.15
Loss from TBG discontinued operations	(1.08		)	0.00			0.00		0.00			0.00		(1.08		)
Net loss per share, diluted (1)	$	0.08		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	0.07
Weighted average common and common equivalent shares outstanding:
Basic	46,684			46,684			46,684		46,684			46,684		46,684
Diluted	47,093			47,093			47,093		47,093			47,093		47,093

_____________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

15

3. TBG DISCONTINUED OPERATIONS:

In October 2017, the Company sold substantially allits mall-based salon business in North America, representing 858 salons, and substantially all its International segment, representing approximately 250 salons in the UK, to The Beautiful Group ("TBG"), an affiliate of Regent, a private equity firm based in Los Angeles, California, who operates these locations as franchise locations.

For the International segment, the Company entered into a share purchase agreement with TBG for minimal consideration.

The Company classified the results of its mall-based business and its International segment as discontinued operations for all periods presented in the Condensed Consolidated Statement of Operations. In connection with the sale of the mall-based business and the International segment, the Company performed an impairment assessment of the asset groups. The Company recognized net impairment charges within discontinued operations based on the difference between the expected sale prices and the carrying value of the asset groups.

The following summarizes the results of our TBG discontinued operations for the periods presented:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2019			2018			2019			2018
	(Dollars in thousands)						(Dollars in thousands)
Revenue	$	—		$	—		$	—		$	101,140
Income (loss) from TBG discontinued operations, before income taxes	224			(13,545		)	(862		)	(57,385		)
Income tax (expense) benefit on TBG discontinued operations	(46		)	2,940			6,889			6,412
Income (loss) from TBG discontinued operations, net of income taxes	$	178		$	(10,605	)	$	6,027		$	(50,973	)

For the three months ended March 31, 2019, the $0.2 million income from discontinued operations includes actuarial insurance accrual adjustments associated with the transaction. For the nine months ended March 31, 2019, the $6.0 million income from discontinued operations includes $6.9 million of income tax benefits associated with the wind-down and transfer of legal entities related to discontinued operations and $0.2 million of actuarial insurance accrual adjustments associated with the transaction, partly offset by $1.0 million of professional fees.

For the three months ended March 31, 2018, included within the $10.6 million loss from discontinued operations were $11.7 million of asset impairment charges, $1.2 million of loss from operations and $0.6 million of professional fees associated with the transaction, partly offset by a $2.9 million income tax benefit. For the nine months ended March 31, 2018, included within the $51.0 million loss from discontinued operations were $40.8 million of asset impairment charges, $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, $4.0 million of loss from operations and $6.4 million of professional fees associated with the transaction, partly offset by a $6.4 million income tax benefit.

16

As part of the sale of the mall-based business, TBG agreed to pay for the value of certain inventory, prepaid rent and assumed specific liabilities, including lease liabilities. In March 2018, the Company entered into discussions with TBG regarding a waiver of working capital and prepaid rent payments associated with the original transaction and the financing of certain receivables to assist TBG with its cash flow and operational needs. Based on those discussions as of March 31, 2018, the Company fully reserved for the working capital and prepaid rent amount of $11.7 million which was recorded in discontinued operations in the Condensed Consolidated Statement of Operations in the third quarter of fiscal year 2018. In August 2018, the Company entered into promissory notes for approximately $11.7 million in working capital receivables and $8.0 million in accounts receivables, a majority of which was for inventory purchases. All notes have a maturity date of August 2, 2020. Pursuant to the working capital notes, such notes would be forgiven as of the maturity date and exchanged for a three-year contingent payment right that is payable upon the occurrence of certain TBG monetization events if no default had occurred under such notes and certain other conditions are met. Based on TBG’s inability to meet the requirements of the promissory notes, including non-payment of amounts due to the Company, the Company recorded a full reserve against such notes. In addition, the Company has recorded additional reserves of approximately $11.6 million for inventory and $1.1 million for outstanding royalties that TBG has failed to pay. As of March 31, 2019, the Company has fully reserved for all amounts invoiced to TBG. The total note and receivables reserve in the third quarter of fiscal year 2019 was $20.7 million and is recorded in the TBG mall location restructuring line of the unaudited Condensed Consolidated Statement of Operations. TBG's business has continued to decline. The Company continues to have conversations with TBG focused on how to assist TBG with its cash flow and operational needs.

The following summarizes the TBG related charges for the periods presented:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,						Income Statement Classification
	2019			2018			2019			2018
	(Dollars in thousands)
TBG mall location restructuring	$	20,711		$	—		$	20,711		$	—		TBG mall location restructuring
Working capital and prepaid rent receivable reserve	—			(11,697		)	—			(11,697		)	Income (loss) from TBG discontinued operations
Other charges	224			(1,848		)	(862		)	(45,688		)	Income (loss) from TBG discontinued operations
Income (loss) from TBG discontinued operations, before income taxes	224			(13,545		)	(862		)	(57,385		)	Income (loss) from TBG discontinued operations
Income tax (expense) benefit on TBG discontinued operations	(46		)	2,940			6,889			6,412			Income (loss) from TBG discontinued operations
Income (loss) from TBG discontinued operations, net of income taxes	$	178		$	(10,605	)	$	6,027		$	(50,973	)	Income (loss) from TBG discontinued operations

Other than the items presented in the Consolidated Statement of Cash Flows, there were no other significant non-cash operating activities or any significant non-cash investing activities related to discontinued operations for the three and nine months ended March 31, 2019 and 2018.

The Company utilized the consolidation of variable interest entities guidance to determine whether or not TBG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of TBG. As of March 31, 2019, the Company concluded that TBG is a VIE, based on the fact that the equity investment at risk in TBG is not sufficient. The Company determined that it is not the primary beneficiary of TBG based on its exposure to the expected losses of TBG and as it is not the variable interest holder that is most closely associated within the relationship and the significance of the activities of TBG. The exposure to loss related to the Company's involvement with TBG is the guarantee of the operating leases for certain TBG operated salons. As of March 31, 2019, prior to any mitigation efforts which may be available, the Company remains liable for up to $64.8 million associated with remaining TBG salon lease commitments, should TBG not perform.

4. EARNINGS PER SHARE:

The Company’s basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding RSAs, RSUs and PSUs. The Company’s diluted earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company’s stock-based compensation plans. Stock-based awards with exercise prices greater than the average market price of the Company’s common stock are excluded from the computation of diluted earnings per share.

For the three and nine months ended March 31, 2019, 1,023,038 and 1,006,589, respectively, common stock equivalents of dilutive common stock were excluded in the diluted earnings per share calculations due to the net loss from continuing operations. For the three and nine months ended March 31, 2018, 541,405 and 409,646, respectively, common stock equivalents of dilutive common stock were included in the diluted earnings per share calculations due to the net income from continuing operations.

The computation of weighted average shares outstanding, assuming dilution, excluded 608,944 and 550,948 of stock-based awards during the three months ended March 31, 2019 and 2018, respectively, and 542,329 and 730,377 of stock-based awards during the nine months ended March 31, 2019 and 2018, respectively, as they were not dilutive under the treasury stock method.

17

5. SHAREHOLDERS’ EQUITY:

Stock-Based Employee Compensation:

During the nine months ended March 31, 2019, the Company granted various equity awards including restricted stock units (RSUs) and performance-based restricted stock units (PSUs).

A summary of equity awards granted is as follows:

	For the Three Months Ended March 31, 2019	For the Nine Months Ended March 31, 2019
Restricted stock units	—	338,859
Performance-based restricted stock units	—	733,688

The RSUs granted to employees vest in equal amounts over a three-year period subsequent to the grant date, cliff vest after a three-year period or cliff vest after a five-year period subsequent to the grant date.

The PSUs granted to employees have a three year performance period ending June 30, 2021 linked to the Company's stock price reaching a specified volume weighted average closing price for a 50 day period that ends on June 30, 2021. The PSUs granted to certain executives include an additional two year service period after the performance period. Of the total PSUs granted, 52,590 PSUs have a maximum vesting percentage of 200% based on the level of performance achieved for the respective award, while the remaining PSUs have a maximum vesting percentage of 100%.

Total compensation cost for stock-based payment arrangements totaling $2.5 and $1.9 million for the three months ended March 31, 2019 and 2018, respectively, and $7.1 and $6.5 million for the nine months ended March 31, 2019 and 2018, respectively, was recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations.

Share Repurchases:

During the three and nine months ended March 31, 2019, the Company repurchased 2.1 million and 6.0 million shares, respectively, for $37.9 million and $106.3 million, respectively, under a previously approved stock repurchase program. At March 31, 2019, $129.1 million remains outstanding under the approved stock repurchase program.

6. INCOME TAXES:

A summary of income tax (expense) benefit and corresponding effective tax rates is as follows:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2019			2018			2019			2018
	(Dollars in thousands)
Income tax (expense) benefit	$	(3,248	)	$	2,609		$	(2,988	)	$	77,875
Effective tax rate	(28.1		%)	(267.3		%)	(25.2		%)	327.9		%

The recorded tax provisions and effective tax rates for the three and nine months ended March 31, 2019 and three and nine months ended March 31, 2018 were different than what would normally be expected primarily due to the impact of tax legislation commonly referred to as the Tax Cuts and Jobs Act, state conformity of the new federal provisions and the deferred tax valuation allowance. The majority of the tax provision in periods ended prior to December 31, 2017 related to non-cash tax expense for tax benefits on certain indefinite-lived assets that the Company could not recognize for reporting purposes.

The Company is no longer subject to IRS examinations for years before 2013. Furthermore, with limited exceptions, the Company is no longer subject to state and international income tax examinations by tax authorities for years before 2012.

7. COMMITMENTS AND CONTINGENCIES:

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

18

8.    CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows:

	March 31, 2019		June 30, 2018
	(Dollars in thousands)
Cash and cash equivalents	$	71,146	$	110,399
Restricted cash, included in Other current assets (1)	23,693		38,375
Total cash, cash equivalents and restricted cash	$	94,839	$	148,774

_______________________________________________________________________________

(1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs.

9.    GOODWILL AND OTHER INTANGIBLES:

The table below contains details related to the Company's goodwill:

	Company-owned			Franchise			Consolidated
	(Dollars in thousands)
Goodwill, net at June 30, 2018	$	184,788		$	227,855		$	412,643
Translation rate adjustments	(147		)	(408		)	(555		)
Derecognition related to sale of salon assets to franchisees (1)	(33,528		)	—			(33,528		)
Goodwill, net at March 31, 2019	$	151,113		$	227,447		$	378,560

_______________________________________________________________________________

(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 trailing-twelve months EBITDA of the salon being sold and the denominator of which is the estimated annualized EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit.

The table below presents other intangible assets:

	March 31, 2019							June 30, 2018
	Cost (1)		Accumulated Amortization (1)			Net		Cost (1)		Accumulated Amortization (1)			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	7,830	$	(4,236	)	$	3,594	$	8,128	$	(4,260	)	$	3,868
Franchise agreements	9,675		(7,888		)	1,787		9,763		(7,712		)	2,051
Lease intangibles	13,474		(9,884		)	3,590		13,997		(9,770		)	4,227
Other	1,966		(1,591		)	375		1,983		(1,572		)	411
	$	32,945	$	(23,599	)	$	9,346	$	33,871	$	(23,314	)	$	10,557

_______________________________________________________________________________

(1)  The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency.

19

10. FINANCING ARRANGEMENTS:

The Company’s long-term debt consists of the following:

Revolving Credit Facility

	Maturity Date	Interest Rate	March 31, 2019		June 30, 2018
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.75%	$	90,000	$	90,000

As of March 31, 2019 and June 30, 2018, the Company has $90.0 million of outstanding borrowings under a $295.0 million revolving credit facility. At March 31, 2019 and June 30, 2018, the Company has outstanding standby letters of credit under the revolving credit facility of $23.0 million and $1.5 million, respectively, primarily related to the Company's self-insurance program. The unused available credit under the facility was $182.0 million and $203.5 million, respectively. Amounts outstanding under the revolving credit facility are due at maturity in March 2023.

Sale and Leaseback Transaction

The Company’s long-term lease liability consists of the following:

	Maturity Date	Interest Rate	March 31, 2019		June 30, 2018
	(Fiscal Year)		(Dollars in thousands)
Long-term lease liability	2033	3.30%	$	17,505	$	—

In November 2018, the Company sold its Salt Lake City Distribution Center to an unrelated party. The Company is leasing the property back for 15 years with the option to renew three times for five year periods. As the Company plans to lease the property for more than 75% of its economic life, the sales proceeds received from the buyer-lessor are recognized as a financial liability. This financial liability is reduced based on the rental payments made under the lease that are allocated between principal and interest. As of March 31, 2019, the current portion of the Company’s lease liability was $0.6 million. As of March 31, 2019, future lease payments due are as follows:

Remainder of 2019	$	302
2020	1,120
2021	1,157
2022	1,171
2023	1,186
Thereafter	13,265
Total	$	18,201

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three and nine months ended March 31, 2019.

20

11.FAIR VALUE MEASUREMENTS:

Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2019 and June 30, 2018, the estimated fair value of the Company’s cash, cash equivalents, restricted cash, receivables and accounts payable approximated their carrying values. As of March 31, 2019 and June 30, 2018, the estimated fair value of the Company's debt was $90.0 million and the carrying value was $90.0 million. As of March 31, 2019 the estimated fair value of the Company’s long-term financial liability was $17.5 million. The estimated fair values of the Company's debt and long-term financial liability are based on Level 2 inputs.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

The following impairments were based on fair values using Level 3 inputs:

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2019		2018		2019		2018
	(Dollars in thousands)
Long-lived assets	$	702	$	313	$	3,005	$	9,565

21

12.SEGMENT INFORMATION:

Segment information is prepared on the same basis that the chief operating decision maker reviews financial information for operational decision-making purposes.

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

	March 31, 2019		June 30, 2018
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,591		1,660
Supercuts	568		928
Signature Style	1,217		1,378
Total Company-owned Salons	3,376		3,966
as a percent of total Company-owned and Franchise salons	43.6	%	49.1	%
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	591		561
Supercuts	2,164		1,739
Signature Style	740		745
Total franchise locations, excluding TBG mall locations	3,495		3,045
as a percent of total Company-owned and Franchise salons	45.1	%	37.7	%
Total North America TBG mall locations (1)	617		807
as a percent of total Company-owned and Franchise salons	8.0	%	10.0	%
Total North American Salons	4,112		3,852
Total International TBG Salons (1)	263		262
as a percent of total Company-owned and Franchise salons	3.4	%	3.2	%
Total Franchise Salons	4,375		4,114
as a percent of total Company-owned and Franchise salons	56.4	%	50.9	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	87		88
Grand Total, System-wide	7,838		8,168

____________________________________

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

As of March 31, 2019, 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.

22

Financial information concerning the Company's reportable operating segments is shown in the following table:

	For the Three Months Ended March 31, 2019
	Company-owned		Franchise			Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	181,809	$	—		$	—		$	181,809
Product	39,427		14,339			—			53,766
Royalties and fees	—		22,768			—			22,768
	221,236		37,107			—			258,343
Operating expenses:
Cost of service	111,632		—			—			111,632
Cost of product	19,992		11,175			—			31,167
Site operating expenses	25,894		8,445			—			34,339
General and administrative	14,505		7,526			19,663			41,694
Rent	31,964		190			178			32,332
Depreciation and amortization	6,519		240			1,871			8,630
TBG mall location restructuring	—		20,711			—			20,711
Total operating expenses	210,506		48,287			21,712			280,505
Operating income (loss)	10,730		(11,180		)	(21,712		)	(22,162		)
Other (expense) income:
Interest expense	—		—			(1,354		)	(1,354		)
Gain from sale of salon assets to franchisees, net	—		—			11,489			11,489
Interest income and other, net	—		—			464			464
Income (loss) from continuing operations before income taxes	$	10,730	$	(11,180	)	$	(11,113	)	$	(11,563	)

	For the Three Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	222,022	$	—	$	—		$	222,022
Product	49,980		14,931		—			64,911
Royalties and fees	—		18,850		—			18,850
	272,002		33,781		—			305,783
Operating expenses:
Cost of service	132,081		—		—			132,081
Cost of product	25,137		12,002		—			37,139
Site operating expenses	31,022		6,526		—			37,548
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
TBG mall location restructuring	—		—		—			—
Total operating expenses	252,661		25,261		23,522			301,444
Operating income (loss)	19,341		8,520		(23,522		)	4,339
Other (expense) income:
Interest expense	—		—		(5,095		)	(5,095		)
Gain from sale of salon assets to franchisees, net	—		—		237			237
Interest income and other, net	—		—		1,495			1,495
Income (loss) from continuing operations before income taxes	$	19,341	$	8,520	$	(26,885	)	$	976

23

	For the Nine Months Ended March 31, 2019
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	580,076	$	—	$	—		$	580,076
Product	125,220		47,786		—			173,006
Royalties and fees	—		67,767		—			67,767
	705,296		115,553		—			820,849
Operating expenses:
Cost of service	348,060		—		—			348,060
Cost of product	61,661		38,037		—			99,698
Site operating expenses	82,435		24,288		—			106,723
General and administrative	45,084		24,656		65,517			135,257
Rent	101,908		468		576			102,952
Depreciation and amortization	21,304		613		5,815			27,732
TBG mall location restructuring	—		20,711		—			20,711
Total operating expenses	660,452		108,773		71,908			841,133
Operating income (loss)	44,844		6,780		(71,908		)	(20,284		)
Other (expense) income:
Interest expense	—		—		(3,432		)	(3,432		)
Gain from sale of salon assets to franchisees, net	—		—		10,394			10,394
Interest income and other, net	—		—		1,453			1,453
Income (loss) from continuing operations before income taxes	$	44,844	$	6,780	$	(63,493	)	$	(11,869	)

	For the Nine Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	680,930	$	—	$	—		$	680,930
Product	159,980		37,721		—			197,701
Royalties and fees	—		56,465		—			56,465
	840,910		94,186		—			935,096
Operating expenses:
Cost of service	406,767		—		—			406,767
Cost of product	77,628		29,537		—			107,165
Site operating expenses	96,443		19,732		—			116,175
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
TBG mall location restructuring	—		—		—			—
Total operating expenses	818,260		68,717		66,659			953,636
Operating income (loss)	22,650		25,469		(66,659		)	(18,540		)
Other (expense) income:
Interest expense	—		—		(9,402		)	(9,402		)
Gain from sale of salon assets to franchisees, net	—		—		255			255
Interest income and other, net	—		—		3,934			3,934
Income (loss) from continuing operations before income taxes	$	22,650	$	25,469	$	(71,872	)	$	(23,753	)

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This MD&A should be read in conjunction with the MD&A included in our June 30, 2018 Annual Report on Form 10-K and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year.

MANAGEMENT’S OVERVIEW

Regis Corporation (RGS) owns, franchises and operates beauty salons. As of March 31, 2019, the Company owned, franchised or held ownership interests in 7,838 worldwide locations. Our locations consisted of 7,751 system-wide North American and International salons, and in 87 locations we maintained a non-controlling ownership interest less than 100 percent. Each of the Company’s salon concepts generally offer similar salon products and services and serve the mass market. As of March 31, 2019, we had approximately 22,000 corporate employees worldwide.

CRITICAL ACCOUNTING POLICIES

The interim unaudited Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the interim unaudited Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the interim unaudited Condensed Consolidated Financial Statements. We base these estimates on historical experience and other assumptions believed to be reasonable under the circumstances. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Changes in these estimates could have a material effect on our interim unaudited Condensed Consolidated Financial Statements.

Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, 2018 Annual Report on Form 10-K, as well as Notes 1 and 2 to the unaudited Condensed Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. We believe the accounting policies related to the valuation of goodwill, the valuation and estimated useful lives of long-lived assets, estimates used in relation to tax liabilities, and deferred taxes are most critical to aid in fully understanding and evaluating our reported financial condition and results of operations. Discussion of each of these policies is contained under “Critical Accounting Policies” in Part II, Item 7 of our June 30, 2018 Annual Report on Form 10-K. Our updated policies on the amended revenue recognition guidance, ASC Topic 606, can be found in Note 2 to the unaudited Condensed Consolidated Financial Statements.

Recent Accounting Pronouncements

The Company adopted the amended revenue recognition guidance, ASC Topic 606, on July 1, 2018 using the full retrospective transition method which required the adjustment of each prior reporting period presented. Recent accounting pronouncements are discussed in detail in Notes 1 and 2 to the unaudited Condensed Consolidated Financial Statements.

RESULTS OF OPERATIONS

Beginning with the period ended September 30, 2017, the mall-based business and International segment were accounted for in discontinued operations for all periods presented. Discontinued operations are discussed at the end of this section. See Note 3 to the unaudited Condensed Consolidated Financial Statements for further discussion on this transaction.

The Company realigned its field leadership team by brand during the period ended September 30, 2017. An outcome of this reorganization is that the costs associated with senior district leaders were moved out of cost of goods sold and site operating expense and into G&A. This change, which affected one month of comparability during the nine months, does not impact the overall consolidated results. The estimated impact of the field reorganization (decreased) increased Cost of Service, Site Operating expense and General and Administrative expense by $(2.4), $(0.4) and $2.8 million, respectively, for the nine months ended March 31, 2018. This expense classification does not have a financial impact on the Company's reported operating (loss) income, reported net (loss) income or cash flows from operations.

25

In the past field leaders were responsible for a geographical area that included a variety of brands, with different business models, services, pay plans and guest expectations. They also served as salon managers with a home salon that they spent a large portion of their time serving guests rather than field leadership.

Impact of salons sold to franchisees on operations.

In the three and nine months ended March 31, 2019, the Company sold 245 and 502, respectively, company-owned salons to franchisees. The impact of these transactions are as follows:

	Three Months Ended  March 31,						Increase		Nine Months Ended   March 31,						(Decrease) Increase
(Dollars in thousands)	2019			2018					2019			2018
Salons sold to franchisees (1)	245			126			119		502			1,437			(935		)
Cash proceeds received	$	30,569		$	2,924		$	27,645	$	54,619		$	5,620		$	48,999
Gain on sale of venditions, excluding goodwill derecognition	$	27,421		$	1,409		$	26,012	$	43,922		$	1,969		$	41,953
Non-cash goodwill derecognition	(15,932		)	(1,172		)	14,760		(33,528		)	(1,714		)	31,814
Gain from sale of salon assets to franchisees, net	$	11,489		$	237		$	11,252	$	10,394		$	255		$	10,139

____________________________________

(1)    In October 2017, the Company sold substantially all of its mall-based salon business in North America, representing

858 salons, and substantially all of its International segment, representing approximately 250 salons in the UK, to The Beautiful Group (TBG).

System-wide results

As we transition to an asset-light franchise platform our results will be more impacted by our system-wide sales, which include sales by all points of distribution, whether owned by the Company or our franchisees. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe system-wide sales information aids in understanding how we derive royalty revenue and in evaluating performance.

System-wide same-store sales by concept are detailed in the table below:

	Three Months Ended   March 31,				Nine Months Ended   March 31,
	2019		2018		2019		2018
SmartStyle	0.6	%	0.6	%	1.2	%	(0.1	)%
Supercuts	(2.2	)	3.2		(0.2	)	2.5
Signature Style	(3.9	)	2.2		(1.0	)	0.6
Total, excluding TBG mall-locations	(2.0	)%	NA		(0.1	)%	NA
TBG mall-locations	(4.7	)	NA		(4.0	)	NA
Total	(2.4	)%	2.2	%	(0.5	)%	1.1	%

_____________________________

(1) System-wide same-store sales are calculated as the total change in sales for system-wide company-owned and franchise locations for more than one year (including TBG mall locations in 2019) that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. 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. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

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Condensed Consolidated Results of Operations (Unaudited)

The following table sets forth, for the periods indicated, certain information derived from our unaudited Condensed Consolidated Statement of Operations. The percentages are computed as a percent of total consolidated revenues, except as otherwise indicated.

	For the Periods Ended March 31,
	Three Months														Nine Months
	2019			2018			2019		2018		2019		2018		2019			2018			2019		2018		2019		2018
	($ in millions)						% of Total Revenues (1)				Basis Point (Decrease) Increase				($ in millions)						% of Total Revenues (1)				Basis Point (Decrease) Increase
Service revenues	$	181.8		$	222.0		70.4	%	72.6	%	(220	)	(200	)	$	580.1		$	680.9		70.6	%	72.9	%	(230	)	(140	)
Product revenues	53.8			64.9			20.8		21.2		(40	)	120		173.0			197.7			21.1		21.1		—		80
Franchise royalties and fees	22.8			18.9			8.8		6.2		260		80		67.8			56.5			8.3		6.0		230		60
Cost of service (2)	111.6			132.1			61.4		59.5		190		(470	)	348.1			406.8			60.0		59.7		30		(380	)
Cost of product (2)	31.2			37.1			58.0		57.2		80		870		99.7			107.2			57.6		54.2		340		500
Site operating expenses	34.3			37.5			13.3		12.3		100		80		106.7			116.2			13.0		12.4		60		50
General and administrative	41.7			45.7			16.1		15.0		110		70		135.3			129.5			16.5		13.8		270		150
Rent	32.3			39.4			12.5		12.9		(40	)	(140	)	103.0			147.3			12.5		15.8		(330	)	160
Depreciation and amortization	8.6			9.6			3.3		3.1		20		(120	)	27.7			46.8			3.4		5.0		(160	)	100
TBG mall location restructuring	20.7			—			8.0		—		800		—		20.7			—			2.5		—		250		—
Operating (loss) income	(22.2		)	4.3			(8.6	)	1.4		(1,000	)	340		(20.3		)	(18.5		)	(2.5	)	(2.0	)	(50	)	(260	)
Interest expense	1.4			5.1			0.5		1.7		(120	)	100		3.4			9.4			0.4		1.0		(60	)	30
Gain from sale of salon assets to franchisees, net	11.5			0.2			4.4		0.1		430		10		10.4			0.3			1.3		—		130		—
Interest income and other, net	0.5			1.5			0.2		0.5		(30	)	40		1.5			3.9			0.2		0.4		(20	)	30
Income tax (expense) benefit (3)	(3.2		)	2.6			28.1		267.3		N/A		N/A		(3.0		)	77.9			25.2		327.9		N/A		N/A
Income (loss) from TBG discontinued operations, net of taxes	0.2			(10.6		)	0.1		(3.5	)	360		(140	)	6.0			(51.0		)	0.7		(5.5	)	620		(420	)

_____________________________

(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 (loss) income from continuing operations before income taxes. The income taxes basis point change is noted as not applicable (N/A) as the discussion within MD&A is related to the effective income tax rate.

27

Consolidated Revenues

Consolidated revenues primarily include revenues of company-owned salons, product and equipment sales to franchisees, and franchise royalties and fees. The following tables summarize revenues and same-store sales by concept as well as the reasons for the percentage change:

	Three Months Ended   March 31,						Nine Months Ended   March 31,
	2019			2018			2019			2018
	(Dollars in thousands)
Company-owned salons:
SmartStyle	$	96,139		$	112,857		$	286,465		$	361,556
Supercuts	48,552			70,448			174,687			212,914
Signature Style	76,545			88,697			244,144			266,440
Total Company-owned salons	221,236			272,002			705,296			840,910
Company-owned salon same-store sales decrease (1)	(2.5		)%	1.6		%	(0.4		)%	0.4		%
Franchise salons:
Product	14,339			14,931			47,786			37,721
Royalties and fees	22,768			18,850			67,767			56,465
Total Franchise salons	37,107			33,781			115,553			94,186
Franchise Same-Store Sales Comps, excluding TBG mall locations (2)	(1.3		)%	NA			0.4		%	NA
Franchise salon same-store sales decrease (2)	(2.2		)%	3.3		%	(0.5		)%	2.5		%
Consolidated revenues	$	258,343		$	305,783		$	820,849		$	935,096
Percent change from prior year	(15.5		)%	(4.3		)%	(12.2		)%	(3.1		)%

_____________________________

(1) Company-owned same-store sales are calculated as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date company-owned same-store sales are the sum of the company-owned 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. Company-owned same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

(2) Franchise same-store sales are calculated as the total change in sales for salons that have been a franchise location for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. 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. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG is not included in 2018 same-store sales as it was not a franchise location in the previous year.

28

Decreases in consolidated revenues were driven by the following:

	Three Months Ended   March 31,				Nine Months Ended   March 31,
Factor	2019		2018		2019		2018
Company-owned same-store sales	(2.5	)%	1.6	%	(0.4	)%	0.4	%
Closed salons	(5.7	)	(5.1	)	(5.7	)	(3.0	)
Salons sold to franchisees	(7.6	)	(3.4	)	(6.9	)	(2.4	)
New company-owned salons	—		0.1		—		0.2
Franchise product and royalties and fees	0.3		0.1		0.2		0.2
Franchise same-store sales (1)	—		—		—		—
TBG product, royalties and fees	(0.9	)	2.0		0.6		1.3
Advertising fund	0.6		0.1		0.5		0.1
Foreign currency	(0.3	)	0.3		(0.3	)	0.3
Other	0.6		—		(0.2	)	(0.2	)
	(15.5	)%	(4.3	)%	(12.2	)%	(3.1	)%

(1) Franchise same-store sales increase (decrease) franchise royalties. As we transition to the asset-light franchise platform, franchise same-store sales will become more significant to consolidated revenues.

Three and Nine Months Ended March 31, 2019 Compared with Three and Nine Months Ended March 31, 2018

Consolidated Revenues

Consolidated revenues are primarily comprised of service and product revenues, as well as franchise royalties and fees.

Consolidated revenue decreased$47.4 and $114.2 million for the three and nine months ended March 31, 2019, respectively. Service revenue and product revenue decreased $40.2 and $11.1 million, respectively, in the three months ended March 31, 2019 and decreased $100.9 and $24.7 million, respectively, in the nine months ended March 31, 2019. The decline in service and product revenue is primarily the result of the Company's sale of salons to franchisees and the shift of the lead up to the Easter holiday from March 2018 to April 2019 which was estimated to unfavorably impact same-store sales by approximately 0.9%. The Company constructed 6 salons and closed 123 company-owned salons and sold (net of buybacks) 635 company-owned salons to franchisees during the twelve months ended March 31, 2019 (2019 Net Salon Count Changes). Company-owned same-store sales decreases of 2.5% and 0.4% during the three and nine months ended March 31, 2019 were due to decreases of 6.1% and 4.8%, respectively, in same-store guest transactions, partly offset by a increases of 3.6% and 4.4%, respectively, in average ticket price. The decline in service and product revenue was partially offset by an increase in royalty and fee revenue of $3.9 and $11.3 million in the three and nine months ended March 31, 2019, respectively. The increase is primarily a result of increased number of franchised locations during the twelve months ended March 31, 2019.

Consolidated revenue decreased$13.6 and $30.3 million for the three and nine months ended March 31, 2018, respectively. Service revenue decreased$16.1 and $36.1 million for the three and nine months ended March 31, 2018, respectively. The decline in service revenue is primarily the result of the Company's sale of salons to franchisees. The Company constructed (net of relocations) 4 company-owned salons and closed 740 company-owned salons and sold (net of buybacks), excluding the salons previously included in the Company's previous mall-based business and International segment, 376 company-owned salons to franchisees during the twelve months ended March 31, 2018 (2018 Net Salon Count Changes). Product revenue increased $1.0 and $1.8 million for the three and nine months ended March 31, 2018, respectively. The company-owned same-store sales increases of 1.6% and 0.4% during the three and nine months ended March 31, 2018, respectively, were due to increases of 3.3% and 3.1%, respectively, in average ticket price, partly offset by decreases of 1.7% and 2.7%, respectively, in same-store transactions. The Company estimates the shift of the the lead up to the Easter holiday from April 2017 to March 2018 favorably impacted same-store sales approximately 0.9% during the three months ended March 31, 2018. Revenue related to franchised locations increased $8.9 and $19.2 million during the three and nine months ended March 31, 2018, respectively, primarily as a result of product sold to TBG and increased number of franchised locations during the twelve months ended March 31, 2018. Also impacting revenues for the three and nine months ended March 31, 2018, were favorable foreign currency and a cumulative adjustment related to discontinuing a piloted loyalty program.

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Service Revenues

The decreases of $40.2 and $100.9 million in service revenues during the three and nine months ended March 31, 2019 were primarily due to the 2019 Net Salon Count Changes and company-owned same-store service sales decreases of 2.4% and 0.1% during the three and nine months ended March 31, 2019, respectively, primarily the result of of 6.3% and 4.8%decreases in same-store guest transactions, respectively, and increases of 3.9% and 4.7% in average ticket price, respectively. Additionally, the nine months ended March 31, 2019 were also unfavorable due to the prior year cumulative adjustments related to the discontinuation of the piloted loyalty program, partly offset by less impact from hurricanes as compared to the prior year.

The decreases of $16.1 and $36.1 million in service revenues during the three and nine months ended March 31, 2018, respectively, were primarily due to the 2018 Net Salon Count Changes. Company-owned same-store service sales increases of 1.4% and 0.5% during the three and nine months ended March 31, 2018, respectively, were primarily the result of 3.6% and 3.5%increases in average ticket price, respectively, and decreases of 2.2% and 3.0%, respectively, in same-store guest transactions. Also impacting service revenues during the three and nine months ended March 31, 2018, was a favorable foreign currency. The nine months ended March 31, 2018 were also impacted by a favorable cumulative adjustment related to the discontinuation of a piloted loyalty program, partly offset by unfavorable impact from hurricanes in the southern United States.

Product Revenues

The decreases of $11.1 and $24.7 million in product revenues during the three and nine months ended March 31, 2019 were primarily due to 2019 Net Salon Count Changes, the lapping on a one-time benefit related to discounted close-out product sales as part of the SmartStyle operational restructuring in the prior year and company-owned same-store product sales decreases of 3.0% and 1.7%, respectively, partly offset by product sold to franchisees. For the three and nine months ended March 31, 2019, the decreases in company-owned same-store product sales was primarily the result of decreases in company-owned same-store transactions of 6.8% and 5.7%, respectively, partially offset by increases in average ticket price of 3.8% and 4.0%, respectively. Additionally, there was less impact from hurricanes in the nine months ended March 31, 2019 as compared to the prior year.

The increases of $1.0 and $1.8 million in product revenues during the three and nine months ended March 31, 2018 were primarily due to product sold to TBG, partly offset by the 2018 Net Salon Count Changes. The increase in the three and nine months ended March 31, 2018 was also due to company-owned same-store product sales increase of 2.5% and 0.0%, respectively, primarily the result of the increase in average ticket price of 4.4% and 3.7%, respectively, partially offset by the decrease in same-store transactions of 1.9% and 3.7%, respectively. The nine months ended March 31, 2018 were also negatively impacted by hurricanes in the southern United States.

Royalties and Fees

The increases of $3.9 and $11.3 million in royalties and fees for the three and nine months ended March 31, 2019, respectively, were primarily due to an increase in franchise locations. Total franchised locations open at March 31, 2019 were 4,375 as compared to 4,012 at March 31, 2018.

The increases of $1.5 and $3.9 million in royalties and fees for the three and nine months ended March 31, 2018, respectively, was primarily the result of higher royalties due to the increased number of franchised locations. Total franchised locations open at March 31, 2018 were 4,012 as compared to 2,561 at March 31, 2017.

Cost of Service

The 190 and 30 basis point increases in cost of service as a percent of service revenues during the three and nine months ended March 31, 2019, respectively, were due to higher minimum wage and commissions. The 30 basis point increase in cost of service for the nine months ended March 31, 2019 was also due to the lapping of the one-time benefit of discontinuing the piloted loyalty program in the prior year, partly offset by the change in expense categorization as a result of the field reorganization that took place during the first quarter of fiscal year 2018 and the lapping of the negative hurricane impact in the prior year.

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The 470 and 380 basis point decreases in cost of service as a percent of service revenues during the three and nine months ended March 31, 2018, respectively, were primarily due to the change in expense categorization as a result of the field reorganization that took place during the first quarter of fiscal year 2018. After considering this change in expense categorization, cost of service as a percent of service revenues decreased180 and 110 basis points for the three and nine months ended March 31, 2018, respectively, as a result of improved stylist productivity and cost savings associated with salon tools, partly offset by state minimum wage increases and higher health insurance costs. The nine months ended March 31, 2018 was also negatively impacted by hurricanes in the southern United States.

Cost of Product

The 80 and 340 basis point increases in cost of product as a percent of product revenues during the three and nine months ended March 31, 2019, respectively, were primarily due to the shift into lower margin products to franchisees and product discounting. The nine months ended March 31, 2019, also increased due to the lapping of the one-time benefit of discontinuing the piloted loyalty program in the prior year, partly offset by the lapping of inventory reserve related to the SmartStyle restructure in the prior year.

The 870 and 500 basis point increases in cost of product as a percent of product revenues during the three and nine months ended March 31, 2018, respectively, were primarily due to franchise product sold to The Beautiful Group and shift into lower margin product revenue to franchisees. The nine months ended March 31, 2018, were also negatively impacted by inventory reserves related to the SmartStyle restructure, partly offset by the one-time benefit of discontinuing the loyalty program in fiscal year 2018.

Site Operating Expenses

The decreases of $3.2 and $9.5 million in site operating expenses during the three and nine months ended March 31, 2019, respectively, were due to a net reduction in salon counts, partly offset by increased advertising fund costs as a result of increased franchise salons and marketing costs associated with our industry exclusive sponsorship with Major League Baseball.

The increases of $0.7 and $1.3 million in site operating expenses during the three and nine months ended March 31, 2018, respectively, were primarily due to the change in expense categorization as a result of the field reorganization that took place during the first quarter of fiscal year 2018. After considering the change in expense categorization, site operating expenses increased $2.2 and $5.6 million during the three and nine months ended March 31, 2018, respectively, primarily as a result of the SmartStyle marketing campaign, marketing costs associated with our industry exclusive sponsorship with Major League Baseball, and less favorable actuarial adjustments related to workers' compensation accruals, partly offset by a net reduction in salon counts.

General and Administrative

The decrease of $4.0 million in general and administrative (G&A) during the three months ended March 31, 2019 was primarily due lower administrative and field management salaries and bonuses, partly offset by increased stock compensation expense and professional fees. The increase of $5.8 million in G&A during the nine months ended March 31, 2019 was primarily due to prior year's favorable impact from a gain associated with life insurance proceeds in connection with the passing of a former executive officer, the change in expense categorization as a result of the field reorganization that took place during the first quarter of fiscal year 2018, increased stock compensation expense and professional fees, partly offset by lower administrative, corporate and field management salaries, the lapping of prior year's severance payments related to terminations of former executives and lower bonus expense.

General and administrative (G&A) remained flat during the three months ended March 31, 2018. The increase of $11.2 million in general and administrative (G&A) during the nine months ended March 31, 2018, was primarily due to the change in expense categorization as a result of the field reorganization that took place during the first quarter of fiscal year 2018. After considering the change in expense categorization, G&A decreased $8.5 and $12.4 million during the three and nine months ended March 31, 2018, respectively, primarily as a result of the prior year including severance related to the termination of former executive officers. The remaining decrease in G&A during the nine months ended March 31, 2018, was primarily a result of a gain associated with life insurance proceeds in connection with the passing of a former executive officer, partially offset by severance payments related to terminations of former executives, year over year increase in incentive compensation accruals and professional fees.

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Rent

The decreases of $7.1 and $44.3 million in rent expense during the three and nine months ended March 31, 2019, respectively, were primarily due to the net reduction in salon counts, partly offset by rent inflation. The decrease during the nine months ended March 31, 2019 was also due to the lapping of lease termination and other related closure costs associated with the SmartStyle operational restructuring in the prior year.

The decrease of $6.4 million in rent expense during the three months ended March 31, 2018 was primarily due to a net reduction in salon counts, partly offset by rent inflation. The increase of $10.1 million in rent expense during the nine months ended March 31, 2018 was primarily due to lease termination and other related closure costs associated with the SmartStyle operational restructuring and rent inflation, partly offset by a deferred rent adjustment related to the SmartStyle restructuring and a net reduction in salon counts.

Depreciation and Amortization

The decreases of $0.9 and $19.0 million in depreciation and amortization (D&A) during the three and nine months ended March 31, 2019, respectively, were primarily due to the reduced salon base. The decrease during the three months ended March 31, 2019 was partly offset by higher fixed asset impairment charges. Decrease during the nine months ended March 31, 2019 was also due the lapping of costs associated with returning SmartStyle locations to their pre-occupancy condition in connection with the SmartStyle operational restructuring in the prior year and lower fixed asset impairments.

The decrease of $4.0 million in depreciation and amortization (D&A) during the three months ended March 31, 2018 was primarily due to to lower fixed asset impairment charges and depreciation on a reduced salon based. The increase of $8.4 million in D&A during the nine months ended March 31, 2018 was primarily due to costs associated with returning SmartStyle locations to their pre-occupancy condition in connection with the SmartStyle restructuring and higher fixed asset impairment charges, partly offset by lower depreciation on a reduced salon base.

TBG Mall Location Restructuring

In the three and nine months ended March 31, 2019 the Company recorded a reserve against a note receivable of $8.0 million and accounts receivables of $12.7 million due from TBG based on TBG’s inability to meet the requirements of the promissory notes, including non-payment of amounts due to the Company. The $8.0 million note relates to prior year inventory shipments and the $12.7 million of receivables primarily relates to current year inventory shipments. As of March 31, 2019, the Company has fully reserved for all amounts invoiced to TBG. There were no related TBG charges in the three and nine months ended March 31, 2018 and March 31. 2017.

Interest Expense

The decreases of $3.7 and $6.0 million in interest expense for the three and nine months ended March 31, 2019, respectively, were primarily due to a lower outstanding principal and lower interest rates associated with the revolving credit facility compared to the retired senior term note, partially offset by lapping of the premium and unamortized debt discount associated with paying off the senior term note in the prior year.

The increases of $3.0 million in interest expense for the three and nine months ended March 31, 2018 were primarily due to the premium and unamortized debt discount associated with paying off the senior term note.

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Gain from sale of salon assets to franchisees, net

In three months ended March 31, 2019 the gain from sale of salon assets to franchisees was $11.5 million, including non-cash goodwill derecognition of $15.9 million. In the nine months ended March 31, 2019 the gain from the sale of salons assets to franchisees was $10.4 million, including $33.5 million of non-cash goodwill derecognition.

In the three months ended March 31, 2018 the gain from the sale of salons assets to franchisees was $0.2 million, including non-cash goodwill derecognition of $1.2 million. In the nine months ended March 31, 2018 the gain from the sale of salons assets to franchisees was $0.3 million, including non-cash goodwill derecognition of $1.7 million.

Interest Income and Other, net

The decreases of $1.0 and $2.5 million in interest income and other, net during the three and nine months ended March 31, 2019, respectively, were primarily due to the lapping of income received for transition services related to TBG transaction and lapping interest income associated with life insurance contracts the Company settled in June 2018.

The increases of $1.2 and $2.6 million in interest income and other, net during the three and nine months ended March 31, 2018, respectively, were primarily due to income received for transition services related to the TBG transaction, partly offset by a prior year insurance recovery benefit.

Income Taxes

During the three and nine months ended March 31, 2019 the Company recognized tax expense of $3.2 and $3.0 million, respectively, with a corresponding effective tax rate of (28.1%) and (25.2%) as compared to recognizing tax benefit of $2.6 and $77.9 million, respectively, with a corresponding effective tax rate of (267.3%) and 327.9% during the three and nine months ended March 31, 2018.

The recorded tax provisions and effective tax rates for the three and nine months ended March 31, 2019 and three and nine months ended March 31, 2018 were different than what would normally be expected primarily due to the impact of tax legislation commonly referred to as the Tax Cuts and Jobs Act, state conformity of the new federal provisions and the deferred tax valuation allowance. The majority of the tax provision in periods ended prior to December 31, 2017 related to non-cash tax expense for tax benefits on certain indefinite-lived assets that the Company could not recognize for reporting purposes.

See Note 6 to the unaudited Condensed Consolidated Financial Statements.

Income (loss) from TBG Discontinued Operations

Income from TBG discontinued operations was $0.2 million and $6.0 million during the three and nine months ended March 31, 2019, respectively. Income from the three and nine months ended March 31, 2019 was primarily due to actuarial insurance accrual adjustments associated with the TBG transaction, partly offset by professional fees. Income from the nine months ended March 31, 2019 was also primarily due to income tax benefits associated with the wind-down and transfer of legal entities related to discontinued operations.

Loss associated with the TBG discontinued operations of the mall-based business and International segment during the three and nine months ended March 31, 2018 was $10.6 and $51.0 million, respectively. The loss during the three and nine months ended March 31, 2018 is primarily due to asset impairment charges, the loss from operations and professional fees associated with the transaction. The loss during the nine months ended March 31, 2018 was also due to the recognition of net loss of amounts previously classified within accumulated other comprehensive income, partially offset by an income tax benefit. The recognition of the net loss of amounts previously classified within accumulated other comprehensive income into earnings was the result of the Company's liquidation of substantially all foreign entities with British pound denominated currencies.

Results of Operations by Segment

Based on our internal management structure, we report two segments: Company-owned salons and Franchise salons. See Note 12 to the Consolidated Financial Statements. Significant results of operations are discussed below with respect to each of these segments.

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Company-owned Salons

	For the Three Months Ended March 31,												For the Nine Months Ended March 31,
	2019			2018			2019			2018			2019			2018			2019			2018
	(Dollars in millions)						(Decrease) Increase						(Dollars in millions)						(Decrease) Increase
Total revenue	$	221.2		$	272.0		$	(50.8	)	$	(22.5	)	$	705.3		$	840.9		$	(135.6	)	$	(49.5	)
Company-owned same-store sales	(2.5		)%	1.6		%	(410 bps)			330 bps			(0.4		)%	0.4		%	(80 bps)			170 bps
Operating income	$	10.7		$	19.3		$	(8.6	)	$	2.6		$	44.8		$	22.7		$	22.2		$	(34.4	)

Company-owned Salon Revenues

Decreases in Company-owned salon revenues were driven by the following:

	Three Months Ended   March 31,				Nine Months Ended   March 31,
Factor	2019		2018		2019		2018
Company-owned same-store sales	(2.5	)%	1.6	%	(0.4	)%	0.4	%
Closed salons	(6.2	)	(5.5	)	(6.2	)	(3.2	)
Salons sold to franchisees	(10.0	)	(4.3	)	(9.0	)	(3.0	)
New stores	—		0.1		—		0.2
Foreign currency	(0.3	)	0.3		(0.3	)	0.3
Other	0.3		0.2		(0.2	)	(0.3	)
	(18.7	)%	(7.6	)%	(16.1	)%	(5.6	)%

Company-owned same-store sales by concept are detailed in the table below:

	Three Months Ended   March 31,				Nine Months Ended   March 31,
	2019		2018		2019		2018
SmartStyle	1.1	%	0.6	%	1.6	%	(0.1	)%
Supercuts	(5.6	)	3.5		(2.1	)	2.2
Signature Style	(4.7	)	1.5		(1.5	)	(0.2	)
Total	(2.5	)%	1.6	%	(0.4	)%	0.4	%

Company-owned salon revenues decreased$50.8 and $135.6 million during the three and nine months ended March 31, 2019, respectively, primarily due to the closure of a net 117 salons and the sale of 635 company-owned salons (net of buybacks) to franchisees during the twelve months ended March 31, 2019. The decreases were also due to company-owned same-store sale decreases of 2.5% and 0.4% during the three and nine months ended March 31, 2019, respectively. The company-owned same-store sales decreases were due to decreases of 6.1% and 4.8% in same-store guest transactions, partly offset by increases of 3.6% and 4.4% in average ticket prices during the three and nine months ended March 31, 2019, respectively.

Company-owned Salon Operating Income

During the three and nine months ended March 31, 2019, Company-owned salon operations generated operating income of $10.7 and $44.8 million, (decrease) increase of $(8.6) and $22.2 million respectively, compared to the prior comparable period. The decrease during the three months ended March 31, 2019 was primarily due to the net reduction in company-owned salons and same-store sale decline. The increase during the nine months ended March 31, 2019 was primarily due to the lapping the impairment charge related to the SmartStyle restructuring and the closing of underperforming salons.

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Franchise Salons

	For the Three Months Ended March 31,											For the Nine Months Ended March 31,
	2019			2018			2019			2018		2019			2018			2019			2018
	(Dollars in millions)						Increase					(Dollars in millions)						Increase
Revenue
Product	$	10.6		$	8.4		$	2.2		$	0.9	$	31.3		$	24.8		$	6.5		$	2.3
Product sold to TBG	3.7			6.5			(2.8		)	6.5		16.5			12.9			3.6			12.9
Total product	$	14.3		$	14.9		$	(0.6	)	$	7.4	$	47.8		$	37.7		$	10.1		$	15.2
Royalties and fees (1)	22.8			18.9			3.9			1.5		67.8			56.5			11.3			3.9
Total franchise salons revenue (2)	$	37.1		$	33.8		$	3.3		$	8.9	$	115.6		$	94.2		$	21.4		$	19.2
Franchise same-store sales, excluding TBG mall-locations (3)	(1.3		)%	NA								0.4		%	NA
Franchise same-store sales (3)	(2.2		)%	3.3		%	(550 bps)			340 bps		(0.5		)%	2.5		%	(300 bps)			190 bps
Operating income	$	(11.1	)	$	8.5		$	(19.6	)	$	0.5	$	5.1		$	25.2		$	(20.1	)	$	1.7
Operating income from TBG	(0.1		)	—			(0.1		)	—		1.7			0.3			1.4			0.3
Total operating income (2)	$	(11.2	)	$	8.5		$	(19.7	)	$	0.5	$	6.8		$	25.5		$	(18.7	)	$	2.0

_______________________________________________________________________________

(1) Total includes $0.0 and $1.7 million of royalties related to TBG during the three and nine months ended March 31, 2019.

(2) Total is a recalculation; line items calculated individually may not sum to total due to rounding.

(3) Franchise same-store sales are calculated as the total change in sales for salons that have been a franchise location for more than one year that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. 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. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation. TBG is not included in 2018 same-store sales as it was not a franchise location in the previous year.

Increases in franchise revenues were driven by the following:

	Three Months Ended   March 31,				Nine Months Ended   March 31,
Factor	2019		2018		2019		2018
Franchise same-store sales (1)	(0.3	)%	1.0	%	0.1	%	0.9	%
Franchise product	0.6		(2.9	)	0.2		(1.9	)
Franchise royalties and fees	2.2		3.6		2.0		3.2
TBG product, royalties and fees	(8.3	)	26.3		5.5		17.2
Salons sold to franchisees and new salons	11.8		6.6		11.8		5.2
Closed salons	(1.3	)	(0.5	)	(1.4	)	(0.5	)
Advertising fund	5.6		1.0		4.8		1.0
Foreign currency	(0.4	)	0.4		(0.4	)	0.4
Other	(0.1	)	0.1		0.1		—
	9.8	%	35.6	%	22.7	%	25.5	%

(1) Franchise same-store sales increase (decrease) franchise royalties. As we transition to the asset-light franchise platform, franchise same-store sales will become more significant to consolidated revenues.

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Franchise same-store sales by concept are detailed in the table below:

	Three Months Ended   March 31,				Nine Months Ended   March 31,
	2019		2018		2019		2018
SmartStyle	(5.2	)%	0.9	%	(4.7	)%	(4.3	)%
Supercuts	(0.6	)	3.1		0.8		2.7
Signature Style	(2.2	)	3.7		0.1		2.2
Total, excluding TBG mall-locations (1)	(1.3	)%	NA		0.4	%	NA
TBG mall-locations	(4.7	)	NA		(4.0	)	NA
Total	(2.2	)%	3.3	%	(0.5	)%	2.5	%

(1) Same-store sales include salons that have been a franchise location for more than one year, therefore TBG is not included in 2018 same-store sales.

Franchise Salon Revenues

Franchise salon revenues increased $3.3 and $21.4 million during the three and nine months ended March 31, 2019. Increase during the three months ended March 31, 2019, was primarily due to an increase of $3.9 million in royalties, ad fund revenue and fees due to higher franchise salon counts, offset by a decrease of $0.6 million in franchise product sales. Increase during the nine months ended March 31, 2019, was primarily due to an increase of $11.3 million in royalties, ad fund revenue and fees due to higher franchise salon counts and an increase of $10.1 million in franchise product sales as a result of higher franchise salon counts. During the twelve months ended March 31, 2019, franchisees constructed (net of relocations) and closed 72 and 344 franchise-owned salons, respectively, and purchased (net of Company buybacks) 635 salons from the Company during the same period.

Franchise Salon Operating (Loss) Income

During the three months ended March 31, 2019, Franchise salon operations generated operating loss of $11.2 million, a decrease of $19.7 million compared to prior comparable period. The decrease during the three months ended March 31, 2019 was primarily due to the $20.7 million charge related to fully reserving TBG's note and all TBG receivables, increased discounting and increased inventory reserves, partly offset by higher royalties and fees. During the nine months ended March 31, 2019, Franchise salon operations generated operating income of $6.8 million, a decrease of $18.7 million compared to prior comparable period. The decrease during the nine months ended March 31, 2019 was primarily due to the $20.7 million charge related to fully reserving TBG's note and all TBG receivables and lower product margins, partially offset by the increased number of new franchised locations resulting in an increase in royalties.

Corporate

Corporate Operating Loss

Corporate operating loss decreased$1.8 million during the three months ended March 31, 2019 primarily driven by lower general and administrative salaries and bonuses. Corporate operating loss increased$5.2 million during the nine months ended March 31, 2019 primarily driven by prior year's favorable impact from a $8.0 million gain associated with life insurance proceeds in connection with the passing of a former executive officer and $5.6 million of professional fees, partially offset by lower general and administrative salaries and bonuses.

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LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents, proceeds from sale of salon assets to franchisees, and our borrowing agreements are our most significant sources of liquidity. 

As of March 31, 2019, cash and cash equivalents were $71.1 million, with $65.6 and $5.6 million within the United States and Canada, respectively.

The Company's borrowing arrangements include a $295.0 million five-year unsecured revolving credit facility that expires in March 2023, of which $182.0 million was available as of March 31, 2019. See Note 10 to the unaudited Condensed Consolidated Financial Statements.

Uses of Cash

The Company closely manages its liquidity and capital resources. The Company's liquidity requirements depend on key variables, including the level of investment needed to support its business strategies, the performance of the business, capital expenditures, credit facilities and borrowing arrangements and working capital management. Capital expenditures are a component of the Company's cash flow and capital management strategy which can be adjusted in response to economic and other changes to the Company's business environment. The Company has a disciplined approach to capital allocation, which focuses on investing in key priorities to support the Company's multi-year strategic plan as discussed within Part I, Item 1 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2018.

Cash Flows

Cash Flows from Operating Activities

During the nine months ended March 31, 2019, cash used in operating activities of $20.3 million, a decrease of $1.4 million compared to the prior comparable period. Cash from operations was used primarily for strategic investments in new product lines and planned strategic G&A investments to enhance the Company's franchisor capabilities and support the increased volume and cadence of transactions and conversions into the Franchise portfolio, partially offset by the elimination of certain general and administrative costs.

Cash Flows from Investing Activities

During the nine months ended March 31, 2019, cash provided by investing activities of $56.1 million, an increase of $53.6 million compared to the prior comparable period, was primarily from proceeds from the settlement of company-owned life insurance policies of $24.6 million and cash proceeds from sale of salon assets of $54.6 million, partly offset by capital expenditures of $23.2 million.

Cash Flows from Financing Activities

During the nine months ended March 31, 2019, cash used in financing activities of $89.7 million, an increase of $43.1 million compared to the prior comparable period was primarily from the repurchase of common stock of $105.4 million, employee taxes paid for shares withheld of $2.4 million, partly offset by the $18.1 million of proceeds from the sale and lease back transaction of one of the Company's distribution centers.

Financing Arrangements

See Note 10 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 and Note 7 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, for additional information regarding our financing arrangements.

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Debt to Capitalization Ratio

Our debt to capitalization ratio, calculated as the principal amount of debt as a percentage of the principal amount of debt and shareholders’ equity at fiscal quarter end, were as follows:

As of	Debt to Capitalization		Basis Point Increase (Decrease) (1)
March 31, 2019	22.3	%	670
June 30, 2018	15.6	%	(390	)

_____________________________

(1)Represents the basis point change in debt to capitalization as compared to the prior fiscal year end (June 30, 2018 and

June 30, 2017, respectively).

The 670 basis point increase in the debt to capitalization ratio as of March 31, 2019 as compared to June 30, 2018 was primarily due to decreases in shareholders' equity resulting from the repurchase of 6.0 million of the Company's shares for $106.3 million, as well as the debt associated with the sale leaseback of one of the Company's distribution centers.

Share Repurchase Program

In May 2000, the Company’s Board of Directors (Board) approved a stock repurchase program with no stated expiration date. Since that time and through March 31, 2019, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program. All repurchased shares become authorized but unissued shares of the Company. The timing and amounts of any repurchases depend on many factors, including the market price of the common stock and overall market conditions. During the three months ended March 31, 2019, the Company repurchased 2.1 million shares for $37.9 million. As of March 31, 2019, 25.9 million shares have been cumulatively repurchased for $520.9 million, and $129.1 million remains outstanding under the approved stock repurchase program.

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SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include the continued ability of the Company to implement its strategy, priorities and initiatives; our ability to attract, train and retain talented stylists; financial performance of our franchisees; acceleration of sale of certain salons to franchisees; The Beautiful Group's ability to transition and operate its salons successfully, as well as maintain adequate working capital; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic; changes in regulatory and statutory laws including increases in minimum wages; our ability to maintain and enhance the value of our brands; premature termination of agreements with our franchisees; our ability to manage cyber threats and protect the security of sensitive information about our guests, employees, vendors or Company information; reliance on information technology systems; reliance on external vendors; competition within the personal hair care industry; changes in tax exposure; changes in healthcare; changes in interest rates and foreign currency exchange rates; failure to standardize operating processes across brands; consumer shopping trends and changes in manufacturer distribution channels; financial performance of Empire Education Group; the continued ability of the Company to implement cost reduction initiatives; compliance with debt covenants; changes in economic conditions; changes in consumer tastes and fashion trends; exposure to uninsured or unidentified risks; ability to attract and retain key management personnel; reliance on our management team and other key personnel or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

There has been no material change to the factors discussed within Part II, Item 7A in the Company’s June 30, 2018 Annual Report on Form 10-K.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Securities Exchange Act of 1934, as amended (the "Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

Management, with the participation of the CEO and CFO, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the period. Based on their evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2019.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

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Item 1A.  Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, except for the revisions to the fifth risk factor listed below:

TBG’s inability to transition and operate its salons successfully could adversely affect our business, financial condition and results of operations or cash flows, and could prevent the transaction from delivering the anticipated benefits and enhancing shareholder value.

In October 2017, we sold substantially all of our mall-based salon business in North America and substantially all of our International segment to TBG, an affiliate of Regent, which is operating them as a franchisee. The success of TBG depends upon a number of factors that are beyond our control, including, among other factors, market conditions, retail trends in mall locations, industry trends, stylist recruiting and retention, customer traffic, as defined by total transactions, the capabilities of TBG, the accuracy and reliability of TBG’s financial reporting systems, TBG's ability to maintain adequate working capital, technology and landlord issues. In particular, as of March 31, 2019, prior to any mitigation efforts which may be available to us, we estimate that we remain liable for up to $64.8 million, which is a material reduction from October 1, 2017, under the leases for certain of these salons until the end of their various terms, and we could be required to make cash payments if TBG fails to do so, which could materially adversely impact our results of operations or cash flows.  TBG has struggled to make changes that improve the business of the mall-based salons and the International business. TBG’s same store sales have declined year over year and there is no assurance that TBG will be successful in improving performance in the future. In addition, several of the services we provided to TBG under the transition services agreement ended in the fourth quarter of fiscal year 2018, thereby ending this income stream. In connection with the purchase agreements, subleases, transition services and other related agreements with the Company, TBG has been consistently delinquent on its payments to the Company and to third parties. TBG’s continued failure to pay landlords, suppliers, service providers and other third parties could adversely affect the Company’s relationships with such third parties and/or result in an allegation (albeit tenuous) by such third parties that the Company should be responsible for TBG’s payment obligations, which in turn could adversely affect the Company’s operations and financial condition. It is foreseeable that TBG may in the future continue to have cash flow and working capital issues, which could have significant adverse impacts on our business. In August 2018, we restructured certain payments due to us from TBG in the form of promissory notes representing approximately $11.7 million in working capital receivables and $8.0 million in accounts receivables, a majority of which was for inventory payables. All notes have a maturity date of August 2, 2020. Pursuant to the working capital notes, such notes would be forgiven as of the maturity date and exchanged for a three-year contingent payment right that is payable upon the occurrence of certain TBG monetization events if no default had occurred under such notes and certain other conditions are met. Based on TBG’s inability to meet the requirements of the promissory notes, including non-payment of amounts due to the Company, the Company recorded a full reserve against such notes. In addition, the Company has recorded additional reserves of approximately $11.6 million for inventory and $1.1 million for outstanding royalties that TBG has failed to pay. As of March 31, 2019, the Company has fully reserved for all amounts invoiced to TBG.

In October 2018, TBG filed a voluntary insolvency proceeding involving its United Kingdom business, which its creditors approved ("CVA"). In November 2018, a group of landlords filed a legal challenge to the CVA in United Kingdom’s High Court alleging material irregularity and unfair prejudice. If the CVA is overturned, or is otherwise not implemented, it is likely that TBG’s United Kingdom business will no longer be able to trade as a going concern, which is likely to result in bankruptcy and/or administrative proceedings. Even if the CVA is implemented and the challenge overturned or a settlement reached, TBG may still not successfully achieve the cost savings and other benefits contemplated by the CVA. Negative events associated with the CVA process and challenge could adversely affect TBG’s and/or our relationships with suppliers, service providers, customers, employees, and other third parties, which in turn could adversely affect TBG’s and/or our operations and financial condition. We had previously agreed in the note documents that a CVA filing would not constitute an item of default and TBG’s debt obligations to us currently remain intact. The Company foresees that TBG may in the future need to attempt to further restructure or even divest of (operationally, legally, or otherwise) its businesses, operations and obligations in order to remain a going concern. The Company has certain rights and remedies under the various agreements with TBG, including, but not limited to, utilization of collateral, litigation, reversion of the leases in respect of certain divested salons back to the Company and enforcement of a guarantee. If the divested salons were to revert, we may have difficulty supporting the businesses because of the challenges involved in quickly and sufficiently staffing the salons and corporate functions to support an influx in company-owned stores, addressing the stores’ performance issues, implementing required data privacy requirements in the United Kingdom and resuming support for the salons’ IT and marketing requirements. Overall, TBG’s inability to transition and operate the salons successfully, or its ability to make payments when due to the Company or third parties, could adversely affect our business, including increased reputation risks, litigation risks, financial condition and results of operations or cash flows, and could prevent the transaction from delivering the anticipated benefits and shareholder value.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

In May 2000, the Company’s Board of Directors (Board) approved a stock repurchase program with no stated expiration date. Since that time and through March 31, 2019, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program. All repurchased shares become authorized but unissued shares of the Company. The timing and amounts of any repurchases depend on many factors, including the market price of the common stock and overall market conditions. During the three and nine months ended March 31, 2019, the Company repurchased 2.1 million and 6.0 million shares, respectively, for $37.9 million and $106.3 million, respectively. As of March 31, 2019, a total accumulated 25.9 million shares have been repurchased for $520.9 million. At March 31, 2019, $129.1 million remains outstanding under the approved stock repurchase program.

The following table shows the stock repurchase activity by the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act, by month for the three months ended March 31, 2019:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in thousands)
1/1/19 - 1/31/19	1,357,039	$	18.43	25,195,359	$	142,012
2/1/19 - 2/28/19	294,004	18.35		25,489,363	136,617
3/1/19 - 3/31/19	399,387	18.72		25,888,750	129,141
Total	2,050,430	$	18.47	25,888,750	$	129,141

Item 6.  Exhibits

Exhibit 10.1	Regis Corporation Amended and Restated Short Term Incentive Compensation Plan, effective February 27, 2019.
Exhibit 10.2	Regis Corporation Stock Purchase and Matching RSU Program as amended and restated effective March 20, 2019, including form of SPMP and forms of Matching RSU Award Agreements.
Exhibit 31.1	President and Chief Executive Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Executive Vice President and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Chief Executive Officer and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101	The following financial information from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly and year-to-date periods ended March 31, 2019, formatted in Extensible Business Reporting Language (XBRL) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	REGIS CORPORATION
Date: April 30, 2019	By:	/s/ Andrew H. Lacko
		Andrew H. Lacko
		Executive Vice President and Chief Financial Officer
		(Signing on behalf of the registrant and as Principal Financial Officer)

Date: April 30, 2019	By:	/s/ Kersten D. Zupfer
		Kersten D. Zupfer
		Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

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EX-10.1

Short Term Incentive Compensation Plan

TABLE OF CONTENTS

ARTICLE I ESTABLISHMENT AND PURPOSE
1.1	Establishment
1.2	Purposes
ARTICLE II DEFINITIONS
ARTICLE III ADMINISTRATION
3.1	Committee Structure and Actions
3.2	Committee Authority
2ARTICLE IV ELIGIBILITY
4.1	Eligibility
ARTICLE V AWARDS
5.1	General
5.2	Award Amounts
5.3	Performance Goals
5.4	Payments
5.5	Termination of Employment Due to Death, Disability or Other Reason
5.6	Election to Defer
5.7	Compensation Recovery
ARTICLE VI MISCELLANEOUS
6.1	Amendment and Termination
6.2	Unfunded Status of Plan
6.3	No Additional Obligation
6.4	Withholding
6.5	Controlling Law
6.6	Offset
6.7	Nontransferability; Beneficiaries
6.8	No Rights with Respect to Continuance of Employment
6.9	Headings
6.10	Severability
6.11	Successors and Assigns
6.12	Entire Agreement

REGIS CORPORATION

AMENDED AND RESTATED SHORT TERM INCENTIVE COMPENSATION PLAN

ARTICLE I

ESTABLISHMENT AND PURPOSE

1.1 Establishment. The Regis Corporation Short Term Incentive Compensation Plan (“Plan”), shall be amended and restated as set forth herein effective as of February 27, 2019 (the “Effective Date”). The Plan shall remain in effect until it has been terminated pursuant to Section 6.1.

1.2 Purposes. The purposes of the Plan are to enhance the value of the Company by providing incentives for the achievement of one or more of the performance goals selected by the Committee for the applicable performance period; to link a significant portion of a Participant’s compensation to the achievement of one or more of the performance goals; and to attract, motivate and retain employees on a competitive basis by making awards based on achievement of performance goals.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms are defined as set forth below:

2.1 “Affiliate” means any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company.

2.2 “Appendix” means any schedule, chart or other description of the specific awards prepared each Performance Period by the Committee with respect to the applicable Performance Period. Each Appendix shall be a part of this Plan as if originally set forth herein.

2.3 “Award” means an incentive award granted to a Participant under the Plan. Awards shall be subject to the terms and conditions of the Plan, and such other terms and conditions as the Committee shall deem desirable (as set out in an Appendix).

2.4 “Beneficiary” means any person or other entity, which has been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the compensation, specified under the Plan to the extent permitted. If there is no designated beneficiary, then the term means any person or other entity entitled by will or the laws of descent and distribution to receive such compensation.

2.5 “Board of Directors” or “Board” means the Board of Directors of the Company.

2.6 “Cause” means, for purposes of determining whether and when a Participant has incurred a Termination of Employment for Cause, any act or omission which permits the Company to terminate the written agreement or arrangement, such as an employment or severance agreement or plan, between the Participant and the Company or an Affiliate for “cause” as defined in such agreement or arrangement, or in the event there is no such agreement or arrangement or the agreement or arrangement does not define the term “Cause,” then “Cause” means (1) (a) a felony conviction under any Federal or state statute which is materially detrimental to the financial interests of the Company, or (b) willful non-performance by the Participant of his or her material employment duties other than by reason of his or her physical or mental incapacity after reasonable written notice to the Participant and reasonable opportunity (not less than thirty (30) days) to cease such non-performance; or (2) the Participant willfully engaging in fraud or gross misconduct which is materially detrimental to the financial interests of the Company.

2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor, along with related rules, regulations and interpretations.

2.8 “Committee” means the committee of the Board responsible for granting Awards under the Plan, which initially shall be the Compensation Committee of the Board, until such time as the Board may designate a different committee.

2.9 “Company” means Regis Corporation, a Minnesota corporation, and includes any successor or assignee corporation or corporations into which the Company may be merged, changed or consolidated; any corporation for whose securities the securities of the Company shall be exchanged; and any assignee of or successor to substantially all of the assets of the Company.

2.10 “Disability” means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

2.11 “Participant” means a person who satisfies the eligibility conditions of Article IV and to whom an Award has been granted by the Committee under the Plan for the applicable Performance Period. In the event that a Representative is appointed for a Participant, then the term “Participant” shall mean such appointed Representative. Notwithstanding the appointment of a Representative, the term “Termination of Employment” shall mean the Termination of Employment of the Participant.

2.12 “Performance Goals” mean one or more of the performance goals set out in Section 5.3(b) and chosen by the Committee for the applicable Performance Period, the achievement of which is a condition to the payment of any Award.

2.13 Performance Period” means the Company’s fiscal year, or such other shorter or longer period designated by the Committee, performance during all or part of which a Participant’s entitlement to receive payment of an Award is based.

2.14 “Plan” means the Regis Corporation Short Term Incentive Compensation Plan, as herein set forth and as may be amended from time to time.

2.15 “Representative” means (a) the person or entity acting as the executor or administrator of a Participant’s estate pursuant to the last will and testament of a Participant or pursuant to the laws of the jurisdiction in which the Participant had the Participant’s primary residence at the date of the Participant’s death; (b) the person or entity acting as the guardian or temporary guardian of a Participant; (c) the person or entity which is the beneficiary of the Participant upon or following the Participant’s death; or (d) the person to whom an Award has been permissibly transferred; provided that only one of the foregoing shall be the Representative at any point in time as determined under applicable law and recognized by the Committee.

2.16 “Termination of Employment” means the occurrence of any act or event whether pursuant to an employment agreement or otherwise that actually or effectively causes or results in the person’s ceasing, for whatever reason, to be any and all of an officer or employee of the Company or of any Affiliate, including, without limitation, death, Disability, dismissal, severance at the election of the Participant, retirement, or severance as a result of the discontinuance, liquidation, sale or transfer by the Company or its Affiliates of a business owned or operated by the Company or its Affiliates.

In addition, certain other terms used herein have definitions given to them in the first place in which they are used.

ARTICLE III

ADMINISTRATION

3.1 Committee Structure and Actions. The Plan shall be administered by the Committee in accordance with the rules and responsibilities of the Committee.

3.2 Committee Authority. Subject to the terms of the Plan, the Committee shall have the authority:

(1) to select those persons to whom Awards may be granted from time to time;

(2) to determine, whether through the use of an Appendix or otherwise, such other terms and conditions regarding any Award granted hereunder, any time or from time to time, of any Award, subject to the limitations of Section 6.1;

(3) to determine to what extent and under what circumstances amounts payable with respect to an Award may be deferred;

(4) to determine what legal requirements are applicable to the Plan and Awards and to require of a Participant that appropriate action be taken with respect to such requirements;

(5) to cancel, with the consent of the Participant or as otherwise provided in the Plan, outstanding Awards;

(6) to determine whether and with what effect an individual has incurred a Termination of Employment;

(7) to determine whether an Award is to be adjusted, modified or prorated under the Plan;

(8) to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of this Plan; and

(9) to appoint and compensate agents, counsel, auditors or other specialists to aid it in the discharge of its duties.

The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued under the Plan and to otherwise supervise the administration of the Plan. The Committee’s policies and procedures may differ with respect to Awards granted at different times and may differ with respect to a Participant from time to time, or with respect to different Participants at the same or different times.

Any determination made by the Committee pursuant to the provisions of the Plan shall be made in its sole discretion, and in the case of any determination relating to an Award may be made at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Participants. Any determination shall not be subject to de novo review if challenged in court.

ARTICLE IV

ELIGIBILITY

4.1 Eligibility. The Participants for each Performance Period shall consist of any employees of the Company or any Affiliate selected by the Committee.

ARTICLE V

AWARDS

5.1 General. The Committee shall have authority to grant Awards under the Plan at any time or from time to time. Awards consist of the right to receive cash upon achievement of certain Performance Goals. The Committee shall have complete discretion to determine the Awards granted to each Participant and the relevant Performance Period.

5.2 Award Amounts.

(a) Target Pay-out. The target amount that may be paid with respect to an Award (the “Target Pay-out”) shall be determined by the Committee at the time of grant (“Participation Factor”), within the range established by this Section and any Appendix to the Plan. Any such amount shall be subject to adjustment as provided below in this Section 5. The Participation Factors are intended to reflect a Participant’s level of responsibility and other factors deemed appropriate by the Committee. Accordingly, the Participation Factors may vary among Participants. The Committee may establish curves, matrices or other measurements for prorating the amount of pay-outs for achievement of Performance Goals at less than the Target Pay-out.

(b) Maximum Pay-out. The Committee may also establish a maximum potential pay-out amount (the “Maximum Pay-out”) with respect to an Award in the event that Performance Goal targets are exceeded by an amount established by the Committee at the time Performance Goals are established. The Committee may establish curves, matrices or other measurements for prorating the amount of pay-outs for achievement of Performance Goals at greater than the Target Pay-out but less than the Maximum Pay-out.

(c) Threshold Pay-out. The Committee may also establish a minimum potential pay-out amount (the “Threshold Pay-out”) with respect to an Award of a fraction of the Target Pay-out in the event that at least a minimum percentage (established by the Committee at the time Performance Goals are established) of the Performance Goal targets are achieved. The Committee may establish curves, matrices or other measurements for prorating the amount of pay-outs for achievement of Performance Goals at greater than the Threshold Pay-out but less than the Target Pay-out.

5.3 Performance Goals.

(a) Establishment. Payment under an Award shall be made to a Participant based on the extent to which the Company achieves the Performance Goals established by the Committee.

(b) Criteria for Performance Goals. Performance Goals may be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, and on an absolute or relative basis compared to other companies or indexes or other external measures, on a per share basis (basic or diluted), as a growth rate or change from prior periods, or relative to one or more other performance criteria, as the Committee may determine: earnings per share (“EPS”); sales; cash flow; cash flow from operations; operating profit or income; net income; operating margin; net income margin; gross margin; service margin; product margin; return on net assets; economic value added; return on total assets; return on common equity; return on total capital; return on invested capital; total shareholder return; revenue; revenue growth; earnings before interest, taxes, depreciation and amortization (“EBITDA”); EBITDA growth; funds from operations per share and per share growth; cash available for distribution; cash available for distribution per share and per share growth; share price performance; improvements in the Company’s attainment of income or expense levels; implementing or completion of critical projects; or such other performance criteria as the Committee may determine. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or non-recurring items, as defined by GAAP; effects of accounting changes; effects of financing activities (e.g., effect on EPS of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation activities and settlements. Any such performance criterion or combination of such criteria may apply to a Participant’s Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise for any Performance Period, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the Award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved, whichever will produce the higher pay-out.

5.4 Payments. After the close of the applicable Performance Period, the Committee shall determine the extent to which the established Performance Goals have been achieved. Before any payment is made under the Plan, the Committee must certify that the Performance Goals established with respect to an Award have been achieved. The Committee may, in its discretion, adjust the amount of payment with respect to an Award based on such factors as it determines appropriate. In the event of a Participant’s Termination of Employment prior to the end of the Performance Period for any reason, the amount payable with respect to such Award will be governed by the provisions of Section 5.5. Payments shall be made as soon as practicable after the Committee’s certification of achievement of the Performance Goals, provided that payment shall be made no more than two and a half months after the end of the calendar year in which the Performance Period ended.

5.5 Termination of Employment Due to Death, Disability or Other Reason. In the event of a Termination of Employment due to death or Disability during a Performance Period, the Participant shall receive a pro rata share of the Award relating to such Performance Period. Unless otherwise determined by the Committee, in the event that a Participant’s employment terminates for any other reason (whether or not the Termination of Employment is for Cause), all Awards not yet paid to the Participant shall be forfeited by the Participant to the Company. Distribution of amounts with respect to earned Awards may be made at the same time payments are made to Participants who did not incur a Termination of Employment during the applicable Performance Period.

5.6 Election to Defer. If so provided in an Appendix, a Participant may elect to defer receipt of the payout of an Award for a specified period or until a specified event, subject to the Committee’s approval, on such terms as are determined by the Committee, and subject to compliance with Section 409A of the Code.

5.7 Compensation Recovery.  Awards are subject to forfeiture, recovery by the Company or other action pursuant to any compensation recovery (“clawback”) policy adopted by the Board or the Committee at any time, including in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder, or as otherwise required by law.  Any Award may be unilaterally amended by the Committee to comply with any such compensation recovery policy.

ARTICLE VI

MISCELLANEOUS

6.1 Amendment and Termination. The Committee may, in its sole discretion, amend, suspend or terminate the Plan at any time, with or without advance notice to Participants. No amendment, modification or termination of the Plan may adversely affect in a material manner any right of any Participant with respect to any Award theretofore granted without such Participant’s written consent, except an amendment (a) made to cause the Plan to comply with applicable law or (b) made to permit the Company or an Affiliate a tax deduction under applicable law.

6.2 Unfunded Status of Plan. It is intended that the Plan be an “unfunded” plan for incentive compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to make payments; provided, however, that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.

6.3 No Additional Obligation. Nothing contained in the Plan shall prevent the Company or an Affiliate from adopting other or additional compensation or benefit arrangements for its employees.

6.4 Withholding. Awards are subject to withholding for certain federal, state, or local taxes required by law to be withheld with respect to such income. The Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant.

6.5 Controlling Law. The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of Minnesota (other than its law respecting choice of law). The Plan shall be construed to comply with all applicable law and to avoid liability to the Company, an Affiliate or a Participant.

6.6 Offset. Any amounts owed to the Company or an Affiliate by a Participant of whatever nature may be offset by the Company from the payment of any Award to the Participant. No cash shall be transferred unless and until all disputes between the Company and the Participant have been fully and finally resolved and the Participant has waived all claims to such against the Company or an Affiliate.

6.7 Nontransferability; Beneficiaries. No Award shall be assignable or transferable by the Participant, otherwise than by will or the laws of descent and distribution or pursuant to a beneficiary designation. Each Participant may designate a Beneficiary to receive the proceeds of any Award held by the Participant at the time of the Participant’s death. If a deceased Participant has named no Beneficiary, the proceeds of any Award held by the Participant at the time of death shall be transferred as provided in his or her will or by the laws of descent and distribution.

6.8 No Rights with Respect to Continuance of Employment. Nothing contained herein shall be deemed to alter the relationship between the Company or an Affiliate and a Participant, or the contractual relationship between a Participant and the Company or an Affiliate if there is a written contract regarding such relationship. Nothing contained herein shall be construed to constitute a contract of employment between the Company or an Affiliate and a Participant. The Company or an Affiliate and each of the Participants continue to have the right to terminate the employment or service relationship at any time for any reason, except as provided in a written contract. The Company or an Affiliate shall have no obligation to retain the Participant in its employ or service as a result of this Plan. There shall be no inference as to the length of employment or service hereby, and the Company or an Affiliate reserves the same rights to terminate the Participant’s employment or service as existed prior to the individual becoming a Participant in this Plan.

6.9 Headings. The headings contained in this Plan are for reference purposes only and shall not affect the meaning or interpretation of this Plan.

6.10 Severability. If any provision of this Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not effect any other provision hereby, and this Plan shall be construed as if such invalid or unenforceable provision were omitted.

6.11 Successors and Assigns. This Plan shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon a Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

6.12 Entire Agreement. This Plan (including any Appendix thereto) constitutes the entire agreement with respect to the subject matter hereof and thereof.

EX-10.2

Approved by Compensation Committee 3.2019

REGIS CORPORATION

STOCK PURCHASE AND MATCHING RSU PROGRAM

(As Amended and Restated Effective March 20, 2019)

1.    Establishment and Purpose. This Regis Corporation Stock Purchase and Matching RSU Program (this “SPMP”) was adopted by the Board of Directors (the “Board”) of Regis Corporation (the “Company”) on August 30, 2018 and amended and restated on March 20, 2019. This SPMP is intended to provide certain key employees of the Company and its affiliates with the opportunity to (i) purchase shares of the Company’s common stock, par value $0.05 per share (the “Common Stock”) with amounts (x) earned under the Company’s Short Term Incentive Compensation Plan, or any successor plan pursuant to which eligible employees receive annual cash incentive awards (together, the “Annual Bonus Plan”), (y) received as a sign-on or inducement bonus in connection with commencement of employment with the Company or its affiliates, to the extent no longer subject to repayment (a “Sign-On Bonus”), or (z) if so authorized by the Compensation Committee of the Board (the “Committee”), contributed directly by an eligible employee (a “Direct Contribution”), and (ii) receive certain matching restricted stock unit awards (the “Matching RSUs”) for making such purchases on the terms set forth herein.

2.Eligibility; Participation; Administration.

2.1.    Eligibility. An employee of the Company or an affiliate shall be eligible to participate in this SPMP if the employee is an officer of the Company subject to Section 16 of the Securities Exchange Act of 1934, as amended, and the Committee approves the participation of such employee.

2.2.    Participation. An eligible employee may elect to participate in this SPMP by submitting a participation agreement in the form determined by the Company (a “Participation Agreement”) to the Company or its affiliate, as applicable, and become a “Participant” under this SPMP.

2.3.    Administration. This SPMP shall be administered by the Committee. The Committee has full discretionary authority to construe and interpret the provisions of this SPMP and make factual determinations hereunder, including the power to determine the rights or eligibility of employees or Participants and any other persons, and the amounts of their contributions and benefits under this SPMP, and to remedy ambiguities, inconsistencies or omissions. The Committee, from time to time, may adopt such rules and regulations as may be necessary or desirable for the proper and efficient administration of this SPMP and as are consistent with the terms of this SPMP. The Committee may delegate all or any part of its powers, rights, and duties under this SPMP to such person or persons as it may deem advisable, and may engage agents to provide certain administrative services with respect to this SPMP. All decisions made by the Committee pursuant to the provisions of this SPMP shall be final and binding on all persons, including the Company and Participants.

3.Stock Purchases; Matching Restricted Stock Unit Awards; Employment Required.

3.1.    Stock Purchases.

(a)    A Participant may, but is not required to, elect to purchase shares of Common Stock having a fair market value on the purchase date equal to the “Stock Purchase Amount.”

(i) For the Company’s fiscal year ended June 30, 2018, “Stock Purchase Amount” will equal the product obtained by multiplying (A) the Participant’s target annual incentive award for fiscal 2018 by (B) 25% or 50%, as selected by Participant (the “Election Percentage”) by (C) 52.8% (the “Post-Tax Percentage”).

(ii) For the Company’s fiscal year ended June 30, 2019 and thereafter, “Stock Purchase Amount” will equal the product obtained by multiplying (A) the Participant’s Bonus Payment, by (B) the Election Percentage by (C) the Post-Tax Percentage.

(iii) If so authorized by the Committee, “Stock Purchase Amount” will equal the Participant’s Direct Contribution.

The “Bonus Payment” is the amount of (i) the annual incentive to be paid under the Annual Bonus Plan, which shall be determined based on the amount of the annual incentive the Committee determines is earned under the Annual Bonus Plan following certification of the level of achievement of the performance metrics under the Annual Bonus Plan and any

discretionary adjustments determined to be used by the Committee pursuant to the Annual Bonus Plan or (ii) any Sign-on Bonus. The Committee shall have the right to revise the Post-Tax Percentage from time to time to reflect changes in tax law.

(b)    If a Participant elects to purchase shares of Common Stock under this SPMP, the purchase shall be effected by the Participant submitting (i) an election form by the date specified by the Company following the determination by the Committee of any eligible Direct Contribution amount or Sign-on Bonus or the certification by the Committee of the level of achievement under the Annual Bonus Plan and (ii) a check payable to the Company in an amount equal to the Stock Purchase Amount, or, alternatively if the Company so elects and the election form provides authorization therefor, the Company shall withhold an amount equal to the Stock Purchase Amount from the amount otherwise due to be paid to the Participant under the applicable Annual Bonus Plan or Sign-On Bonus. Once submitted by the Participant for the applicable fiscal year, such election form shall become irrevocable. The Company will then use such Stock Purchase Amount to purchase shares of Common Stock under this SPMP on a date determined by the Company (the “Purchase Date”). The number of shares of Common Stock (rounded down to the nearest whole share) to be purchased shall be determined by dividing the Stock Purchase Amount by the closing price of a share of Common Stock on the New York Stock Exchange or such other principal securities exchange on which the shares of Common Stock are listed or traded on the Purchase Date. The Company shall, as soon as practicable after the Purchase Date, issue one or more certificates representing the shares of Common Stock purchased under this SPMP in the name of the Participant and shall hold such certificates on behalf of the Participant for the sole purpose of determining whether the shares are being retained by the Participant. The Participant shall have all rights of a shareholder with respect to all shares of Common Stock purchased under the SPMP, including the right to vote as well as the right to receive all dividends declared and paid thereon. The Participant shall have a right to receive the certificates from the Company at any time, provided that once the Participant receives the certificates, the Company shall be entitled to such action as it deems appropriate to determine whether the shares are being retained by the Participant or being sold or transferred in a manner that would affect the Participant’s rights under the Matching RSUs.

(c)    The total number of shares of Common Stock reserved and available for stock purchases pursuant to this SPMP shall be 250,000, which number of shares shall be subject to equitable adjustment by the Committee in the event of any equity restructuring, such as a stock dividend or stock split. For the avoidance of doubt, shares of Common Stock issued pursuant to awards of Matching RSUs shall not reduce the shares reserved and available in the preceding sentence, but instead shall be issued from the shares reserved and available for issuance under the Company’s 2016 Long Term Incentive Plan or any successor equity compensation plan (“LTIP”).

3.2.    Matching Restricted Stock Unit Awards. A Participant who purchases shares in accordance with Section 3.1 shall also receive Matching RSUs, evidenced by the form of agreement attached hereto as Exhibit A(1), in the case of the Company’s CEO only, and Exhibit A(2), in the case of the other Participants.

For fiscal year 2018, the number of shares of Common Stock subject to the Matching RSUs shall be determined by dividing the amount of the Participant’s target annual incentive award for fiscal 2018, regardless of the amount actually earned or paid) by the per share price at which shares of Common Stock were purchased in accordance with Section 3.1(b), multiplied by 100% if the Participant’s election with respect to the fiscal 2018 is 50% or (b) 50% if the Participant’s election was 25%.

For fiscal years after fiscal year 2018, the number of shares of Common Stock subject to the Matching RSUs shall be determined by dividing the Bonus Payment (before deducting any related or normalized tax withholding) by the per share price at which shares of Common Stock were purchased in accordance with Section 3.1(b), multiplied by (a) 200% if the Participant’s Election Percentage was 50% or (b) 100% if the Participant’s Election Percentage was 25%.

With respect to any Direct Contribution, the number of shares of Common Stock subject to the Matching RSUs shall be determined by dividing the Direct Contribution by the per share price at which shares of Common Stock were purchased in accordance with Section 3.1(b), multiplied by a percentage determined by the Committee in its discretion when it authorizes the Direct Contribution.

Sale or transfer of the shares of Common Stock purchased under the SPMP prior to the date Matching RSUs have vested will affect the vesting of any Matching RSUs or result in the forfeiture thereof, as detailed in Matching RSU award agreement.

3.3.    Calculation Example. For illustrative purposes only, if a Participant’s pre-tax annual incentive to be paid (or, with respect to fiscal 2018, the target annual incentive award amount) under the Annual Bonus Plan for a fiscal year was $500,000 and the Participant elected to purchase shares of Common Stock under this SPMP at an Election Percentage of 50%, the following calculation would apply:

	FY18	FY19
Pre-tax contribution:	$250,000	$250,000
Assumed tax rate:	47.2%	47.2%
After-tax common stock purchase value required to be paid to the Company by Participant (i.e., “Stock Purchase Amount”):	$132,000	$132,000
Value of Matching RSU grant:	$250,000	$500,000

3.4    Employment Required. A Participant must be employed by the Company or an affiliate of the Company on the date that the shares of Common Stock are purchased in accordance with Section 3.1(b) in order to purchase shares of Common Stock under this SPMP and receive Matching RSUs under the LTIP.

4.Miscellaneous.

4.1.    Amendment and Termination. The Company reserves the right to amend, modify, or terminate this SPMP (in whole or in part) at any time by action of the Board or the Committee, with or without prior notice. Except as described below in this Section 4.1, no such amendment or termination shall in any material manner adversely affect any Participant’s rights to any shares already purchased hereunder or any Matching RSUs granted pursuant hereto, up to the date of amendment or termination, without the consent of the Participant. Subject to the above provisions, the Board and the Committee shall have broad authority to amend this SPMP to take into account changes in applicable law, including but not limited to securities and tax laws and accounting rules.

4.2.    No Right to Employment. Neither the adoption of this SPMP nor the granting of awards under this SPMP shall confer upon any employee any right to continued employment nor shall they interfere in any way with the right of the Company, or a subsidiary or an affiliate thereof, to terminate the employment of any employee at any time. Nothing contained in this SPMP shall prevent the Company, or a subsidiary or an affiliate thereof, from adopting other or additional compensation arrangements for their respective employees.

4.3.    Controlling Law. This SPMP and actions taken thereunder shall be governed by and construed in accordance with the laws of Minnesota (other than its law respecting choice of law). This SPMP shall be construed to comply with all applicable law and to avoid liability to the Company, an affiliate or a Participant.

4.4.    No Rights with Respect to Continuance of Employment. Nothing contained herein shall be deemed to alter the relationship between the Company or an affiliate and a Participant, or the contractual relationship between a Participant and the Company or an affiliate if there is a written contract regarding such relationship. Nothing contained herein shall be construed to constitute a contract of employment between the Company or an affiliate and a Participant. The Company or an affiliate and each of the Participants continue to have the right to terminate the employment or service relationship at any time for any reason, except as provided in a written contract. The Company or an affiliate shall have no obligation to retain the Participant in its employ or service as a result of this SPMP. There shall be no inference as to the length of employment or service hereby, and the Company or an affiliate reserves the same rights to terminate the Participant’s employment or service as existed prior to the individual becoming a Participant in this SPMP.

4.5.    Headings. The headings contained in this SPMP are for reference purposes only and shall not affect the meaning or interpretation of this SPMP.

4.6.    Severability. If any provision of this SPMP shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereby, and this SPMP shall be construed as if such invalid or unenforceable provision were omitted.

4.7.    Successors and Assigns. This SPMP shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon a Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

4.8.    Entire Agreement. This SPMP and each Participation Agreement constitute the entire agreement with respect to the subject matter hereof and thereof, provided that in the event of any inconsistency between the SPMP and each Participation Agreement, the terms and conditions of this SPMP shall control.

REGIS CORPORATION

RESTRICTED STOCK UNIT AGREEMENT

(Tier I EMPLOYEES)

THIS RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”), dated as of ________, 20__ (the “Grant Date”), is between Regis Corporation, a Minnesota corporation (the “Company”), and ________________ (the “Participant”).

WHEREAS, the Participant is a valued and trusted employee of the Company and the Company desires to grant the Participant an award of Restricted Stock Units which afford the Participant an opportunity to receive shares of the Company’s Common Stock under the Regis Corporation 2018 Long Term Incentive Plan (as may be amended from time to time, the “Plan”); and

WHEREAS, the Committee has duly made all determinations necessary or appropriate for the grant of the Restricted Stock Units hereunder (the “Award”); and

WHEREAS, this Award is granted in connection with your purchase of [•] shares of the Company’s Common Stock (the “Related Shares”) under the Company’s Stock Purchase and Matching RSU Program.

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto have agreed, and do hereby agree, as follows:

1.    Definitions.

For purposes of this Agreement, the definitions of terms contained in the Plan hereby are incorporated by reference, except to the extent that any such term is specifically defined in this Agreement.

(a)    “Good Reason” (i) shall have the meaning ascribed to such term in Participant's employment agreement with the Company; provided, however, that in order for the Termination of Employment to constitute a Termination of Employment for Good Reason, Participant must terminate employment no later than one hundred and twenty (120) days following the end of the applicable cure period, or (ii) if there is no such employment agreement with the Company, “Good Reason” shall mean the occurrence, without the express written consent of the Participant, of any of the following:

(A)    any material diminution in the nature of the Participant's authority, duties or responsibilities;

(B)    any reduction by the Company in the Participant's base salary then in effect or target bonus percentage (other than any reduction mutually agreed upon by the Company and the Participant), other than an across the board reduction of not more than 10% that applies to all other executives who report to the Chief Executive Officer of the Company; or

(C)    following a Change in Control, failure by the Company to continue in effect (without substitution of a substantially equivalent plan or a plan of substantially equivalent value) any compensation plan, bonus or incentive plan, stock purchase plan, stock option plan, life insurance plan, health plan, disability plan or other benefit plan or arrangement in which the Participant is then participating;

provided that the Participant notifies the Company of such condition set forth in clause (A), (B) or (C) within ninety (90) days of its initial existence and the Company fails to remedy such condition within thirty (30) days of receiving such notice (the “Cure Period”) and the Participant delivers written notice of termination of employment to the Company's General Counsel within thirty (30) days following the end of the Cure Period, designating an employment termination date no later than one hundred and twenty (120) days following the end of the Cure Period.

(b)    “Qualifying Termination” means a Termination of Employment:

(i)    (A) without Cause (other than a result of death or Disability) or for Good Reason within 12 months following a Change in Control or (B) due to death or Disability; or

(ii)    by reason of Participant’s Retirement or termination without Cause (other than as a result of death or Disability), in each case on or after the second anniversary of the Grant Date.

(c)    “Retirement” means any Termination of Employment (other than by the Company for Cause or due to death or Disability) at or after age sixty-two (62) or at or after age fifty-five (55) with fifteen (15) or more years of continuous service to the Company and its Affiliates.

2.    Grant of Restricted Stock Units, Term and Vesting.

(a)    Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Participant _______     (______    ) Restricted Stock Units (the “RSUs”), with no obligation to pay cash or other property for such RSUs. The RSUs will be credited to an account in the Participant’s name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with each RSU representing an unfunded and unsecured promise by the Company to issue to the Participant one share of the Company’s Common Stock in settlement of a vested RSU.

(b)    100% of the RSUs will vest on the fifth anniversary of the Grant Date, subject to Participant’s continued employment with the Company through such anniversary and the other terms and conditions set forth in this Agreement.

(c)    Notwithstanding Section 2(b), if the Participant experiences a Qualifying Termination, then the Applicable Portion of the RSUs immediately shall vest as of the date of Participant’s Termination of Employment. For purposes of the immediately preceding sentence, the “Applicable Portion of the RSUs” has the meaning set forth in the table below:

Type of Qualifying Termination	Applicable Portion of the RSUs
Clause (i) of the definition of Qualifying Termination	(i) if the Termination of Employment occurs prior to the third anniversary of the Grant Date, a number of RSUs equal to the product obtained by multiplying (A) the total number RSUs by (B) a fraction, the numerator of which is the number of days elapsed from the Grant Date through the date of Participant’s Termination of Employment and the denominator of which is the number of days between the Grant Date and the fifth anniversary of the Grant Date, and (ii) if the Termination of Employment occurs on or after the third anniversary of the Grant Date, 100% of the RSUs.
Clause (ii) of the definition of Qualifying Termination	a number of RSUs equal to the product obtained by multiplying (i) the total number RSUs by (ii) a fraction, the numerator of which is the number of days elapsed from the Grant Date through the date of Participant’s Termination of Employment and the denominator of which is the number of days between the Grant Date and the fifth anniversary of the Grant Date.

(d)    For purposes of this Agreement, if Participant’s RSUs are considered non-qualified deferred compensation subject to Code Section 409A, a Termination of Employment shall be deemed to have occurred only if on such date the Participant has also experienced a “separation from service” as defined in the regulations promulgated under Code Section 409A.

(e)    For purposes of this Agreement, if Participant’s RSUs are considered non-qualified deferred compensation subject to Code Section 409A, a Change in Control shall be deemed to have occurred for purposes of settling vested RSUs only if such event would also be deemed to constitute a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets, of the Company under Code Section 409A.

(f)    In the event that Participant’s Termination of Employment would qualify Participant for accelerated vesting under more than one type of Qualifying Termination, the type of Qualifying Termination that provides for the vesting of the greatest number of RSUs shall apply.

3.    Forfeiture of Unvested RSUs.

(a)    Subject to any accelerated vesting under Sections 2(c), and any exercise of the Committee’s discretion under Section 8.3(4) of the Plan, if the Participant experiences a Termination of Employment, any unvested RSUs shall be forfeited and the Participant shall have no further interest in, or right to receive shares of Common Stock in settlement of, such RSUs.

(b)    If Participant transfers (other than pursuant to the laws of descent and distribution) 50% or less of the Related Shares before any portion of Participant’s RSUs vest, Participant will immediately forfeit 50% of the unvested RSUs. If Participant transfers (other than pursuant to the laws of descent and distribution) more than 50% of the Related Shares (including any such shares transferred pursuant to the immediately preceding sentence) before any portion of the Participant’s RSUs vest, Participant will immediately forfeit 100% of any unvested RSUs.

4.    Settlement of RSUs.

Subject to Section 21, after any RSUs vest pursuant to Section 2, the Company shall, as soon as practicable (but no later than thirty (30) days following the date on which the RSUs vest), cause to be issued and delivered to the Participant one share of Common Stock in payment and settlement of each vested RSU. Delivery of the shares shall be effected by the delivery of a stock certificate evidencing the shares, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to the Participant, or by the electronic delivery of the shares to a brokerage account designated by the Participant, and shall be subject to the tax withholding provisions of Section 8 and compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws, and shall be in complete satisfaction and settlement of such vested RSUs. Upon settlement of the RSUs, the Participant will obtain, with respect to the shares of Common Stock received in such settlement, full voting and other rights as a shareholder of the Company.

5.    Shareholder Rights.

The RSUs subject to this Award do not entitle the Participant to any rights of a holder of the Company’s Common Stock. The Participant will not have any of the rights of a shareholder of the Company in connection with the grant of the RSUs unless and until shares of Common Stock are issued to the Participant in settlement of the RSUs as provided in Section 4.

6.    Dividend Equivalents.

If a cash dividend is declared and paid by the Company with respect to its Common Stock, the Participant will be credited as of the applicable dividend payment date with an additional number of RSUs (the “Dividend RSUs”) equal to (i) the total cash dividend the Participant would have received if the number of RSUs credited to the Participant under this Agreement as of the related dividend payment record date (including any previously credited Dividend RSUs) had been actual shares of Common Stock, divided by (ii) the Fair Market Value of a share of Common Stock as of the applicable dividend payment date (with the quotient rounded down to the nearest whole number). Once credited to the Participant’s account, Dividend RSUs will be considered RSUs for all purposes of this Agreement.

7.    Restrictions on Transferability.

Neither the Award evidenced by this Agreement nor the RSUs may be sold, transferred, pledged, assigned, or otherwise alienated at any time, other than by will or the laws of descent and distribution. Any attempt to do so contrary to the provisions hereof shall be null and void.

8.    Tax Consequences and Payment of Withholding Taxes.

Neither the Company nor any of its Affiliates shall be liable or responsible in any way for the tax consequences relating to the award of RSUs, their vesting and the settlement of vested RSUs in shares of Common Stock. The Participant agrees to determine and be responsible for any and all tax consequences to the Participant relating to the award, vesting and settlement of RSUs hereunder. If the Company is obligated to withhold an amount on account of any tax imposed as a result of the grant, vesting or settlement of the RSUs, the provisions of Section 13.4 of the Plan regarding the satisfaction of tax withholding obligations shall apply (including any required payments by the Participant).

9.    Administration.

The Plan and this Award of RSUs are administered by the Committee, in accordance with the terms and conditions of the Plan. Actions and decisions made by the Committee in accordance with this authority shall be effectuated by the Company.

10.    Plan and Agreement; Recoupment Policy.

The Participant hereby acknowledges receipt of a copy of the Plan. The grant of RSUs is made pursuant to the Plan, as in effect on the date hereof, and is subject to all the terms and conditions of the Plan, as the same may be amended or restated from time to time, and of this Agreement. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern. The interpretation and construction by the Committee of the Plan, this Agreement, and such rules and regulations as may be adopted by the Committee for the purpose of administering the Plan, shall be final and binding upon the Participant. The Company shall, upon written request therefore, send a copy of the Plan, in its then current form, to the Participant or any other person or entity then entitled to receive the shares of Common Stock to be issued in settlement of the RSUs.

The Company may recover any equity awarded to the Participant under this Agreement, or proceeds from the sale of such equity, to the extent required by any rule of the Securities and Exchange Commission or any listing standard of the New York Stock Exchange, including any rule or listing standard requiring recovery of incentive compensation in connection with an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, which recovery shall be subject to the terms of any policy of the Company implementing such rule or listing standard.

11.    No Employment Rights.

Neither this Agreement nor the Award evidenced hereby shall give the Participant any right to continue in the employ of the Company, any Affiliate or any other entity, or create any inference as to the length of employment of the Participant, or affect the right of the Company (or any Affiliate or any other entity) to terminate the employment of the Participant (with or without Cause), or give the Participant any right to participate in any employee welfare or benefit plan or other program of the Company, any Affiliate or any other

12.    Requirements of Law and No Disclosure Rights.

The Company shall not be required to issue any shares of Common Stock in settlement of RSUs granted under this Agreement if the issuance of such shares shall constitute a violation of any provision of any applicable law or regulation of any governmental authority. The Company shall have no duty or obligation beyond those imposed by applicable securities laws generally to affirmatively disclose to the Participant or a Representative, and the Participant or Representative shall have no right to be advised of, any material non-public information regarding the Company or an Affiliate at any time prior to, upon or in connection with the issuance of the shares of Common Stock in settlement of the Participant’s RSU Award.

13.    Governing Law.

This Agreement, the awards of RSUs hereunder and the issuance of Common Stock in payment of RSUs shall be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota (other than its laws respecting choice of law).

14.    Entire Agreement.

This Agreement and the Plan constitute the entire obligation of the parties hereto with respect to the subject matter hereof and shall supersede any prior expressions of intent or understanding with respect to this transaction.

15.    Amendment.

Any amendment to this Agreement shall be in writing and signed on behalf of the Company, and shall comply with the terms and conditions of the Plan.

16.    Waiver; Cumulative Rights.

The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each and every right hereunder is cumulative and may be exercised in part or in whole from time to time.

17.    Counterparts.

This Agreement may be signed in two (2) counterparts, each of which shall be an original, but both of which shall constitute but one and the same instrument.

18.    Headings.

The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

19.    Severability.

If for any reason any provision of this Agreement shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision were omitted.

20.    Successors and Assigns.

This Agreement shall inure to the benefit of and be binding upon each successor and assign of the Company, and upon the heirs, legal representatives and successors of the Participant.

21.    Code Section 409A.

Notwithstanding anything to the contrary in this Agreement, including Section 4, if any amount shall be payable with respect to this Award as a result of the Participant’s “separation from service” at such time as the Participant is a “specified employee” (as those terms are defined in regulations promulgated under Code Section 409A) and such amount is subject to the provisions of Code Section 409A, then no payment shall be made, except as permitted under Code Section 409A, prior to the first day of the seventh calendar month beginning after the Participant’s separation from service (or the date of Participant’s earlier death), or as soon as administratively practicable thereafter. Participant shall not have the right to designate the timing of settlement of the RSUs. If the thirty-day settlement period spans two different calendar years, settlement shall occur during the later calendar year.

[Signature Page Follows]

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Participant has hereunto set his hand, all as of the day and year first above written.

REGIS CORPORATION

By: _______________________________________________________

Name: _____________________________________________________

Title: _____________________________________________________

PARTICIPANT:

___________________________________________________________

[Name]

EX-31.1

Exhibit No. 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hugh E. Sawyer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2. 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;

3. 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;

4. 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:

(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;

(b) 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;

(c) 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

(d) 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

5. 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:

(a) 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

(b) 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.

April 30, 2019

/s/ Hugh E. Sawyer

Hugh E. Sawyer, President and Chief Executive Officer

EX-31.2

Exhibit No. 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew H. Lacko, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2. 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;

3. 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;

4. 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:

(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;

(b) 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;

(c) 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

(d) 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

5. 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:

(a) 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

(b) 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.

April 30, 2019

/s/ Andrew H. Lacko

Andrew H. Lacko, Executive Vice President and Chief Financial Officer

EX-32

Exhibit No. 32

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regis Corporation (the Registrant) on Form 10-Q for the fiscal quarter ending March 31, 2019 filed with the Securities and Exchange Commission on the date hereof, Hugh E. Sawyer, President and Chief Executive Officer of the Registrant, and Andrew H. Lacko, Executive Vice President and Chief Financial Officer of the Registrant, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarter Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

April 30, 2019

/s/ Hugh E. Sawyer

Hugh E. Sawyer, President and Chief Executive Officer

April 30, 2019

/s/ Andrew H. Lacko

Andrew H. Lacko, Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2019	Apr. 24, 2019
Document and Entity Information
Entity Registrant Name	REGIS CORP
Entity Central Index Key	0000716643
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		39,326,526
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3

XML

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017
Current assets:
Cash and cash equivalents	$ 71,146		$ 110,399
Receivables, net	33,737		52,430
Inventories	90,869		79,363
Other current assets	32,386		47,867
Total current assets	228,138		290,059
Property and equipment, net	83,629		99,288
Goodwill	378,560		412,643
Other intangibles, net	9,346		10,557
Other assets	32,768		37,616
Other assets	6,529		6,572
Total assets	738,970		856,735
Current liabilities:
Accounts payable	57,021		57,738
Accrued expenses	83,490		100,716
Total current liabilities	140,511		158,454
Long-term debt	90,000		90,000
Long-term lease liability	17,505		0
Other noncurrent liabilities	115,144		121,843
Total liabilities	363,160		370,297
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively	1,972		2,263
Additional paid-in capital	93,515		194,436
Accumulated other comprehensive income	9,050		9,656
Retained earnings	271,273		280,083
Total shareholders’ equity	375,810	$ 425,010	486,438	$ 497,667	$ 514,173	$ 493,620
Total liabilities and shareholders’ equity	$ 738,970		$ 856,735

XML

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Jun. 30, 2018
Statement of Financial Position [Abstract]
Common stock par value (in dollars per share)	$ 0.05	$ 0.05
Common stock issued (in shares)	39,433,124	45,258,571
Common stock outstanding (in shares)	39,433,124	45,258,571

XML

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Total revenues		$ 258,343	$ 305,783	$ 820,849	$ 935,096
Operating expenses:
Cost of service		111,632	132,081	348,060	406,767
Cost of product		31,167	37,139	99,698	107,165
Site operating expenses		34,339	37,548	106,723	116,175
General and administrative		41,694	45,727	135,257	129,485
Rent		32,332	39,391	102,952	147,280
Depreciation and amortization		8,630	9,558	27,732	46,764
Non-cash TBG mall location restructuring charge		20,711	0	20,711	0
Total operating expenses		280,505	301,444	841,133	953,636
Operating (loss) income		(22,162)	4,339	(20,284)	(18,540)
Other (expense) income:
Interest expense		(1,354)	(5,095)	(3,432)	(9,402)
Gain from sale of salon assets to franchisees, net		11,489	237	10,394	255
Interest income and other, net		464	1,495	1,453	3,934
(Loss) income from continuing operations before income taxes		(11,563)	976	(11,869)	(23,753)
Income tax (expense) benefit		(3,248)	2,609	(2,988)	77,875
(Loss) income from continuing operations		(14,811)	3,585	(14,857)	54,122
Income (loss) from TBG discontinued operations, net of taxes		178	(10,605)	6,027	(50,973)
Net (loss) income		$ (14,633)	$ (7,020)	$ (8,830)	$ 3,149
Basic:
(Loss) income from continuing operations (in dollars per share)		$ (0.37)	$ 0.08	$ (0.35)	$ 1.16
Income (loss) from TBG discontinued operations (in dollars per share)		0.00	(0.23)	0.14	(1.09)
Net (loss) income per share, basic (in dollars per share)	[1]	(0.36)	(0.15)	(0.21)	0.07
Diluted:
(Loss) income from continuing operations (in dollars per share)		(0.37)	0.08	(0.35)	1.15
Income (loss) from TBG discontinued operations (in dollars per share)		0.00	(0.22)	0.14	(1.08)
Net (loss) income per share, diluted (in dollars per share)	[1]	$ (0.36)	$ (0.15)	$ (0.21)	$ 0.07
Weighted average common and common equivalent shares outstanding:
Basic (in shares)		40,314	46,612	42,900	46,684
Diluted (in shares)		40,314	47,153	42,900	47,093
Service
Revenues:
Total revenues		$ 181,809	$ 222,022	$ 580,076	$ 680,930
Product
Revenues:
Total revenues		53,766	64,911	173,006	197,701
Royalties and fees
Revenues:
Total revenues		$ 22,768	$ 18,850	$ 67,767	$ 56,465

[1] Total is a recalculation; line items calculated individually may not sum to total due to rounding.

XML

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (14,633)	$ (7,020)	$ (8,830)	$ 3,149
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	905	(1,372)	(606)	904
Reclassification adjustments for losses included in net (loss) income (Note 3)	0	0	0	6,152
Net current period foreign currency translation adjustments	905	(1,372)	(606)	7,056
Comprehensive (loss) income	$ (13,728)	$ (8,392)	$ (9,436)	$ 10,205

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Statement - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Retained Earnings
Balance (in shares) at Jun. 30, 2017		46,400,367
Balance at Jun. 30, 2017	$ 493,620	$ 2,320	$ 214,109	$ 3,415	$ 273,776
Net income (loss)	3,149
Foreign currency translation adjustments	7,056			7,056
Stock repurchase program (in shares)		(585,967)
Stock repurchase program	(9,635)	$ (30)	(9,605)
Exercise of SARs (in shares)		27,793
Exercise of SARs	(276)	$ 2	(278)
Stock-based compensation	5,933		5,933
Shares issued through franchise stock incentive program (in shares)		522
Shares issued through franchise stock incentive program	7	$ 0	7
Net restricted stock activity (in shares)		283,534
Net restricted stock activity	(2,003)	$ 14	(2,017)
Minority interest	(184)				(184)
Balance (in shares) at Mar. 31, 2018		46,126,249
Balance at Mar. 31, 2018	497,667	$ 2,306	208,149	10,471	276,741
Balance (in shares) at Dec. 31, 2017		46,688,423
Balance at Dec. 31, 2017	514,173	$ 2,335	216,301	11,843	283,694
Net income (loss)	(7,020)				(7,020)
Foreign currency translation adjustments	(1,372)			(1,372)
Stock repurchase program (in shares)		(585,967)
Stock repurchase program	(9,635)	$ (30)	(9,605)
Exercise of SARs (in shares)		18,697
Exercise of SARs	(183)	$ 1	(184)
Stock-based compensation	1,690		1,690
Net restricted stock activity (in shares)		5,096
Net restricted stock activity	(53)		(53)
Minority interest	67				67
Balance (in shares) at Mar. 31, 2018		46,126,249
Balance at Mar. 31, 2018	$ 497,667	$ 2,306	208,149	10,471	276,741
Balance (in shares) at Jun. 30, 2018	45,258,571	45,258,571
Balance at Jun. 30, 2018	$ 486,438	$ 2,263	194,436	9,656	280,083
Net income (loss)	(8,830)
Foreign currency translation adjustments	$ (606)			(606)
Stock repurchase program (in shares)	(6,023,523)	(6,023,523)
Stock repurchase program	$ (106,252)	$ (301)	(105,951)
Exercise of SARs (in shares)		15,412
Exercise of SARs	(204)	$ 1	(205)
Stock-based compensation	7,065		7,065
Net restricted stock activity (in shares)		182,664
Net restricted stock activity	(1,821)	$ 9	(1,830)
Minority interest	$ 20				20
Balance (in shares) at Mar. 31, 2019	39,433,124	39,433,124
Balance at Mar. 31, 2019	$ 375,810	$ 1,972	93,515	9,050	271,273
Balance (in shares) at Dec. 31, 2018		41,472,468
Balance at Dec. 31, 2018	425,010	$ 2,074	128,964	8,145	285,827
Net income (loss)	(14,633)				(14,633)
Foreign currency translation adjustments	$ 905			905
Stock repurchase program (in shares)	(2,050,430)	(2,050,430)
Stock repurchase program	$ (37,920)	$ (102)	(37,818)
Exercise of SARs (in shares)		7,080
Exercise of SARs	(101)		(101)
Stock-based compensation	2,512		2,512
Net restricted stock activity (in shares)		4,006
Net restricted stock activity	(42)		(42)
Minority interest	$ 79				79
Balance (in shares) at Mar. 31, 2019	39,433,124	39,433,124
Balance at Mar. 31, 2019	$ 375,810	$ 1,972	$ 93,515	$ 9,050	$ 271,273

XML

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) $ in Thousands	9 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)
Cash flows from operating activities:
Net (loss) income	$ (8,830)	$ 3,149
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Non-cash impairment and other adjustments related to TBG discontinued operations	(163)	37,020
Depreciation and amortization	24,727	29,736
Depreciation related to TBG discontinued operations	0	3,723
Deferred income taxes	(6,034)	(85,026)
Gain on life insurance	0	(7,986)
Non-cash TBG mall location restructuring charge	20,711	0
Gain from sale of salon assets to franchisees, net	(10,394)	(255)
Salon asset impairments	3,005	11,099
Accumulated other comprehensive income reclassification adjustment	0	6,152
Stock-based compensation	7,065	6,483
Amortization of debt discount and financing costs	206	4,011
Other non-cash items affecting earnings	(492)	(287)
Changes in operating assets and liabilities, excluding the effects of asset sales	(50,074)	(29,483)
Net cash used in operating activities	(20,273)	(21,664)
Cash flows from investing activities:
Capital expenditures	(23,160)	(20,065)
Capital expenditures related to TBG discontinued operations	0	(1,171)
Proceeds from sale of assets to franchisees	54,619	5,620
Proceeds from company-owned life insurance policies	24,617	18,108
Net cash provided by investing activities	56,076	2,492
Cash flows from financing activities:
Borrowings on revolving credit facilities	0	90,000
Repayment of long-term debt and capital lease obligations	0	(124,230)
Repurchase of common stock	(105,364)	(9,634)
Settlement of equity awards	0	(550)
Taxes paid for shares withheld	(2,447)	(2,279)
Net proceeds from sale and leaseback transaction	18,068	0
Net cash used in financing activities	(89,743)	(46,693)
Effect of exchange rate changes on cash and cash equivalents	5	(30)
Decrease in cash, cash equivalents, and restricted cash	(53,935)	(65,895)
Cash, cash equivalents and restricted cash:
Beginning of period	94,839
Beginning of period, total cash, cash equivalents and restricted cash	148,774	209,986
End of period	$ 94,839	$ 144,091

XML

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the "Company") as of March 31, 2019 and for the three and nine months ended March 31, 2019 and 2018, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2019 and its consolidated results of operations, comprehensive (loss) income, changes in equity and cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2018 and other documents filed or furnished with the SEC during the current fiscal year.

Goodwill:

As of March 31, 2019 and June 30, 2018, the Company-owned reporting unit had $151.1 million and $184.8 million of goodwill, respectively, and the Franchise salons reporting unit had $227.4 million and $227.9 million of goodwill, respectively. See Note 9 to the unaudited interim Condensed Consolidated Financial Statements. The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An interim impairment analysis was not required in the nine months ended March 31, 2019.

The Company performs its annual impairment assessment as of April 30. For the fiscal year 2018 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Company-owned and Franchise reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of our reporting units exceeded their carrying value.  The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 24%. The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis and comparable market multiples. The assumptions used in determining fair value were the number and pace of salons sold to franchisees, proceeds for salon sales, weighted average cost of capital, general and administrative expenses and utilization of net operating loss benefits. We selected the assumptions by considering our historical financial performance and trends, historical salon sale proceeds and estimated salon sale activities. The preparation of our fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. A 100 basis point increase in our weighted average cost of capital within the Company-owned reporting unit would result in a reduction in headroom to approximately 17%.

Other uncertain factors or events exist which may result in a future triggering event and require us to perform an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to our annual assessment. These internal and external factors include but are not limited to the following:

• Changes in the company-owned salon strategy,

• Franchise expansion and sales opportunities,

• Future market earnings multiples deterioration,

• Our financial performance falls short of our projections due to internal operating factors,

• Economic recession,

• Reduced salon traffic, as defined by total transactions, and/or revenue,

• Deterioration of industry trends,

• Increased competition,

• Inability to reduce general and administrative expenses as company-owned salon count potentially decreases,

• Other factors causing our cash flow to deteriorate.

If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 24% headroom, we may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill.

Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses in its goodwill impairment assessment. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material.

Non-Current Assets Held for Sale:

In March 2019, the Company announced that entered into a ten year lease for a new corporate headquarters and would be selling the land and buildings in Edina, MN, currently used for its headquarters. The non-current assets held for sale represent the net book value of the land of $1.7 and $1.7 million and buildings of $4.8 and $4.9 million, as of March 31, 2019 and June 30, 2018, respectively. No impairments were identified as of March 31, 2019.

Accounting Standards Recently Adopted by the Company:

Revenue from Contracts with Customers

In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company retrospectively adopted these standards on July 1, 2018. The impact of these standards was applied to all periods presented and the cumulative effect of applying the standard was recognized at the beginning of the earliest period presented. See Note 2 to the unaudited Condensed Consolidated Financial Statements for additional information regarding the impact of the adoption of the revenue recognition guidance.

Restricted Cash

In November 2016, the FASB issued cash flow guidance requiring restricted cash and restricted cash equivalents to be included in the cash and cash equivalent balances in the statement of cash flows. Transfers between cash and cash equivalents and restricted cash are no longer presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The Company retrospectively adopted this guidance on July 1, 2018. The impact of this standard was applied to all periods presented. As a result of including restricted cash in the beginning and end of period balances, cash, cash equivalents and restricted cash presented in the statement of cash flows increased $38.4 million, $23.6 million and $37.6 million as of June 30, 2018, March 31, 2019 and June 30, 2017, respectively.

Statement of Cash Flows

In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The Company retrospectively adopted this guidance on July 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated statement of cash flows.

Accounting Standards Recently Issued But Not Yet Adopted by the Company:

Leases

In February 2016, the FASB issued updated guidance requiring organizations that lease assets to recognize the rights and obligations created by those leases on the consolidated balance sheet. The new standard is effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company will elect this optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods.  The Company will also elect the package of practical expedients that do not require reassessment of whether existing contracts are or contain leases, lease classification or initial direct costs. The Company is leveraging its lease management system to facilitate the adoption of this standard and is evaluating business processes and internal controls related to lease accounting to assist in the application of the new guidance. The Company is continuing to evaluate the effect the new standard will have on the Company's consolidated financial statements but expects this adoption will result in a material increase in the assets and liabilities on the Company's consolidated balance sheet, as substantially all its operating lease commitments, including leases signed on behalf of franchisees, will be subject to the new guidance. The Company does not expect the adoption of the new guidance to have a material impact on net income, cash flows or compliance with debt agreements.

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REVENUE RECOGNITION:

9 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION:

REVENUE RECOGNITION:

In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted the amended revenue recognition guidance, ASC Topic 606, on July 1, 2018 using the full retrospective transition method which required the adjustment of each prior reporting period presented. The adjusted amounts include the application of a practical expedient that permitted the Company to reflect the aggregate effect of all modifications that occurred prior to fiscal year 2017 when identifying the satisfied and unsatisfied performance obligation, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. As a result of adopting this new standard, the Company is providing its updated revenue recognition policies.

Revenue Recognition and Deferred Revenue:

Revenue recognized at point of sale

Company-owned salon revenues are recognized at the time when the services are provided. Product revenues for Company-owned salons are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the customer. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales by the Company to its franchisees are included within product revenues in the unaudited Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 days of delivery.

Revenue recognized over time

Franchise revenues primarily include royalties, advertising fund fees, franchise fees and other fees. Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenue is billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the unaudited Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Upon adoption of the new revenue recognition guidance, recognition of these fees is deferred until the salon opening and is then recognized over the term of the franchise agreement, typically ten years. Under previous guidance the initial franchise fees were recognized in full upon salon opening.

The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows:

	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Company-owned		Franchise		Company-owned		Franchise
	(in thousands)
Revenue recognized at a point in time:
Service	$	181,809	$	—	$	222,022	$	—
Product	39,427		14,339		49,980		14,931
Total revenue recognized at a point in time	$	221,236	$	14,339	$	272,002	$	14,931
Revenue recognized over time:
Royalty and other franchise fees	$	—	$	14,339	$	—	$	12,322
Advertising fund fees	—		8,429		—		6,528
Total revenue recognized over time	—		22,768		—		18,850
Total revenue	$	221,236	$	37,107	$	272,002	$	33,781

	Nine Months Ended March 31, 2019				Nine Months Ended March 31, 2018
	Company-owned		Franchise		Company-owned		Franchise
	(in thousands)
Revenue recognized at a point in time:
Service	$	580,076	$	—	$	680,930	$	—
Product	125,220		47,786		159,980		37,721
Total revenue recognized at a point in time	$	705,296	$	47,786	$	840,910	$	37,721
Revenue recognized over time:
Royalty and other franchise fees	$	—	$	43,495	$	—	$	36,733
Advertising fund fees	—		24,272		—		19,732
Total revenue recognized over time	—		67,767		—		56,465
Total revenue	$	705,296	$	115,553	$	840,910	$	94,186

Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows:

	March 31, 2019		June 30, 2018		Balance Sheet Classification
	(in thousands)
Receivables from contracts with customers, net	$	23,904	$	21,504	Accounts receivable, net
Broker fees	$	16,904	$	14,002	Other assets
Deferred revenue:
Current
Gift card liability	$	3,439	$	3,320	Accrued expenses
Deferred franchise fees unopened salons	137		2,306		Accrued expenses
Deferred franchise fees open salons	3,767		3,030		Accrued expenses
Total current deferred revenue	$	7,343	$	8,656
Non-current
Deferred franchise fees unopened salons	$	13,941	$	11,161	Other non-current liabilities
Deferred franchise fees open salons	21,943		18,346		Other non-current liabilities
Total non-current deferred revenue	$	35,884	$	29,507

Receivables relate primarily to payments due for royalties, franchise fees, advertising fees, and sales of salon services and product. The receivables balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from franchisees. As of March 31, 2019 and June 30, 2018, the balance in the allowance for doubtful accounts was $15.7 and $1.2 million, respectively. The increase in the allowance for doubtful accounts is due to reserving for $12.7 million of TBG receivables in the three months ended March 31, 2019 (see Note 3). Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as General and Administrative expense over the term of the agreement. The adoption of the amended revenue recognition guidance did not significantly change the Company's accounting for broker fees.

The following table is a rollforward of the broker fee balance for the periods indicated (in thousands):

Balance as of June 30, 2018	$	14,002
Additions	4,393
Amortization	(1,484		)
Write-offs	(7		)
Balance as of March 31, 2019	$	16,904

Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons. Gift card revenue for the three months ended March 31, 2019 and 2018 was $1.8 and $1.9 million, respectively, and for the nine months ended March 31, 2019 and 2018 was $4.0 and $4.6 million, respectively. Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue for the three months ended March 31, 2019 and 2018 was $0.9 and $0.7 million, respectively, and for the nine months ended March 31, 2019 and 2018 was $2.6 and $2.0 million. Estimated revenue expected to the recognized in the future related to deferred franchise fees for open salons as of March 31, 2019 is as follows (in thousands):

Remainder of 2019	$	840
2020	3,631
2021	3,543
2022	3,423
2023	3,246
Thereafter	11,027
Total	$	25,710

The amended revenue recognition guidance impacted the Company's previously reported financial statements as follows:

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

June 30, 2018

(Dollars in thousands)

			Adjustments for new revenue recognition guidance
	Previously		Franchise			Advertising		Gift Card
	Reported		Fees			Funds		Breakage			Taxes			Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	110,399	$	—		$	—	$	—		$	—		$	110,399
Receivables, net	52,430		—			—		—			—			52,430
Inventories	79,363		—			—		—			—			79,363
Other current assets	47,867		—			—		—			—			47,867
Total current assets	290,059		—			—		—			—			290,059
Property and equipment, net	99,288		—			—		—			—			99,288
Goodwill	412,643		—			—		—			—			412,643
Other intangibles, net	10,557		—			—		—			—			10,557
Other assets	37,616		—			—		—			—			37,616
Non-current assets held for sale (Note 1)	6,572		—			—		—			—			6,572
Total assets	$	856,735	$	—		$	—	$	—		$	—		$	856,735
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	57,738	$	—		$	—	$	—		$	—		$	57,738
Accrued expenses	97,630		3,030			—		56			—			100,716
Total current liabilities	155,368		3,030			—		56			—			158,454
Long-term debt	90,000		—			—		—			—			90,000
Other noncurrent liabilities	107,875		18,346			—		—			(4,378		)	121,843
Total liabilities	353,243		21,376			—		56			(4,378		)	370,297
Commitments and contingencies (Note 7)
Shareholders’ equity:			0
Common stock	2,263		—			—		—			—			2,263
Additional paid-in capital	194,436		—			—		—			—			194,436
Accumulated other comprehensive income	9,568		88			—		—			—			9,656
Retained earnings	297,225		(21,464		)	—		(56		)	4,378			280,083
Total shareholders’ equity	503,492		(21,376		)	—		(56		)	4,378			486,438
Total liabilities and shareholders’ equity	$	856,735	$	—		$	—	$	—		$	—		$	856,735

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three Months Ended March 31, 2018

(Dollars and shares in thousands, except per share data amounts)

				Adjustments for new revenue recognition guidance
	Previously			Franchise			Advertising		Gift Card
	Reported			Fees			Funds		Breakage			Taxes		Adjusted
Revenues:
Service	$	221,926		$	—		$	—	$	96		$	—	$	222,022
Product	64,887			—			—		24			—		64,911
Royalties and fees	13,988			(1,666		)	6,528		—			—		18,850
	300,801			(1,665		)	6,527		120			—		305,783
Operating expenses:
Cost of service	132,081			—			—		—			—		132,081
Cost of product	37,139			—			—		—			—		37,139
Site operating expenses	31,021			—			6,527		—			—		37,548
General and administrative	45,727			—			—		—			—		45,727
Rent	39,391			—			—		—			—		39,391
Depreciation and amortization	9,558			—			—		—			—		9,558
Total operating expenses	294,917			—			6,527		—			—		301,444
Operating income	5,884			(1,665		)	—		120			—		4,339
Other (expense) income:
Interest expense	(5,095		)	—			—		—			—		(5,095		)
Gain from sale of salon assets to franchisees, net	237			—			—		—			—		237
Interest income and other, net	1,548			—			—		(53		)	—		1,495
Income from continuing operations before income taxes	2,574			(1,665		)	—		67			—		976
Income tax expense	2,225			—			—		—			384		2,609
Income from continuing operations	4,799			(1,665		)	—		67			384		3,585
Loss from TBG discontinued operations, net of taxes	(10,605		)	—			—		—			—		(10,605		)
Net loss	$	(5,806	)	$	(1,665	)	$	—	$	67		$	384	$	(7,020	)
Net loss per share:
Basic:
Income from continuing operations (1)	$	0.10		$	(0.04	)	$	0.00	$	0.00		$	0.01	$	0.08
Loss from TBG discontinued operations	(0.23		)	0.00			0.00		0.00			0.00		(0.23		)
Net loss per share, basic (1)	$	(0.12	)	$	(0.04	)	$	0.00	$	0.00		$	0.01	$	(0.15	)
Diluted:
Income from continuing operations (1)	$	0.10		$	(0.04	)	$	0.00	$	0.00		$	0.01	$	0.08
Loss from TBG discontinued operations	(0.22		)	0.00			0.00		0.00			0.00		(0.22		)
Net loss per share, diluted (1)	$	(0.12	)	$	(0.04	)	$	0.00	$	0.00		$	0.01	$	(0.15	)
Weighted average common and common equivalent shares outstanding:
Basic	46,612			46,612			46,612		46,612			46,612		46,612
Diluted	47,153			47,153			47,153		47,153			47,153		47,153

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(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Nine Months Ended March 31, 2018

(Dollars and shares in thousands, except per share data amounts)

				Adjustments for new revenue recognition guidance
	Previously			Franchise			Advertising		Gift Card
	Reported			Fees			Funds		Breakage			Taxes		Adjusted
Revenues:
Service	$	680,699		$	—		$	—	$	231		$	—	$	680,930
Product	197,643			—			—		58			—		197,701
Royalties and fees	40,847			(4,114		)	19,732		—			—		56,465
	919,189			(4,114		)	19,732		289			—		935,096
Operating expenses:
Cost of service	406,767			—			—		—			—		406,767
Cost of product	107,165			—			—		—			—		107,165
Site operating expenses	96,443			—			19,732		—			—		116,175
General and administrative	129,485			—			—		—			—		129,485
Rent	147,280			—			—		—			—		147,280
Depreciation and amortization	46,764			—			—		—			—		46,764
Total operating expenses	933,904			—			19,732		—			—		953,636
Operating income	(14,715		)	(4,114		)	—		289			—		(18,540		)
Other (expense) income:
Interest expense	(9,402		)	—			—		—			—		(9,402		)
Gain from sale of salon assets to franchisees, net	255			—			—		—			—		255
Interest income and other, net	4,919			—			—		(985		)	—		3,934
Income from continuing operations before income taxes	(18,943		)	(4,114		)	—		(696		)	—		(23,753		)
Income tax expense	73,855			—			—		—			4,020		77,875
Income from continuing operations	54,912			(4,114		)	—		(696		)	4,020		54,122
Loss from TBG discontinued operations, net of taxes	(50,973		)	—			—		—			—		(50,973		)
Net loss	$	3,939		$	(4,114	)	$	—	$	(696	)	$	4,020	$	3,149
Net loss per share:
Basic:
Income from continuing operations (1)	$	1.18		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	1.16
Loss from TBG discontinued operations	(1.09		)	0.00			0.00		0.00			0.00		(1.09		)
Net loss per share, basic (1)	$	0.08		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	0.07
Diluted:
Income from continuing operations (1)	$	1.17		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	1.15
Loss from TBG discontinued operations	(1.08		)	0.00			0.00		0.00			0.00		(1.08		)
Net loss per share, diluted (1)	$	0.08		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	0.07
Weighted average common and common equivalent shares outstanding:
Basic	46,684			46,684			46,684		46,684			46,684		46,684
Diluted	47,093			47,093			47,093		47,093			47,093		47,093

_____________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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TBG DISCONTINUED OPERATIONS:

9 Months Ended

Mar. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

TBG DISCONTINUED OPERATIONS

TBG DISCONTINUED OPERATIONS:

In October 2017, the Company sold substantially allits mall-based salon business in North America, representing 858 salons, and substantially all its International segment, representing approximately 250 salons in the UK, to The Beautiful Group ("TBG"), an affiliate of Regent, a private equity firm based in Los Angeles, California, who operates these locations as franchise locations.

For the International segment, the Company entered into a share purchase agreement with TBG for minimal consideration.

The Company classified the results of its mall-based business and its International segment as discontinued operations for all periods presented in the Condensed Consolidated Statement of Operations. In connection with the sale of the mall-based business and the International segment, the Company performed an impairment assessment of the asset groups. The Company recognized net impairment charges within discontinued operations based on the difference between the expected sale prices and the carrying value of the asset groups.

The following summarizes the results of our TBG discontinued operations for the periods presented:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2019			2018			2019			2018
	(Dollars in thousands)						(Dollars in thousands)
Revenue	$	—		$	—		$	—		$	101,140
Income (loss) from TBG discontinued operations, before income taxes	224			(13,545		)	(862		)	(57,385		)
Income tax (expense) benefit on TBG discontinued operations	(46		)	2,940			6,889			6,412
Income (loss) from TBG discontinued operations, net of income taxes	$	178		$	(10,605	)	$	6,027		$	(50,973	)

For the three months ended March 31, 2019, the $0.2 million income from discontinued operations includes actuarial insurance accrual adjustments associated with the transaction. For the nine months ended March 31, 2019, the $6.0 million income from discontinued operations includes $6.9 million of income tax benefits associated with the wind-down and transfer of legal entities related to discontinued operations and $0.2 million of actuarial insurance accrual adjustments associated with the transaction, partly offset by $1.0 million of professional fees.

For the three months ended March 31, 2018, included within the $10.6 million loss from discontinued operations were $11.7 million of asset impairment charges, $1.2 million of loss from operations and $0.6 million of professional fees associated with the transaction, partly offset by a $2.9 million income tax benefit. For the nine months ended March 31, 2018, included within the $51.0 million loss from discontinued operations were $40.8 million of asset impairment charges, $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, $4.0 million of loss from operations and $6.4 million of professional fees associated with the transaction, partly offset by a $6.4 million income tax benefit.

As part of the sale of the mall-based business, TBG agreed to pay for the value of certain inventory, prepaid rent and assumed specific liabilities, including lease liabilities. In March 2018, the Company entered into discussions with TBG regarding a waiver of working capital and prepaid rent payments associated with the original transaction and the financing of certain receivables to assist TBG with its cash flow and operational needs. Based on those discussions as of March 31, 2018, the Company fully reserved for the working capital and prepaid rent amount of $11.7 million which was recorded in discontinued operations in the Condensed Consolidated Statement of Operations in the third quarter of fiscal year 2018. In August 2018, the Company entered into promissory notes for approximately $11.7 million in working capital receivables and $8.0 million in accounts receivables, a majority of which was for inventory purchases. All notes have a maturity date of August 2, 2020. Pursuant to the working capital notes, such notes would be forgiven as of the maturity date and exchanged for a three-year contingent payment right that is payable upon the occurrence of certain TBG monetization events if no default had occurred under such notes and certain other conditions are met. Based on TBG’s inability to meet the requirements of the promissory notes, including non-payment of amounts due to the Company, the Company recorded a full reserve against such notes. In addition, the Company has recorded additional reserves of approximately $11.6 million for inventory and $1.1 million for outstanding royalties that TBG has failed to pay. As of March 31, 2019, the Company has fully reserved for all amounts invoiced to TBG. The total note and receivables reserve in the third quarter of fiscal year 2019 was $20.7 million and is recorded in the TBG mall location restructuring line of the unaudited Condensed Consolidated Statement of Operations. TBG's business has continued to decline. The Company continues to have conversations with TBG focused on how to assist TBG with its cash flow and operational needs.

The following summarizes the TBG related charges for the periods presented:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,						Income Statement Classification
	2019			2018			2019			2018
	(Dollars in thousands)
TBG mall location restructuring	$	20,711		$	—		$	20,711		$	—		TBG mall location restructuring
Working capital and prepaid rent receivable reserve	—			(11,697		)	—			(11,697		)	Income (loss) from TBG discontinued operations
Other charges	224			(1,848		)	(862		)	(45,688		)	Income (loss) from TBG discontinued operations
Income (loss) from TBG discontinued operations, before income taxes	224			(13,545		)	(862		)	(57,385		)	Income (loss) from TBG discontinued operations
Income tax (expense) benefit on TBG discontinued operations	(46		)	2,940			6,889			6,412			Income (loss) from TBG discontinued operations
Income (loss) from TBG discontinued operations, net of income taxes	$	178		$	(10,605	)	$	6,027		$	(50,973	)	Income (loss) from TBG discontinued operations

Other than the items presented in the Consolidated Statement of Cash Flows, there were no other significant non-cash operating activities or any significant non-cash investing activities related to discontinued operations for the three and nine months ended March 31, 2019 and 2018.

The Company utilized the consolidation of variable interest entities guidance to determine whether or not TBG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of TBG. As of March 31, 2019, the Company concluded that TBG is a VIE, based on the fact that the equity investment at risk in TBG is not sufficient. The Company determined that it is not the primary beneficiary of TBG based on its exposure to the expected losses of TBG and as it is not the variable interest holder that is most closely associated within the relationship and the significance of the activities of TBG. The exposure to loss related to the Company's involvement with TBG is the guarantee of the operating leases for certain TBG operated salons. As of March 31, 2019, prior to any mitigation efforts which may be available, the Company remains liable for up to $64.8 million associated with remaining TBG salon lease commitments, should TBG not perform.

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EARNINGS PER SHARE:

9 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE:

The Company’s basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding RSAs, RSUs and PSUs. The Company’s diluted earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company’s stock-based compensation plans. Stock-based awards with exercise prices greater than the average market price of the Company’s common stock are excluded from the computation of diluted earnings per share.

For the three and nine months ended March 31, 2019, 1,023,038 and 1,006,589, respectively, common stock equivalents of dilutive common stock were excluded in the diluted earnings per share calculations due to the net loss from continuing operations. For the three and nine months ended March 31, 2018, 541,405 and 409,646, respectively, common stock equivalents of dilutive common stock were included in the diluted earnings per share calculations due to the net income from continuing operations.

The computation of weighted average shares outstanding, assuming dilution, excluded 608,944 and 550,948 of stock-based awards during the three months ended March 31, 2019 and 2018, respectively, and 542,329 and 730,377 of stock-based awards during the nine months ended March 31, 2019 and 2018, respectively, as they were not dilutive under the treasury stock method.

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SHAREHOLDERS' EQUITY:

9 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY:

Stock-Based Employee Compensation:

During the nine months ended March 31, 2019, the Company granted various equity awards including restricted stock units (RSUs) and performance-based restricted stock units (PSUs).

A summary of equity awards granted is as follows:

	For the Three Months Ended March 31, 2019	For the Nine Months Ended March 31, 2019
Restricted stock units	—	338,859
Performance-based restricted stock units	—	733,688

The RSUs granted to employees vest in equal amounts over a three-year period subsequent to the grant date, cliff vest after a three-year period or cliff vest after a five-year period subsequent to the grant date.

The PSUs granted to employees have a three year performance period ending June 30, 2021 linked to the Company's stock price reaching a specified volume weighted average closing price for a 50 day period that ends on June 30, 2021. The PSUs granted to certain executives include an additional two year service period after the performance period. Of the total PSUs granted, 52,590 PSUs have a maximum vesting percentage of 200% based on the level of performance achieved for the respective award, while the remaining PSUs have a maximum vesting percentage of 100%.

Total compensation cost for stock-based payment arrangements totaling $2.5 and $1.9 million for the three months ended March 31, 2019 and 2018, respectively, and $7.1 and $6.5 million for the nine months ended March 31, 2019 and 2018, respectively, was recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations.

Share Repurchases:

During the three and nine months ended March 31, 2019, the Company repurchased 2.1 million and 6.0 million shares, respectively, for $37.9 million and $106.3 million, respectively, under a previously approved stock repurchase program. At March 31, 2019, $129.1 million remains outstanding under the approved stock repurchase program.

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INCOME TAXES:

9 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES:

A summary of income tax (expense) benefit and corresponding effective tax rates is as follows:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2019			2018			2019			2018
	(Dollars in thousands)
Income tax (expense) benefit	$	(3,248	)	$	2,609		$	(2,988	)	$	77,875
Effective tax rate	(28.1		%)	(267.3		%)	(25.2		%)	327.9		%

The recorded tax provisions and effective tax rates for the three and nine months ended March 31, 2019 and three and nine months ended March 31, 2018 were different than what would normally be expected primarily due to the impact of tax legislation commonly referred to as the Tax Cuts and Jobs Act, state conformity of the new federal provisions and the deferred tax valuation allowance. The majority of the tax provision in periods ended prior to December 31, 2017 related to non-cash tax expense for tax benefits on certain indefinite-lived assets that the Company could not recognize for reporting purposes.

The Company is no longer subject to IRS examinations for years before 2013. Furthermore, with limited exceptions, the Company is no longer subject to state and international income tax examinations by tax authorities for years before 2012.

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COMMITMENTS AND CONTINGENCIES:

9 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES:

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

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CASH, CASH EQUIVALETS AND RESTRICTED CASH:

9 Months Ended

Mar. 31, 2019

Cash and Cash Equivalents [Abstract]

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows:

	March 31, 2019		June 30, 2018
	(Dollars in thousands)
Cash and cash equivalents	$	71,146	$	110,399
Restricted cash, included in Other current assets (1)	23,693		38,375
Total cash, cash equivalents and restricted cash	$	94,839	$	148,774

_______________________________________________________________________________

(1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs.

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GOODWILL AND OTHER INTANGIBLES:

9 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLES

GOODWILL AND OTHER INTANGIBLES:

The table below contains details related to the Company's goodwill:

	Company-owned			Franchise			Consolidated
	(Dollars in thousands)
Goodwill, net at June 30, 2018	$	184,788		$	227,855		$	412,643
Translation rate adjustments	(147		)	(408		)	(555		)
Derecognition related to sale of salon assets to franchisees (1)	(33,528		)	—			(33,528		)
Goodwill, net at March 31, 2019	$	151,113		$	227,447		$	378,560

_______________________________________________________________________________

(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 trailing-twelve months EBITDA of the salon being sold and the denominator of which is the estimated annualized EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit.

The table below presents other intangible assets:

	March 31, 2019							June 30, 2018
	Cost (1)		Accumulated Amortization (1)			Net		Cost (1)		Accumulated Amortization (1)			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	7,830	$	(4,236	)	$	3,594	$	8,128	$	(4,260	)	$	3,868
Franchise agreements	9,675		(7,888		)	1,787		9,763		(7,712		)	2,051
Lease intangibles	13,474		(9,884		)	3,590		13,997		(9,770		)	4,227
Other	1,966		(1,591		)	375		1,983		(1,572		)	411
	$	32,945	$	(23,599	)	$	9,346	$	33,871	$	(23,314	)	$	10,557

_______________________________________________________________________________

(1)  The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency.

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FINANCING ARRANGEMENTS:

9 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS:

The Company’s long-term debt consists of the following:

Revolving Credit Facility

	Maturity Date	Interest Rate	March 31, 2019		June 30, 2018
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.75%	$	90,000	$	90,000

As of March 31, 2019 and June 30, 2018, the Company has $90.0 million of outstanding borrowings under a $295.0 million revolving credit facility. At March 31, 2019 and June 30, 2018, the Company has outstanding standby letters of credit under the revolving credit facility of $23.0 million and $1.5 million, respectively, primarily related to the Company's self-insurance program. The unused available credit under the facility was $182.0 million and $203.5 million, respectively. Amounts outstanding under the revolving credit facility are due at maturity in March 2023.

Sale and Leaseback Transaction

The Company’s long-term lease liability consists of the following:

	Maturity Date	Interest Rate	March 31, 2019		June 30, 2018
	(Fiscal Year)		(Dollars in thousands)
Long-term lease liability	2033	3.30%	$	17,505	$	—

In November 2018, the Company sold its Salt Lake City Distribution Center to an unrelated party. The Company is leasing the property back for 15 years with the option to renew three times for five year periods. As the Company plans to lease the property for more than 75% of its economic life, the sales proceeds received from the buyer-lessor are recognized as a financial liability. This financial liability is reduced based on the rental payments made under the lease that are allocated between principal and interest. As of March 31, 2019, the current portion of the Company’s lease liability was $0.6 million. As of March 31, 2019, future lease payments due are as follows:

Remainder of 2019	$	302
2020	1,120
2021	1,157
2022	1,171
2023	1,186
Thereafter	13,265
Total	$	18,201

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three and nine months ended March 31, 2019.

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FAIR VALUE MEASUREMENTS:

9 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS:

Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2019 and June 30, 2018, the estimated fair value of the Company’s cash, cash equivalents, restricted cash, receivables and accounts payable approximated their carrying values. As of March 31, 2019 and June 30, 2018, the estimated fair value of the Company's debt was $90.0 million and the carrying value was $90.0 million. As of March 31, 2019 the estimated fair value of the Company’s long-term financial liability was $17.5 million. The estimated fair values of the Company's debt and long-term financial liability are based on Level 2 inputs.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

The following impairments were based on fair values using Level 3 inputs:

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2019		2018		2019		2018
	(Dollars in thousands)
Long-lived assets	$	702	$	313	$	3,005	$	9,565

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SEGMENT INFORMATION:

9 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION:

Segment information is prepared on the same basis that the chief operating decision maker reviews financial information for operational decision-making purposes.

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

	March 31, 2019		June 30, 2018
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,591		1,660
Supercuts	568		928
Signature Style	1,217		1,378
Total Company-owned Salons	3,376		3,966
as a percent of total Company-owned and Franchise salons	43.6	%	49.1	%
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	591		561
Supercuts	2,164		1,739
Signature Style	740		745
Total franchise locations, excluding TBG mall locations	3,495		3,045
as a percent of total Company-owned and Franchise salons	45.1	%	37.7	%
Total North America TBG mall locations (1)	617		807
as a percent of total Company-owned and Franchise salons	8.0	%	10.0	%
Total North American Salons	4,112		3,852
Total International TBG Salons (1)	263		262
as a percent of total Company-owned and Franchise salons	3.4	%	3.2	%
Total Franchise Salons	4,375		4,114
as a percent of total Company-owned and Franchise salons	56.4	%	50.9	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	87		88
Grand Total, System-wide	7,838		8,168

____________________________________

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

As of March 31, 2019, 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.

Financial information concerning the Company's reportable operating segments is shown in the following table:

	For the Three Months Ended March 31, 2019
	Company-owned		Franchise			Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	181,809	$	—		$	—		$	181,809
Product	39,427		14,339			—			53,766
Royalties and fees	—		22,768			—			22,768
	221,236		37,107			—			258,343
Operating expenses:
Cost of service	111,632		—			—			111,632
Cost of product	19,992		11,175			—			31,167
Site operating expenses	25,894		8,445			—			34,339
General and administrative	14,505		7,526			19,663			41,694
Rent	31,964		190			178			32,332
Depreciation and amortization	6,519		240			1,871			8,630
TBG mall location restructuring	—		20,711			—			20,711
Total operating expenses	210,506		48,287			21,712			280,505
Operating income (loss)	10,730		(11,180		)	(21,712		)	(22,162		)
Other (expense) income:
Interest expense	—		—			(1,354		)	(1,354		)
Gain from sale of salon assets to franchisees, net	—		—			11,489			11,489
Interest income and other, net	—		—			464			464
Income (loss) from continuing operations before income taxes	$	10,730	$	(11,180	)	$	(11,113	)	$	(11,563	)

	For the Three Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	222,022	$	—	$	—		$	222,022
Product	49,980		14,931		—			64,911
Royalties and fees	—		18,850		—			18,850
	272,002		33,781		—			305,783
Operating expenses:
Cost of service	132,081		—		—			132,081
Cost of product	25,137		12,002		—			37,139
Site operating expenses	31,022		6,526		—			37,548
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
TBG mall location restructuring	—		—		—			—
Total operating expenses	252,661		25,261		23,522			301,444
Operating income (loss)	19,341		8,520		(23,522		)	4,339
Other (expense) income:
Interest expense	—		—		(5,095		)	(5,095		)
Gain from sale of salon assets to franchisees, net	—		—		237			237
Interest income and other, net	—		—		1,495			1,495
Income (loss) from continuing operations before income taxes	$	19,341	$	8,520	$	(26,885	)	$	976

	For the Nine Months Ended March 31, 2019
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	580,076	$	—	$	—		$	580,076
Product	125,220		47,786		—			173,006
Royalties and fees	—		67,767		—			67,767
	705,296		115,553		—			820,849
Operating expenses:
Cost of service	348,060		—		—			348,060
Cost of product	61,661		38,037		—			99,698
Site operating expenses	82,435		24,288		—			106,723
General and administrative	45,084		24,656		65,517			135,257
Rent	101,908		468		576			102,952
Depreciation and amortization	21,304		613		5,815			27,732
TBG mall location restructuring	—		20,711		—			20,711
Total operating expenses	660,452		108,773		71,908			841,133
Operating income (loss)	44,844		6,780		(71,908		)	(20,284		)
Other (expense) income:
Interest expense	—		—		(3,432		)	(3,432		)
Gain from sale of salon assets to franchisees, net	—		—		10,394			10,394
Interest income and other, net	—		—		1,453			1,453
Income (loss) from continuing operations before income taxes	$	44,844	$	6,780	$	(63,493	)	$	(11,869	)

	For the Nine Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	680,930	$	—	$	—		$	680,930
Product	159,980		37,721		—			197,701
Royalties and fees	—		56,465		—			56,465
	840,910		94,186		—			935,096
Operating expenses:
Cost of service	406,767		—		—			406,767
Cost of product	77,628		29,537		—			107,165
Site operating expenses	96,443		19,732		—			116,175
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
TBG mall location restructuring	—		—		—			—
Total operating expenses	818,260		68,717		66,659			953,636
Operating income (loss)	22,650		25,469		(66,659		)	(18,540		)
Other (expense) income:
Interest expense	—		—		(9,402		)	(9,402		)
Gain from sale of salon assets to franchisees, net	—		—		255			255
Interest income and other, net	—		—		3,934			3,934
Income (loss) from continuing operations before income taxes	$	22,650	$	25,469	$	(71,872	)	$	(23,753	)

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies)

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Goodwill

The Company assesses goodwill impairment on an annual basis, during the Company’s fourth fiscal quarter, and between annual assessments if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An interim impairment analysis was not required in the nine months ended March 31, 2019.

The Company performs its annual impairment assessment as of April 30. For the fiscal year 2018 annual impairment assessment, due to the transformational efforts completed during the year, the Company elected to forgo the optional Step 0 assessment and performed the quantitative impairment analysis on the Company-owned and Franchise reporting units. The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair value. The results of these assessments indicated that the estimated fair value of our reporting units exceeded their carrying value.  The Franchise reporting unit had substantial headroom and the Company-owned reporting unit had headroom of approximately 24%. The fair value of the Company-owned reporting unit was determined based on a discounted cash flow analysis and comparable market multiples. The assumptions used in determining fair value were the number and pace of salons sold to franchisees, proceeds for salon sales, weighted average cost of capital, general and administrative expenses and utilization of net operating loss benefits. We selected the assumptions by considering our historical financial performance and trends, historical salon sale proceeds and estimated salon sale activities. The preparation of our fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change. A 100 basis point increase in our weighted average cost of capital within the Company-owned reporting unit would result in a reduction in headroom to approximately 17%.

Other uncertain factors or events exist which may result in a future triggering event and require us to perform an interim impairment analysis with respect to the carrying value of goodwill for the Company-owned reporting unit prior to our annual assessment. These internal and external factors include but are not limited to the following:

• Changes in the company-owned salon strategy,

• Franchise expansion and sales opportunities,

• Future market earnings multiples deterioration,

• Our financial performance falls short of our projections due to internal operating factors,

• Economic recession,

• Reduced salon traffic, as defined by total transactions, and/or revenue,

• Deterioration of industry trends,

• Increased competition,

• Inability to reduce general and administrative expenses as company-owned salon count potentially decreases,

• Other factors causing our cash flow to deteriorate.

If the triggering event analysis indicates the fair value of the Company-owned reporting unit has potentially fallen below more than the 24% headroom, we may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill.

Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses in its goodwill impairment assessment. However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for company-owned salons, the Company may be exposed to future impairment losses that could be material.

Accounting Standards

Accounting Standards Recently Adopted by the Company:

Revenue from Contracts with Customers

In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company retrospectively adopted these standards on July 1, 2018. The impact of these standards was applied to all periods presented and the cumulative effect of applying the standard was recognized at the beginning of the earliest period presented. See Note 2 to the unaudited Condensed Consolidated Financial Statements for additional information regarding the impact of the adoption of the revenue recognition guidance.

Restricted Cash

In November 2016, the FASB issued cash flow guidance requiring restricted cash and restricted cash equivalents to be included in the cash and cash equivalent balances in the statement of cash flows. Transfers between cash and cash equivalents and restricted cash are no longer presented in the statement of cash flows and a reconciliation between the balance sheet and statement of cash flows must be disclosed. The Company retrospectively adopted this guidance on July 1, 2018. The impact of this standard was applied to all periods presented. As a result of including restricted cash in the beginning and end of period balances, cash, cash equivalents and restricted cash presented in the statement of cash flows increased $38.4 million, $23.6 million and $37.6 million as of June 30, 2018, March 31, 2019 and June 30, 2017, respectively.

Statement of Cash Flows

In August 2016, the FASB issued updated cash flow guidance clarifying cash flow classification and presentation for certain items. The Company retrospectively adopted this guidance on July 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated statement of cash flows.

Accounting Standards Recently Issued But Not Yet Adopted by the Company:

Leases

In February 2016, the FASB issued updated guidance requiring organizations that lease assets to recognize the rights and obligations created by those leases on the consolidated balance sheet. The new standard is effective for the Company in the first quarter of fiscal year 2020, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, which provides companies with the option to apply the new lease standard either at the beginning of the earliest comparative period presented or in the period of adoption. The Company will elect this optional transition relief amendment that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods.  The Company will also elect the package of practical expedients that do not require reassessment of whether existing contracts are or contain leases, lease classification or initial direct costs. The Company is leveraging its lease management system to facilitate the adoption of this standard and is evaluating business processes and internal controls related to lease accounting to assist in the application of the new guidance. The Company is continuing to evaluate the effect the new standard will have on the Company's consolidated financial statements but expects this adoption will result in a material increase in the assets and liabilities on the Company's consolidated balance sheet, as substantially all its operating lease commitments, including leases signed on behalf of franchisees, will be subject to the new guidance. The Company does not expect the adoption of the new guidance to have a material impact on net income, cash flows or compliance with debt agreements.

Revenue Recognition

In May 2014, the FASB issued amended guidance for revenue recognition which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted the amended revenue recognition guidance, ASC Topic 606, on July 1, 2018 using the full retrospective transition method which required the adjustment of each prior reporting period presented. The adjusted amounts include the application of a practical expedient that permitted the Company to reflect the aggregate effect of all modifications that occurred prior to fiscal year 2017 when identifying the satisfied and unsatisfied performance obligation, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. As a result of adopting this new standard, the Company is providing its updated revenue recognition policies.

Revenue Recognition and Deferred Revenue:

Revenue recognized at point of sale

Company-owned salon revenues are recognized at the time when the services are provided. Product revenues for Company-owned salons are recognized when the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the customer. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized proportional to redemptions using estimates based on historical redemption patterns. Product sales by the Company to its franchisees are included within product revenues in the unaudited Condensed Consolidated Statement of Operations and recorded at the time product is delivered to the franchisee. Payment for franchisee product revenue is generally collected within 30 days of delivery.

Revenue recognized over time

Franchise revenues primarily include royalties, advertising fund fees, franchise fees and other fees. Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenue is billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the unaudited Condensed Consolidated Statement of Operations. This increases both the gross amount of reported franchise revenue and site operating expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Upon adoption of the new revenue recognition guidance, recognition of these fees is deferred until the salon opening and is then recognized over the term of the franchise agreement, typically ten years. Under previous guidance the initial franchise fees were recognized in full upon salon opening.

Fair Value Measurements

We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

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REVENUE RECOGNITION: (Tables)

9 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of revenue

The following table disaggregates revenue by timing of revenue recognition and is reconciled to reportable segment revenues as follows:

	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Company-owned		Franchise		Company-owned		Franchise
	(in thousands)
Revenue recognized at a point in time:
Service	$	181,809	$	—	$	222,022	$	—
Product	39,427		14,339		49,980		14,931
Total revenue recognized at a point in time	$	221,236	$	14,339	$	272,002	$	14,931
Revenue recognized over time:
Royalty and other franchise fees	$	—	$	14,339	$	—	$	12,322
Advertising fund fees	—		8,429		—		6,528
Total revenue recognized over time	—		22,768		—		18,850
Total revenue	$	221,236	$	37,107	$	272,002	$	33,781

	Nine Months Ended March 31, 2019				Nine Months Ended March 31, 2018
	Company-owned		Franchise		Company-owned		Franchise
	(in thousands)
Revenue recognized at a point in time:
Service	$	580,076	$	—	$	680,930	$	—
Product	125,220		47,786		159,980		37,721
Total revenue recognized at a point in time	$	705,296	$	47,786	$	840,910	$	37,721
Revenue recognized over time:
Royalty and other franchise fees	$	—	$	43,495	$	—	$	36,733
Advertising fund fees	—		24,272		—		19,732
Total revenue recognized over time	—		67,767		—		56,465
Total revenue	$	705,296	$	115,553	$	840,910	$	94,186

Schedule of receivables, broker fees and deferred revenue

Information about receivables, broker fees and deferred revenue subject to the amended revenue recognition guidance is as follows:

	March 31, 2019		June 30, 2018		Balance Sheet Classification
	(in thousands)
Receivables from contracts with customers, net	$	23,904	$	21,504	Accounts receivable, net
Broker fees	$	16,904	$	14,002	Other assets
Deferred revenue:
Current
Gift card liability	$	3,439	$	3,320	Accrued expenses
Deferred franchise fees unopened salons	137		2,306		Accrued expenses
Deferred franchise fees open salons	3,767		3,030		Accrued expenses
Total current deferred revenue	$	7,343	$	8,656
Non-current
Deferred franchise fees unopened salons	$	13,941	$	11,161	Other non-current liabilities
Deferred franchise fees open salons	21,943		18,346		Other non-current liabilities
Total non-current deferred revenue	$	35,884	$	29,507

Broker fees

The following table is a rollforward of the broker fee balance for the periods indicated (in thousands):

Balance as of June 30, 2018	$	14,002
Additions	4,393
Amortization	(1,484		)
Write-offs	(7		)
Balance as of March 31, 2019	$	16,904

Estimated revenue expected to be recognized

Estimated revenue expected to the recognized in the future related to deferred franchise fees for open salons as of March 31, 2019 is as follows (in thousands):

Remainder of 2019	$	840
2020	3,631
2021	3,543
2022	3,423
2023	3,246
Thereafter	11,027
Total	$	25,710

Schedules of impact of revenue recognition policy

The amended revenue recognition guidance impacted the Company's previously reported financial statements as follows:

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

June 30, 2018

(Dollars in thousands)

			Adjustments for new revenue recognition guidance
	Previously		Franchise			Advertising		Gift Card
	Reported		Fees			Funds		Breakage			Taxes			Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	110,399	$	—		$	—	$	—		$	—		$	110,399
Receivables, net	52,430		—			—		—			—			52,430
Inventories	79,363		—			—		—			—			79,363
Other current assets	47,867		—			—		—			—			47,867
Total current assets	290,059		—			—		—			—			290,059
Property and equipment, net	99,288		—			—		—			—			99,288
Goodwill	412,643		—			—		—			—			412,643
Other intangibles, net	10,557		—			—		—			—			10,557
Other assets	37,616		—			—		—			—			37,616
Non-current assets held for sale (Note 1)	6,572		—			—		—			—			6,572
Total assets	$	856,735	$	—		$	—	$	—		$	—		$	856,735
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	57,738	$	—		$	—	$	—		$	—		$	57,738
Accrued expenses	97,630		3,030			—		56			—			100,716
Total current liabilities	155,368		3,030			—		56			—			158,454
Long-term debt	90,000		—			—		—			—			90,000
Other noncurrent liabilities	107,875		18,346			—		—			(4,378		)	121,843
Total liabilities	353,243		21,376			—		56			(4,378		)	370,297
Commitments and contingencies (Note 7)
Shareholders’ equity:			0
Common stock	2,263		—			—		—			—			2,263
Additional paid-in capital	194,436		—			—		—			—			194,436
Accumulated other comprehensive income	9,568		88			—		—			—			9,656
Retained earnings	297,225		(21,464		)	—		(56		)	4,378			280,083
Total shareholders’ equity	503,492		(21,376		)	—		(56		)	4,378			486,438
Total liabilities and shareholders’ equity	$	856,735	$	—		$	—	$	—		$	—		$	856,735

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three Months Ended March 31, 2018

(Dollars and shares in thousands, except per share data amounts)

				Adjustments for new revenue recognition guidance
	Previously			Franchise			Advertising		Gift Card
	Reported			Fees			Funds		Breakage			Taxes		Adjusted
Revenues:
Service	$	221,926		$	—		$	—	$	96		$	—	$	222,022
Product	64,887			—			—		24			—		64,911
Royalties and fees	13,988			(1,666		)	6,528		—			—		18,850
	300,801			(1,665		)	6,527		120			—		305,783
Operating expenses:
Cost of service	132,081			—			—		—			—		132,081
Cost of product	37,139			—			—		—			—		37,139
Site operating expenses	31,021			—			6,527		—			—		37,548
General and administrative	45,727			—			—		—			—		45,727
Rent	39,391			—			—		—			—		39,391
Depreciation and amortization	9,558			—			—		—			—		9,558
Total operating expenses	294,917			—			6,527		—			—		301,444
Operating income	5,884			(1,665		)	—		120			—		4,339
Other (expense) income:
Interest expense	(5,095		)	—			—		—			—		(5,095		)
Gain from sale of salon assets to franchisees, net	237			—			—		—			—		237
Interest income and other, net	1,548			—			—		(53		)	—		1,495
Income from continuing operations before income taxes	2,574			(1,665		)	—		67			—		976
Income tax expense	2,225			—			—		—			384		2,609
Income from continuing operations	4,799			(1,665		)	—		67			384		3,585
Loss from TBG discontinued operations, net of taxes	(10,605		)	—			—		—			—		(10,605		)
Net loss	$	(5,806	)	$	(1,665	)	$	—	$	67		$	384	$	(7,020	)
Net loss per share:
Basic:
Income from continuing operations (1)	$	0.10		$	(0.04	)	$	0.00	$	0.00		$	0.01	$	0.08
Loss from TBG discontinued operations	(0.23		)	0.00			0.00		0.00			0.00		(0.23		)
Net loss per share, basic (1)	$	(0.12	)	$	(0.04	)	$	0.00	$	0.00		$	0.01	$	(0.15	)
Diluted:
Income from continuing operations (1)	$	0.10		$	(0.04	)	$	0.00	$	0.00		$	0.01	$	0.08
Loss from TBG discontinued operations	(0.22		)	0.00			0.00		0.00			0.00		(0.22		)
Net loss per share, diluted (1)	$	(0.12	)	$	(0.04	)	$	0.00	$	0.00		$	0.01	$	(0.15	)
Weighted average common and common equivalent shares outstanding:
Basic	46,612			46,612			46,612		46,612			46,612		46,612
Diluted	47,153			47,153			47,153		47,153			47,153		47,153

_____________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Nine Months Ended March 31, 2018

(Dollars and shares in thousands, except per share data amounts)

				Adjustments for new revenue recognition guidance
	Previously			Franchise			Advertising		Gift Card
	Reported			Fees			Funds		Breakage			Taxes		Adjusted
Revenues:
Service	$	680,699		$	—		$	—	$	231		$	—	$	680,930
Product	197,643			—			—		58			—		197,701
Royalties and fees	40,847			(4,114		)	19,732		—			—		56,465
	919,189			(4,114		)	19,732		289			—		935,096
Operating expenses:
Cost of service	406,767			—			—		—			—		406,767
Cost of product	107,165			—			—		—			—		107,165
Site operating expenses	96,443			—			19,732		—			—		116,175
General and administrative	129,485			—			—		—			—		129,485
Rent	147,280			—			—		—			—		147,280
Depreciation and amortization	46,764			—			—		—			—		46,764
Total operating expenses	933,904			—			19,732		—			—		953,636
Operating income	(14,715		)	(4,114		)	—		289			—		(18,540		)
Other (expense) income:
Interest expense	(9,402		)	—			—		—			—		(9,402		)
Gain from sale of salon assets to franchisees, net	255			—			—		—			—		255
Interest income and other, net	4,919			—			—		(985		)	—		3,934
Income from continuing operations before income taxes	(18,943		)	(4,114		)	—		(696		)	—		(23,753		)
Income tax expense	73,855			—			—		—			4,020		77,875
Income from continuing operations	54,912			(4,114		)	—		(696		)	4,020		54,122
Loss from TBG discontinued operations, net of taxes	(50,973		)	—			—		—			—		(50,973		)
Net loss	$	3,939		$	(4,114	)	$	—	$	(696	)	$	4,020	$	3,149
Net loss per share:
Basic:
Income from continuing operations (1)	$	1.18		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	1.16
Loss from TBG discontinued operations	(1.09		)	0.00			0.00		0.00			0.00		(1.09		)
Net loss per share, basic (1)	$	0.08		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	0.07
Diluted:
Income from continuing operations (1)	$	1.17		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	1.15
Loss from TBG discontinued operations	(1.08		)	0.00			0.00		0.00			0.00		(1.08		)
Net loss per share, diluted (1)	$	0.08		$	(0.09	)	$	0.00	$	(0.01	)	$	0.09	$	0.07
Weighted average common and common equivalent shares outstanding:
Basic	46,684			46,684			46,684		46,684			46,684		46,684
Diluted	47,093			47,093			47,093		47,093			47,093		47,093

_____________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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TBG DISCONTINUED OPERATIONS: (Tables)

9 Months Ended

Mar. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Schedule of discontinued operations

The following summarizes the results of our TBG discontinued operations for the periods presented:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2019			2018			2019			2018
	(Dollars in thousands)						(Dollars in thousands)
Revenue	$	—		$	—		$	—		$	101,140
Income (loss) from TBG discontinued operations, before income taxes	224			(13,545		)	(862		)	(57,385		)
Income tax (expense) benefit on TBG discontinued operations	(46		)	2,940			6,889			6,412
Income (loss) from TBG discontinued operations, net of income taxes	$	178		$	(10,605	)	$	6,027		$	(50,973	)

The following summarizes the TBG related charges for the periods presented:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,						Income Statement Classification
	2019			2018			2019			2018
	(Dollars in thousands)
TBG mall location restructuring	$	20,711		$	—		$	20,711		$	—		TBG mall location restructuring
Working capital and prepaid rent receivable reserve	—			(11,697		)	—			(11,697		)	Income (loss) from TBG discontinued operations
Other charges	224			(1,848		)	(862		)	(45,688		)	Income (loss) from TBG discontinued operations
Income (loss) from TBG discontinued operations, before income taxes	224			(13,545		)	(862		)	(57,385		)	Income (loss) from TBG discontinued operations
Income tax (expense) benefit on TBG discontinued operations	(46		)	2,940			6,889			6,412			Income (loss) from TBG discontinued operations
Income (loss) from TBG discontinued operations, net of income taxes	$	178		$	(10,605	)	$	6,027		$	(50,973	)	Income (loss) from TBG discontinued operations

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SHAREHOLDERS' EQUITY: (Tables)

9 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

Schedule of restricted stock awards activity

A summary of equity awards granted is as follows:

	For the Three Months Ended March 31, 2019	For the Nine Months Ended March 31, 2019
Restricted stock units	—	338,859
Performance-based restricted stock units	—	733,688

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INCOME TAXES: (Tables)

9 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Summary of income tax benefit (expense) and corresponding effective tax rates

A summary of income tax (expense) benefit and corresponding effective tax rates is as follows:

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2019			2018			2019			2018
	(Dollars in thousands)
Income tax (expense) benefit	$	(3,248	)	$	2,609		$	(2,988	)	$	77,875
Effective tax rate	(28.1		%)	(267.3		%)	(25.2		%)	327.9		%

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CASH, CASH EQUIVALETS AND RESTRICTED CASH: (Tables)

9 Months Ended

Mar. 31, 2019

Cash and Cash Equivalents [Abstract]

Schedule of cash and cash equivalents

The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows:

	March 31, 2019		June 30, 2018
	(Dollars in thousands)
Cash and cash equivalents	$	71,146	$	110,399
Restricted cash, included in Other current assets (1)	23,693		38,375
Total cash, cash equivalents and restricted cash	$	94,839	$	148,774

_______________________________________________________________________________

(1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs.

Schedule of restricted cash and cash equivalents

The table below reconciles the cash and cash equivalents balances and restricted cash balances, recorded in other current assets from the unaudited Condensed Consolidated Balance Sheet to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statement of Cash flows:

	March 31, 2019		June 30, 2018
	(Dollars in thousands)
Cash and cash equivalents	$	71,146	$	110,399
Restricted cash, included in Other current assets (1)	23,693		38,375
Total cash, cash equivalents and restricted cash	$	94,839	$	148,774

_______________________________________________________________________________

(1) Restricted cash within Other current assets primarily relates to consolidated advertising cooperatives funds which can only be used to settle obligations of the respective cooperatives and contractual obligations to collateralize the Company's self-insurance programs.

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GOODWILL AND OTHER INTANGIBLES: (Tables)

9 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of recorded goodwill

The table below contains details related to the Company's goodwill:

	Company-owned			Franchise			Consolidated
	(Dollars in thousands)
Goodwill, net at June 30, 2018	$	184,788		$	227,855		$	412,643
Translation rate adjustments	(147		)	(408		)	(555		)
Derecognition related to sale of salon assets to franchisees (1)	(33,528		)	—			(33,528		)
Goodwill, net at March 31, 2019	$	151,113		$	227,447		$	378,560

_______________________________________________________________________________

(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 trailing-twelve months EBITDA of the salon being sold and the denominator of which is the estimated annualized EBITDA of the Company-owned reporting unit) that is applied to the total goodwill balance of the Company-owned reporting unit.

Schedule of other intangible assets

The table below presents other intangible assets:

	March 31, 2019							June 30, 2018
	Cost (1)		Accumulated Amortization (1)			Net		Cost (1)		Accumulated Amortization (1)			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	7,830	$	(4,236	)	$	3,594	$	8,128	$	(4,260	)	$	3,868
Franchise agreements	9,675		(7,888		)	1,787		9,763		(7,712		)	2,051
Lease intangibles	13,474		(9,884		)	3,590		13,997		(9,770		)	4,227
Other	1,966		(1,591		)	375		1,983		(1,572		)	411
	$	32,945	$	(23,599	)	$	9,346	$	33,871	$	(23,314	)	$	10,557

_______________________________________________________________________________

(1)  The change in the gross carrying value and accumulated amortization of other intangible assets is impacted by foreign currency.

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FINANCING ARRANGEMENTS: (Tables)

9 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of long-term debt

The Company’s long-term debt consists of the following:

Revolving Credit Facility

	Maturity Date	Interest Rate	March 31, 2019		June 30, 2018
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.75%	$	90,000	$	90,000

Schedule of long-term financial liability

As of March 31, 2019, future lease payments due are as follows:

Remainder of 2019	$	302
2020	1,120
2021	1,157
2022	1,171
2023	1,186
Thereafter	13,265
Total	$	18,201

The Company’s long-term lease liability consists of the following:

	Maturity Date	Interest Rate	March 31, 2019		June 30, 2018
	(Fiscal Year)		(Dollars in thousands)
Long-term lease liability	2033	3.30%	$	17,505	$	—

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FAIR VALUE MEASUREMENTS: (Tables)

9 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of fair value impairments

The following impairments were based on fair values using Level 3 inputs:

	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2019		2018		2019		2018
	(Dollars in thousands)
Long-lived assets	$	702	$	313	$	3,005	$	9,565

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SEGMENT INFORMATION: (Tables)

9 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of reportable operating segment salons

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

	March 31, 2019		June 30, 2018
COMPANY-OWNED SALONS:
SmartStyle/Cost Cutters in Walmart Stores	1,591		1,660
Supercuts	568		928
Signature Style	1,217		1,378
Total Company-owned Salons	3,376		3,966
as a percent of total Company-owned and Franchise salons	43.6	%	49.1	%
FRANCHISE SALONS:
SmartStyle/Cost Cutters in Walmart Stores	591		561
Supercuts	2,164		1,739
Signature Style	740		745
Total franchise locations, excluding TBG mall locations	3,495		3,045
as a percent of total Company-owned and Franchise salons	45.1	%	37.7	%
Total North America TBG mall locations (1)	617		807
as a percent of total Company-owned and Franchise salons	8.0	%	10.0	%
Total North American Salons	4,112		3,852
Total International TBG Salons (1)	263		262
as a percent of total Company-owned and Franchise salons	3.4	%	3.2	%
Total Franchise Salons	4,375		4,114
as a percent of total Company-owned and Franchise salons	56.4	%	50.9	%
OWNERSHIP INTEREST LOCATIONS:
Equity ownership interest locations	87		88
Grand Total, System-wide	7,838		8,168

____________________________________

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

Schedule of summarized financial information of reportable operating segments

Financial information concerning the Company's reportable operating segments is shown in the following table:

	For the Three Months Ended March 31, 2019
	Company-owned		Franchise			Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	181,809	$	—		$	—		$	181,809
Product	39,427		14,339			—			53,766
Royalties and fees	—		22,768			—			22,768
	221,236		37,107			—			258,343
Operating expenses:
Cost of service	111,632		—			—			111,632
Cost of product	19,992		11,175			—			31,167
Site operating expenses	25,894		8,445			—			34,339
General and administrative	14,505		7,526			19,663			41,694
Rent	31,964		190			178			32,332
Depreciation and amortization	6,519		240			1,871			8,630
TBG mall location restructuring	—		20,711			—			20,711
Total operating expenses	210,506		48,287			21,712			280,505
Operating income (loss)	10,730		(11,180		)	(21,712		)	(22,162		)
Other (expense) income:
Interest expense	—		—			(1,354		)	(1,354		)
Gain from sale of salon assets to franchisees, net	—		—			11,489			11,489
Interest income and other, net	—		—			464			464
Income (loss) from continuing operations before income taxes	$	10,730	$	(11,180	)	$	(11,113	)	$	(11,563	)

	For the Three Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	222,022	$	—	$	—		$	222,022
Product	49,980		14,931		—			64,911
Royalties and fees	—		18,850		—			18,850
	272,002		33,781		—			305,783
Operating expenses:
Cost of service	132,081		—		—			132,081
Cost of product	25,137		12,002		—			37,139
Site operating expenses	31,022		6,526		—			37,548
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
TBG mall location restructuring	—		—		—			—
Total operating expenses	252,661		25,261		23,522			301,444
Operating income (loss)	19,341		8,520		(23,522		)	4,339
Other (expense) income:
Interest expense	—		—		(5,095		)	(5,095		)
Gain from sale of salon assets to franchisees, net	—		—		237			237
Interest income and other, net	—		—		1,495			1,495
Income (loss) from continuing operations before income taxes	$	19,341	$	8,520	$	(26,885	)	$	976

	For the Nine Months Ended March 31, 2019
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	580,076	$	—	$	—		$	580,076
Product	125,220		47,786		—			173,006
Royalties and fees	—		67,767		—			67,767
	705,296		115,553		—			820,849
Operating expenses:
Cost of service	348,060		—		—			348,060
Cost of product	61,661		38,037		—			99,698
Site operating expenses	82,435		24,288		—			106,723
General and administrative	45,084		24,656		65,517			135,257
Rent	101,908		468		576			102,952
Depreciation and amortization	21,304		613		5,815			27,732
TBG mall location restructuring	—		20,711		—			20,711
Total operating expenses	660,452		108,773		71,908			841,133
Operating income (loss)	44,844		6,780		(71,908		)	(20,284		)
Other (expense) income:
Interest expense	—		—		(3,432		)	(3,432		)
Gain from sale of salon assets to franchisees, net	—		—		10,394			10,394
Interest income and other, net	—		—		1,453			1,453
Income (loss) from continuing operations before income taxes	$	44,844	$	6,780	$	(63,493	)	$	(11,869	)

	For the Nine Months Ended March 31, 2018
	Company-owned		Franchise		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	680,930	$	—	$	—		$	680,930
Product	159,980		37,721		—			197,701
Royalties and fees	—		56,465		—			56,465
	840,910		94,186		—			935,096
Operating expenses:
Cost of service	406,767		—		—			406,767
Cost of product	77,628		29,537		—			107,165
Site operating expenses	96,443		19,732		—			116,175
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
TBG mall location restructuring	—		—		—			—
Total operating expenses	818,260		68,717		66,659			953,636
Operating income (loss)	22,650		25,469		(66,659		)	(18,540		)
Other (expense) income:
Interest expense	—		—		(9,402		)	(9,402		)
Gain from sale of salon assets to franchisees, net	—		—		255			255
Interest income and other, net	—		—		3,934			3,934
Income (loss) from continuing operations before income taxes	$	22,650	$	25,469	$	(71,872	)	$	(23,753	)

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Goodwill (Details) $ in Thousands	Mar. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill	$ 378,560	$ 412,643
Headroom Percent
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input		0.24
Increase (decrease) per 100 basis-point increase in weighted average cost of capital		(0.17)
Company-owned
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill	151,113	$ 184,788
Franchise
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Goodwill	$ 227,447	$ 227,855

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Non-Current Assets Held for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 30, 2018
Long Lived Assets Held-for-sale [Line Items]
Other assets	$ 6,529	$ 6,572
Land
Long Lived Assets Held-for-sale [Line Items]
Other assets	1,700	1,700
Building
Long Lived Assets Held-for-sale [Line Items]
Other assets	$ 4,800	$ 4,900

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounting Standards Recently Adopted by the Company (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash, cash equivalents and restricted cash	$ 94,839	$ 148,774	$ 208,634
Accounting Standards Update 2016-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash, cash equivalents and restricted cash	$ 23,600	$ 38,400	$ 37,600

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REVENUE RECOGNITION: Revenue Recognized (Details)	9 Months Ended
	Mar. 31, 2019
Revenue recognized at a point in time
Disaggregation of Revenue [Line Items]
Performance obligations expected to be satisfied, expected timing	30 days
Revenue recognized over time
Disaggregation of Revenue [Line Items]
Performance obligations expected to be satisfied, expected timing	ten years

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REVENUE RECOGNITION: Disaggregation of Revenue by Timing (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Total revenues	$ 258,343	$ 305,783	$ 820,849	$ 935,096
Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	221,236	272,002	705,296	840,910
Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	37,107	33,781	115,553	94,186
Service
Disaggregation of Revenue [Line Items]
Total revenues	181,809	222,022	580,076	680,930
Service | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	181,809	222,022	580,076	680,930
Service | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Product
Disaggregation of Revenue [Line Items]
Total revenues	53,766	64,911	173,006	197,701
Product | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	39,427	49,980	125,220	159,980
Product | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	14,339	14,931	47,786	37,721
Royalties and fees
Disaggregation of Revenue [Line Items]
Total revenues	22,768	18,850	67,767	56,465
Royalties and fees | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Royalties and fees | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	22,768	18,850	67,767	56,465
Revenue recognized at a point in time | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	221,236	272,002	705,296	840,910
Revenue recognized at a point in time | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	14,339	14,931	47,786	37,721
Revenue recognized at a point in time | Service | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	181,809	222,022
Revenue recognized at a point in time | Service | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	0	0
Revenue recognized at a point in time | Product | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	39,427	49,980
Revenue recognized at a point in time | Product | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	14,339	14,931
Revenue recognized over time | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Revenue recognized over time | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	22,768	18,850	67,767	56,465
Revenue recognized over time | Royalties and fees | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Revenue recognized over time | Royalties and fees | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	14,339	12,322	43,495	36,733
Revenue recognized over time | Advertising fund | Operating Segments | Company-owned
Disaggregation of Revenue [Line Items]
Total revenues	0	0	0	0
Revenue recognized over time | Advertising fund | Operating Segments | Franchise
Disaggregation of Revenue [Line Items]
Total revenues	$ 8,429	$ 6,528	$ 24,272	$ 19,732

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REVENUE RECOGNITION: Receivables, Broker Fees and Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 30, 2018
Revenue from Contract with Customer [Abstract]
Receivables	$ 23,904	$ 21,504
Broker fees	16,904	14,002
Deferred revenue
Current	7,343	8,656
Total deferred revenue	35,884	29,507
Gift card liability
Deferred revenue
Current	3,439	3,320
Deferred franchise fees unopened salons
Deferred revenue
Current	137	2,306
Non-current	13,941	11,161
Deferred franchise fees open salons
Deferred revenue
Current	3,767	3,030
Non-current	$ 21,943	$ 18,346

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REVENUE RECOGNITION: Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Jun. 30, 2018
Revenue from Contract with Customer [Abstract]
Allowance for doubtful accounts	$ 15,700		$ 15,700		$ 1,200
Disaggregation of Revenue [Line Items]
Revenues	258,343	$ 305,783	820,849	$ 935,096
Gift Cards
Disaggregation of Revenue [Line Items]
Revenues	1,800	1,900	4,000	4,600
Franchise Fees
Disaggregation of Revenue [Line Items]
Revenues	900	$ 700	$ 2,600	$ 2,000
TBG Notes Receivable
Disaggregation of Revenue [Line Items]
TBG allowance for doubtful accounts reserve	$ 12,700

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REVENUE RECOGNITION: Broker Fee Balance (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2019 USD ($)
Change In Deferred Costs [Roll Forward]
Balance as of June 30, 2018	$ 14,002
Additions	4,393
Amortization	(1,484)
Write-offs	(7)
Balance as of March 31, 2019	$ 16,904

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REVENUE RECOGNITION: Future Estimated Expected Revenue (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 25,710
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 840
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 3,631
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 3,543
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 3,423
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 3,246
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01
Revenue from Contract with Customer [Abstract]
Performance obligations expected to be satisfied	$ 11,027
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations expected to be satisfied, expected timing

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REVENUE RECOGNITION: Impact on Balance Sheets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017
Current assets:
Cash and cash equivalents	$ 71,146		$ 110,399
Receivables, net	33,737		52,430
Inventories	90,869		79,363
Other current assets	32,386		47,867
Total current assets	228,138		290,059
Property and equipment, net	83,629		99,288
Goodwill	378,560		412,643
Other intangibles, net	9,346		10,557
Other assets	32,768		37,616
Other assets	6,529		6,572
Total assets	738,970		856,735
Current liabilities:
Accounts payable	57,021		57,738
Accrued expenses	83,490		100,716
Total current liabilities	140,511		158,454
Long-term debt	90,000		90,000
Other noncurrent liabilities	115,144		121,843
Total liabilities	363,160		370,297
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively	1,972		2,263
Additional paid-in capital	93,515		194,436
Accumulated other comprehensive income	9,050		9,656
Retained earnings	271,273		280,083
Total shareholders’ equity	375,810	$ 425,010	486,438	$ 497,667	$ 514,173	$ 493,620
Total liabilities and shareholders’ equity	$ 738,970		856,735
Previously Reported
Current assets:
Cash and cash equivalents			110,399
Receivables, net			52,430
Inventories			79,363
Other current assets			47,867
Total current assets			290,059
Property and equipment, net			99,288
Goodwill			412,643
Other intangibles, net			10,557
Other assets			37,616
Other assets			6,572
Total assets			856,735
Current liabilities:
Accounts payable			57,738
Accrued expenses			97,630
Total current liabilities			155,368
Long-term debt			90,000
Other noncurrent liabilities			107,875
Total liabilities			353,243
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively			2,263
Additional paid-in capital			194,436
Accumulated other comprehensive income			9,568
Retained earnings			297,225
Total shareholders’ equity			503,492
Total liabilities and shareholders’ equity			856,735
Restatement Adjustment | Franchise Fees
Current assets:
Cash and cash equivalents			0
Receivables, net			0
Inventories			0
Other current assets			0
Total current assets			0
Property and equipment, net			0
Goodwill			0
Other intangibles, net			0
Other assets			0
Other assets			0
Total assets			0
Current liabilities:
Accounts payable			0
Accrued expenses			3,030
Total current liabilities			3,030
Long-term debt			0
Other noncurrent liabilities			18,346
Total liabilities			21,376
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively			0
Additional paid-in capital			0
Accumulated other comprehensive income			88
Retained earnings			(21,464)
Total shareholders’ equity			(21,376)
Total liabilities and shareholders’ equity			0
Restatement Adjustment | Advertising Funds
Current assets:
Cash and cash equivalents			0
Receivables, net			0
Inventories			0
Other current assets			0
Total current assets			0
Property and equipment, net			0
Goodwill			0
Other intangibles, net			0
Other assets			0
Other assets			0
Total assets			0
Current liabilities:
Accounts payable			0
Accrued expenses			0
Total current liabilities			0
Long-term debt			0
Other noncurrent liabilities			0
Total liabilities			0
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively			0
Additional paid-in capital			0
Accumulated other comprehensive income			0
Retained earnings			0
Total shareholders’ equity			0
Total liabilities and shareholders’ equity			0
Restatement Adjustment | Gift Card Breakage
Current assets:
Cash and cash equivalents			0
Receivables, net			0
Inventories			0
Other current assets			0
Total current assets			0
Property and equipment, net			0
Goodwill			0
Other intangibles, net			0
Other assets			0
Other assets			0
Total assets			0
Current liabilities:
Accounts payable			0
Accrued expenses			56
Total current liabilities			56
Long-term debt			0
Other noncurrent liabilities			0
Total liabilities			56
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively			0
Additional paid-in capital			0
Accumulated other comprehensive income			0
Retained earnings			(56)
Total shareholders’ equity			(56)
Total liabilities and shareholders’ equity			0
Restatement Adjustment | Taxes
Current assets:
Cash and cash equivalents			0
Receivables, net			0
Inventories			0
Other current assets			0
Total current assets			0
Property and equipment, net			0
Goodwill			0
Other intangibles, net			0
Other assets			0
Other assets			0
Total assets			0
Current liabilities:
Accounts payable			0
Accrued expenses			0
Total current liabilities			0
Long-term debt			0
Other noncurrent liabilities			(4,378)
Total liabilities			(4,378)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 39,433,124 and 45,258,571 common shares at March 31, 2019 and June 30, 2018 respectively			0
Additional paid-in capital			0
Accumulated other comprehensive income			0
Retained earnings			4,378
Total shareholders’ equity			4,378
Total liabilities and shareholders’ equity			$ 0

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REVENUE RECOGNITION: Impact on Statement of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Total revenues		$ 258,343	$ 305,783	$ 820,849	$ 935,096
Operating expenses:
Cost of service		111,632	132,081	348,060	406,767
Cost of product		31,167	37,139	99,698	107,165
Site operating expenses		34,339	37,548	106,723	116,175
General and administrative		41,694	45,727	135,257	129,485
Rent		32,332	39,391	102,952	147,280
Depreciation and amortization		8,630	9,558	27,732	46,764
Total operating expenses		280,505	301,444	841,133	953,636
Operating (loss) income		(22,162)	4,339	(20,284)	(18,540)
Other (expense) income:
Interest expense		(1,354)	(5,095)	(3,432)	(9,402)
Gain from sale of salon assets to franchisees, net		11,489	237	10,394	255
Interest income and other, net		464	1,495	1,453	3,934
Income from continuing operations before income taxes		(11,563)	976	(11,869)	(23,753)
Income tax (expense) benefit		(3,248)	2,609	(2,988)	77,875
(Loss) income from continuing operations		(14,811)	3,585	(14,857)	54,122
Income (loss) from TBG discontinued operations, net of taxes		178	(10,605)	6,027	(50,973)
Net (loss) income		$ (14,633)	$ (7,020)	$ (8,830)	$ 3,149
Basic:
Income from continuing operations (in dollars per share)		$ (0.37)	$ 0.08	$ (0.35)	$ 1.16
Loss from discontinued operations (in dollars per share)		0.00	(0.23)	0.14	(1.09)
Net (loss) income per share, basic (in dollars per share)	[1]	(0.36)	(0.15)	(0.21)	0.07
Diluted:
Income from continuing operations (in dollars per share)		(0.37)	0.08	(0.35)	1.15
Loss from discontinued operations (in dollars per share)		0.00	(0.22)	0.14	(1.08)
Net (loss) income per share, diluted (in dollars per share)	[1]	$ (0.36)	$ (0.15)	$ (0.21)	$ 0.07
Weighted average common and common equivalent shares outstanding:
Basic (in shares)		40,314	46,612	42,900	46,684
Diluted (in shares)		40,314	47,153	42,900	47,093
Service
Revenues:
Total revenues		$ 181,809	$ 222,022	$ 580,076	$ 680,930
Product
Revenues:
Total revenues		53,766	64,911	173,006	197,701
Royalties and fees
Revenues:
Total revenues		$ 22,768	18,850	$ 67,767	56,465
Previously Reported
Revenues:
Total revenues			300,801		919,189
Operating expenses:
Cost of service			132,081		406,767
Cost of product			37,139		107,165
Site operating expenses			31,021		96,443
General and administrative			45,727		129,485
Rent			39,391		147,280
Depreciation and amortization			9,558		46,764
Total operating expenses			294,917		933,904
Operating (loss) income			5,884		(14,715)
Other (expense) income:
Interest expense			(5,095)		(9,402)
Gain from sale of salon assets to franchisees, net			237		255
Interest income and other, net			1,548		4,919
Income from continuing operations before income taxes			2,574		(18,943)
Income tax (expense) benefit			2,225		73,855
(Loss) income from continuing operations			4,799		54,912
Income (loss) from TBG discontinued operations, net of taxes			(10,605)		(50,973)
Net (loss) income			$ (5,806)		$ 3,939
Basic:
Income from continuing operations (in dollars per share)			$ 0.10		$ 1.18
Loss from discontinued operations (in dollars per share)			(0.23)		(1.09)
Net (loss) income per share, basic (in dollars per share)			(0.12)		0.08
Diluted:
Income from continuing operations (in dollars per share)			0.10		1.17
Loss from discontinued operations (in dollars per share)			(0.22)		(1.08)
Net (loss) income per share, diluted (in dollars per share)			$ (0.12)		$ 0.08
Previously Reported | Service
Revenues:
Total revenues			$ 221,926		$ 680,699
Previously Reported | Product
Revenues:
Total revenues			64,887		197,643
Previously Reported | Royalties and fees
Revenues:
Total revenues			13,988		40,847
Restatement Adjustment | Franchise Fees
Revenues:
Total revenues			(1,665)		(4,114)
Operating expenses:
Cost of service			0		0
Cost of product			0		0
Site operating expenses			0		0
General and administrative			0		0
Rent			0		0
Depreciation and amortization			0		0
Total operating expenses			0		0
Operating (loss) income			(1,665)		(4,114)
Other (expense) income:
Interest expense			0		0
Gain from sale of salon assets to franchisees, net			0		0
Interest income and other, net			0		0
Income from continuing operations before income taxes			(1,665)		(4,114)
Income tax (expense) benefit			0		0
(Loss) income from continuing operations			(1,665)		(4,114)
Income (loss) from TBG discontinued operations, net of taxes			0		0
Net (loss) income			$ (1,665)		$ (4,114)
Basic:
Income from continuing operations (in dollars per share)			$ (0.04)		$ (0.09)
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, basic (in dollars per share)			(0.04)		(0.09)
Diluted:
Income from continuing operations (in dollars per share)			(0.04)		(0.09)
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, diluted (in dollars per share)			$ (0.04)		$ (0.09)
Restatement Adjustment | Franchise Fees | Service
Revenues:
Total revenues			$ 0		$ 0
Restatement Adjustment | Franchise Fees | Product
Revenues:
Total revenues			0		0
Restatement Adjustment | Franchise Fees | Royalties and fees
Revenues:
Total revenues			(1,666)		(4,114)
Restatement Adjustment | Advertising Funds
Revenues:
Total revenues			6,527		19,732
Operating expenses:
Cost of service			0		0
Cost of product			0		0
Site operating expenses			6,527		19,732
General and administrative			0		0
Rent			0		0
Depreciation and amortization			0		0
Total operating expenses			6,527		19,732
Operating (loss) income			0		0
Other (expense) income:
Interest expense			0		0
Gain from sale of salon assets to franchisees, net			0		0
Interest income and other, net			0		0
Income from continuing operations before income taxes			0		0
Income tax (expense) benefit			0		0
(Loss) income from continuing operations			0		0
Income (loss) from TBG discontinued operations, net of taxes			0		0
Net (loss) income			$ 0		$ 0
Basic:
Income from continuing operations (in dollars per share)			$ 0.00		$ 0.00
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, basic (in dollars per share)			0.00		0.00
Diluted:
Income from continuing operations (in dollars per share)			0.00		0.00
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, diluted (in dollars per share)			$ 0.00		$ 0.00
Restatement Adjustment | Advertising Funds | Service
Revenues:
Total revenues			$ 0		$ 0
Restatement Adjustment | Advertising Funds | Product
Revenues:
Total revenues			0		0
Restatement Adjustment | Advertising Funds | Royalties and fees
Revenues:
Total revenues			6,528		19,732
Restatement Adjustment | Gift Card Breakage
Revenues:
Total revenues			120		289
Operating expenses:
Cost of service			0		0
Cost of product			0		0
Site operating expenses			0		0
General and administrative			0		0
Rent			0		0
Depreciation and amortization			0		0
Total operating expenses			0		0
Operating (loss) income			120		289
Other (expense) income:
Interest expense			0		0
Gain from sale of salon assets to franchisees, net			0		0
Interest income and other, net			(53)		(985)
Income from continuing operations before income taxes			67		(696)
Income tax (expense) benefit			0		0
(Loss) income from continuing operations			67		(696)
Income (loss) from TBG discontinued operations, net of taxes			0		0
Net (loss) income			$ 67		$ (696)
Basic:
Income from continuing operations (in dollars per share)			$ 0.00		$ (0.01)
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, basic (in dollars per share)			0.00		(0.01)
Diluted:
Income from continuing operations (in dollars per share)			0.00		(0.01)
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, diluted (in dollars per share)			$ 0.00		$ (0.01)
Restatement Adjustment | Gift Card Breakage | Service
Revenues:
Total revenues			$ 96		$ 231
Restatement Adjustment | Gift Card Breakage | Product
Revenues:
Total revenues			24		58
Restatement Adjustment | Gift Card Breakage | Royalties and fees
Revenues:
Total revenues			0		0
Restatement Adjustment | Taxes
Revenues:
Total revenues			0		0
Operating expenses:
Cost of service			0		0
Cost of product			0		0
Site operating expenses			0		0
General and administrative			0		0
Rent			0		0
Depreciation and amortization			0		0
Total operating expenses			0		0
Operating (loss) income			0		0
Other (expense) income:
Interest expense			0		0
Gain from sale of salon assets to franchisees, net			0		0
Interest income and other, net			0		0
Income from continuing operations before income taxes			0		0
Income tax (expense) benefit			384		4,020
(Loss) income from continuing operations			384		4,020
Income (loss) from TBG discontinued operations, net of taxes			0		0
Net (loss) income			$ 384		$ 4,020
Basic:
Income from continuing operations (in dollars per share)			$ 0.01		$ 0.09
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, basic (in dollars per share)			0.01		0.09
Diluted:
Income from continuing operations (in dollars per share)			0.01		0.09
Loss from discontinued operations (in dollars per share)			0.00		0.00
Net (loss) income per share, diluted (in dollars per share)			$ 0.01		$ 0.09
Restatement Adjustment | Taxes | Service
Revenues:
Total revenues			$ 0		$ 0
Restatement Adjustment | Taxes | Product
Revenues:
Total revenues			0		0
Restatement Adjustment | Taxes | Royalties and fees
Revenues:
Total revenues			$ 0		$ 0

[1] Total is a recalculation; line items calculated individually may not sum to total due to rounding.

XML

TBG DISCONTINUED OPERATIONS: Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019 USD ($) salon	Mar. 31, 2018 USD ($)	Mar. 31, 2019 USD ($) salon	Mar. 31, 2018 USD ($)	Aug. 31, 2018 USD ($)	Jun. 30, 2018 salon	Oct. 31, 2017 salon
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of stores | salon	7,838		7,838			8,168
(Loss) income from discontinued operations, net of income taxes	$ 178	$ (10,605)	$ 6,027	$ (50,973)
Actuarial insurance accrual adjustment			200
Professional fees			1,000
Asset impairment charges			(163)	37,020
Non-cash TBG mall location restructuring charge	20,711	0	20,711	0
Salon lease commitments	64,800		64,800
Discontinued Operations, Disposed of by Sale | Mall-Based Salons and International Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) income from discontinued operations, net of income taxes	178	(10,605)	6,027	(50,973)
Income tax (expense) benefit on TBG discontinued operations	(46)	2,940	6,889	6,412
Professional fees		600		6,400
Asset impairment charges		11,700		40,800
Loss from operations		1,200
Foreign currency transaction loss				6,200
Loss from operations				4,000
Working capital and prepaid rent receivable reserve	0	$ 11,697	$ 0	$ 11,697
North America | Facility Closing
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of stores | salon							858
United Kingdom | Facility Closing
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of stores | salon							250
Working Capital Note Receivable | Discontinued Operations, Disposed of by Sale | Mall-Based Salons and International Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Promissory note receivable					$ 11,700
Inventory Notes Receivable
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Financing Receivable, Gross					$ 8,000
TBG allowance for doubtful accounts reserve	11,600
Outstanding Royalties
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
TBG allowance for doubtful accounts reserve	$ 1,100

XML

TBG DISCONTINUED OPERATIONS: Schedule of Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from TBG discontinued operations, net of income taxes	$ 178	$ (10,605)	$ 6,027	$ (50,973)
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	0	0	0	101,140
Income (loss) from TBG discontinued operations, before income taxes	224	(13,545)	(862)	(57,385)
Income tax (expense) benefit on TBG discontinued operations	(46)	2,940	6,889	6,412
Income (loss) from TBG discontinued operations, net of income taxes	$ 178	$ (10,605)	$ 6,027	$ (50,973)

XML

TBG DISCONTINUED OPERATIONS: TBG Related Charges (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Non-cash TBG mall location restructuring charge	$ 20,711	$ 0	$ 20,711	$ 0
Income (loss) from TBG discontinued operations, net of income taxes	178	(10,605)	6,027	(50,973)
Mall-Based Salons and International Segment | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Working capital and prepaid rent receivable reserve	0	(11,697)	0	(11,697)
Other charges	224
Other charges		(1,848)	(862)	(45,688)
Income (loss) from TBG discontinued operations, before income taxes	224	(13,545)	(862)	(57,385)
Income tax (expense) benefit on TBG discontinued operations	46	(2,940)	(6,889)	(6,412)
Income (loss) from TBG discontinued operations, net of income taxes	$ 178	$ (10,605)	$ 6,027	$ (50,973)

XML

EARNINGS PER SHARE: (Details) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Common stock equivalents included in the diluted earnings per share calculation (in shares)		541,405		409,646
Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share computation (in shares)	1,023,038		1,006,589
Equity Based Compensation Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Awards excluded from diluted earnings per share computation (in shares)	608,944	550,948	542,329	730,377

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SHAREHOLDERS' EQUITY: Schedule of Equity Awards Granted (Details) - shares	3 Months Ended	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2019
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted (in shares)	0	338,859
Performance-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted (in shares)	0	733,688

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SHAREHOLDERS' EQUITY: Stock-Based Employee Compensation, Additional Information (Details) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2019 USD ($) shares	Mar. 31, 2018 USD ($)	Mar. 31, 2019 USD ($) day shares	Mar. 31, 2018 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation | $	$ 2.5	$ 1.9	$ 7.1	$ 6.5
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Stock granted (in shares)	0		338,859
Restricted stock units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Restricted stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			5 years
Restricted stock units | Tranche 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			33.33%
Restricted stock units | Tranche 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			33.33%
Restricted stock units | Tranche 3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			33.33%
Performance-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Threshold trading days | day			50
Additional service period			2 years
Stock granted (in shares)	0		733,688
Performance-based restricted stock units | Tranche 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted (in shares)			52,590
Performance-based restricted stock units | Tranche 1 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			200.00%
Performance-based restricted stock units | Tranche 2 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			100.00%

XML

SHAREHOLDERS' EQUITY: Share Repurchases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Stockholders' Equity Note [Abstract]
Stock repurchased during period (in shares)	2,050,430		6,023,523
Stock repurchase program	$ 37,920	$ 9,635	$ 106,252	$ 9,635
Remaining authorized repurchase amount	$ 129,100		$ 129,100

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INCOME TAXES: Summary of Income Tax Benefit (expense) and corresponding effective tax rates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Income tax (expense) benefit	$ (3,248)	$ 2,609	$ (2,988)	$ 77,875
Effective tax rate	(28.10%)	(267.30%)	(25.20%)	327.90%

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CASH, CASH EQUIVALETS AND RESTRICTED CASH: (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2017
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	$ 71,146	$ 110,399
Restricted cash, included in Other current assets	23,693	38,375
Total cash, cash equivalents and restricted cash	$ 94,839	$ 148,774	$ 208,634

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GOODWILL AND OTHER INTANGIBLES: Changes in Goodwill (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2019 USD ($)
Goodwill [Roll Forward]
Goodwill, net at June 30, 2018	$ 412,643
Translation rate adjustments	(555)
Derecognition related to sale of salon assets to franchisees	(33,528)
Goodwill, net at March 31, 2019	378,560
Company-owned
Goodwill [Roll Forward]
Goodwill, net at June 30, 2018	184,788
Translation rate adjustments	(147)
Goodwill, net at March 31, 2019	151,113
Franchise
Goodwill [Roll Forward]
Goodwill, net at June 30, 2018	227,855
Translation rate adjustments	(408)
Derecognition related to sale of salon assets to franchisees	0
Goodwill, net at March 31, 2019	$ 227,447

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GOODWILL AND OTHER INTANGIBLES: Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 30, 2018
Amortized intangible assets:
Cost	$ 32,945	$ 33,871
Accumulated Amortization	(23,599)	(23,314)
Net	9,346	10,557
Brand assets and trade names
Amortized intangible assets:
Cost	7,830	8,128
Accumulated Amortization	(4,236)	(4,260)
Net	3,594	3,868
Franchise agreements
Amortized intangible assets:
Cost	9,675	9,763
Accumulated Amortization	(7,888)	(7,712)
Net	1,787	2,051
Lease intangibles
Amortized intangible assets:
Cost	13,474	13,997
Accumulated Amortization	(9,884)	(9,770)
Net	3,590	4,227
Other
Amortized intangible assets:
Cost	1,966	1,983
Accumulated Amortization	(1,591)	(1,572)
Net	$ 375	$ 411

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FINANCING ARRANGEMENTS: Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jun. 30, 2018
Debt Instrument [Line Items]
Long-term debt	$ 90,000	$ 90,000
Line of Credit | Revolving Credit Facility | Revolving credit facility
Debt Instrument [Line Items]
Interest rate percentage	3.75%
Long-term debt	$ 90,000	$ 90,000

XML

FINANCING ARRANGEMENTS: Revolving Credit Facility (Details) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Debt Instrument [Line Items]
Long-term debt	$ 90,000,000	$ 90,000,000
Line of Credit | Revolving Credit Facility | Revolving credit facility
Debt Instrument [Line Items]
Long-term debt	90,000,000	90,000,000
Maximum borrowing capacity	295,000,000	295,000,000
Unused borrowing capacity, amount	182,000,000	203,500,000
Line of Credit | Letter of Credit | Revolving credit facility
Debt Instrument [Line Items]
Long-term line of credit	$ 23,000,000	$ 1,500,000

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FINANCING ARRANGEMENTS: Schedule of Long-term Financial Liability (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2019	Jun. 30, 2018
Debt Disclosure [Abstract]
Interest Rate	3.30%
Long-term lease liability	$ 17,505	$ 0

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FINANCING ARRANGEMENTS: Sale and Leaseback Transaction (Details) $ in Millions	Mar. 31, 2019 USD ($)	Nov. 30, 2018 renewal_option
Debt Disclosure [Abstract]
Term of contract		15 years
Number of renewal options | renewal_option		3
Renewal term		5 years
Lease period as a percent of economic life (more than)		75.00%
Short-term financial liability | $	$ 0.6

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FINANCING ARRANGEMENTS: Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Minimum Lease Payments, Sale Leaseback Transactions, Fiscal Year Maturity [Abstract]
Remainder of 2019	$ 302
2020	1,120
2021	1,157
2022	1,171
2023	1,186
Thereafter	13,265
Total	$ 18,201

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FAIR VALUE MEASUREMENTS: (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Jun. 30, 2018
Assets and liabilities measured at fair value on a nonrecurring basis
Long-term debt, fair value	$ 90,000		$ 90,000		$ 90,000
Long-term debt	90,000		90,000		90,000
Long-term lease liability	17,505		17,505		$ 0
Long-lived assets			3,005	$ 11,099
Level 2
Assets and liabilities measured at fair value on a nonrecurring basis
Long-term lease liability	17,500		17,500
Nonrecurring | Level 3
Assets and liabilities measured at fair value on a nonrecurring basis
Long-lived assets	$ 702	$ 313	$ 3,005	$ 9,565

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SEGMENT INFORMATION: Reportable Operating Segment Salons (Details) - salon	Mar. 31, 2019	Jun. 30, 2018
Franchisor Disclosure [Line Items]
Number of salons	7,838	8,168
Equity ownership interest locations
Franchisor Disclosure [Line Items]
Number of salons	87	88
Company-owned
Franchisor Disclosure [Line Items]
Number of salons	3,376	3,966
Salons as a percent of total Company-owned and Franchise salons	43.60%	49.10%
Company-owned | SmartStyle/Cost Cutters in Walmart Stores
Franchisor Disclosure [Line Items]
Number of salons	1,591	1,660
Company-owned | Supercuts
Franchisor Disclosure [Line Items]
Number of salons	568	928
Company-owned | Signature Style
Franchisor Disclosure [Line Items]
Number of salons	1,217	1,378
Franchise
Franchisor Disclosure [Line Items]
Number of salons	4,375	4,114
Salons as a percent of total Company-owned and Franchise salons	56.40%	50.90%
Franchise | North American
Franchisor Disclosure [Line Items]
Number of salons	4,112	3,852
Franchise | International
Franchisor Disclosure [Line Items]
Number of salons	263	262
Salons as a percent of total Company-owned and Franchise salons	3.40%	3.20%
Franchise | Total franchise locations, excluding TBG mall locations
Franchisor Disclosure [Line Items]
Number of salons	3,495	3,045
Salons as a percent of total Company-owned and Franchise salons	45.10%	37.70%
Franchise | SmartStyle/Cost Cutters in Walmart Stores
Franchisor Disclosure [Line Items]
Number of salons	591	561
Franchise | Supercuts
Franchisor Disclosure [Line Items]
Number of salons	2,164	1,739
Franchise | Signature Style
Franchisor Disclosure [Line Items]
Number of salons	740	745
Franchise | Total North America TBG mall locations (1)
Franchisor Disclosure [Line Items]
Number of salons	617	807
Salons as a percent of total Company-owned and Franchise salons	8.00%	10.00%

XML

SEGMENT INFORMATION: Operating Results (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Total revenues	$ 258,343	$ 305,783	$ 820,849	$ 935,096
Operating expenses:
Cost of service	111,632	132,081	348,060	406,767
Cost of product	31,167	37,139	99,698	107,165
Site operating expenses	34,339	37,548	106,723	116,175
General and administrative	41,694	45,727	135,257	129,485
Rent	32,332	39,391	102,952	147,280
Depreciation and amortization	8,630	9,558	27,732	46,764
TBG mall location restructuring (Note 3)	20,711	0	20,711	0
Total operating expenses	280,505	301,444	841,133	953,636
Operating (loss) income	(22,162)	4,339	(20,284)	(18,540)
Other (expense) income:
Interest expense	(1,354)	(5,095)	(3,432)	(9,402)
Gain from sale of salon assets to franchisees, net	11,489	237	10,394	255
Interest income and other, net	464	1,495	1,453	3,934
(Loss) income from continuing operations before income taxes	(11,563)	976	(11,869)	(23,753)
Operating Segments | Company-owned
Revenues:
Total revenues	221,236	272,002	705,296	840,910
Operating expenses:
Cost of service	111,632	132,081	348,060	406,767
Cost of product	19,992	25,137	61,661	77,628
Site operating expenses	25,894	31,022	82,435	96,443
General and administrative	14,505	18,051	45,084	51,822
Rent	31,964	39,094	101,908	146,376
Depreciation and amortization	6,519	7,276	21,304	39,224
TBG mall location restructuring (Note 3)	0	0	0	0
Total operating expenses	210,506	252,661	660,452	818,260
Operating (loss) income	10,730	19,341	44,844	22,650
Other (expense) income:
Interest expense	0	0	0	0
Gain from sale of salon assets to franchisees, net	0	0	0	0
Interest income and other, net	0	0	0	0
(Loss) income from continuing operations before income taxes	10,730	19,341	44,844	22,650
Operating Segments | Franchise
Revenues:
Total revenues	37,107	33,781	115,553	94,186
Operating expenses:
Cost of service	0	0	0	0
Cost of product	11,175	12,002	38,037	29,537
Site operating expenses	8,445	6,526	24,288	19,732
General and administrative	7,526	6,590	24,656	19,005
Rent	190	51	468	168
Depreciation and amortization	240	92	613	275
TBG mall location restructuring (Note 3)	20,711	0	20,711	0
Total operating expenses	48,287	25,261	108,773	68,717
Operating (loss) income	(11,180)	8,520	6,780	25,469
Other (expense) income:
Interest expense	0	0	0	0
Gain from sale of salon assets to franchisees, net	0	0	0	0
Interest income and other, net	0	0	0	0
(Loss) income from continuing operations before income taxes	(11,180)	8,520	6,780	25,469
Unallocated Corporate
Operating expenses:
General and administrative	19,663	21,086	65,517	58,658
Rent	178	246	576	736
Depreciation and amortization	1,871	2,190	5,815	7,265
TBG mall location restructuring (Note 3)	0	0	0	0
Total operating expenses	21,712	23,522	71,908	66,659
Operating (loss) income	(21,712)	(23,522)	(71,908)	(66,659)
Other (expense) income:
Interest expense	(1,354)	(5,095)	(3,432)	(9,402)
Gain from sale of salon assets to franchisees, net	11,489	237	10,394	255
Interest income and other, net	464	1,495	1,453	3,934
(Loss) income from continuing operations before income taxes	(11,113)	(26,885)	(63,493)	(71,872)
Service
Revenues:
Total revenues	181,809	222,022	580,076	680,930
Service | Operating Segments | Company-owned
Revenues:
Total revenues	181,809	222,022	580,076	680,930
Service | Operating Segments | Franchise
Revenues:
Total revenues	0	0	0	0
Product
Revenues:
Total revenues	53,766	64,911	173,006	197,701
Product | Operating Segments | Company-owned
Revenues:
Total revenues	39,427	49,980	125,220	159,980
Product | Operating Segments | Franchise
Revenues:
Total revenues	14,339	14,931	47,786	37,721
Royalties and fees
Revenues:
Total revenues	22,768	18,850	67,767	56,465
Royalties and fees | Operating Segments | Company-owned
Revenues:
Total revenues	0	0	0	0
Royalties and fees | Operating Segments | Franchise
Revenues:
Total revenues	$ 22,768	$ 18,850	$ 67,767	$ 56,465

XML

Label	Element	Value
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Disposal Group, Including Discontinued Operations	us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsDisposalGroupIncludingDiscontinuedOperations	$ 1,352,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Disposal Group, Including Discontinued Operations	us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsDisposalGroupIncludingDiscontinuedOperations	$ 0