Exhibit 99
REGIS CORPORATION:
Mark Fosland – Vice President, Finance
(952) 806-1707
Alex Forliti – Director, Finance – Investor Relations
952-947-7781
For Immediate Release
REGIS REPORTS FOURTH QUARTER AND FISCAL YEAR 2007 RESULTS
– Fourth Quarter Earnings Exceed Guidance
MINNEAPOLIS, August 22, 2007 — Regis Corporation (NYSE:RGS), the global leader in the $150 billion hair care industry, today reported fourth quarter net income of $27.9 million, or $0.62 per diluted share, which exceeded the Company’s previously issued guidance of $0.53 to $0.60 per share. Fourth quarter earnings included nine cents of benefit primarily related to actuarial adjustments to prior years’ workers’ compensation claim reserves.
On July 12, 2007, the Company reported revenues for the fourth quarter ended June 30, 2007 of $675 million, up 6.2 percent over the $636 million reported in the comparable period in fiscal 2006. In the quarter, same-store service sales increased 0.9 percent and same-store total sales decreased 0.1 percent.
During the quarter, Regis added a net total of 254 locations. The Company constructed 85 locations and franchisees built an additional 75 locations. In addition, Regis acquired 213 salons (including 12 franchise buybacks). The Company closed or relocated 107 corporate and franchise locations during the quarter.
Full-Year Results
For the full year, revenues totaled $2.6 billion, up 8 percent compared to $2.4 billion during fiscal year 2006. Same-store sales for the full year increased 0.2 percent. Net income was $83.2 million, or $1.82 per diluted share. Net income results for the year were reduced by a $19.6 million, or $0.43 per diluted share, non-cash write-off for goodwill impairment related to the merger of the Company’s beauty school division with Empire Education.
“Fiscal year 2007 was the continuation of a very challenging period for the salon industry,” commented Paul D. Finkelstein, chairman and chief executive officer. “We remain as bullish as ever on the long-term prospects of Regis as well as the industry. Our service business continues to improve. The reality of the product business is that it is much more competitive today. However, no other company in our industry has the resources that we have and we are determined to improve the profitability and growth of our product business.”
During the year, the Company added a net total of 550 locations. Regis constructed 422 locations and franchisees built 256 locations. The Company acquired 357 corporate locations (including 98 franchise buybacks). Regis closed or relocated 387 corporate and franchised locations. As of June 30,
2007, Regis Corporation owned, franchised or held ownership interests in over 12,400 worldwide locations.
Fourth Quarter Non-Operational Detail
During the fourth quarter, Regis Corporation recorded nine cents of non-operational benefits and charges which are detailed below:
· A $7.5 million pre-tax benefit, or $0.11 per diluted share benefit from a favorable actuarial adjustment to workers’ compensation and insurance accruals related to reductions in prior years’ reserves.
· A $0.9 million pre-tax charge, or $0.01 per diluted share charge related to severance for two individuals.
· A $0.5 million pre-tax charge, or $0.01 per diluted share charge related to the sale and closing of five underperforming salons.
First Quarter 2008 Outlook
The following outlook pertains to the fiscal first quarter ending September 30, 2007:
· Earnings per diluted share are forecasted to be in a range of $0.43 to $0.49.
· Consolidated revenue is forecasted to grow four percent to five percent to a range of $665 million to $675 million compared to $639 million a year ago.
· Consolidated same-store sales are forecasted to be in a range of 0.0 to 2.0 percent.
Updated Fiscal Year 2008 Outlook
The following outlook pertains to the fiscal year ending June 30, 2008:
· Excluding accretion from future possible acquisitions, earnings per diluted share are forecasted to be in a range of $2.01 to $2.27.
· Excluding revenue from future possible acquisitions, consolidated revenue is forecasted to grow four percent to $2.7 billion.
· Consolidated same-store sales are forecasted to increase to a range of 1.0 to 3.0 percent.
Regis Corporation will host a conference call discussing fourth quarter and fiscal year results today, August 22, 2007 at 10:00 a.m., Central Time. Interested parties are invited to listen by logging on to www.regiscorp.com or dialing 800-218-0530. A replay of the call will be available through August 24, 2007. The replay phone number is 800-405-2236, access code 11091868#.
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, 2007, the Company owned, franchised or held ownership interests in over 12,400 worldwide locations. Regis’ corporate and franchised locations operate under concepts such as Supercuts, Jean Louis David, Vidal Sassoon, Regis Salons, MasterCuts, Trade Secret, SmartStyle, Cost Cutters and Hair Club for Men and Women. In addition, Regis maintains ownership interests in various other salon concepts such as Cool Cuts 4 Kids, and the Beauty Takashi and Beauty Plaza concepts in Japan. System-wide, these and other concepts are located in the U.S. and in eleven other countries in North America, Europe and Asia. Regis also maintains a 50 percent ownership interest in Intelligent Nutrients, a joint venture that provides a wide variety of certified organic products for health and beauty. For additional information about the company, including
management’s current financial outlook and a reconciliation of non-GAAP 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 competition within the personal hair care industry, which remains strong, both domestically and internationally; price sensitivity; changes in economic conditions; 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 for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons and beauty schools that support its growth objectives; the ability of the Company to maintain satisfactory relationships with suppliers; or other factors not listed above. The ability of the Company to meet its expected revenue growth is dependent on salon and beauty school 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, 2006. 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, 2007 and 2006
(In thousands, except per share data)
|
| June 30, |
| ||||
|
| 2007 |
| 2006 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 184,785 |
| $ | 135,397 |
|
Receivables, net |
| 67,773 |
| 62,558 |
| ||
Inventories |
| 196,582 |
| 193,999 |
| ||
Deferred income taxes |
| 18,775 |
| 16,224 |
| ||
Other current assets |
| 57,149 |
| 36,848 |
| ||
Total current assets |
| 525,064 |
| 445,026 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 494,085 |
| 483,764 |
| ||
Goodwill |
| 812,383 |
| 778,228 |
| ||
Other intangibles, net |
| 213,452 |
| 216,831 |
| ||
Other assets |
| 87,130 |
| 61,475 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 2,132,114 |
| $ | 1,985,324 |
|
|
|
|
|
|
| ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Long-term debt, current portion |
| $ | 223,352 |
| $ | 101,912 |
|
Accounts payable |
| 74,532 |
| 70,807 |
| ||
Accrued expenses |
| 240,748 |
| 233,496 |
| ||
Total current liabilities |
| 538,632 |
| 406,215 |
| ||
Long-term debt and capital lease obligations |
| 485,879 |
| 520,357 |
| ||
Other noncurrent liabilities |
| 194,295 |
| 187,345 |
| ||
Total liabilities |
| 1,218,806 |
| 1,113,917 |
| ||
Shareholders’ equity: |
|
|
|
|
| ||
Common stock, $0.05 par value; issued and outstanding, 44,164,645 and 45,303,459 common shares at June 30, 2007 and 2006, respectively |
| 2,209 |
| 2,266 |
| ||
Additional paid-in capital |
| 178,029 |
| 232,284 |
| ||
Accumulated other comprehensive income |
| 78,278 |
| 58,066 |
| ||
Retained earnings |
| 654,792 |
| 578,791 |
| ||
Total shareholders’ equity |
| 913,308 |
| 871,407 |
| ||
Total liabilities and shareholders’ equity |
| $ | 2,132,114 |
| $ | 1,985,324 |
|
- more -
REGIS CORPORATION (NYSE: RGS)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
|
| (Unaudited) |
|
|
| ||||||||
|
| Three Months Ended June 30, |
| Year Ended June 30, |
| ||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
| ||||
Service |
| $ | 469,357 |
| $ | 436,717 |
| $ | 1,793,802 |
| $ | 1,634,028 |
|
Product |
| 185,141 |
| 179,175 |
| 752,280 |
| 718,942 |
| ||||
Franchise royalties and fees |
| 20,823 |
| 20,073 |
| 80,506 |
| 77,894 |
| ||||
|
| 675,321 |
| 635,965 |
| 2,626,588 |
| 2,430,864 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Cost of service |
| 265,022 |
| 247,849 |
| 1,014,781 |
| 928,515 |
| ||||
Cost of product |
| 92,414 |
| 93,074 |
| 380,492 |
| 371,018 |
| ||||
Site operating expenses |
| 45,866 |
| 49,900 |
| 208,101 |
| 199,602 |
| ||||
General and administrative |
| 85,982 |
| 78,011 |
| 328,644 |
| 294,092 |
| ||||
Rent |
| 102,226 |
| 95,869 |
| 382,820 |
| 350,926 |
| ||||
Depreciation and amortization |
| 33,741 |
| 34,687 |
| 124,137 |
| 115,903 |
| ||||
Goodwill impairment |
| — |
| — |
| 23,000 |
| — |
| ||||
Terminated acquisition income, net |
| — |
| (39,370 | ) | — |
| (33,683 | ) | ||||
Total operating expenses |
| 625,251 |
| 560,020 |
| 2,461,975 |
| 2,226,373 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 50,070 |
| 75,945 |
| 164,613 |
| 204,491 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest |
| (10,906 | ) | (9,128 | ) | (41,770 | ) | (34,989 | ) | ||||
Other, net |
| 1,645 |
| (2,351 | ) | 5,113 |
| 651 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 40,809 |
| 64,466 |
| 127,956 |
| 170,153 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income taxes |
| (12,934 | ) | (22,951 | ) | (44,786 | ) | (60,575 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 27,875 |
| $ | 41,515 |
| $ | 83,170 |
| $ | 109,578 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.63 |
| $ | 0.92 |
| $ | 1.86 |
| $ | 2.43 |
|
Diluted |
| $ | 0.62 |
| $ | 0.90 |
| $ | 1.82 |
| $ | 2.36 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common and common equivalent shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 44,468 |
| 45,226 |
| 44,723 |
| 45,168 |
| ||||
Diluted |
| 45,256 |
| 46,259 |
| 45,623 |
| 46,400 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash dividends declared per common share |
| $ | 0.04 |
| $ | 0.04 |
| $ | 0.16 |
| $ | 0.16 |
|
REGIS CORPORATION (NYSE: RGS)
SELECTED CASH FLOW DATA
(In thousands)
|
| Years Ended June 30, |
| ||||
|
| 2007 |
| 2006 |
| ||
|
|
|
|
|
| ||
Net cash provided by operating activities |
| $ | 241,860 |
| $ | 281,685 |
|
Net cash used in investing activities |
| (193,049 | ) | (280,665 | ) | ||
Net cash (used in) provided by financing activities |
| (6,425 | ) | 28,571 |
| ||
Effect of exchange rate changes on cash and cash equivalents |
| 7,002 |
| 3,088 |
| ||
Increase in cash and cash equivalents |
| 49,388 |
| 32,679 |
| ||
Cash and cash equivalents: |
|
|
|
|
| ||
Beginning of year |
| 135,397 |
| 102,718 |
| ||
End of year |
| $ | 184,785 |
| $ | 135,397 |
|
REGIS CORPORATION (NYSE: RGS)
Salon / School / Hair Restoration Center Counts and Revenues
|
| June 30, |
| June 30, |
|
|
| 2007 |
| 2006 |
|
SYSTEM-WIDE LOCATIONS: |
|
|
|
|
|
|
|
|
|
|
|
Company-owned salons |
| 8,139 |
| 7,559 |
|
Franchise salons |
| 3,742 |
| 3,774 |
|
Beauty career schools |
| 56 |
| 54 |
|
Company-owned hair restoration centers |
| 49 |
| 48 |
|
Franchise hair restoration centers |
| 41 |
| 42 |
|
Ownership interest locations |
| 389 |
| 191 |
|
Total, system-wide |
| 12,416 |
| 11,668 |
|
SALON LOCATION SUMMARY
|
| June 30, |
| June 30, |
|
|
| 2007 |
| 2006 |
|
NORTH AMERICAN SALONS: |
|
|
|
|
|
REGIS SALONS |
|
|
|
|
|
Open at beginning of period |
| 1,079 |
| 1,093 |
|
Salons constructed |
| 17 |
| 38 |
|
Acquired |
| 49 |
| 14 |
|
Less relocations |
| (14 | ) | (16 | ) |
Salon openings |
| 52 |
| 36 |
|
Conversions |
| (1 | ) | — |
|
Salons closed |
| (31 | ) | (50 | ) |
Total, Regis Salons |
| 1,099 |
| 1,079 |
|
|
|
|
|
|
|
MASTERCUTS |
|
|
|
|
|
Open at beginning of period |
| 642 |
| 636 |
|
Salons constructed |
| 15 |
| 32 |
|
Acquired |
| — |
| — |
|
Less relocations |
| (12 | ) | (8 | ) |
Salon openings |
| 3 |
| 24 |
|
Conversions |
| — |
| (2 | ) |
Salons closed |
| (16 | ) | (16 | ) |
Total, MasterCuts Salons |
| 629 |
| 642 |
|
|
|
|
|
|
|
TRADE SECRET |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 615 |
| 597 |
|
Salons constructed |
| 20 |
| 33 |
|
Acquired |
| 3 |
| 2 |
|
Franchise buybacks |
| — |
| 5 |
|
Less relocations |
| (11 | ) | (6 | ) |
Salon openings |
| 12 |
| 34 |
|
Conversions |
| 1 |
| 1 |
|
Salons closed |
| (15 | ) | (17 | ) |
Total company-owned salons |
| 613 |
| 615 |
|
|
| June 30, |
| June 30, |
|
|
| 2007 |
| 2006 |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 19 |
| 24 |
|
Salons constructed |
| — |
| — |
|
Acquired |
| — |
| — |
|
Less relocations |
| — |
| — |
|
Salon openings |
| — |
| — |
|
Franchise buybacks |
| — |
| (5 | ) |
Salons closed |
| — |
| — |
|
Total franchise salons |
| 19 |
| 19 |
|
|
|
|
|
|
|
Total, Trade Secret Salons |
| 632 |
| 634 |
|
|
|
|
|
|
|
SMARTSTYLE/COST CUTTERS IN WAL-MART |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 1,739 |
| 1,497 |
|
Salons constructed |
| 242 |
| 215 |
|
Acquired |
| — |
| — |
|
Franchise buybacks |
| 21 |
| 31 |
|
Less relocations |
| (2 | ) | (2 | ) |
Salon openings |
| 261 |
| 244 |
|
Conversions |
| — |
| 1 |
|
Salons closed |
| — |
| (3 | ) |
Total company-owned salons |
| 2,000 |
| 1,739 |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 164 |
| 184 |
|
Salons constructed |
| 8 |
| 11 |
|
Acquired |
| — |
| — |
|
Less relocations |
| — |
| — |
|
Salon openings |
| 8 |
| 11 |
|
Conversions |
| — |
| — |
|
Franchise buybacks |
| (21 | ) | (31 | ) |
Salons closed |
| — |
| — |
|
Total franchise salons |
| 151 |
| 164 |
|
|
|
|
|
|
|
Total, SmartStyle/Cost Cutters in Wal-Mart Salons |
| 2,151 |
| 1,903 |
|
|
| June 30, |
| June 30, |
|
|
| 2007 |
| 2006 |
|
STRIP CENTERS |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 3,031 |
| 2,728 |
|
Salons constructed |
| 101 |
| 180 |
|
Acquired |
| 193 |
| 122 |
|
Franchise buybacks |
| 72 |
| 104 |
|
Less relocations |
| (17 | ) | (21 | ) |
Salon openings |
| 349 |
| 385 |
|
Conversions |
| — |
| (2 | ) |
Salons closed |
| (63 | ) | (80 | ) |
Total company-owned salons |
| 3,317 |
| 3,031 |
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 2,004 |
| 2,102 |
|
Salons constructed |
| 135 |
| 135 |
|
Acquired (2) |
| — |
| — |
|
Less relocations |
| (19 | ) | (18 | ) |
Salon openings |
| 116 |
| 117 |
|
Conversions |
| — |
| 2 |
|
Franchise buybacks |
| (72 | ) | (104 | ) |
Salons closed |
| (50 | ) | (113 | ) |
Total franchise salons |
| 1,998 |
| 2,004 |
|
|
|
|
|
|
|
Total, Strip Center Salons |
| 5,315 |
| 5,035 |
|
|
|
|
|
|
|
INTERNATIONAL SALONS (1) |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 453 |
| 426 |
|
Salons constructed |
| 25 |
| 33 |
|
Acquired |
| 12 |
| 10 |
|
Franchise buybacks |
| 4 |
| 2 |
|
Less relocations |
| (3 | ) | (4 | ) |
Salon openings |
| 38 |
| 41 |
|
Conversions |
| — |
| (2 | ) |
Salons closed |
| (10 | ) | (12 | ) |
Total company-owned salons |
| 481 |
| 453 |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 1,587 |
| 1,592 |
|
Salons constructed |
| 110 |
| 111 |
|
Acquired (2) |
| — |
| — |
|
Less relocations |
| (1 | ) | — |
|
Salon openings |
| 109 |
| 111 |
|
Conversions |
| — |
| 2 |
|
Franchise buybacks |
| (4 | ) | (2 | ) |
Salons closed |
| (118 | ) | (116 | ) |
Total franchise salons |
| 1,574 |
| 1,587 |
|
|
|
|
|
|
|
Total, International Salons |
| 2,055 |
| 2,040 |
|
|
| June 30, |
| June 30, |
|
|
| 2007 |
| 2006 |
|
TOTAL SYSTEM-WIDE SALONS: |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 7,559 |
| 6,977 |
|
Salons constructed |
| 420 |
| 531 |
|
Acquired |
| 257 |
| 148 |
|
Franchise buybacks |
| 97 |
| 142 |
|
Less relocations |
| (59 | ) | (57 | ) |
Salon openings |
| 715 |
| 764 |
|
Conversions |
| — |
| (4 | ) |
Salons closed |
| (135 | ) | (178 | ) |
Total company-owned salons |
| 8,139 |
| 7,559 |
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 3,774 |
| 3,902 |
|
Salons constructed |
| 253 |
| 257 |
|
Acquired (2) |
| — |
| — |
|
Less relocations |
| (20 | ) | (18 | ) |
Salon openings |
| 233 |
| 239 |
|
Conversions |
| — |
| 4 |
|
Franchise buybacks |
| (97 | ) | (142 | ) |
Salons closed |
| (168 | ) | (229 | ) |
Total franchise salons |
| 3,742 |
| 3,774 |
|
|
|
|
|
|
|
Total Salons |
| 11,881 |
| 11,333 |
|
|
|
|
|
|
|
BEAUTY SCHOOLS |
|
|
|
|
|
Open at beginning of period |
| 54 |
| 24 |
|
Salons constructed |
| 2 |
| 2 |
|
Acquired |
| 1 |
| 30 |
|
Less relocations |
| (1 | ) | (2 | ) |
Total Beauty Schools |
| 56 |
| 54 |
|
|
|
|
|
|
|
HAIR RESTORATION CENTERS: |
|
|
|
|
|
Company-owned hair restoration centers: |
|
|
|
|
|
Open at beginning of period |
| 48 |
| 41 |
|
Salons constructed |
| — |
| 1 |
|
Acquired |
| 1 |
| 1 |
|
Franchise buybacks |
| 1 |
| 7 |
|
Less relocations |
| — |
| (1 | ) |
Salon openings |
| 2 |
| 8 |
|
Sites closed |
| (1 | ) | (1 | ) |
Total company-owned hair restoration centers |
| 49 |
| 48 |
|
|
|
|
|
|
|
Franchise hair restoration centers: |
|
|
|
|
|
Open at beginning of period |
| 42 |
| 49 |
|
Salons constructed |
| 3 |
| — |
|
Acquired |
| — |
| — |
|
Less relocations |
| (2 | ) | — |
|
Salon openings |
| 43 |
| 49 |
|
Franchise buybacks |
| (1 | ) | — |
|
Sites closed |
| (1 | ) | (7 | ) |
Total franchise salons |
| 41 |
| 42 |
|
|
|
|
|
|
|
Total Hair Restoration Centers |
| 90 |
| 90 |
|
|
|
|
|
|
|
Ownership interest locations |
| 389 |
| 191 |
|
|
|
|
|
|
|
Grand Total, System-wide |
| 12,416 |
| 11,668 |
|
(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.
NOTE 1: REVENUES BY CONCEPT:
|
| For the Periods Ended June 30, |
| ||||||||||
|
| Three Months |
| Twelve Months |
| ||||||||
(Dollars in thousands) |
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
North American salons: |
|
|
|
|
|
|
|
|
| ||||
Regis |
| $ | 124,703 |
| $ | 120,783 |
| $ | 498,577 |
| $ | 481,760 |
|
MasterCuts |
| 42,310 |
| 43,066 |
| 174,287 |
| 174,674 |
| ||||
Trade Secret(1) |
| 57,248 |
| 63,005 |
| 253,250 |
| 262,862 |
| ||||
SmartStyle |
| 119,235 |
| 107,189 |
| 462,321 |
| 413,907 |
| ||||
Strip Center(1) |
| 202,473 |
| 191,354 |
| 776,995 |
| 703,345 |
| ||||
Total North American salons |
| 545,969 |
| 525,397 |
| 2,165,430 |
| 2,036,548 |
| ||||
International salons(1) |
| 76,194 |
| 64,249 |
| 253,430 |
| 220,662 |
| ||||
Beauty schools |
| 21,245 |
| 17,590 |
| 85,627 |
| 63,952 |
| ||||
Hair restoration centers(1) |
| 31,913 |
| 28,729 |
| 122,101 |
| 109,702 |
| ||||
Consolidated revenues |
| $ | 675,321 |
| $ | 635,965 |
| $ | 2,626,588 |
| $ | 2,430,864 |
|
Percent change from prior year |
| 6.2 | % | 7.2 | % | 8.1 | % | 10.8 | % | ||||
Salon same-store sales increase(2) |
| -0.1 | % | 0.1 | % | 0.2 | % | 0.4 | % |
(1) Includes aggregate franchise royalties and fees of $20.8 and $20.1 million for the three months ended June 30, 2007 and 2006, respectively, and $80.5 and $77.9 million for the twelve months ended June 30, 2007 and 2006, respectively. North American salon franchise royalties and fees represented 48.4 and 50.1 percent of total franchise revenues in the three months ended June 30, 2007 and 2006, respectively, and 48.2 and 50.4 percent in the twelve months ended June 30, 2007 and 2006, respectively.
(2) The Company began including hair restoration centers in its same-store sales calculation beginning with the third fiscal quarter of 2007.
NOTE 2: FINANCIAL INFORMATION BY SEGMENT:
Financial information concerning the Company’s salon, school and hair restoration businesses is shown in the following tables:
|
| For the Quarter Ended June 30, 2007 |
| ||||||||||||||||
|
|
|
|
|
|
|
| Hair |
|
|
|
|
| ||||||
|
| Salons |
| Beauty |
| Restoration |
| Unallocated |
|
|
| ||||||||
(Dollars in thousands) |
| North America |
| International |
| Schools |
| Centers |
| Corporate |
| Consolidated |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Service |
| $ | 389,024 |
| $ | 47,277 |
| $ | 18,991 |
| $ | 14,065 |
| $ | — |
| $ | 469,357 |
|
Product |
| 146,857 |
| 19,521 |
| 2,254 |
| 16,509 |
| — |
| 185,141 |
| ||||||
Royalties and fees |
| 10,088 |
| 9,396 |
| 0 |
| 1,339 |
| — |
| 20,823 |
| ||||||
|
| 545,969 |
| 76,194 |
| 21,245 |
| 31,913 |
| — |
| 675,321 |
| ||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cost of service |
| 224,499 |
| 24,738 |
| 8,328 |
| 7,457 |
| — |
| 265,022 |
| ||||||
Cost of product |
| 75,596 |
| 10,931 |
| 1,049 |
| 4,838 |
| — |
| 92,414 |
| ||||||
Site operating expenses |
| 36,587 |
| 4,122 |
| 3,770 |
| 1,387 |
| — |
| 45,866 |
| ||||||
General and administrative |
| 30,307 |
| 12,235 |
| 2,328 |
| 7,146 |
| 33,966 |
| 85,982 |
| ||||||
Rent |
| 81,014 |
| 16,642 |
| 2,447 |
| 1,637 |
| 486 |
| 102,226 |
| ||||||
Depreciation and amortization |
| 22,744 |
| 2,835 |
| 862 |
| 2,657 |
| 4,643 |
| 33,741 |
| ||||||
Total operating expenses |
| 470,747 |
| 71,503 |
| 18,784 |
| 25,122 |
| 39,095 |
| 625,251 |
| ||||||
Operating income (loss) |
| 75,222 |
| 4,691 |
| 2,461 |
| 6,791 |
| (39,095 | ) | 50,070 |
| ||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest |
| — |
| — |
| — |
| — |
| (10,906 | ) | (10,906 | ) | ||||||
Other, net |
| — |
| — |
| — |
| — |
| 1,645 |
| 1,645 |
| ||||||
Income (loss) before income taxes |
| $ | 75,222 |
| $ | 4,691 |
| $ | 2,461 |
| $ | 6,791 |
| $ | (48,356 | ) | $ | 40,809 |
|
|
| For the Quarter Ended June 30, 2006 |
| ||||||||||||||||
|
|
|
|
|
|
|
| Hair |
|
|
|
|
| ||||||
|
| Salons |
| Beauty |
| Restoration |
| Unallocated |
|
|
| ||||||||
(Dollars in thousands) |
| North America |
| International |
| Schools |
| Centers |
| Corporate |
| Consolidated |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Service |
| $ | 368,292 |
| $ | 40,107 |
| $ | 15,933 |
| $ | 12,385 |
| $ | — |
| $ | 436,717 |
|
Product |
| 147,055 |
| 15,413 |
| 1,657 |
| 15,050 |
| — |
| 179,175 |
| ||||||
Royalties and fees |
| 10,050 |
| 8,729 |
| — |
| 1,294 |
| — |
| 20,073 |
| ||||||
|
| 525,397 |
| 64,249 |
| 17,590 |
| 28,729 |
| — |
| 635,965 |
| ||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cost of service |
| 211,965 |
| 21,014 |
| 7,858 |
| 7,012 |
| — |
| 247,849 |
| ||||||
Cost of product |
| 78,616 |
| 8,934 |
| 964 |
| 4,560 |
| — |
| 93,074 |
| ||||||
Site operating expenses |
| 41,828 |
| 2,905 |
| 3,935 |
| 1,232 |
| — |
| 49,900 |
| ||||||
General and administrative |
| 28,593 |
| 11,584 |
| 2,442 |
| 6,040 |
| 29,352 |
| 78,011 |
| ||||||
Rent |
| 78,522 |
| 13,096 |
| 2,151 |
| 1,677 |
| 423 |
| 95,869 |
| ||||||
Depreciation and amortization |
| 23,300 |
| 3,619 |
| 785 |
| 2,996 |
| 3,987 |
| 34,687 |
| ||||||
Terminated acquisition expenses (income)(1) |
| — |
| — |
| — |
| — |
| (39,370 | ) | (39,370 | ) | ||||||
Total operating expenses |
| 462,824 |
| 61,152 |
| 18,135 |
| 23,517 |
| (5,608 | ) | 560,020 |
| ||||||
Operating income (loss) |
| 62,573 |
| 3,097 |
| (545 | ) | 5,212 |
| 5,608 |
| 75,945 |
| ||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest |
| — |
| — |
| — |
| — |
| (9,128 | ) | (9,128 | ) | ||||||
Other, net |
| — |
| — |
| — |
| — |
| (2,351 | ) | (2,351 | ) | ||||||
Income (loss) before income taxes |
| $ | 62,573 |
| $ | 3,097 |
| $ | (545 | ) | $ | 5,212 |
| $ | (5,871 | ) | $ | 64,466 |
|
(1) As a result of the termination of the merger agreement with Alberto-Culver, the Company recognized $50.0 million in income related to a termination fee, partially offset by $10.6 million in acquisition related expenses.
|
| For the Year Ended June 30, 2007 |
| ||||||||||||||||
|
|
|
|
|
|
|
| Hair |
|
|
|
|
| ||||||
|
| Salons |
| Beauty |
| Restoration |
| Unallocated |
|
|
| ||||||||
(Dollars in thousands) |
| North America |
| International |
| Schools |
| Centers |
| Corporate |
| Consolidated |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Service |
| $ | 1,512,287 |
| $ | 151,057 |
| $ | 76,556 |
| $ | 53,902 |
| $ | — |
| $ | 1,793,802 |
|
Product |
| 614,377 |
| 65,675 |
| 9,071 |
| 63,157 |
| — |
| 752,280 |
| ||||||
Royalties and fees |
| 38,766 |
| 36,698 |
| — |
| 5,042 |
| — |
| 80,506 |
| ||||||
|
| 2,165,430 |
| 253,430 |
| 85,627 |
| 122,101 |
| — |
| 2,626,588 |
| ||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cost of service |
| 872,813 |
| 80,256 |
| 32,583 |
| 29,129 |
| — |
| 1,014,781 |
| ||||||
Cost of product |
| 317,214 |
| 38,957 |
| 5,462 |
| 18,859 |
| — |
| 380,492 |
| ||||||
Site operating expenses |
| 174,733 |
| 11,989 |
| 16,366 |
| 5,013 |
| — |
| 208,101 |
| ||||||
General and administrative |
| 119,204 |
| 45,179 |
| 9,848 |
| 27,191 |
| 127,222 |
| 328,644 |
| ||||||
Rent |
| 314,718 |
| 50,410 |
| 9,272 |
| 6,535 |
| 1,885 |
| 382,820 |
| ||||||
Depreciation and amortization |
| 84,250 |
| 9,091 |
| 3,355 |
| 9,813 |
| 17,628 |
| 124,137 |
| ||||||
Goodwill impairment(1) |
| — |
| — |
| 23,000 |
| — |
| — |
| 23,000 |
| ||||||
Total operating expenses |
| 1,882,932 |
| 235,882 |
| 99,886 |
| 96,540 |
| 146,735 |
| 2,461,975 |
| ||||||
Operating income (loss) |
| 282,498 |
| 17,548 |
| (14,259 | ) | 25,561 |
| (146,735 | ) | 164,613 |
| ||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest |
| — |
| — |
| — |
| — |
| (41,770 | ) | (41,770 | ) | ||||||
Other, net |
| — |
| — |
| — |
| — |
| 5,113 |
| 5,113 |
| ||||||
Income (loss) before income taxes |
| $ | 282,498 |
| $ | 17,548 |
| $ | (14,259 | ) | $ | 25,561 |
| $ | (183,392 | ) | $ | 127,956 |
|
(1) Operating income for the beauty school segment was reduced by $23.0 million for a non-cash write-off for goodwill impairment related to the merger of the Company’s beauty school segment with Empire Education.
|
| For the Year Ended June 30, 2006 |
| ||||||||||||||||
|
|
|
|
|
|
|
| Hair |
|
|
|
|
| ||||||
|
| Salons |
| Beauty |
| Restoration |
| Unallocated |
|
|
| ||||||||
(Dollars in thousands) |
| North America |
| International |
| Schools |
| Centers |
| Corporate |
| Consolidated |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Service |
| $ | 1,395,953 |
| $ | 133,323 |
| $ | 58,281 |
| $ | 46,471 |
| $ | — |
| $ | 1,634,028 |
|
Product |
| 601,332 |
| 53,796 |
| 5,671 |
| 58,143 |
| — |
| 718,942 |
| ||||||
Royalties and fees |
| 39,263 |
| 33,543 |
| — |
| 5,088 |
| — |
| 77,894 |
| ||||||
|
| 2,036,548 |
| 220,662 |
| 63,952 |
| 109,702 |
| — |
| 2,430,864 |
| ||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cost of service |
| 806,024 |
| 71,110 |
| 24,757 |
| 26,624 |
| — |
| 928,515 |
| ||||||
Cost of product |
| 316,980 |
| 32,168 |
| 4,278 |
| 17,592 |
| — |
| 371,018 |
| ||||||
Site operating expenses |
| 175,039 |
| 9,755 |
| 10,272 |
| 4,536 |
| — |
| 199,602 |
| ||||||
General and administrative |
| 108,362 |
| 41,963 |
| 8,270 |
| 23,254 |
| 112,243 |
| 294,092 |
| ||||||
Rent |
| 293,571 |
| 42,756 |
| 6,999 |
| 6,215 |
| 1,385 |
| 350,926 |
| ||||||
Depreciation and amortization |
| 80,011 |
| 9,348 |
| 2,610 |
| 9,908 |
| 14,026 |
| 115,903 |
| ||||||
Terminated acquisition income, net(1) |
| — |
| — |
| — |
| — |
| (33,683 | ) | (33,683 | ) | ||||||
Total operating expenses |
| 1,779,987 |
| 207,100 |
| 57,186 |
| 88,129 |
| 93,971 |
| 2,226,373 |
| ||||||
Operating income (loss) |
| 256,561 |
| 13,562 |
| 6,766 |
| 21,573 |
| (93,971 | ) | 204,491 |
| ||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest |
| — |
| — |
| — |
| — |
| (34,989 | ) | (34,989 | ) | ||||||
Other, net |
| — |
| — |
| — |
| — |
| 651 |
| 651 |
| ||||||
Income (loss) before income taxes |
| $ | 256,561 |
| $ | 13,562 |
| $ | 6,766 |
| $ | 21,573 |
| $ | (128,309 | ) | $ | 170,153 |
|
(1) As a result of the termination of the merger agreement with Alberto-Culver, the Company recognized $50.0 million in income related to a termination fee, partially offset by $16.3 million in acquisition related expenses. Of the acquisition related expenses, $10.6 million was recognized during the fourth quarter of fiscal year 2006.
-END-