Regis Reports Fourth Quarter 2010 Earnings

MINNEAPOLIS--(BUSINESS WIRE)--Regis Corporation (NYSE:RGS), the global leader in the $150 billion to $170 billion hair care industry, today reported fourth quarter earnings per diluted share of $0.30. As expected, fourth quarter reported earnings per diluted share were reduced by $0.04 due primarily to non-operational income tax expense related to the third quarter Regis Salon division non-cash, goodwill impairment charge. Absent non-operational items, fourth quarter operational earnings were $0.34 per diluted share. A complete reconciliation of reported earnings to operational earnings is included in today’s press release. A more comprehensive reconciliation is available on the Company’s website at www.regiscorp.com.

“During the past year, we have taken aggressive action to strengthen our balance sheet and improve our efficiency. We have substantially lowered our debt, improved our cash flow and reduced expenses. These measures played an important role in achieving our financial results”

On July 9, 2010, the Company reported that revenues for the fourth quarter ended June 30, 2010 decreased 5.6 percent to $590 million.

“During the past year, we have taken aggressive action to strengthen our balance sheet and improve our efficiency. We have substantially lowered our debt, improved our cash flow and reduced expenses. These measures played an important role in achieving our financial results,” said Paul D. Finkelstein, Chairman and Chief Executive Officer.

“Going forward our focus will be on top-line growth and we are budgeting same-store sales to improve throughout fiscal 2011, with positive comps expected in the second half of the year. Same-store sales for the first fifty-five days of the current quarter are down 1.9 percent in contrast to a decline in consolidated total same-store sales of 2.7 percent for the fourth quarter. We have a huge opportunity to improve the overall customer experience. Our customer service and communication programs, marketing and salon revitalization efforts will help mitigate the adverse effects of the current economy,” added Finkelstein.

“Finally, in an effort to further enhance shareholder value, we announced earlier this month that we are working with our financial advisors to review the various strategic options available to the Company,” concluded Finkelstein.

As of June 30, 2010 Regis Corporation owned, franchised, or held ownership interest in 12,728 worldwide locations.

Regis Corporation will host a conference call discussing fourth quarter results today, August 26, 2010 at 10 a.m., Central time. Interested parties are invited to listen by logging on to www.regiscorp.com or dialing 877-941-2927. A replay of the call will be available later that day. The replay phone number is 800-406-7325, access code 4330671#.

About Regis Corporation

Regis Corporation (NYSE:RGS) is the beauty industry’s global leader in beauty salons, hair restoration centers and cosmetology education. As of June 30, 2010, the Company owned, franchised or held ownership interests in over 12,700 worldwide locations. Regis’ corporate and franchised locations operate under concepts such as Supercuts, Sassoon Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Cool Cuts 4 Kids and Hair Club for Men and Women. In addition, Regis maintains an ownership interest in Provalliance, which operates salons primarily in Europe, under the brands of Jean Louis David, Franck Provost and Saint Algue. Regis also maintains ownership interests in Empire Education Group in the U.S. and the MY Style concepts in Japan. System-wide, these and other concepts are located in the U.S. and in over 30 other countries in North America, South America, Europe, Africa and Asia. For additional information about the company, including a reconciliation of non-GAAP financial information and certain supplemental financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com. To join Regis Corporation’s email alert list, click on this link:

http://www.b2i.us/irpass.asp?BzID=913&to=ea&Nav=1&S=0&L=1

This press release contains “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 results and impact of the Company’s announcement to explore strategic alternatives; competition within the personal hair care industry, which remains strong, both domestically and internationally; price sensitivity; changes in economic conditions, and in particular, continued weakness in the U.S. and global economies; changes in consumer tastes and fashion trends; the ability of the Company to implement its planned spending and cost reduction plan and to continue to maintain compliance with the financial covenants in its credit agreements; labor and benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company and its franchisees to obtain suitable locations and financing for new salon development and to maintain satisfactory relationships with landlords and other licensors with respect to existing locations; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons that support its growth objectives; the ability of the Company to maintain satisfactory relationships with suppliers; the ability of the Company to consummate the planned closure of salons and the related realization of the anticipated costs, benefits and time frame; or other factors not listed above. The ability of the Company to meet its expected revenue target is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. 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, 2009. 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.

REGIS CORPORATION (NYSE: RGS)
CONSOLIDATED BALANCE SHEET (Unaudited)
as of June 30, 2010 and 2009
(In thousands, except per share data)
	June 30,
	2010		2009
ASSETS
Current assets:
Cash and cash equivalents	$	151,871	$	42,538
Receivables, net		24,312		44,935
Inventories		153,380		158,570
Deferred income taxes		16,892		22,086
Income tax receivable		46,207		47,164
Other current assets		36,203		37,693
Total current assets		428,865		352,986
Property and equipment, net		359,250		391,538
Goodwill		736,989		764,422
Other intangibles, net		118,070		126,961
Investment in and loans to affiliates		195,786		211,400
Other assets		80,612		45,179
Total assets	$	1,919,572	$	1,892,486
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term debt, current portion	$	51,629	$	55,454
Accounts payable		57,683		62,394
Accrued expenses		160,797		156,638
Total current liabilities		270,109		274,486
Long-term debt and capital lease obligations		388,400		578,853
Other noncurrent liabilities		247,770		236,287
Total liabilities		906,279		1,089,626
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 57,561,180 and 43,881,364 common shares at June 30, 2010 and 2009, respectively		2,878		2,194
Additional paid-in capital		332,372		151,394
Accumulated other comprehensive income		47,032		51,855
Retained earnings		631,011		597,417
Total shareholders’ equity		1,013,293		802,860
Total liabilities and shareholders’ equity	$	1,919,572	$	1,892,486

REGIS CORPORATION (NYSE: RGS)
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share data)
	(Unaudited)
	Three Months Ended							Year Ended
	June 30,							June 30,
	2010			2009				2010				2009
Revenues:
Service	$	451,855		$		466,544		$	1,784,137			$	1,833,958
Product	127,820			128,438				514,631				523,968
Product sold to Premier (1)	—			19,641				19,962				32,237
Royalties and fees	10,273			10,123				39,704				39,624
	589,948			624,746				2,358,434				2,429,787
Operating expenses:
Cost of service	255,371			261,339				1,015,720				1,044,719
Cost of product	59,907			58,483				243,921				250,801
Cost of product sold to Premier (1)	—			19,641				19,962				32,237
Site operating expenses	51,973			44,570				199,338				190,456
General and administrative	74,079			71,774				291,991				291,661
Rent	86,718			87,946				344,098				347,792
Depreciation and amortization	27,511			33,484				108,764				115,655
Goodwill impairment	—			—				35,277				41,661
Lease termination costs	(1,325		)	2,896				2,145				5,732
Total operating expenses	554,234			580,133				2,261,216				2,320,714
Operating income	35,714			44,613				97,218				109,073
Other income (expense):
Interest expense	(8,990		)	(8,986			)	(54,414			)	(39,768		)
Interest income and other, net	3,642			2,948				10,410				9,461
Income from continuing operations before income taxes and equity in income (loss) of affiliated companies	30,366			38,575				53,214				78,766
Income taxes	(15,575		)	(12,942			)	(25,577			)	(41,950		)
Equity in income (loss) of affiliated companies, net of income taxes	3,548			(29,988			)	11,942				(29,846		)
Income (loss) from continuing operations	$	18,339		$		(4,355	)	$	39,579			$	6,970
Income (loss) from discontinued operations, net of tax	—			(199			)	3,161				(131,436		)
Net income (loss)	$	18,339		$		(4,554	)	$		42,740		$	(124,466	)
Net income (loss) per share:
Basic:
Income (loss) from continuing operations	$	0.32		$	(0.10		)	$		0.71		$	0.16
Income (loss) from discontinued operations, net of tax	—			(0.00			)	0.06				(3.06		)
Net income (loss) per share, basic (2)	$	0.32		$	(0.11		)	$	0.77			$	(2.90	)
Diluted:
Income (loss) from continuing operations	$	0.30		$	(0.10		)	$		0.71		$	0.16
Income (loss) from discontinued operations, net of tax	—			(0.00			)	0.05				(3.05		)
Net income (loss) income per share, diluted (2)	$	0.30		$	(0.11		)	$	0.75			$	(2.89	)
Weighted average common and common equivalent shares outstanding:
Basic	56,493			43,000				55,806				42,897
Diluted	67,878			43,000				66,753				43,026
Cash dividends declared per common share	$	0.04		$	0.04			$	0.16			$	0.16

(1) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would supply product to Premier at cost for a transition period. The agreement was substantially complete as of September 30, 2009.

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

REGIS CORPORATION (NYSE: RGS)
SELECTED CASH FLOW DATA
(In thousands)
	Year Ended
	June 30,
	2010			2009
Net cash provided by operating activities	$	192,223		$	188,064
Net cash used in investing activities	(44,580		)	(115,511		)
Net cash used in financing activities	(39,133		)	(148,307		)
Effect of exchange rate changes on cash and cash equivalents	823			(9,335		)
Increase (decrease) in cash and cash equivalents	109,333			(85,089		)
Cash and cash equivalents:
Beginning of year	42,538			127,627
End of year	$	151,871		$	42,538

REGIS CORPORATION (NYSE: RGS)
Salon and Hair Restoration Center Counts and Revenues
	June 30,		June 30,
SYSTEM-WIDE LOCATIONS:	2010		2009
Company-owned salons	7,909		7,981
Franchise salons	2,020		2,045
Company-owned hair restoration centers	62		62
Franchise hair restoration centers	33		33
Ownership interest locations	2,704		2,804
Total, system-wide	12,728		12,925
SALON LOCATION SUMMARY
	June 30,		June 30,
NORTH AMERICAN SALONS:	2010		2009
REGIS SALONS
Open at beginning of period	1,071		1,078
Salons constructed	14		20
Acquired	3		23
Less relocations	(11	)	(14	)
Salon openings	6		29
Conversions	—		—
Salons closed	(28	)	(36	)
Total, Regis Salons	1,049		1,071
MASTERCUTS
Open at beginning of period	602		615
Salons constructed	15		14
Acquired	—		—
Less relocations	(7	)	(10	)
Salon openings	8		4
Conversions	—		—
Salons closed	(10	)	(17	)
Total, MasterCuts Salons	600		602
TRADE SECRET (3)
Company-owned salons:
Open at beginning of period	—		674
Salons constructed	—		10
Acquired	—		—
Franchise buybacks	—		—
Less relocations	—		(4	)
Salon openings	—		6
Conversions	—		—
Salons sold	—		(655	)
Salons closed	—		(25	)
Total company-owned salons	—		—
	June 30,		June 30,
	2010		2009
Franchise salons:
Open at beginning of period	—		106
Salons constructed	—		1
Acquired	—		—
Less relocations	—		—
Salon openings	—		1
Franchise buybacks	—		—
Divisional reclassification (3)	—		(43	)
Salons sold	—		(57	)
Salons closed	—		(7	)
Total franchise salons	—		—
Total, Trade Secret Salons	—		—
SMARTSTYLE/COST CUTTERS IN WAL-MART
Company-owned salons:
Open at beginning of period	2,300		2,212
Salons constructed	80		71
Acquired	—		—
Franchise buybacks	5		24
Less relocations	(3	)	(2	)
Salon openings	82		93
Conversions	—		—
Salons closed	(8	)	(5	)
Total company-owned salons	2,374		2,300
Franchise salons:
Open at beginning of period	122		146
Salons constructed	2		1
Acquired	—		—
Less relocations	—		—
Salon openings	2		1
Conversions	—		—
Franchise buybacks	(5	)	(24	)
Salons closed	—		(1	)
Total franchise salons	119		122
Total, SmartStyle/Cost Cutters in Wal-Mart Salons	2,493		2,422
SUPERCUTS
Company-owned salons:
Open at beginning of period	1,114		1,132
Salons constructed	10		27
Acquired	—		—
Franchise buybacks	12		6
Less relocations	(2	)	(2	)
Salon openings	20		31
Conversions	—		(2	)
Salons closed	(34	)	(47	)
Total company-owned salons	1,100		1,114
	June 30,		June 30,
	2010		2009
Franchise salons:
Open at beginning of period	1,022		997
Salons constructed	42		51
Acquired (2)	—		—
Less relocations	(6	)	(7	)
Salon openings	36		44
Conversions	9		1
Franchise buybacks	(12	)	(6	)
Salons closed	(21	)	(14	)
Total franchise salons	1,034		1,022
Total, Supercuts Salons	2,134		2,136
PROMENADE
Company-owned salons:
Open at beginning of period	2,450		2,399
Salons constructed	18		36
Acquired	—		71
Franchise buybacks	6		53
Less relocations	(10	)	(16	)
Salon openings	14		144
Conversions	—		1
Salons closed	(82	)	(94	)
Total company-owned salons	2,382		2,450
Franchise salons:
Open at beginning of period	901		914
Salons constructed	34		40
Acquired	—		—
Less relocations	(9	)	(7	)
Salon openings	25		33
Conversions	(9	)	—
Divisional reclassification (3)	—		43
Franchise buybacks	(6	)	(53	)
Salons closed	(44	)	(36	)
Total franchise salons	867		901
Total, Promenade	3,249		3,351
INTERNATIONAL SALONS (1)
Company-owned salons:
Open at beginning of period	444		472
Salons constructed	2		4
Acquired	—		—
Franchise buybacks	—		—
Less relocations	—		(1	)
Salon openings	2		3
Conversions	—		—
Salons closed	(42	)	(31	)
Total company-owned salons	404		444
	June 30,		June 30,
	2010		2009
Franchise salons:
Open at beginning of period	—		—
Salons constructed	—		—
Acquired (2)	—		—
Less relocations	—		—
Salon openings	—		—
Conversions	—		—
Franchise buybacks	—		—
Salons closed	—		—
Total franchise salons	—		—
Total, International Salons	404		444
TOTAL SYSTEM-WIDE SALONS:
Company-owned salons:
Open at beginning of period	7,981		8,582
Salons constructed	139		182
Acquired	3		94
Franchise buybacks	23		83
Less relocations	(33	)	(49	)
Salon openings	132		310
Conversions	—		(1	)
Salons sold	—		(655	)
Salons closed	(204	)	(255	)
Total company-owned salons	7,909		7,981
Franchise salons:
Open at beginning of period	2,045		2,163
Salons constructed	78		93
Acquired (2)	—		—
Less relocations	(15	)	(14	)
Salon openings	63		79
Conversions	—		1
Franchise buybacks	(23	)	(83	)
Salons sold	—		(57	)
Salons closed	(65	)	(58	)
Total franchise salons	2,020		2,045
Total Salons	9,929		10,026
HAIR RESTORATION CENTERS:
Company-owned hair restoration centers:
Open at beginning of period	62		57
Salons constructed	4		8
Acquired	—		—
Franchise buybacks	—		2
Less relocations	(4	)	(5	)
Salon openings	—		5
Conversions	—		—
Sites closed	—		—
Total company-owned hair restoration centers	62		62
	June 30,		June 30,
	2010		2009
Franchise hair restoration centers:
Open at beginning of period	33		35
Salons constructed	—		—
Acquired	—		—
Less relocations	—		—
Salon openings	—		—
Franchise buybacks	—		(2	)
Sites closed	—		—
Total franchise hair restoration centers	33		33
Total Hair Restoration Centers	95		95
Ownership interest locations	2,704		2,804
Grand Total, System-wide	12,728		12,925

(1) Canadian and Puerto Rican salons are included in the Regis Salons, MasterCuts, Supercuts, and Promenade concepts and not included in the International salon totals.

(2) Represents primarily the acquisition of franchise networks.

(3) On February 16, 2009 the Company announced the completion of the sale of Trade Secret retail product division to Premier Salons Beauty, Inc. As a result of this transaction, the Company reported the Trade Secret operations as discontinued operations for all periods presented. Forty-three franchise salons were not included in the sale of Trade Secret to Premier Salons Beauty, Inc. and are not reported as discontinued operations. These franchise salons are now included in Promenade.

Relocations represent a transfer of location by the same salon concept.

Conversions represent the transfer of one salon concept to another concept.

REVENUES BY CONCEPT:

	For the Periods Ended June 30,
	Three Months									Twelve Months
(Dollars in thousands)		2010				2009				2010				2009
North American salons:
Regis		$	108,021			$	114,198			$	437,990			$	474,964
MasterCuts		41,261				41,587				166,821				170,338
SmartStyle		134,275				134,729				533,094				529,782
Supercuts		80,791				80,537				314,698				310,913
Promenade (3)		147,558				171,745				607,960				631,701
Total North American salons (2)		511,906				542,796				2,060,563				2,117,698
International salons		41,482				45,975				156,085				171,569
Hair restoration centers		36,560				35,975				141,786				140,520
Consolidated revenues		$	589,948			$	624,746			$	2,358,434			$	2,429,787
Percent change from prior year		(5.6		)	%	(2.5		)	%	(2.9		)	%	(2.1		)	%
Same-store sales decrease (1)		(2.7		)	%	(4.0		)	%	(3.2		)	%	(3.1		)	%

(1) Salon same-store sales are calculated on a daily basis as the total change in sales for company-owned salons which were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date salon same-store sales are the sum of the same-store sales computed on a daily basis. Relocated salons are included in same-store sales as they are considered to have been open in the prior period. International same-store sales are calculated in local currencies so that foreign currency fluctuations do not impact the calculation. Management believes that same-store sales, a component of organic growth, are useful in order to help determine the change in salon revenues attributable to its organic growth (new salon construction and same-store sales growth) versus growth from acquisitions.

(2) Beginning with the period ended December 31, 2008, the operations of the Trade Secret concept within the North American reportable segment were accounted for as a discontinued operation. All comparable periods will reflect Trade Secret as a discontinued operation.

(3) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would supply product to Premier at cost for a transition period. For the three months ended June 30, 2010, and 2009, the Company generated revenue of $0.0 and $19.6 million, respectively, in product sold to Premier, which represented 0.0 and 3.1 percent of consolidated revenues, respectively. For the twelve months ended June 30, 2010 and 2009, the Company generated revenue of $20.0 and $32.2 million, respectively, in product sold to Premier, which represented 0.8 and 1.3 percent of consolidated revenues, respectively. The agreement was substantially complete as of September 30, 2009.

FINANCIAL INFORMATION BY SEGMENT:

Financial information concerning the Company’s salon and hair restoration businesses is shown in the following tables.

	For the Three Months Ended June 30, 2010
	Salons					Hair Restoration		Unallocated
(Dollars in thousands)	North America		International			Centers		Corporate			Consolidated
Revenues:
Service	$	404,276	$	30,480		$	17,099	$	—		$	451,855
Product		97,980		11,002			18,838		—			127,820
Product sold to Premier (1)		—		—			—		—			—
Royalties and fees		9,650		—			623		—			10,273
		511,906		41,482			36,560		—			589,948
Operating expenses:
Cost of service		230,041		15,563			9,767		—			255,371
Cost of product		48,808		5,526			5,573		—			59,907
Cost of product sold to Premier (1)		—		—			—		—			—
Site operating expenses		47,748		2,792			1,433		—			51,973
General and administrative		28,575		3,826			8,687		32,991			74,079
Rent		73,303		10,592			2,269		554			86,718
Depreciation and amortization		19,232		599			3,084		4,596			27,511
Goodwill impairment		—		—			—		—			—
Lease termination costs		—		(1,325	)		—		—			(1,325	)
Total operating expenses		447,707		37,573			30,813		38,141			554,234
Operating income (loss)		64,199		3,909			5,747		(38,141	)		35,714
Other income (expense):
Interest expense		—		—			—		(8,990	)		(8,990	)
Interest income and other, net		—		—			—		3,642			3,642
Income (loss) from continuing operations before income taxes and equity in income (loss) of affiliated companies	$	64,199	$	3,909		$	5,747	$	(43,489	)	$	30,366

(1) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would supply product to Premier at cost for a transition period. The agreement was substantially complete as of September 30, 2009.

	For the Three Months Ended June 30, 2009
	Salons					Hair Restoration		Unallocated
(Dollars in thousands)	North America		International			Centers		Corporate			Consolidated
Revenues:
Service	$	416,503	$	33,584		$	16,457	$	—		$	466,544
Product		97,156		12,391			18,891		—			128,438
Product sold to Premier (1)		19,641		—			—		—			19,641
Royalties and fees		9,496		—			627		—			10,123
		542,796		45,975			35,975		—			624,746
Operating expenses:
Cost of service		234,908		17,424			9,007		—			261,339
Cost of product		47,560		5,526			5,397		—			58,483
Cost of product sold to Premier (1)		19,641		—			—		—			19,641
Site operating expenses		40,106		3,218			1,246		—			44,570
General and administrative		27,728		4,224			8,245		31,577			71,774
Rent		72,465		12,619			2,295		567			87,946
Depreciation and amortization		17,988		7,698			2,950		4,848			33,484
Goodwill impairment		—		—			—		—			—
Lease termination costs		2,154		742			—		—			2,896
Total operating expenses		462,550		51,451			29,140		36,992			580,133
Operating income (loss)		80,246		(5,476	)		6,835		(36,992	)		44,613
Other income (expense):
Interest expense		—		—			—		(8,986	)		(8,986	)
Interest income and other, net		—		—			—		2,948			2,948
Income (loss) from continuing operations before income taxes and equity in income (loss) of affiliated companies	$	80,246	$	(5,476	)	$	6,835	$	(43,030	)	$	38,575

(1) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would supply product to Premier at cost for a transition period. The agreement was substantially complete as of September 30, 2009.

	For the Twelve Months Ended June 30, 2010
	Salons				Hair Restoration		Unallocated
(Dollars in thousands)	North America		International		Centers		Corporate			Consolidated
Revenues:
Service	$	1,605,979	$	111,833	$	66,325	$	—		$	1,784,137
Product		397,401		44,252		72,978		—			514,631
Product sold to Premier (1)		19,962		—		—		—			19,962
Royalties and fees		37,221		—		2,483		—			39,704
		2,060,563		156,085		141,786		—			2,358,434
Operating expenses:
Cost of service		920,905		57,657		37,158		—			1,015,720
Cost of product		199,783		22,570		21,568		—			243,921
Cost of product sold to Premier (1)		19,962		—		—		—			19,962
Site operating expenses		183,881		10,152		5,305		—			199,338
General and administrative		113,956		13,115		36,207		128,713			291,991
Rent		294,263		38,681		9,013		2,141			344,098
Depreciation and amortization		72,681		4,986		12,198		18,899			108,764
Goodwill impairment		35,277		—		—		—			35,277
Lease termination costs		—		2,145		—		—			2,145
Total operating expenses		1,840,708		149,306		121,449		149,753			2,261,216
Operating income (loss)		219,855		6,779		20,337		(149,753	)		97,218
Other income (expense):
Interest expense		—		—		—		(54,414	)		(54,414	)
Interest income and other, net		—		—		—		10,410			10,410
Income (loss) from continuing operations before income taxes and equity in income (loss) of affiliated companies	$	219,855	$	6,779	$	20,337	$	(193,757	)	$	53,214

(1) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would supply product to Premier at cost for a transition period. The agreement was substantially complete as of September 30, 2009.

	For the Twelve Months Ended June 30, 2009(1)
	Salons				Hair Restoration		Unallocated
(Dollars in thousands)	North America		International		Centers		Corporate		Consolidated
Revenues:
Service	$	1,646,239	$	122,664	$	65,055	$	—	$	1,833,958
Product		402,103		48,905		72,960		—		523,968
Product sold to Premier (2)		32,237		—		—		—		32,237
Royalties and fees		37,119		—		2,505		—		39,624
		2,117,698		171,569		140,520		—		2,429,787
Operating expenses:
Cost of service		944,782		64,326		35,611		—		1,044,719
Cost of product		203,283		25,855		21,663		—		250,801
Cost of product sold to Premier (2)		32,237		—		—		—		32,237
Site operating expenses		173,457		11,762		5,237		—		190,456
General and administrative		117,673		15,720		33,924		124,344		291,661
Rent		292,253		44,492		8,887		2,160		347,792
Depreciation and amortization		73,395		12,492		11,327		18,441		115,655
Goodwill impairment		—		41,661		—		—		41,661
Lease termination costs		4,990		742		—		—		5,732
Total operating expenses		1,842,070		217,050		116,649		144,945		2,320,714
Operating income (loss)		275,628		(45,481