Regis (RGS) 8-K Results of Operations and Financial Condition

Exhibit 99

	CONTACTS:
	Investors:	REGIS CORPORATION:
		Paul D. Finkelstein – Chairman & CEO
		Randy L. Pearce – Executive Vice President, CFO
		Kyle P. Didier – Vice President, Finance (952) 947-7000
For Immediate Release
	Media:	BERNS COMMUNICATIONS GROUP:
		Melissa Jaffin/Michael McMullan
		(212) 994-4660

REGIS REPORTS RECORD FOURTH QUARTER AND FISCAL YEAR 2004 RESULTS
- -Fiscal Year 2004 EPS Increased 19 Percent to $2.29-

     MINNEAPOLIS, August 24, 2004 — Regis Corporation (NYSE:RGS), the global leader in the $140 billion hair care industry, today reported record financial results for its fiscal fourth quarter and year ended June 30, 2004.

Fourth Quarter Results

     Consolidated revenues increased 13 percent to a record $509 million compared to $448 million a year ago. Same-store sales increased 1.5 percent. Fourth quarter net income increased 21 percent to $27.3 million, or $0.59 per diluted share. During the quarter, Regis Corporation added a net total of 276 salons. The Company constructed 137 salons and franchisees built 74 salons. In addition, 167 salons were acquired, including 7 franchise buybacks. A total of 95 salons were closed or relocated during the quarter.

Fiscal Year 2004 Results

     Consolidated revenues increased 14 percent to a record $1.92 billion compared to $1.68 billion during fiscal year 2003. Same-store sales increased 2.6 percent. Net income increased 22 percent to a record $105 million, or $2.29 per diluted share. During the year, the Company constructed 452 salons and franchisees built 268 salons. In addition, 411 salons were acquired, including 206 franchise buybacks. A total of 380 salons were closed or relocated during the year. As of June 30, 2004, Regis Corporation owned or franchised 10,162 salons compared to 9,617 salons as of June 30, 2003, a net increase of 545 salons.

     “Fiscal 2004 represented another year of record performance for Regis Corporation. Our flexible strategy of adding salons organically and by acquisition allows us to generate consistent revenue growth year after year,” commented Paul D. Finkelstein, chairman and chief executive officer. “This strategy enables us to achieve, and sometimes exceed, our long-term objective of low-to-mid teens earnings growth.”

     Mr. Finkelstein further commented, “Strong cash flow generated in fiscal 2004 allowed Regis Corporation to strengthen its balance sheet. We reduced our debt-to-capitalization ratio by 440 basis points to 30.5 percent and have now reduced this ratio by over 1500 basis points in the last four years.”

Fiscal Year 2005 Outlook

     Guidance for fiscal 2005 remains unchanged. Excluding the benefit from future acquisitions, revenue for fiscal year 2005 is expected to increase 7-to-8 percent to nearly $2.1 billion, with

same-store sales forecasted to increase 1.0 to 2.0 percent. Earnings for fiscal year 2005 are forecasted to increase to a range of $2.43 to $2.47 per diluted share.

     Mr. Finkelstein continued, “We anticipate completing our planned fiscal year 2005 acquisition activity in the coming months. Based on the transactions under review, we believe fiscal year 2005 will be another year in which we achieve our long-term growth objectives.”

     Regis Corporation will broadcast its year-end conference call live on the internet, Tuesday, August 24, 2004 at 10:00 a.m. Central Time. Interested parties are invited to listen by logging onto www.regiscorp.com. An archive of the conference call will be available at this website shortly after the conclusion of the live broadcast. Regis Corporation will release August 2004 revenue results, including same-store sales, on September 8, 2004.

          Regis Corporation, a Fortune 1000 company, is the largest owner, operator and franchisor of hair and retail product salons in the world. As of June 30, 2004, the Company operated or franchised 10,162 salons utilizing several concepts including: Supercuts, Jean Louis David, Vidal Sassoon, Regis Salons, MasterCuts, Trade Secret, SmartStyle and Cost Cutters. These salons are located in the United States, Canada, France, Italy, United Kingdom, Spain, Germany, Belgium, Switzerland, Poland and Puerto Rico.

          Regis Corporation is headquartered in Minneapolis, Minnesota. The Company’s common stock is traded on the New York Stock Exchange under the symbol RGS. For additional information about the Company, including a reconciliation of non-GAAP financial information and our current financial outlook, please visit the Investor Information section of the corporate website atwww.regiscorp.com.

               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 competition within the personal hair care industry, which remains strong, both domestically and internationally, and price sensitivity; changes in economic condition; changes in consumer tastes and fashion trends; 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; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify and acquire salons that support its growth objectives; or other factors not listed above. The ability of the Company to meet its expected revenue growth 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 the Company’s Annual Report onForm 10-K for the year ended June 30, 2003 and included inForm S-3 Registration Statement filed with the Securities

and Exchange Commission on June 4, 2004. 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.

(TABLES TO FOLLOW)

REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED BALANCE SHEET

as of June 30, 2004 and 2003

(Dollars in thousands, except per share amounts)

	June 30,
	2004		2003
ASSETS
Current assets:
Cash and cash equivalents	$	73,567	$	55,454
Receivables, net		35,033		31,947
Inventories		161,304		156,827
Deferred income taxes		15,285		18,469
Other current assets		28,253		16,963
Total current assets		313,442		279,660
Property and equipment, net		381,903		356,725
Goodwill		457,140		372,618
Other intangibles, net		79,174		64,498
Other assets		40,200		39,454
Total assets	$	1,271,859	$	1,112,955
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term debt, current portion	$	19,128	$	21,123
Accounts payable		53,112		56,175
Accrued expenses		129,721		118,696
Total current liabilities		201,961		195,994
Long-term debt		282,015		280,634
Other noncurrent liabilities		100,322		73,523
Total liabilities		584,298		550,151
Shareholders’ equity:
Preferred stock, authorized 250,000 shares at June 30, 2004 and 2003
Common stock, $.05 par value; issued and outstanding, 44,283,949 and 43,527,244 common shares at June 30, 2004 and 2003, respectively		2,214		2,176
Additional paid-in capital		220,204		207,650
Accumulated other comprehensive income		40,642		27,789
Retained earnings		424,501		325,189
Total shareholders’ equity		687,561		562,804
Total liabilities and shareholders’ equity	$	1,271,859	$	1,112,955

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REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)

	Three Months Ended						Year Ended
	June 30,						June 30,
	2004			2003			2004			2003
Revenues:
Company-owned salons:
Service	$	343,353		$	302,026		$	1,271,232		$	1,117,562
Product		137,460			121,644			545,012			465,053
		480,813			423,670			1,816,244			1,582,615
Franchise revenues:
Royalties and fees		18,748			16,108			73,632			67,682
Product sales		9,036			8,455			33,267			34,233
		27,784			24,563			106,899			101,915
Total Revenue		508,597			448,233			1,923,143			1,684,530
Operating expenses:
Company-owned salons:
Cost of service		195,734			170,538			719,809			629,945
Cost of product		68,762			61,694			276,704			232,596
Direct salon		43,496			36,677			163,178			142,173
Rent		73,156			63,801			267,368			233,821
Depreciation		16,808			15,239			62,273			54,894
		397,956			347,949			1,489,332			1,293,429
Franchise direct costs, including product and equipment		14,538			13,433			58,413			57,050
Corporate and franchise support costs		46,488			43,246			181,992			163,256
Depreciation and amortization		3,305			2,864			12,688			11,855
Total operating expenses		462,287			407,492			1,742,425			1,525,590
Operating income		46,310			40,741			180,718			158,940
Other income (expense):
Interest		(4,021	)		(5,690	)		(17,064	)		(21,394	)
Other, net		32			208			1,155			1,055
Income before income taxes		42,321			35,259			164,809			138,601
Income taxes		(15,017	)		(12,765	)		(59,331	)		(51,926	)
Net income	$	27,304		$	22,494		$	105,478		$	86,675
Net income per share:
Basic	$	.62		$	.52		$	2.40		$	2.00
Diluted	$	.59		$	.50		$	2.29		$	1.92
Weighted average common and common equivalent shares outstanding:
Basic		44,298			43,353			44,014			43,292
Diluted		46,416			45,203			46,145			45,229
Cash dividends declared per common share	$	.04		$	.03		$	.14		$	.12

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REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

	Year Ended June 30,
	2004			2003
Cash flows from operating activities:
Net income	$	105,478		$	86,675
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		72,096			63,767
Amortization		3,451			3,632
Deferred income taxes		16,071			3,475
Other		1,265			710
Changes in operating assets and liabilities*:
Receivables		(16	)		8
Inventories		(462	)		(31,145	)
Other current assets		(10,629	)		2,120
Other assets		(1,387	)		(13,606	)
Accounts payable		(4,991	)		1,363
Accrued expenses		9,461			21,105
Other noncurrent liabilities		15,327			13,015
Net cash provided by operating activities		205,664			151,119
Cash flows from investing activities:
Capital expenditures		(74,076	)		(77,460	)
Proceeds from sale of assets		432			1,273
Business and salon acquisitions, net of cash acquired		(99,734	)		(66,880	)
Net cash used in investing activities		(173,378	)		(143,067	)
Cash flows from financing activities:
Borrowings on revolving credit facilities		514,650			854,195
Payments on revolving credit facilities		(508,025	)		(886,420	)
Proceeds from issuance of long-term debt		11,887			30,000
Repayments of long-term debt		(24,111	)		(11,471	)
Other, primarily increase (decrease) in negative book cash balances		118			(2,720	)
Dividends paid		(6,166	)		(5,202	)
Repurchase of common stock		(22,548	)		(21,694	)
Proceeds from issuance of common stock		17,347			7,051
Net cash used in financing activities		(16,848	)		(36,261	)
Effect of exchange rate changes on cash		2,675			2,122
Increase (decrease) in cash		18,113			(26,087	)
Cash and cash equivalents:
Beginning of period		55,454			81,541
End of period	$	73,567		$	55,454

* Changes in operating assets and liabilities do not include assets and liabilities assumed through acquisitions.

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REGIS CORPORATION (NYSE:RGS)
Salon Counts and Revenues

	June 30,			June 30,
	2004			2003
SYSTEM-WIDE SALONS:
Company-owned salons		6,238			5,563
Franchise salons		3,924			4,054
		10,162			9,617
SALON LOCATION SUMMARY
NORTH AMERICA:
REGIS SALONS
Open at beginning of period		1,096			1,016
Salons constructed		33			53
Acquired		10			73
Less relocations		10			12
Salon openings		33			114
Conversions		(2	)		(2	)
Salons closed		(35	)		(32	)
Open at end of period		1,092			1,096
MASTERCUTS
Open at beginning of period		590			551
Salons constructed		34			47
Acquired		3			0
Less relocations		9			6
Salon openings		28			41
Conversions		1			2
Salons closed		(15	)		(4	)
Open at end of period		604			590
TRADE SECRET
Company-owned salons:
Open at beginning of period		517			490
Salons constructed		26			34
Acquired		12			10
Franchise buybacks		2			0
Less relocations		5			4
Salon openings		35			40
Conversions		1			0
Salons closed		(4	)		(13	)
Open at end of period		549			517
Franchise salons:
Open at beginning of period		25			26
Salons constructed		1			0
Acquired		0			0
Salon openings		1			0
Franchise buybacks		(2	)		0
Salons closed		0			(1	)
Open at end of period		24			25

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	June 30,			June 30,
	2004			2003
SMARTSTYLE/COST CUTTERS IN WAL-MART
Company-owned salons:
Open at beginning of period		1,033			861
Salons constructed		174			168
Acquired		0			2
Franchise buybacks		61			12
Less relocations		0			5
Salon openings		235			177
Conversions		0			0
Salons closed		(5	)		(5	)
Open at end of period		1,263			1,033
Franchise salons:
Open at beginning of period		230			210
Salons constructed		33			33
Acquired		0			0
Less relocations		0			0
Salon openings		33			33
Conversions		0			0
Franchise buybacks		(61	)		(12	)
Salons closed		(1	)		(1	)
Open at end of period		201			230
STRIP CENTERS
Company-owned salons:
Open at beginning of period		1,928			1,476
Salons constructed		166			85
Acquired		162			361
Franchise buybacks		133			85
Less relocations		8			3
Salon openings		453			528
Conversions		(8	)		(13	)
Salons closed		(63	)		(63	)
Open at end of period		2,310			1,928
Franchise salons:
Open at beginning of period		2,172			1,988
Salons constructed		146			147
Acquired (2)		0			198
Less relocations		10			10
Salon openings		136			335
Conversions		8			13
Franchise buybacks		(133	)		(85	)
Salons closed		(78	)		(79	)
Open at end of period		2,105			2,172

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	June 30,			June 30,
	2004			2003
INTERNATIONAL (1)
Company-owned salons:
Open at beginning of period		399			382
Salons constructed		19			10
Acquired		18			17
Franchise buybacks		10			0
Salon openings		47			27
Conversions		0			0
Salons closed		(26	)		(10	)
Open at end of period		420			399
Franchise salons:
Open at beginning of period		1,627			1,684
Salons constructed		88			95
Acquired (2)		0			0
Salon openings		88			95
Conversions		0			0
Franchise buybacks		(10	)		0
Salons closed		(111	)		(152	)
Open at end of period		1,594			1,627
TOTAL SYSTEM-WIDE SALONS
Company-owned salons:
Open at beginning of period		5,563			4,776
Salons constructed		452			397
Acquired		205			463
Franchise buybacks		206			97
Less relocations		32			30
Salon openings		831			927
Conversions		(8	)		(13	)
Salons closed		(148	)		(127	)
Open at end of period		6,238			5,563
Franchise salons:
Open at beginning of period		4,054			3,908
Salons constructed		268			275
Acquired (2)		0			198
Less relocations		10			10
Salon openings		258			463
Conversions		8			13
Franchise buybacks		(206	)		(97	)
Salons closed		(190	)		(233	)
Open at end of period		3,924			4,054
Grand total, system-wide		10,162			9,617

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(1) Canadian and Puerto Rican salons are included in the Regis Salons, Strip Center, MasterCuts and Trade Secret concepts and not included in the International salon totals.

(2) Represents primarily the acquisition of franchise networks.

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

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

	(Dollars in thousands)
	Three Months Ended				Year Ended
	June 30,				June 30,
Revenues by Concept:	2004		2003		2004		2003
Regis Salons	$	120,886	$	116,524	$	482,303	$	437,449
MasterCuts		42,568		42,450		173,415		170,288
Trade Secret		59,747		53,485		242,604		209,671
SmartStyle		78,809		61,712		294,564		227,527
Strip Centers		142,471		123,056		518,856		468,121
International		64,116		51,006		211,401		171,474
	$	508,597	$	448,233	$	1,923,143	$	1,684,530

Included in the table above are franchise revenues of $27,784 and $24,563 for the three months ended June 30, 2004 and 2003, respectively, and $106,899 and $101,915 for the year ended June 30, 2004 and 2003, respectively.

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