REVISION OF SECOND QUARTER 2020 UNAUDITED RESULTS

6 Months Ended

Dec. 31, 2020

Accounting Changes and Error Corrections [Abstract]

REVISION OF SECOND QUARTER 2020 UNAUDITED RESULTS

REVISION OF SECOND QUARTER 2020 UNAUDITED RESULTS:

During the fourth quarter of fiscal year 2020, the Company identified an error in the calculation of the goodwill derecognition associated with the sale of salons to franchisees in the second quarter. In the second quarter, goodwill derecognition was understated by $6.7 million, resulting in the loss from the sale of salons to franchisees and net loss being understated and goodwill being overstated by $6.7 million. The Company assessed the applicable guidance issued by the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) and concluded these misstatements were not material, individually or in the aggregate, to the Company’s Unaudited Condensed Consolidated Financial Statements for the aforementioned interim period. However, to facilitate comparisons among periods, the Company has decided to revise its previously issued second quarter unaudited condensed consolidated financial information.

	Three Months Ended December 31, 2019
	As Previously Reported		Adjustments		As Revised
	(Dollars in thousands, except per share amounts)
Loss from sale of salon assets to franchisees, net (1)	$	(5,692)	$	(6,715)	$	(12,407)
Interest income and other, net (2)	4,346		(1,477)		2,869
Loss from continuing operations before income taxes	(10,276)		(8,192)		(18,468)
Income tax benefit	795		1,153		1,948
Net loss	(9,402)		(7,039)		(16,441)
Net loss per share	(0.26)		(0.20)		(0.46)
Comprehensive loss	(8,861)		(7,039)		(15,900)
Goodwill as of December 31, 2019	293,019		(6,715)		286,304
Other assets as of December 31, 2019	38,144		(1,477)		36,667
Other non-current liabilities as of December 31, 2019	95,979		(1,153)		94,826

	Six Months Ended December 31, 2019
	As Previously Reported		Adjustments		As Revised
	(Dollars in thousands, except per share amounts)
Loss from sale of salon assets to franchisees, net (1)	$	(11,552)	$	(6,715)	$	(18,267)
Interest income and other, net (2)	4,517		(1,477)		3,040
Loss from continuing operations before income taxes	(27,310)		(8,192)		(35,502)
Income tax benefit	3,651		1,153		4,804
Net loss	(23,207)		(7,039)		(30,246)
Net loss per share	(0.64)		(0.20)		(0.84)
Comprehensive loss	(23,069)		(7,039)		(30,108)

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The Company revised the amounts originally reported for the second quarter of fiscal year 2020 for the following items:

(1)Recorded an additional $6.7 million loss from the sale of salons to franchisees, net that should have been recorded in the second quarter. The error in the Company's goodwill derecognition estimation calculation was identified in the fourth quarter of fiscal year 2020. The goodwill derecognition was understated which understated the loss of the sale of salons to franchisees, net. The error impacted the three and six months ended December 31, 2019.

(2)Recorded a reduction to the gain on the sale of a building, included in interest income and other, net related to the sale of the Company's headquarters which occurred in the second quarter of fiscal year 2020. Previously, the Company identified this error during the third quarter of fiscal year 2020 and recorded and disclosed the correction in the third quarter as an out-of-period adjustment. The correction applies to the three and six months ended December 31, 2019.