REVENUE RECOGNITION: (Tables)

9 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

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.